UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant to
Section 13 OR 15(d) of
the
Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported) October
25, 2012
LNB BANCORP, INC. |
(Exact name of registrant as specified in its charter) |
Ohio |
0-13203 |
34-1406303 |
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
457 Broadway, Lorain, Ohio |
44052-1769 |
|
(Address of principal executive offices) |
(Zip Code) |
Registrant’s
telephone number, including area code: (440)
244-6000
(Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On October 25, 2012, LNB Bancorp, Inc. (the “Company”) issued a press release announcing its results of operations for the third quarter of 2012. A copy of the press release is furnished herewith as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
The attached letter was mailed on October 25, 2012 to all shareholders of record of LNB Bancorp, Inc. (the “Company”) on October 24, 2012. A copy of the letter is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated by reference into this Item 7.01.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. |
Description |
99.1 |
Press Release issued by LNB Bancorp, Inc., announcing its results of operations for the third quarter of 2012. |
99.2 |
Letter to Shareholders. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LNB BANCORP, INC. |
|||||
(Registrant) |
|||||
Date: | October 25, 2012 |
By: |
/s/ Gary J. Elek |
||
Gary J. Elek |
|||||
Chief Financial Officer |
Exhibit Index
Exhibit No. |
Description |
99.1 |
Press Release issued by LNB Bancorp, Inc., announcing its results of operations for the third quarter of 2012. |
99.2 |
Letter to Shareholders. |
Exhibit 99.1
LNB Bancorp, Inc. Reports Earnings for the Third Quarter 2012
LORAIN, Ohio--(BUSINESS WIRE)--October 25, 2012--LNB Bancorp, Inc. (NASDAQ: LNBB) (“LNB” or the “Company”) today reported financial results for the quarter ended September 30, 2012. Net income was $1.53 million compared to $1.67 million for the third quarter of 2011, a decline of $147,000 or 8.79%. Net income available to common shareholders was $1.21 million, or $0.15 per common share, compared to $1.35 million, or $0.17 per common share, for the 2011 third quarter. For the first nine months of 2012, net income was $4.46 million, up $954,000 or 27%, from the first nine months of the prior year. Net income available to common shareholders for the first nine months of 2012 was $3.51 million, or $0.44 per common share; this compares to $2.56 million for the 2011 nine-month period, or $0.32 per common share, an increase of $0.12 per share, or 37.5%.
“We are particularly pleased with the continued progress that we are making in credit quality,” noted Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. “Non-performing assets have declined $2.3 million in the quarter and nearly $5 million year over year. The ratio of non-performing assets to total assets is 2.84% in the quarter, down from 3.35% a year ago.
“Loans have grown by $42.6 million since year-end 2011. This month, the U.S. Small Business Administration recognized Lorain National Bank for ranking 4th in the Cleveland metro area in small business SBA loan production over the last twelve months.
“We have participated in the resurgence in the automobile industry through our indirect lending activities, originating auto loans through dealers in Ohio, Indiana, Georgia, North Carolina, Kentucky and Tennessee. The auto loan portfolio has increased $21 million during the first nine months of 2012.”
Third Quarter Review
Net income for the 2012 third quarter declined by $147,000 from the year-ago quarter but increased $88,000 from the preceding quarter. Improvement in asset quality has more than offset the impact of declining interest rates, resulting in a 27% improvement in net income for the first nine months of 2012 compared to the year-earlier nine months.
Operating revenue, including net interest income on a fully tax-equivalent basis ("FTE") plus noninterest income from operations, was $12.5 million for the third quarter of 2012, a decline of $100,000 compared to the third quarter of 2011. Stronger loan sales this quarter offset declining net interest income; and while loan sales were stronger, the Company still achieved $47 million of growth in average earning assets year over year. Net interest income on a tax-equivalent basis (FTE) in the quarter was $9.6 million, down $600,000, or 6.0%, from the 2011 third quarter. The net interest margin (FTE) for the full nine months of 2012 was 3.53%, a decline of fifteen basis points from the 2011 nine-month period.
Excluding gains of $46,000 and $7,000 from securities sales in the third quarter of 2012 and 2011 respectively, noninterest income from recurring operations was $3.0 million for the third quarter of 2012 compared to $2.5 million for the year-ago third quarter, an increase of 17.8%. Strong mortgage and auto loan originations and sales accounted for the majority of fee income growth, up $183,000, or double the level of gains in the 2011 third quarter.
For the third quarter of 2012, noninterest expense was $8.5 million compared to $8.3 million for the year-ago quarter. On a pretax, tax equivalent basis, pre-provision core earnings* for the third quarter were $3.94 million, down 7.8%, from the third quarter of 2011.
Total assets were $1.2 billion as of September 30, 2012, up 3.1% since September 30, 2011. Portfolio loans increased 5.7% during the same 12-month period, to $885.7 million. Of the $48.2 million in total loan growth over the past twelve months, $42.6 million was booked since year-end 2011. Commercial lending was the primary contributor to recent loan growth, up $28.3 million since the beginning of the year.
Asset quality continues to improve. Nonperforming assets declined by $5 million, or 12.7%, over the past twelve months, to $34.2 million. LNB added $1.9 million to the loan loss reserve during the quarter. At quarter-end, the loan loss reserve was 1.99% of total portfolio loans compared to 2.13% for the year-ago third quarter and 1.99% for the second quarter of 2012.
All regulatory ratios continue to exceed the threshold for “well-capitalized.” Tangible common equity ratio improved by 13 basis points to 5.79% as a result of $3.5 million growth in common equity since September 30, 2011.
* 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 its Morgan Bank division serve customers through 20 retail-banking locations and 28 ATMs in Lorain, Erie, Cuyahoga and Summit counties, as well as a loan production office in Solon, Ohio. 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.
Forward-Looking Statements
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 comments, are forward-looking in nature. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include but are not limited to:
The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
CONSOLIDATED BALANCE SHEETS | ||||||||||||
At September 30, 2012 | At December 31, 2011 | |||||||||||
(unaudited) | ||||||||||||
(Dollars in thousands except share amounts) | ||||||||||||
ASSETS | ||||||||||||
Cash and due from Banks | $ | 20,445 | $ | 34,323 | ||||||||
Federal funds sold and interest bearing deposits in banks | 8,082 | 6,324 | ||||||||||
Cash and cash equivalents | 28,527 | 40,647 | ||||||||||
Securities Available for sale, at fair value | 235,334 | 226,012 | ||||||||||
Total securities | 235,334 | 226,012 | ||||||||||
Restricted stock | 5,741 | 5,741 | ||||||||||
Loans held for sale | 3,380 | 3,448 | ||||||||||
Loans: | ||||||||||||
Portfolio loans | 885,715 | 843,088 | ||||||||||
Allowance for loan losses | (17,587 | ) | (17,063 | ) | ||||||||
Net loans | 868,128 | 826,025 | ||||||||||
Bank premises and equipment, net | 8,954 | 8,968 | ||||||||||
Other real estate owned | 1,653 | 1,687 | ||||||||||
Bank owned life insurance | 18,370 | 17,868 | ||||||||||
Goodwill, net | 21,582 | 21,582 | ||||||||||
Intangible assets, net | 629 | 731 | ||||||||||
Accrued interest receivable | 3,758 | 3,550 | ||||||||||
Other assets | 10,573 | 12,163 | ||||||||||
Total Assets | $ | 1,206,629 | $ | 1,168,422 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Deposits | ||||||||||||
Demand and other noninterest-bearing | $ | 143,085 | $ | 126,713 | ||||||||
Savings, money market and interest-bearing demand | 382,613 | 359,977 | ||||||||||
Certificates of deposit | 496,011 | 504,390 | ||||||||||
Total deposits | 1,021,709 | 991,080 | ||||||||||
Short-term borrowings | 988 | 227 | ||||||||||
Federal Home Loan Bank advances | 47,494 | 42,497 | ||||||||||
Junior subordinated debentures | 16,238 | 16,238 | ||||||||||
Accrued interest payable | 928 | 1,118 | ||||||||||
Accrued taxes, expenses and other liabilities | 3,195 | 3,988 | ||||||||||
Total Liabilities | 1,090,552 | 1,055,148 | ||||||||||
Shareholders' Equity | ||||||||||||
Preferred stock, Series A Voting, no par value, authorized 150,000 shares at September 30, 2012 and December 31, 2011. |
- | - | ||||||||||
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, 25,223 shares authorized and issued at September 30, 2012 and December 31, 2011. | 25,223 | 25,223 | ||||||||||
Discount on Series B preferred stock | (90 | ) | (101 | ) | ||||||||
Warrant to purchase common stock | - | 146 | ||||||||||
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 8,272,548 at September 30, 2012 and 8,210,443 at December 31, 2011. |
8,273 | 8,210 | ||||||||||
Additional paid-in capital | 39,060 | 39,607 | ||||||||||
Retained earnings | 47,353 | 44,080 | ||||||||||
Accumulated other comprehensive income | 2,350 | 2,201 | ||||||||||
Treasury shares at cost, 328,194 shares at September 30, 2012 and at December 31, 2011 | (6,092 | ) | (6,092 | ) | ||||||||
Total Shareholders' Equity | 116,077 | 113,274 | ||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,206,629 | $ | 1,168,422 | ||||||||
Consolidated Statements of Income (unaudited) | |||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||
(Dollars in thousands except share and per share amounts) | (Dollars in thousands except share and per share amounts) | ||||||||||||||||||
Interest Income | |||||||||||||||||||
Loans | $ | 9,779 | $ | 10,692 | $ | 30,022 | $ | 31,731 | |||||||||||
Securities: | |||||||||||||||||||
U.S. Government agencies and corporations | 1,145 | 1,505 | 3,686 | 4,594 | |||||||||||||||
State and political subdivisions | 289 | 257 | 867 | 770 | |||||||||||||||
Other debt and equity securities | 69 | 67 | 210 | 210 | |||||||||||||||
Federal funds sold and short-term investments | 8 | 15 | 27 | 38 | |||||||||||||||
Total interest income | 11,290 | 12,536 | 34,812 | 37,343 | |||||||||||||||
Interest Expense | |||||||||||||||||||
Deposits | 1,450 | 2,044 | 4,608 | 6,531 | |||||||||||||||
Federal Home Loan Bank advances | 214 | 263 | 641 | 790 | |||||||||||||||
Short-term borrowings | - | - | - | 2 | |||||||||||||||
Junior subordinated debenture | 179 | 170 | 528 | 511 | |||||||||||||||
Total interest expense | 1,843 | 2,477 | 5,777 | 7,834 | |||||||||||||||
Net Interest Income | 9,447 | 10,059 | 29,035 | 29,509 | |||||||||||||||
Provision for Loan Losses | 1,875 | 2,100 | 5,442 | 7,545 | |||||||||||||||
Net interest income after provision for loan losses | 7,572 | 7,959 | 23,593 | 21,964 | |||||||||||||||
Noninterest Income | |||||||||||||||||||
Investment and trust services | 375 | 378 | 1,190 | 1,251 | |||||||||||||||
Deposit service charges | 994 | 1,099 | 2,858 | 3,015 | |||||||||||||||
Other service charges and fees | 842 | 769 | 2,394 | 2,494 | |||||||||||||||
Income from bank owned life insurance | 167 | 175 | 501 | 524 | |||||||||||||||
Other income | 214 | 66 | 614 | 186 | |||||||||||||||
Total fees and other income | 2,592 | 2,487 | 7,557 | 7,470 | |||||||||||||||
Securities gains, net | 46 | 7 | 46 | 507 | |||||||||||||||
Gains on sale of loans | 364 | 181 | 916 | 598 | |||||||||||||||
Gain (Loss) on sale of other assets, net | 31 | (133 | ) | (68 | ) | (158 | ) | ||||||||||||
Total noninterest income | 3,033 | 2,542 | 8,451 | 8,417 | |||||||||||||||
Noninterest Expense | |||||||||||||||||||
Salaries and employee benefits | 4,131 | 3,986 | 12,136 | 12,149 | |||||||||||||||
Furniture and equipment | 1,273 | 821 | 2,982 | 2,299 | |||||||||||||||
Net occupancy | 531 | 569 | 1,664 | 1,769 | |||||||||||||||
Professional fees | 414 | 450 | 1,473 | 1,381 | |||||||||||||||
Marketing and public relations | 312 | 215 | 954 | 761 | |||||||||||||||
Supplies, postage and freight | 317 | 265 | 825 | 826 | |||||||||||||||
Telecommunications | 191 | 163 | 536 | 547 | |||||||||||||||
Ohio Franchise tax | 304 | 303 | 927 | 899 | |||||||||||||||
FDIC assessments | 346 | 396 | 1,132 | 1,369 | |||||||||||||||
Other real estate owned | 107 | 144 | 414 | 941 | |||||||||||||||
Electronic banking expenses | 121 | 236 | 682 | 668 | |||||||||||||||
Loan and collection expense | 352 | 334 | 1,009 | 1,086 | |||||||||||||||
Other expense | 144 | 447 | 1,400 | 1,345 | |||||||||||||||
Total noninterest expense | 8,542 | 8,329 | 26,133 | 26,040 | |||||||||||||||
Income before income tax expense | 2,063 | 2,172 | 5,911 | 4,341 | |||||||||||||||
Income tax expense | 538 | 500 | 1,443 | 827 | |||||||||||||||
Net Income | $ | 1,525 | $ | 1,672 | $ | 4,468 | $ | 3,514 | |||||||||||
Dividends and accretion on preferred stock | 319 | 319 | 956 | 956 | |||||||||||||||
Net Income Available to Common Shareholders | $ | 1,206 | $ | 1,353 | $ | 3,512 | $ | 2,558 | |||||||||||
Net Income Per Common Share | |||||||||||||||||||
Basic | $ | 0.15 | $ | 0.17 | $ | 0.44 | $ | 0.32 | |||||||||||
Diluted | 0.15 | 0.17 | 0.44 | 0.32 | |||||||||||||||
Dividends declared | 0.01 | 0.01 | 0.03 | 0.03 | |||||||||||||||
Average Common Shares Outstanding | |||||||||||||||||||
Basic | 7,944,354 | 7,882,439 | 7,937,781 | 7,879,575 | |||||||||||||||
Diluted | 7,949,118 | 7,882,439 | 7,941,990 | 7,879,575 | |||||||||||||||
LNB Bancorp, Inc. | |||||||||||||||||||||||||
Supplemental Financial Information | |||||||||||||||||||||||||
(Unaudited - Dollars in thousands except Share and Per Share Data) | |||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | |||||||||||||||||||
END OF PERIOD BALANCES | 2012 | 2012 | 2012 | 2011 | 2011 | 2012 | 2011 | ||||||||||||||||||
Cash and Cash Equivalents | $ | 28,527 | $ | 56,619 | $ | 44,112 | $ | 40,647 | $ | 40,648 | $ | 28,527 | $ | 40,648 | |||||||||||
Securities | 235,334 | 228,788 | 231,851 | 226,012 | 232,358 | 235,334 | 232,358 | ||||||||||||||||||
Restricted stock | 5,741 | 5,741 | 5,741 | 5,741 | 5,741 | 5,741 | 5,741 | ||||||||||||||||||
Loans held for sale | 3,380 | 1,207 | 4,462 | 3,448 | 4,069 | 3,380 | 4,069 | ||||||||||||||||||
Portfolio loans | 885,715 | 867,459 | 862,220 | 843,088 | 837,492 | 885,715 | 837,492 | ||||||||||||||||||
Allowance for loan losses | 17,587 | 17,300 | 17,115 | 17,063 | 17,845 | 17,587 | 17,845 | ||||||||||||||||||
Net loans | 868,128 | 850,159 | 845,105 | 826,025 | 819,647 | 868,128 | 819,647 | ||||||||||||||||||
Other assets | 65,519 | 65,431 | 67,823 | 66,549 | 67,820 | 65,519 | 67,820 | ||||||||||||||||||
Total assets | $ | 1,206,629 | $ | 1,207,945 | $ | 1,199,094 | $ | 1,168,422 | $ | 1,170,283 | $ | 1,206,629 | $ | 1,170,283 | |||||||||||
Total deposits | 1,021,709 | 1,023,553 | 1,016,166 | 991,080 | 989,279 | 1,021,709 | 989,279 | ||||||||||||||||||
Other borrowings | 64,720 | 64,560 | 64,628 | 58,962 | 64,107 | 64,720 | 64,107 | ||||||||||||||||||
Other liabilities | 4,123 | 4,296 | 4,240 | 5,106 | 4,199 | 4,123 | 4,199 | ||||||||||||||||||
Total liabilities | 1,090,552 | 1,092,409 | 1,085,034 | 1,055,148 | 1,057,585 | 1,090,552 | 1,057,585 | ||||||||||||||||||
Total shareholders' equity | 116,077 | 115,537 | 114,061 | 113,274 | 112,698 | 116,077 | 112,698 | ||||||||||||||||||
Total liabilities and shareholders' equity | $ | 1,206,629 | $ | 1,207,945 | $ | 1,199,094 | $ | 1,168,422 | $ | 1,170,283 | $ | 1,206,629 | $ | 1,170,283 | |||||||||||
AVERAGE BALANCES | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||
Total assets | $ | 1,202,425 | $ | 1,206,297 | $ | 1,176,454 | $ | 1,168,340 | $ | 1,167,114 | $ | 1,195,086 | $ | 1,167,432 | |||||||||||
Earning assets* | 1,128,665 | 1,122,918 | 1,093,618 | 1,082,438 | 1,081,696 | 1,115,117 | 1,086,414 | ||||||||||||||||||
Securities | 233,153 | 226,476 | 222,832 | 224,778 | 232,252 | 227,508 | 237,394 | ||||||||||||||||||
Portfolio loans | 876,817 | 866,909 | 856,364 | 833,811 | 835,090 | 865,462 | 820,644 | ||||||||||||||||||
Liabilities and shareholders' equity: | |||||||||||||||||||||||||
Total deposits | $ | 1,016,029 | $ | 1,022,428 | $ | 993,839 | $ | 991,105 | $ | 990,189 | $ | 1,010,784 | $ | 991,664 | |||||||||||
Interest bearing deposits | 872,309 | 885,922 | 869,107 | 866,037 | 865,043 | 875,767 | 870,984 | ||||||||||||||||||
Interest bearing liabilities | 939,268 | 950,647 | 933,033 | 925,530 | 925,041 | 940,977 | 930,786 | ||||||||||||||||||
Total shareholders' equity | 115,666 | 115,281 | 114,156 | 112,925 | 112,678 | 115,036 | 111,433 | ||||||||||||||||||
INCOME STATEMENT | |||||||||||||||||||||||||
Total Interest Income | $ | 11,290 | $ | 11,845 | $ | 11,677 | $ | 12,006 | $ | 12,536 | $ | 34,812 | $ | 37,343 | |||||||||||
Total Interest Expense | 1,843 | 1,912 | 2,022 | 2,274 | 2,477 | 5,777 | 7,834 | ||||||||||||||||||
Net interest income | 9,447 | 9,933 | 9,655 | 9,732 | 10,059 | 29,035 | 29,509 | ||||||||||||||||||
Provision for loan losses | 1,875 | 1,667 | 1,900 | 2,808 | 2,100 | 5,442 | 7,545 | ||||||||||||||||||
Other income | 2,592 | 2,384 | 2,581 | 2,517 | 2,487 | 7,557 | 7,470 | ||||||||||||||||||
Net gain on sale of assets | 441 | 159 | 294 | 481 | 55 | 894 | 947 | ||||||||||||||||||
Noninterest expense | 8,542 | 9,047 | 8,544 | 8,104 | 8,329 | 26,133 | 26,040 | ||||||||||||||||||
Income before income taxes | 2,063 | 1,762 | 2,086 | 1,818 | 2,172 | 5,911 | 4,341 | ||||||||||||||||||
Income tax expense | 538 | 324 | 581 | 329 | 500 | 1,443 | 827 | ||||||||||||||||||
Net income | 1,525 | 1,438 | 1,505 | 1,489 | 1,672 | 4,468 | 3,514 | ||||||||||||||||||
Preferred stock dividend and accretion | 319 | 318 | 319 | 320 | 319 | 956 | 956 | ||||||||||||||||||
Net income available to common shareholders | $ | 1,206 | $ | 1,120 | $ | 1,186 | $ | 1,169 | $ | 1,353 | $ | 3,512 | $ | 2,558 | |||||||||||
Common cash dividend declared and paid | $ | 79 | $ | 79 | $ | 79 | $ | 79 | $ | 79 | $ | 238 | $ | 237 | |||||||||||
Net interest income-FTE (1) | $ | 9,592 | $ | 10,093 | $ | 9,806 | $ | 9,877 | $ | 10,203 | $ | 29,494 | $ | 29,909 | |||||||||||
Pre-provision core earnings | 3,938 | 3,429 | 3,986 | 4,626 | 4,272 | 11,353 | 11,886 | ||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | September 30, | September 30, | ||||||||||||||||||||||||||
2012 | 2012 | 2012 | 2011 | 2011 | 2012 | 2011 | ||||||||||||||||||||||||||
PER SHARE DATA | ||||||||||||||||||||||||||||||||
Basic net income per common share | $ | 0.15 | $ | 0.14 | $ | 0.15 | $ | 0.15 | $ | 0.17 | $ | 0.44 | $ | 0.32 | ||||||||||||||||||
Diluted net income per common share | 0.15 | 0.14 | 0.15 | 0.15 | 0.17 | 0.44 | 0.32 | |||||||||||||||||||||||||
Cash dividends per common share | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | 0.03 | 0.03 | |||||||||||||||||||||||||
Book value per common shares outstanding | 11.45 | 11.38 | 11.19 | 11.18 | 11.11 | 11.45 | 11.11 | |||||||||||||||||||||||||
Tangible book value per common shares outstanding** | 8.65 | 8.58 | 8.39 | 8.35 | 8.28 | 8.65 | 8.28 | |||||||||||||||||||||||||
Period-end common share market value | 6.09 | 6.58 | 6.94 | 4.70 | 3.75 | 6.09 | 3.75 | |||||||||||||||||||||||||
Market as a % of book | 53.20 | % | 57.82 | % | 61.99 | % | 42.04 | % | 33.75 | % | 53.20 | % | 33.75 | % | ||||||||||||||||||
Basic average common shares outstanding | 7,944,354 | 7,944,354 | 7,924,562 | 7,882,249 | 7,882,439 | 7,937,781 | 7,879,575 | |||||||||||||||||||||||||
Diluted average common shares outstanding | 7,949,118 | 7,950,539 | 7,925,368 | 7,882,249 | 7,882,439 | 7,941,990 | 7,879,575 | |||||||||||||||||||||||||
Common shares outstanding | 7,944,354 | 7,944,354 | 7,944,354 | 7,882,249 | 7,882,249 | 7,944,354 | 7,882,249 | |||||||||||||||||||||||||
KEY RATIOS | ||||||||||||||||||||||||||||||||
Return on average assets (2) | 0.50 | % | 0.48 | % | 0.51 | % | 0.51 | % | 0.57 | % | 0.50 | % | 0.40 | % | ||||||||||||||||||
Return on average common equity (2) | 5.25 | % | 5.02 | % | 5.30 | % | 5.23 | % | 5.89 | % | 5.19 | % | 4.22 | % | ||||||||||||||||||
Efficiency ratio | 67.66 | % | 71.60 | % | 67.38 | % | 62.94 | % | 65.35 | % | 68.87 | % | 67.94 | % | ||||||||||||||||||
Noninterest expense to average assets (2) | 2.83 | % | 3.02 | % | 2.92 | % | 2.75 | % | 2.83 | % | 2.92 | % | 2.98 | % | ||||||||||||||||||
Average equity to average assets | 9.62 | % | 9.56 | % | 9.70 | % | 9.67 | % | 9.65 | % | 9.63 | % | 9.55 | % | ||||||||||||||||||
Net interest margin (FTE) (1) | 3.38 | % | 3.61 | % | 3.61 | % | 3.62 | % | 3.74 | % | 3.53 | % | 3.68 | % | ||||||||||||||||||
Common stock dividend payout ratio | 6.59 | % | 7.10 | % | 6.68 | % | 6.74 | % | 5.83 | % | 6.78 | % | 9.24 | % | ||||||||||||||||||
Common stock market capitalization | $ | 48,381 | $ | 52,274 | $ | 55,134 | $ | 37,047 | $ | 29,558 | $ | 48,381 | $ | 29,558 | ||||||||||||||||||
ASSET QUALITY | ||||||||||||||||||||||||||||||||
Allowance for Loan Losses | ||||||||||||||||||||||||||||||||
Allowance for loan losses, beginning of period | $ | 17,300 | $ | 17,115 | $ | 17,063 | $ | 17,845 |
$ |
17,351 |
$ |
17,063 |
$ |
16,136 | ||||||||||||||||||
Provision for loan losses | 1,875 | 1,667 | 1,900 | 2,808 | 2,100 | 5,442 | 7,545 | |||||||||||||||||||||||||
Charge-offs | 1,681 | 1,621 | 2,076 | 3,747 | 1,751 | 5,378 | 6,362 | |||||||||||||||||||||||||
Recoveries | 93 | 139 | 228 | 157 | 145 | 460 | 526 | |||||||||||||||||||||||||
Net charge-offs | 1,588 | 1,482 | 1,848 | 3,590 | 1,606 | 4,918 | 5,836 | |||||||||||||||||||||||||
Allowance for loan losses, end of period | $ | 17,587 | $ | 17,300 | $ | 17,115 | $ | 17,063 | $ | 17,845 | $ | 17,587 | $ | 17,845 | ||||||||||||||||||
CAPITAL & LIQUIDITY | ||||||||||||||||||||||||||||||||
Period-end tangible common equity to assets** | 5.79 | % | 5.73 | % | 5.65 | % | 5.73 | % | 5.66 | % | 5.79 | % | 5.66 | % | ||||||||||||||||||
Average equity to assets | 9.62 | % | 9.56 | % | 9.70 | % | 9.67 | % | 9.65 | % | 9.63 | % | 9.55 | % | ||||||||||||||||||
Average equity to loans | 13.19 | % | 13.30 | % | 13.33 | % | 13.54 | % | 13.49 | % | 13.29 | % | 13.58 | % | ||||||||||||||||||
Average loans to deposits | 86.30 | % | 84.79 | % | 86.17 | % | 84.13 | % | 84.34 | % | 85.62 | % | 82.75 | % | ||||||||||||||||||
Tier 1 leverage ratio (3) | 9.17 | % | 8.78 | % | 8.87 | % | 8.80 | % | 8.87 | % | 9.17 | % | 8.49 | % | ||||||||||||||||||
Tier 1 risk-based capital ratio (3) | 11.71 | % | 11.46 | % | 11.37 | % | 11.39 | % | 11.37 | % | 11.71 | % | 11.14 | % | ||||||||||||||||||
Total risk-based capital ratio (3) | 12.97 | % | 13.97 | % | 13.94 | % | 14.01 | % | 13.94 | % | 12.97 | % | 13.84 | % | ||||||||||||||||||
Nonperforming Assets | ||||||||||||||||||||||||||||||||
Nonperforming loans | $ | 32,584 | $ | 34,993 | $ | 36,870 | $ | 34,471 | $ | 37,115 | $ | 32,584 | $ | 37,115 | ||||||||||||||||||
Other real estate owned | 1,653 | 1,506 | 1,845 | 1,687 | 2,116 | 1,653 | 2,116 | |||||||||||||||||||||||||
Total nonperforming assets | $ | 34,237 | $ | 36,499 | $ | 38,715 | $ | 36,158 | $ | 39,231 | $ | 34,237 | $ | 39,231 | ||||||||||||||||||
Ratios | ||||||||||||||||||||||||||||||||
Total nonperforming loans to total loans | 3.68 | % | 4.03 | % | 4.28 | % | 4.09 | % | 4.43 | % | 3.68 | % | 4.43 | % | ||||||||||||||||||
Total nonperforming assets to total assets | 2.84 | % | 3.02 | % | 3.23 | % | 3.09 | % | 3.35 | % | 2.84 | % | 3.35 | % | ||||||||||||||||||
Net charge-offs to average loans (2) | 0.72 | % | 0.69 | % | 0.87 | % | 1.71 | % | 0.76 | % | 0.76 | % | 0.95 | % | ||||||||||||||||||
Provision for loan losses to average loans (2) | 0.85 | % | 0.77 | % | 0.89 | % | 1.34 | % | 1.00 | % | 0.84 | % | 1.23 | % | ||||||||||||||||||
Allowance for loan losses to portfolio loans | 1.99 | % | 1.99 | % | 1.98 | % | 2.02 | % | 2.13 | % | 1.99 | % | 2.13 | % | ||||||||||||||||||
Allowance to nonperforming loans | 53.97 | % | 49.44 | % | 46.42 | % | 49.50 | % | 48.08 | % | 53.97 | % | 48.08 | % | ||||||||||||||||||
Allowance to nonperforming assets | 51.37 | % | 47.40 | % | 44.21 | % | 47.19 | % | 45.49 | % | 51.37 | % | 45.49 | % | ||||||||||||||||||
(1) FTE -- fully tax equivalent at 34% tax rate | ||||||||||||||||||||||||||||||||
(2) Annualized | ||||||||||||||||||||||||||||||||
(3) 9-30-12 ratio is estimated. | ||||||||||||||||||||||||||||||||
* Earning Assets includes Loans Held for Sale | ||||||||||||||||||||||||||||||||
* * Non-GAAP measures. | ||||||||||||||||||||||||||||||||
Reconciliation of Pre-Provision Core Earnings* | ||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||
Pre-provision Core Earnings* | $ 3,938 | $ 4,272 | $ 11,353 | $ 11,886 | ||||||||
Provision for Loan Losses | 1,875 | 2,100 | 5,442 | 7,545 | ||||||||
Income before income tax expense | $ 2,063 | $ 2,172 | $ 5,911 | $ 4,341 | ||||||||
* 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:
LNB Bancorp, Inc.
Peter R. Catanese, Senior Vice
President, 440-244-7126
Exhibit 99.2
October 2012
I am pleased to report continued improvement in the performance of LNB in the third quarter of 2012. Our efforts to focus on improving credit quality, growing our loan production and managing expenses are resulting in a positive earnings trend. Net income year to date has improved almost $1 million which is a 27% increase over the same period in 2011.
We are particularly pleased with the continued progress that we are making in credit quality. Nonperforming assets have declined by $5 million over the last twelve months and are 2.84% of total assets, versus 3.35% at September 30, 2011. We continue to manage credit quality while working with our local customers to assist them in these difficult economic times.
Commercial loan production has already matched the full year production for 2011 and our balances have grown $25.8 million from prior year, a healthy 6% increase. We continue to utilize SBA (Small Business Administration) programs to enhance the quality of our lending efforts. We were recently recognized by the SBA as the 4th highest SBA lender in the Cleveland metropolitan area, generating over $15 million in SBA loan originations in the past twelve months.
We have participated in the resurgence in the automotive industry through our indirect lending activities, originating auto loans through more than 650 dealers in Ohio, Indiana, North Carolina, Georgia, Kentucky and Tennessee. The auto loan portfolio has increased $21 million from the same time period in 2011, a 12% increase.
Expense management continues to be a priority at LNB. Our noninterest expenses are relatively unchanged from the same time frame in 2011. We have accomplished this in spite of spending over $750,000 in 2012 for one time systems conversion and TARP auction expenses. We continue to perform equal to or better than our peer group average in managing expenses.
Investing for Growth
We are excited to announce the expansion of our mortgage banking capabilities. We have recently added a sales leader for this business in the Hudson market and are in the process of expanding the reach of this group further into Summit and Medina counties. We are currently opening a Mortgage Banking Center in Solon, Ohio which will house a team responsible for growing the mortgage business in Eastern Cuyahoga County. These additions are already generating positive returns to LNB. We are seeing strong demand for home loan refinance and an improving demand for home purchases. Our newest offering, a No-Cost Refinance, allows customers to refinance without paying any upfront fees.
We have certainly been pleased to see the improvement in our stock price. Our recent price of $6.09 at the end of the third quarter is a 62% increase from the stock price at the end of the third quarter of 2011. We will continue to focus on improving the performance of LNB and on sharing our story with the investment community.
We have made a number of investments this quarter, hiring new commercial banking officers, hiring mortgage originators and opening up a loan production office in Solon as we look to continue the strong balance sheet growth that we have been experiencing. We are building momentum and strengthening the core earnings potential and, therefore, the value of LNB.
Community Caring
You should be very proud of LNB and our fine associates. While working diligently to improve the performance of the company, they continue to be deeply involved in support of our local communities. Our volunteer efforts make a significant difference, especially in the lives of those most in need of our help. As we head toward the holiday season, the generosity of our entire team becomes even more apparent as we look to make the holidays brighter and more satisfying for our entire community.
I want to personally thank you for all of your support. I am excited about the progress we are making and the growth initiatives that we continue to invest in. We appreciate all that each of you do to support LNB.
During the holiday season we take time to reflect on the many things that we have to be grateful for and to spend quality time with our friends and family. I hope that all of you find the time to enjoy your families and friends and that you have a peaceful holiday season.
Sincerely,
Daniel E. Klimas
President & Chief Executive Officer
Earnings | Jan.-Sept. 2012 | Jan.-Sept. 2011 | |
Net Income | $4,468,000 | $3,514,000 | 27% Increase |
Pre-provision Core Earnings | $11,353,000 | $11,886,000 | 4% Decrease |
Margin | 3.53% | 3.68% | |
Credit Quality | Jan.-Sept. 2012 | Jan.-Sept. 2011 | |
Non-Performing Assets | $34,237,000 | $39,231,000 | 13% Decrease |
Non-Performing Assets/Total Assets | 2.84% | 3.35% | |
Loan Growth | Jan.-Sept. 2012 | Jan.-Sept. 2011 | |
Commercial | $483,484,000 | $457,643,000 | 6% Increase |
Consumer | $344,587,000 | $321,699,000 | 7% Increase |
Total Portfolio Loans | $885,715,000 | $837,492,000 | 6% Increase |
Expenses | Jan.-Sept. 2012 | Jan.-Sept. 2011 | |
Non-Interest Expenses | $26,133,000 | $26,040,000 |