EX-99.1 2 a6382139_ex991.htm EXHIBIT 99.1

Exhibit 99.1

LNB Bancorp, Inc. Reports Second Quarter 2010 Results

  • Net income for second quarter is up 140.9 percent compared to the prior year
  • Net interest income increases 6.0 percent 2Q10 vs. 2Q09
  • Noninterest expense declines 5.5 percent in the second quarter compared to the prior year

LORAIN, Ohio--(BUSINESS WIRE)--August 3, 2010--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported net income for the three months ended June 30, 2010 of $1,243,000, or $0.12 per diluted share, compared with $516,000, or $0.03 per diluted share reported for the same period a year ago.

For the first six months of 2010, net income was $2,574,000, or $0.26 per diluted share, compared with $1,833,000, or $0.17 per diluted share for the first half of 2009.

“We are pleased to report another quarter of profitability sustained by strong core earnings growth and revenue increases,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. “Pre-provision core earnings* increased 25.43 percent in the second quarter of 2010 compared to the same quarter in 2009. While the economic environment continues to pose challenges, net interest income increased 5.95 percent and our net interest margin continued to strengthen when compared to the same period a year ago.”

Noninterest expense showed a 5.51 percent decline for the quarter ended June 30, 2010 compared to the same period one year ago which included a special assessment from the Federal Deposit Insurance Corporation (FDIC).

“While the past two quarters have produced heartening results, we continue to take significant reserves to provide for additional losses in our credit portfolio as the economic environment continues to be challenging,” said Klimas. “Our focus remains fixed on building revenues and aggressively managing our assets.”

Pre-provision core earnings* equaled $3,635,000 for the second quarter compared to $2,898,000 for the second quarter one year ago, an increase of 25.43 percent. For the first six months of 2010, pre-provision core earnings* totaled $7,372,000 compared to $6,293,000 for the first six months of 2009, an increase of 17.2 percent.

Key Performance Measures

Net interest income on a fully taxable equivalent basis for the second quarter of 2010 was $9,826,000, a 5.95 percent increase compared with $9,274,000 for the second quarter a year ago. For the first half of 2010, net interest income on a fully tax equivalent basis was $19,728,000, compared to $18,293,000 for the same period in 2009, an increase of 7.84 percent. The net interest margin for the second quarter of 2010 was 3.61 percent, compared with 3.28 percent for the second quarter of 2009. It represented a modest decline from 3.69 percent in the first quarter of 2010. Noninterest income for the second quarter of 2010 was $2,896,000, an improvement from the $2,651,000 in the first quarter of 2010, but down from the $3,244,000 in the second quarter of 2009. For the first six months of 2010, noninterest income was $5,547,000, compared to $6,101,000 for the first six months of 2009.

Noninterest expense was $8,958,000, a 5.51 percent decline from the $9,480,000 in the second quarter of 2009. Noninterest expense for the first half of 2010 was $17,651,000, compared to $17,840,000 for the same period a year earlier. Much of the decline was due to a special assessment from the FDIC imposed in 2009. The efficiency ratio, which is a measure of cost to generate revenue, was 70.41 percent in the second quarter of 2010, a significant improvement from 75.73 percent in the second quarter of 2009. The efficiency ratio for the first half of 2010 was 69.84 percent, compared to 73.13 percent in the first half of 2009.

The provision for loan losses totaled $2,109,000 for the quarter ended June 30, 2010, down from $2,484,000 for the second quarter a year ago. For the six-month period, the provision for loan losses was $4,218,000, compared with $4,293,000 for the first half of 2009.

Overall loan demand remains weak as total loans ended the quarter at $795,451,000 up slightly from $792,585,000 at the end of the first quarter of 2010, but down from $803,549,000 at the end of the second quarter of 2009. Total assets for the second quarter ended at $1,153,955,000 compared to $1,232,095,000 at the end of the second quarter of 2009. Total deposits were $973,890,000 at the end of the second quarter of 2010, compared to $1,014,724,000 at the end of the same quarter of 2009.

The Company continues to work through asset quality challenges amid a difficult economy. At June 30, 2010 the Company’s non-performing assets totaled $48,769,000, or 4.23 percent of total assets, compared to $44,374,000 or 3.83 percent of total assets at March 31, 2010 and $34,303,000 or 2.78 percent at June 30, 2009.

The allowance for possible loan losses is $19,435,000 at June 30, 2010 an increase from $19,183,000 at March 31, 2010 and $12,978,000 at June 30, 2009. The allowance to total loans at June 30, 2010 equaled 2.44 percent compared to 2.42 percent and 1.62 percent at March 31, 2010 and June 30, 2009, respectively.

Net charge-offs to average loans for the quarter ending June 30, 2010 was 0.94 percent, compared to 0.54 percent one year ago.

* Pre-provision core earnings is a non-GAAP financial measure that the Company’s management believes is useful in analyzing the Company’s underlying performance trends, particularly in periods of economic stress. Pre-provision core earnings is defined as income before income tax expense, adjusted to exclude the impact of provision for loan losses. Pre-provision core earnings is reconciled to the related GAAP financial measure in the “Reconciliation” table included after the consolidated financial statements and supplemental financial information included in this press release.

About LNB Bancorp, Inc.

LNB Bancorp, Inc. is a $1.2 billion bank holding company. Its major subsidiary, The Lorain National Bank, is a full-service commercial bank, specializing in commercial, personal banking services, residential mortgage lending and investment and trust services. The Lorain National Bank and Morgan Bank serve customers through 20 retail-banking locations and 27 ATMs in Lorain, eastern Erie, western Cuyahoga and Summit counties. North Coast Community Development Corporation is a wholly owned subsidiary of The Lorain National Bank. For more information about LNB Bancorp, Inc., and its related products and services or to view its filings with the Securities and Exchange Commission, visit us at http://www.4lnb.com.

This press release contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Terms such as “will,” “should,” “plan,” “intend,” “expect,” “continue,” “believe,” “anticipate” and “seek,” as well as similar expressions, are forward-looking in nature. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include fluctuations in interest rates, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which LNB Bancorp, Inc. conducts its operations, as well as the risks and uncertainties described from time to time in LNB Bancorp’s reports as filed with the Securities and Exchange Commission. Except to the extent required by law, we undertake no obligation to review or update any forward-looking statements, whether as a result of new information, future events or otherwise.

CONSOLIDATED BALANCE SHEETS
   
At June 30, 2010 At December 31, 2009
(unaudited)
(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks $ 17,876 $ 16,318
Federal funds sold and short-term investments   37,100     10,615  
Cash and cash equivalents 54,976 26,933
Interest-bearing deposits in other banks 346 359
Securities:
Trading securities, at fair value - 8,445
Available for sale, at fair value 244,111 247,037
Federal Home Loan Bank and Federal Reserve Stock 5,741 4,985
Total Securities 249,852 260,467
Loans held for sale 1,528 3,783
Loans:
Portfolio loans 795,451 803,197
Allowance for loan losses   (19,435 )   (18,792 )
Net loans   776,016     784,405  
Bank premises and equipment, net 9,654 10,105
Other real estate owned 2,355 1,264
Bank owned life insurance 16,780 16,435
Goodwill, net 21,582 21,582
Intangible assets, net 938 1,005
Accrued interest receivable 3,994 4,072
Other assets   15,934     19,099  
Total Assets $ 1,153,955   $ 1,149,509  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing $ 115,689 $ 118,505
Savings, money market and interest-bearing demand 307,560 305,045
Certificates of deposit   550,641     547,883  
Total deposits   973,890     971,433  
Short-term borrowings 1,725 1,457
Federal Home Loan Bank advances 42,503 42,505
Junior subordinated debentures 20,620 20,620
Accrued interest payable 1,935 2,074
Accrued taxes, expenses and other liabilities   6,143     7,279  
Total Liabilities   1,046,816     1,045,368  
Shareholders' Equity

Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at June 30, 2010 and December 31, 2009.

- -
Preferred stock, Series B, no par value, 25,233 shares authorized and issued at June 30, 2010 and December 31, 2009. 25,223 25,223
Discount on Series B preferred stock (124 ) (131 )
Warrant to purchase common stock 146 146

Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 7,691,355 at June 30, 2010 and 7,623,857 at December 31, 2009.

7,691 7,624
Additional paid-in capital 37,837 37,862
Retained earnings 38,672 36,883
Accumulated other comprehensive income 3,786 2,626
Treasury shares at cost, 328,194 shares at June 30, 2010 and at December 31, 2009 (6,092 ) (6,092 )
Total Shareholders' Equity   107,139     104,141  
Total Liabilities and Shareholders' Equity $ 1,153,955   $ 1,149,509  
 
Consolidated Statements of Income (unaudited)
   
Three Months Ended

June 30,

Six Months Ended

June 30,

2010   2009 2010   2009
(Dollars in thousands except share and per share amounts) (Dollars in thousands except share and per share amounts)
Interest Income
Loans $ 10,580 $ 11,360 $ 21,372 $ 22,971
Securities:
U.S. Government agencies and corporations 2,070 2,537 4,206 5,012
State and political subdivisions 245 266 491 499
Trading securities - 119 49 246
Other debt and equity securities 69 55 130 118
Federal funds sold and short-term investments   11     19     20     33
Total interest income 12,975 14,356 26,268 28,879
Interest Expense
Deposits 2,745 4,601 5,725 9,503
Federal Home Loan Bank advances 316 348 634 780
Short-term borrowings 1 32 2 68
Junior subordinated debenture   216     241     431     496
Total interest expense   3,278     5,222     6,792     10,847
Net Interest Income 9,697 9,134 19,476 18,032
Provision for Loan Losses   2,109     2,484     4,218     4,293
Net interest income after provision for loan losses 7,588 6,650 15,258 13,739
Noninterest Income
Investment and trust services 563 559 1,008 909
Deposit service charges 1,094 1,095 2,033 2,121
Other service charges and fees 826 705 1,620 1,342
Income from bank owned life insurance 173 165 344 327
Other income   69     81     162     164
Total fees and other income 2,725 2,605 5,167 4,863
Securities gains, net - 249 38 586
Gains on sale of loans 195 368 387 622
Gains (loss) on sale of other assets, net   (24 )   22     (45 )   30
Total noninterest income 2,896 3,244 5,547 6,101
Noninterest Expense
Salaries and employee benefits 3,911 3,802 7,829 7,520
Furniture and equipment 917 1,189 1,850 2,331
Net occupancy 581 570 1,196 1,214
Outside services 595 789 1,148 1,344
Marketing and public relations 326 295 572 539
Supplies, postage and freight 302 306 644 640
Telecommunications 211 185 423 388
Ohio Franchise tax 281 225 562 457
FDIC assessments 557 976 1,085 1,289
Other real estate owned 71 103 152 174
Electronic banking expenses 238 200 422 389
Loan and collection expense 450 368 773 578
Other expense   518     472     995     977
Total noninterest expense   8,958     9,480     17,651     17,840
Income before income tax expense 1,526 414 3,154 2,000
Income tax expense (benefit)   283     (102 )   580     167
Net Income $ 1,243   $ 516   $ 2,574   $ 1,833
Dividends and accretion on preferred stock   318     319     637     618
Net Income Available to Common Shareholders $ 925   $ 197   $ 1,937   $ 1,215
 
Net Income Per Common Share
Basic $ 0.12 $ 0.03 $ 0.26 $ 0.17
Diluted 0.12 0.03 0.26 0.17
Dividends declared 0.01 0.09 0.02 0.18
Average Common Shares Outstanding
Basic 7,363,161 7,295,663 7,343,023 7,295,663
Diluted 7,363,161 7,295,663 7,343,023 7,295,663
 
LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except Share and Per Share Data)
         
Three Months Ended   Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2010   2010   2009   2010   2009
END OF PERIOD BALANCES
Assets $ 1,153,955 $ 1,158,763 $ 1,232,095 $ 1,153,955 $ 1,232,095
Deposits 973,890 979,053 1,014,724 973,890 1,014,724
Portfolio loans 795,451 792,585 803,549 795,451 803,549
Allowance for loan losses 19,435 19,183 12,978 19,435 12,978
Shareholders' equity 107,139 105,381 107,679 107,139 107,679
 
AVERAGE BALANCES
Assets:
Total assets $ 1,158,724 $ 1,160,455 $ 1,202,197 $ 1,158,458 $ 1,186,135
Earning assets 1,090,318 1,088,093 1,133,466 1,089,212 1,116,483
Securities 258,413 256,310 278,340 257,367 264,732
Portfolio loans 792,132 796,040 805,779 794,076 802,957
Liabilities and shareholders' equity:
Total deposits $ 980,917 $ 979,643 $ 995,775 $ 980,285 $ 972,927
Interest bearing deposits 868,694 868,392 903,018 868,545 881,315
Interest bearing liabilities 933,703 934,908 990,496 934,303 975,838
Total shareholders' equity 106,314 105,026 108,255 105,802 107,981
 
INCOME STATEMENT
Net interest income $ 9,697 $ 9,779 $ 9,134 $ 19,476 $ 18,032
Net interest income-FTE (1) 9,826 9,904 9,274 19,728 18,293
Provision for loan losses 2,109 2,109 2,484 4,218 4,293
Noninterest income 2,896 2,651 3,244 5,547 6,101
Noninterest expense 8,958 8,693 9,480 17,651 17,840
Taxes     283       297       (102 )     580       167  
Net income     1,243       1,331       516       2,574       1,833  
Less Preferred stock dividend and amortization     318       319       319       637       618  
Net income available to common shareholders   $ 925     $ 1,012     $ 197     $ 1,937     $ 1,215  
 
PER SHARE DATA
Basic net income per common share $ 0.12 $ 0.14 $ 0.03 $ 0.26 $ 0.17
Diluted net income per common share 0.12 0.14 0.03 0.26 0.17
Cash dividends per common share 0.01 0.01 0.09 0.02 0.18
Basic average common shares outstanding 7,363,161 7,322,662 7,295,663 7,343,023 7,295,663
Diluted average common shares outstanding 7,363,161 7,322,662 7,295,663 7,343,023 7,295,663
 
KEY RATIOS
Return on average assets (2) 0.43 % 0.47 % 0.17 % 0.45 % 0.31 %
Return on average common equity (2) 4.69 % 5.14 % 1.91 % 4.91 % 3.42 %
Efficiency ratio 70.41 % 69.24 % 75.73 % 69.84 % 73.13 %
Noninterest expense to average assets (2) 3.10 % 3.04 % 3.16 % 3.07 % 3.03 %
Average equity to average assets 9.18 % 9.05 % 9.00 % 9.13 % 9.10 %
Net interest margin 3.57 % 3.64 % 3.23 % 3.61 % 3.26 %
Net interest margin (FTE) (1) 3.61 % 3.69 % 3.28 % 3.65 % 3.30 %
 
ASSET QUALITY
Allowance for Loan Losses
Allowance for loan losses, beginning of period $ 19,183 $ 18,792 $ 11,575 $ 18,792 $ 11,652
Provision for loan losses 2,109 2,109 2,484 4,218 4,293
Charge-offs 2,188 1,851 1,369 4,039 3,341
Recoveries     331       133       288       464       374  
Net charge-offs     1,857       1,718       1,081       3,575       2,967  
Allowance for loan losses, end of period   $ 19,435     $ 19,183     $ 12,978     $ 19,435     $ 12,978  
 
Nonperforming Assets
Nonperforming loans $ 46,414 $ 42,907 $ 33,133 $ 46,414 $ 33,133
Other real estate owned     2,355       1,467       1,170       2,355       1,170  
Total nonperforming assets   $ 48,769     $ 44,374     $ 34,303     $ 48,769     $ 34,303  
 
Ratios
Total nonperforming loans to total loans 5.83 % 5.41 % 4.12 % 5.83 % 4.12 %
Total nonperforming assets to total assets 4.23 % 3.83 % 2.78 % 4.23 % 2.78 %
Net charge-offs to average loans (2) 0.94 % 0.88 % 0.54 % 0.91 % 0.75 %
Provision for loan losses to average loans (2) 1.07 % 1.07 % 1.24 % 1.07 % 1.08 %
Allowance for loan losses to portfolio loans 2.44 % 2.42 % 1.62 % 2.44 % 1.62 %
Allowance to nonperforming loans 41.87 % 44.71 % 39.17 % 41.87 % 39.17 %
 
(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized
 
Reconciliation of Pre-Provision Core Earnings*
       
Three Months Ended

June 30,

Six Months Ended

June 30,

 
2010 2009 2010 2009
 
Pre-provision Core Earnings* $ 3,635 $ 2,898 $ 7,372 $ 6,293
Provision for Loan Losses   2,109   2,484   4,218   4,293
Income before income tax expense $ 1,526 $ 414 $ 3,154 $ 2,000
 
* Pre-provision core earnings is a non-GAAP financial measure that the Company’s management believes is useful in analyzing the Company’s underlying performance trends, particularly in periods of economic stress.
Pre-provision core earnings is defined as income before income tax expense, adjusted to exclude the impact of provision for loan losses.

CONTACT:
For LNB Bancorp, Inc.
W. John Fuller, 216-978-7643