LNB Bancorp, Inc. Reports First Quarter 2013 Results
LNB Bancorp, Inc. Reports First Quarter 2013 Results
First quarter net income available to common shareholders of $856,000, includes a one-time after-tax charge of $455,000
Loan balances increased $27 million over first quarter of prior year, a 3.2% increase
Nonperforming assets declined by $9 million, a decrease of 23% from the first quarter a year ago
Completed exchange of common shares for $9.73 million of Series B Preferred Stock
LORAIN, Ohio--(BUSINESS WIRE)-- LNB Bancorp, Inc. (NAS: LNBB) ("LNB" or the "Company") today reported financial results for the first quarter 2013. Net income available to common shareholders was $856,000, or $0.10 per common share, compared to $1.19 million, or $0.15 per common share, for the year-ago quarter. Results were impacted by a one-time Supplemental Executive Retirement Plan (SERP) after-tax charge of $455,000 during the quarter. Excluding this one-time expense, net income available to common shareholders would have been $1.31 million for the first quarter 2013 compared to $1.19 million for the first quarter in 2012.
"Gain on the sale of loans was $656,000 for the quarter, compared to $346,000 for the first quarter of 2012, an increase of 90%. This increase is primarily due to the gain on the sale of mortgages of $591,000 which is up 130%, compared to $256,000 for first quarter of 2012. We have continued to see strong demand for mortgage lending, both refinancing and new purchase loans." stated Daniel E. Klimas, president and chief executive officer of LNB Bancorp.
"Loan balances grew by 3.2% compared to the first quarter of 2012, led by our commercial and indirect auto loan portfolios. We have continued to make progress on improving credit quality as non-performing assets declined nearly $9 million from the same quarter in 2012. The ratio of non-performing assets to total assets at March 31, 2013, was 2.41%, down from 3.23% a year ago."
Operating revenue, including net interest income on a fully tax-equivalent basis ("FTE") plus noninterest income from operations, was $12.2 million for the first quarter of 2013, which was down $489,000, or 3.9%, from the first quarter of the prior year. The net interest margin (FTE) for the first quarter of 2013 was 3.23%, a decline of 38 basis points from the 2012 first quarter. The margin has continued to be under pressure in the current interest rate environment.
Noninterest income was $3.3 million for the first quarter of 2013 compared to $2.9 million for the prior-year first quarter. This 16% year over year increase was driven primarily by strategic investments in mortgage and indirect auto lending businesses.
Noninterest expense was $9.28 million for the first quarter of 2013 compared with $8.54 million for the first quarter of 2012, an increase of 8.6%. Excluding the one-time expense for SERP compensation of $690,000, noninterest expenses would have been essentially flat compared to the first quarter of 2012.
The provision for loan losses was $1.35 million in the first quarter of 2013, down $550,000 from the 2012 first quarter, reflecting the Company's improvement in credit quality. Net charge-offs were $1.18 million for the first quarter of 2013, or 0.54% of average loans (annualized), compared to $1.85 million, or 0.87% of average loans (annualized), in the first quarter of 2012.
The Company is focused on active capital management and is committed to maintaining strong capital levels while supporting balance sheet growth and enhancing returns to the Company's shareholders. On March 15, 2013, the Company completed the exchange of newly issued LNB common shares for approximately $9.73 million in par value of its Fixed Rate Cumulative Perpetual Preferred Stock, Series B, ("preferred stock") $1,000 per share liquidation preference in privately negotiated transactions. LNB issued an aggregate of 1,359,348 of its common shares at a price of $7.16 per share in exchange for an aggregate of 9,733 shares of the preferred stock at par, or $1,000 per share. As a result from this exchange, the period-end tangible common equity to assets ratio increased to 6.53% from 5.98% at year-end 2012.
Approximately $9.2 million in par value of the preferred stock remains outstanding. The preferred stock was originally issued by LNB in December of 2008 as part of the U.S. Department of the Treasury's Capital Purchase Program.
Total assets at March 31, 2013 were $1.23 billion, up $32 million, or 2.7%, from a year ago. Total deposits at March 31, 2013 were $1.05 billion, up $33 million, or 3.2%, from a year ago.
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. 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: a worsening of economic conditions or slowing of any economic recovery, which could negatively impact, among other things, business activity and consumer spending and could lead to a lack of liquidity in the credit markets; changes in the interest rate environment which could reduce anticipated or actual margins; increases in interest rates or further weakening of economic conditions that could constrain borrowers' ability to repay outstanding loans or diminish the value of the collateral securing those loans; market conditions or other events that could negatively affect the level or cost of funding, affecting the Company's ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth, and new business transactions at a reasonable cost, in a timely manner and without adverse consequences; changes in political conditions or the legislative or regulatory environment, including new or heightened legal standards and regulatory requirements, practices or expectations, which may impede profitability or affect the Company's financial condition (such as, for example, the Dodd-Frank Act and rules and regulations that have been or may be promulgated under the Act); persisting volatility and limited credit availability in the financial markets, particularly if market conditions limit the Company's ability to raise funding to the extent required by banking regulators or otherwise; significant increases in competitive pressure in the banking and financial services industries, particularly in the geographic or business areas in which the Company conducts its operations; limitations on the Company's ability to return capital to shareholders, including the ability to pay dividends, and the dilution of the Company's common shares that may result from, among other things, funding any repurchase or redemption of the Company's outstanding preferred stock; adverse effects on the Company's ability to engage in routine funding transactions as a result of the actions and commercial soundness of other financial institutions; general economic conditions becoming less favorable than expected, continued disruption in the housing markets and/or asset price deterioration, which have had and may continue to have a negative effect on the valuation of certain asset categories represented on the Company's balance sheet; increases in deposit insurance premiums or assessments imposed on the Company by the FDIC; a failure of the Company's operating systems or infrastructure, or those of its third-party vendors, that could disrupt its business; risks that are not effectively identified or mitigated by the Company's risk management framework; and difficulty attracting and/or retaining key executives and/or relationship managers at compensation levels necessary to maintain a competitive market position; as well as the risks and uncertainties described from time to time in the Company's reports as filed with the SEC. 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 March 31, 2013 | At December 31, 2012 | |||||||
(unaudited) | ||||||||
(Dollars in thousands except share amounts) | ||||||||
ASSETS | ||||||||
Cash and due from Banks | $ | 35,798 | $ | 24,139 | ||||
Federal funds sold and interest bearing deposits in banks | 19,156 | 6,520 | ||||||
Cash and cash equivalents | 54,954 | 30,659 | ||||||
Securities Available for sale, at fair value | 223,173 | 203,763 | ||||||
Total securities | 223,173 | 203,763 | ||||||
Restricted stock | 5,741 | 5,741 | ||||||
Loans held for sale | 6,250 | 7,634 | ||||||
Loans: | ||||||||
Portfolio loans | 889,931 | 882,548 | ||||||
Allowance for loan losses | (17,806 | ) | (17,637 | ) | ||||
Net loans | 872,125 | 864,911 | ||||||
Bank premises and equipment, net | 8,588 | 8,721 | ||||||
Other real estate owned | 1,215 | 1,366 | ||||||
Bank owned life insurance | 18,778 | 18,611 | ||||||
Goodwill, net | 21,582 | 21,582 | ||||||
Intangible assets, net | 561 | 594 | ||||||
Accrued interest receivable | 4,018 | 3,726 | ||||||
Other assets | 14,198 | 10,946 | ||||||
Total Assets | $ | 1,231,183 | $ | 1,178,254 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Deposits | ||||||||
Demand and other noninterest-bearing | $ | 136,313 | $ | 139,894 | ||||
Savings, money market and interest-bearing demand | 397,080 | 377,287 | ||||||
Certificates of deposit | 515,783 | 482,411 | ||||||
Total deposits | 1,049,176 | 999,592 | ||||||
Short-term borrowings | 1,889 | 1,115 | ||||||
Federal Home Loan Bank advances | 46,557 | 46,508 | ||||||
Junior subordinated debentures | 16,238 | 16,238 | ||||||
Accrued interest payable | 803 | 882 | ||||||
Accrued taxes, expenses and other liabilities | 6,315 | 3,775 | ||||||
Total Liabilities | 1,120,978 | 1,068,110 | ||||||
Shareholders' Equity | ||||||||
Preferred stock, Series A Voting, no par value, authorized 150,000 shares at March 31, 2013 and December 31, 2012. | - | - | ||||||
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, 9,147 shares authorized and issued at March 31, 2013 and 18,880 shares at December 31, 2012. | 9,147 | 18,880 | ||||||
Discount on Series B preferred stock | (29 | ) | (65 | ) | ||||
Warrant to purchase common stock | - | - | ||||||
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 9,631,896 at March 31, 2013 and 8,272,548 at December 31, 2012. | 9,632 | 8,273 | ||||||
Additional paid-in capital | 47,587 | 39,141 | ||||||
Retained earnings | 49,551 | 48,767 | ||||||
Accumulated other comprehensive income | 409 | 1,240 | ||||||
Treasury shares at cost, 328,194 shares at March 31, 2013 and at December 31, 2012 | (6,092 | ) | (6,092 | ) | ||||
Total Shareholders' Equity | 110,205 | 110,144 | ||||||
Total Liabilities and Shareholders' Equity | $ | 1,231,183 | $ | 1,178,254 | ||||
Consolidated Statements of Income (unaudited) | ||||||||||||
Three Months Ended March 31, | Three Months Ended December 31, | Three Months Ended March 31, | ||||||||||
2013 | 2012 | 2012 | ||||||||||
(Dollars in thousands except share and per share amounts) | ||||||||||||
Interest Income | ||||||||||||
Loans | $ | 9,054 | $ | 9,556 | $ | 10,049 | ||||||
Securities: | ||||||||||||
U.S. Government agencies and corporations | 841 | 991 | 1,260 | |||||||||
State and political subdivisions | 289 | 290 | 287 | |||||||||
Other debt and equity securities | 70 | 75 | 72 | |||||||||
Federal funds sold and short-term investments | 20 | 8 | 9 | |||||||||
Total interest income | 10,274 | 10,920 | 11,677 | |||||||||
Interest Expense | ||||||||||||
Deposits | 1,249 | 1,336 | 1,631 | |||||||||
Federal Home Loan Bank advances | 155 | 224 | 215 | |||||||||
Short-term borrowings | - | 1 | - | |||||||||
Junior subordinated debenture | 166 | 171 | 176 | |||||||||
Total interest expense | 1,570 | 1,732 | 2,022 | |||||||||
Net Interest Income | 8,704 | 9,188 | 9,655 | |||||||||
Provision for Loan Losses | 1,350 | 1,800 | 1,900 | |||||||||
Net interest income after provision for loan losses | 7,354 | 7,388 | 7,755 | |||||||||
Noninterest Income | ||||||||||||
Investment and trust services | 375 | 373 | 390 | |||||||||
Deposit service charges | 816 | 953 | 935 | |||||||||
Other service charges and fees | 831 | 768 | 748 | |||||||||
Income from bank owned life insurance | 168 | 241 | 165 | |||||||||
Other income | 321 | 263 | 342 | |||||||||
Total fees and other income | 2,511 | 2,598 | 2,580 | |||||||||
Securities gains, net | 178 | 143 | - | |||||||||
Gains on sale of loans | 656 | 659 | 347 | |||||||||
Loss on sale of other assets, net | (13 | ) | (24 | ) | (52 | ) | ||||||
Total noninterest income | 3,332 | 3,376 | 2,875 | |||||||||
Noninterest Expense | ||||||||||||
Salaries and employee benefits | 5,027 | 4,581 | 4,111 | |||||||||
Furniture and equipment | 949 | 998 | 1,070 | |||||||||
Net occupancy | 588 | 543 | 579 | |||||||||
Professional fees | 490 | 595 | 495 | |||||||||
Marketing and public relations | 289 | 277 | 247 | |||||||||
Supplies, postage and freight | 307 | 308 | 243 | |||||||||
Telecommunications | 162 | 195 | 173 | |||||||||
Ohio Franchise tax | 308 | 305 | 316 | |||||||||
FDIC assessments | 242 | 172 | 392 | |||||||||
Other real estate owned | 77 | 156 | 132 | |||||||||
Loan and collection expense | 388 | 99 | 349 | |||||||||
Other expense | 454 | 405 | 437 | |||||||||
Total noninterest expense | 9,281 | 8,634 | 8,544 | |||||||||
Income before income tax expense | 1,405 | 2,130 | 2,086 | |||||||||
Income tax expense | 292 | 491 | 581 | |||||||||
Net Income | $ | 1,113 | $ | 1,639 | $ | 1,505 | ||||||
Dividends and accretion on preferred stock | 257 | 310 | ||||||||||
