UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
SCHEDULE 14A
(RULE 14a-101)
 
INFORMATION REQUIRED IN
PROXY STATEMENT
 
SCHEDULE 14A INFORMATION
 
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.     )
 
 
Filed by the Registrant x Filed by a Party other than the Registrant o
 
Check the appropriate box:

o
 
Preliminary Proxy Statement
o
 
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o
 
Definitive Proxy Statement
o
 
Definitive Additional Materials
x
 
Soliciting Material Pursuant to §240.14a-12
LNB Bancorp, Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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x
 
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o
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
   
(1
)
 
Title of each class of securities to which transaction applies:
           
   
(2
)
 
Aggregate number of securities to which transaction applies:
           
   
(3
)
 
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
           
   
(4
)
 
Proposed maximum aggregate value of transaction:
           
   
(5
)
 
Total fee paid:
           
           
o
 
Fee paid previously with preliminary materials.
o
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
   
(1
)
 
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(2
)
 
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(3
)
 
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(4
)
 
Date Filed:
           
 
 
 

 
 
LNB Bancorp, Inc. Reports Fourth Quarter and Full Year 2014 Results
 
 
● 
Entered into a definitive merger agreement to merge with Northwest Bancshares, Inc.
 
● 
Fourth quarter 2014 net income available to common shareholders of $1.5 million. Excluding expenses related to the proposed merger of approximately $.6 million after tax, net income available to common shareholders was $2.1 million during the quarter, a 36% increase year-over-year
 
● 
Full year 2014 net income available to common shareholders of $7.2 million. Excluding merger related expenses of $.6 million after tax, net income available to common shareholders was $7.8 million, a 42% increase year-over-year
 
● 
Loans increased by $28 million or 3.1% year over year
 
● 
Improved asset quality and lower net charge-offs resulted in a reduced provision for loan losses
 
LORAIN, Ohio--(BUSINESS WIRE)--January 29, 2015--LNB Bancorp, Inc. (NASDAQ: LNBB) (“LNB” or the “Company”) today reported financial results for the fourth quarter and the full year ended December 31, 2014. Net income available to common shareholders for the quarter ending December 31, 2014 was $1.5 million, or $0.15 per diluted share, compared to $1.5 million, or $0.16 per diluted share, for the fourth quarter 2013. On December 15, 2014, LNB entered into a definitive merger agreement with Northwest Bancshares, Inc. During the quarter, the Company incurred merger related expenses of $.8 million or $.6 million after tax. Excluding merger related expenses of $.6 million after tax, net income available to common shareholders was $2.1 million during the quarter, a 36% increase year-over-year.
 
“We are very pleased with the fourth quarter results. We saw solid loan growth and continued improvement in credit quality, which reduced charge-offs and the provision for loan losses,” stated Daniel E. Klimas, president and chief executive officer.
 
Loan balances at December 31, 2014 increased by $28 million compared to December 31, 2013, led by the consumer and commercial loan portfolios.
 
The Company continued to make progress on improving credit quality as non-performing assets for the fourth quarter declined $5.2 million as compared to the same quarter in 2013. The ratio of non-performing assets to total assets at December 31, 2014, was 1.40%, down from 1.83% at December 31, 2013.
 
 
 

 
 
Fourth Quarter Review
 
Noninterest income was $3.4 million for the fourth quarter of 2014 compared to $3.3 million for the prior-year fourth quarter. This year-over-year increase was driven primarily by gains on the sale of SBA (Small Business Administration) and consumer loans, an increase in Trust Department revenues and income from bank owned life insurance, which more than offset a decline in deposit and service charge fees.
 
Gain on the sale of loans was $1.0 million for the quarter, compared to $.7 million for the fourth quarter of 2013. This increase is primarily due to the gain on the sale of SBA loans as this initiative continued to contribute nicely to the Company’s operating performance.
 
The provision for loan losses was $.6 million in the fourth quarter of 2014, down $.4 million, or 41%, from the 2013 fourth quarter, reflecting the Company’s improvement in credit quality. Net charge-offs were $.6 million for the fourth quarter of 2014, or 0.26% of average loans (annualized), compared to $1.3 million, or 0.58% of average loans (annualized), in the fourth quarter of 2013. The allowance for loan losses was $17.4 million, or 1.87% of total loans, at December 31, 2014 compared with $17.5 million, or 1.94% of total loans, at December 31, 2013. The allowance for loan losses coverage of nonperforming loans at the end of the fourth quarter improved to 105% from 80% at the end of the same quarter a year ago. “The credit quality indicators continued to improve, resulting in a lower provision for the fourth quarter of 2014,” stated Klimas.
 
Noninterest expense was $9.9 million for the fourth quarter of 2014 compared with $9.0 million for the fourth quarter of 2013, an increase of 10%. The increase in noninterest expense was largely in part due to the merger related costs incurred of $.8 million or $.6 million after tax.
 
Full Year 2014 Review
 
For the year ended December 31, 2014, net income available to common shareholders was $7.2 million, or $0.74 per common share, compared to $5.5 million, or $0.61 per common share for the year 2013. This represents an increase in net income available to common shareholders of $1.7 million, or 31%, and $0.13, or 21%, per common share. Excluding merger related expenses, the annual net income available to common shareholders was $7.8 million, up 42% compared to net income during 2013.
 
Net interest income on a fully tax-equivalent basis (FTE) for 2014 was $37.1 million compared to $36.2 million for 2013. The net interest margin was 3.21% for 2014 compared to 3.19% for 2013.
 
 
 

 
 
Noninterest income for 2014 was $12.9 million, compared to $12.1 million for 2013.
 
Noninterest expense for 2014 totaled $36.4 million, a $1.2 million increase from the total of $35.2 million for 2013.
 
During 2014, nonperforming assets declined $5.2 million, or 23%, to $17.4 million. For 2014, nonperforming assets comprised 1.40% of total assets, compared to 1.83% of total assets for 2013.
 
Net charge-offs were $3.2 million for 2014, or 0.35% of average loans, compared to $4.5 million in 2013, or 0.51% of average loans.
 
The allowance for loan losses was $17.4 million at December 31, 2014, or 1.87% of total loans, compared to $17.5 million at December 31, 2013, or 1.94% of total loans. For the year 2014, the provision for loan losses was $3.1 million compared to the 2013 provision of $4.4 million.
 
The Company continued to maintain capital levels in excess of the regulatory requirements to be categorized as “well capitalized” with a total risk-based capital ratio of 12.51%, Tier 1 leverage ratio of 9.10% and tangible common equity to tangible assets ratio of 7.69% at December 31, 2014.
 
Total assets at December 31, 2014 were $1.24 billion, up $6 million, or 0.5%, from December 31, 2013. Total deposits at December 31, 2014 were $1.03 billion, down $11 million, or 1.0%, from December 31, 2013.
 
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 21 retail-banking locations and 30 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," “proposed”, "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, any capital-raising or acquisition activities of the Company; 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.
 
In addition, expected cost savings, synergies and other financial benefits from the proposed merger with Northwest Bancshares might not be realized within the expected time frame and costs or difficulties relating to integration matters might be greater than expected. The requisite shareholder and regulatory approvals for the proposed merger might not be obtained.
 
 
 

 
 
Important Additional Information and Where to Find It
 
In connection with the proposed merger with Northwest Bancshares, Inc., Northwest Bancshares, Inc. will file with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of LNB Bancorp, Inc. and a Prospectus of Northwest Bancshares, Inc. as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. SHAREHOLDERS OF LNB BANCORP, INC. ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
 
A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Northwest Bancshares, Inc. and LNB Bancorp, Inc., may be obtained at the SEC’s Internet site (http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Northwest Bancshares, Inc. at www.northwestsavingsbank.com under the heading “Investor Relations” and then under “SEC Filings” or from LNB Bancorp, Inc. by accessing LNB Bancorp, Inc.’s website at www.4lnb.com under the heading “Investor Relations” and then under “SEC Filings.” Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Northwest Bancshares, Inc., 100 Liberty Street, Warren, Pennsylvania 16365, Attention: Investor Relations, Telephone: (814) 726-2140 or to LNB Bancorp, Inc., 457 Broadway, Lorain, Ohio 44052, Attention: Investor Relations, Telephone: (440) 244-7317.
 
LNB Bancorp, Inc. and Northwest Bancshares, Inc. and certain of their directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders of LNB Bancorp, Inc. in connection with the proposed merger. Information about the directors and executive officers of LNB Bancorp, Inc. and their ownership of LNB Bancorp, Inc. common stock is set forth in the proxy statement for LNB Bancorp, Inc.’s 2014 annual meeting of shareholders, as filed with the SEC on Schedule 14A on March 11, 2014. Information about the directors and executive officers of Northwest Bancshares, Inc. is set forth in the proxy statement for Northwest Bancshares, Inc. 2014 annual meeting of shareholders, as filed with the SEC on a Schedule 14A on March 5, 2014. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the Proxy Statement/Prospectus regarding the proposed merger when it becomes available. Free copies of this document may be obtained as described in the preceding paragraph.
 
 
 

 
 
CONSOLIDATED BALANCE SHEETS
         
   
At December 31, 2014
 
At December 31, 2013
   
(unaudited)
   
   
(Dollars in thousands except share amounts)
ASSETS
Cash and due from banks
 
$
17,927
   
$
36,717
 
Federal funds sold and interest bearing deposits in banks
   
6,215
     
15,555
 
Cash and cash equivalents
   
24,142
     
52,272
 
Securities available for sale, at fair value
   
217,572
     
216,122
 
Restricted stock
   
5,741
     
5,741
 
Loans held for sale
   
3,646
     
4,483
 
Loans:
       
Portfolio loans
   
930,025
     
902,299
 
Allowance for loan losses
   
(17,416
)
   
(17,505
)
Net loans
   
912,609
     
884,794
 
Bank premises and equipment, net
   
9,173
     
8,198
 
Other real estate owned
   
772
     
579
 
Bank owned life insurance
   
19,757
     
19,362
 
Goodwill, net
   
21,582
     
21,582
 
Intangible assets, net
   
321
     
457
 
Accrued interest receivable
   
3,635
     
3,621
 
Other assets
   
17,677
     
13,046
 
Total Assets
 
$
1,236,627
   
$
1,230,257
 
         
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
       
Demand and other noninterest-bearing
 
$
158,476
   
$
148,961
 
Savings, money market and interest-bearing demand
   
436,271
     
393,778
 
Certificates of deposit
   
440,178
     
502,850
 
Total deposits
   
1,034,925
     
1,045,589
 
Short-term borrowings
   
10,611
     
4,576
 
Federal Home Loan Bank advances
   
54,321
     
46,708
 
Junior subordinated debentures
   
16,238
     
16,238
 
Accrued interest payable
   
596
     
789
 
Accrued taxes, expenses and other liabilities
   
4,597
     
4,901
 
Total Liabilities
   
1,121,288
     
1,118,801
 
Shareholders' Equity
       
Preferred stock, Series A Voting, no par value, authorized 150,000 shares at December 31, 2014 and December 31, 2013
   
-
     
-
 
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, no shares were issued at December 31, 2014 and 7,689 shares at December 31, 2013
   
-
     
7,689
 
Discount on Series B preferred stock
   
-
     
(19
)
Common stock, par value $1 per share, authorized 15,000,000 shares, issued shares 10,002,139 at December 31, 2014 and 10,001,717 at December 31, 2013
   
10,002
     
10,002
 
Additional paid-in capital
   
51,441
     
51,098
 
Retained earnings
   
60,568
     
53,966
 
Accumulated other comprehensive income (loss)
   
(495
)
   
(5,188
)
Treasury shares at cost, 336,745 shares at December 31, 2014 and 328,194 shares at December 31, 2013
   
(6,177
)
   
(6,092
)
Total Shareholders' Equity
   
115,339
     
111,456
 
Total Liabilities and Shareholders' Equity
 
$
1,236,627
   
$
1,230,257
 
                 
 
 
 

 
 
Consolidated Statements of Income (unaudited)
                 
   
Three Months Ended
December 31,
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
 
Twelve Months Ended
December 31,
   
2014
 
2013
 
2014
 
2013
   
(Dollars in thousands except per share data)
Interest Income
                     
Loans
 
$
9,243
     
$
9,118
   
$
36,319
     
$
36,409
Securities:
                     
U.S. Government agencies and corporations
   
1,022
       
971
     
4,097
       
3,587
State and political subdivisions
   
311
       
304
     
1,235
       
1,191
Other debt and equity securities
   
68
       
127
     
318
       
464
Federal funds sold and short-term investments
   
4
       
5
     
34
       
28
Total interest income
   
10,648
       
10,525
     
42,003
       
41,679
Interest Expense
                     
Deposits
   
1,028
       
1,153
     
4,159
       
4,838
Federal Home Loan Bank advances
   
157
       
159
     
627
       
628
Short-term borrowings
   
13
       
6
     
86
       
7
Junior subordinated debenture
   
172
       
172
     
680
       
683
Total interest expense
   
1,370
       
1,490
     
5,552
       
6,156
Net Interest Income
   
9,278
       
9,035
     
36,451
       
35,523
Provision for Loan Losses
   
600
       
1,025
     
3,113
       
4,375
Net interest income after provision for loan losses
   
8,678
       
8,010
     
33,338
       
31,148
Noninterest Income
                     
Investment and trust services
   
404
       
377
     
1,685
       
1,555
Deposit service charges
   
840
       
901
     
3,309
       
3,509
Other service charges and fees
   
752
       
820
     
3,014
       
3,279
Income from bank owned life insurance
   
374
       
240
     
888
       
752
Other income
   
65
       
186
     
393
       
521
Total fees and other income
   
2,435
       
2,524
     
9,289
       
9,616
Securities gains (losses), net
   
-
       
-
     
(5
)
     
178
Gains on sale of loans
   
963
       
707
     
3,612
       
2,324
Gain (loss) on sale of other assets, net
   
(7
)
     
25
     
19
       
8
Total noninterest income
   
3,391
       
3,256
     
12,915
       
12,126
Noninterest Expense
                     
Salaries and employee benefits
   
5,046
       
4,607
     
18,800
       
18,058
Furniture and equipment
   
1,190
       
1,075
     
4,715
       
4,234
Net occupancy
   
555
       
609
     
2,339
       
2,310
Professional fees
   
1,222
       
457
     
2,563
       
1,870
Marketing and public relations
   
302
       
278
     
1,425
       
1,216
Supplies, postage and freight
   
271
       
236
     
946
       
1,045
Telecommunications
   
163
       
168
     
640
       
669
Ohio Franchise tax
   
129
       
299
     
800
       
1,213
Intangible asset amortization
   
35
       
36
     
136
       
137
FDIC assessments
   
191
       
266
     
979
       
1,039
Other real estate owned
   
44
       
102
     
110
       
382
Loan and collection expense
   
398
       
397
     
1,399
       
1,427
Other expense
   
361
       
453
     
1,530
       
1,587
Total noninterest expense
   
9,907
       
8,983
     
36,382
       
35,187
Income before income tax expense
   
2,162
       
2,283
     
9,871
       
8,087
Income tax expense
   
660
       
577
     
2,654
       
1,926
Net Income
 
$
1,502
     
$
1,706
   
$
7,217
     
$
6,161
Dividends and accretion on preferred stock
   
-
       
163
     
35
       
646
Net Income Available to Common Shareholders
 
$
1,502
     
$
1,543
   
$
7,182
     
$
5,515
                       
Net Income Per Common Share
                     
Basic
 
$
0.16
     
$
0.16
   
$
0.75
     
$
0.61
Diluted
   
0.15
       
0.16
     
0.74
       
0.61
Dividends declared
   
0.03
       
0.01
     
0.06
       
0.04
Average Common Shares Outstanding
                     
Basic
   
9,626,842
       
9,288,745
     
9,623,772
       
8,953,815
Diluted
   
9,692,425
       
9,302,458
     
9,656,774
       
8,966,088
 
 
 

 
 
LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except per share data)
                             
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
December 31,
 
December 31,
END OF PERIOD BALANCES
 
2014
 
2014
 
2014
 
2014
 
2013
 
2014
 
2013
Cash and Cash Equivalents
 
$
24,142
 
$
36,167
 
$
47,795
 
$
68,241
 
$
52,272
 
$
24,142
 
$
52,272
Securities
   
217,572
   
218,847
   
219,422
   
217,510
   
216,122
   
217,572
   
216,122
Restricted stock
   
5,741
   
5,741
   
5,741
   
5,741
   
5,741
   
5,741
   
5,741
Loans held for sale
   
3,646
   
1,497
   
2,856
   
1,811
   
4,483
   
3,646
   
4,483
Portfolio loans
   
930,025
   
922,514
   
907,365
   
910,189
   
902,299
   
930,025
   
902,299
Allowance for loan losses
   
17,416
   
17,432
   
17,430
   
17,497
   
17,505
   
17,416
   
17,505
Net loans
   
912,609
   
905,082
   
889,935
   
892,692
   
884,794
   
912,609
   
884,794
Other assets
   
72,917
   
73,765
   
71,093
   
69,398
   
66,845
   
72,917
   
66,845
Total assets
 
$
1,236,627
 
$
1,241,099
 
$
1,236,842
 
$
1,255,393
 
$
1,230,257
 
$
1,236,627
 
$
1,230,257
Total deposits
   
1,034,925
   
1,056,784
   
1,048,938
   
1,076,851
   
1,045,589
   
1,034,925
   
1,045,589
Other borrowings
   
81,170
   
65,779
   
66,413
   
66,723
   
67,522
   
81,170
   
67,522
Other liabilities
   
5,193
   
5,471
   
11,003
   
4,705
   
5,690
   
5,193
   
5,690
Total liabilities
   
1,121,288
   
1,128,034
   
1,126,354
   
1,148,279
   
1,118,801
   
1,121,288
   
1,118,801
Total shareholders' equity
   
115,339
   
113,065
   
110,488
   
107,114
   
111,456
   
115,339
   
111,456
Total liabilities and shareholders' equity
 
$
1,236,627
 
$
1,241,099
 
$
1,236,842
 
$
1,255,393
 
$
1,230,257
 
$
1,236,627
 
$
1,230,257
                             
AVERAGE BALANCES
                           
Assets:
                           
Total assets
 
$
1,233,457
 
$
1,228,769
 
$
1,236,203
 
$
1,234,380
 
$
1,221,830
 
$
1,233,187
 
$
1,216,228
Earning assets*
   
1,160,953
   
1,151,577
   
1,154,063
   
1,150,500
   
1,137,943
   
1,154,295
   
1,132,514
Securities
   
219,861
   
217,791
   
223,198
   
217,753
   
214,860
   
219,652
   
217,882
Portfolio loans
   
924,216
   
915,773
   
907,851
   
906,843
   
899,899
   
914,137
   
887,866
Liabilities and shareholders' equity:
                           
Total deposits
 
$
1,047,688
 
$
1,044,021
 
$
1,056,144
 
$
1,055,980
 
$
1,041,763
 
$
1,050,916
 
$
1,037,273
Interest-bearing deposits
   
876,897
   
883,713
   
905,838
   
910,340
   
891,589
   
894,077
   
895,634
Interest-bearing liabilities
   
943,339
   
951,142
   
972,784
   
978,073
   
956,866
   
961,211
   
960,372
Total shareholders' equity
   
114,135
   
111,394
   
108,624
   
106,681
   
109,814
   
110,232
   
109,712
                             
INCOME STATEMENT
                           
Total Interest Income
 
$
10,648
 
$
10,350
 
$
10,612
 
$
10,393
 
$
10,525
 
$
42,003
 
$
41,679
Total Interest Expense
   
1,370
   
1,374
   
1,376
   
1,432
   
1,490
   
5,552
   
6,156
Net interest income
   
9,278
   
8,976
   
9,236
   
8,961
   
9,035
   
36,451
   
35,523
Provision for loan losses
   
600
   
720
   
893
   
900
   
1,025
   
3,113
   
4,375
Other income
   
2,435
   
2,289
   
2,322
   
2,243
   
2,524
   
9,289
   
9,616
Net gain on sale of assets
   
956
   
1,072
   
929
   
669
   
732
   
3,626
   
2,510
Noninterest expense
   
9,907
   
8,818
   
8,798
   
8,859
   
8,983
   
36,382
   
35,187
Income before income taxes
   
2,162
   
2,799
   
2,796
   
2,114
   
2,283
   
9,871
   
8,087
Income tax expense
   
660
   
713
   
773
   
508
   
577
   
2,654
   
1,926
Net income
   
1,502
   
2,086
   
2,023
   
1,606
   
1,706
   
7,217
   
6,161
Preferred stock dividend and accretion
   
-
   
-
   
-
   
35
   
163
   
35
   
646
Net income available to common shareholders
 
$
1,502
 
$
2,086
 
$
2,023
 
$
1,571
 
$
1,543
 
$
7,182
 
$
5,515
Common cash dividend declared and paid
 
$
290
 
$
97
 
$
97
 
$
97
 
$
93
 
$
580
 
$
358
                             
Net interest income-FTE (1)
 
$
9,436
 
$
9,135
 
$
9,396
 
$
9,117
 
$
9,192
 
$
37,084
 
$
36,156
Total Operating Revenue (4)
 
$
12,827
 
$
12,496
 
$
12,647
 
$
12,029
 
$
12,448
 
$
49,999
 
$
48,282
 
 
 

 
 
   
Three Months Ended
 
Twelve Months Ended
   
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
December 31,
 
December 31,
   
2014
 
2014
 
2014
 
2014
 
2013
 
2014
 
2013
PER SHARE DATA
                           
Basic net income per common share
 
$
0.16
   
$
0.22
   
$
0.21
   
$
0.16
   
$
0.16
   
$
0.75
   
$
0.61
 
Diluted net income per common share
   
0.15
     
0.22
     
0.21
     
0.16
     
0.16
     
0.75
     
0.61
 
Cash dividends per common share
   
0.03
     
0.01
     
0.01
     
0.01
     
0.01
     
0.06
     
0.04
 
Book value per common shares outstanding
   
11.93
     
11.70
     
11.43
     
11.08
     
10.73
     
11.93
     
10.73
 
Tangible book value per common shares outstanding**
   
9.67
     
9.43
     
9.16
     
8.81
     
8.45
     
9.67
     
8.45
 
Period-end common share market value
   
18.03
     
14.29
     
12.18
     
11.42
     
10.03
     
18.03
     
10.03
 
Market as a % of tangible book
   
186.51
%
   
151.57
%
   
132.97
%
   
129.69
%
   
118.69
%
   
186.51
%
   
118.69
%
Basic average common shares outstanding
   
9,626,842
     
9,626,536
     
9,664,972
     
9,668,297
     
9,288,745
     
9,623,772
     
8,953,815
 
Diluted average common shares outstanding
   
9,692,425
     
9,659,593
     
9,682,444
     
9,705,432
     
9,302,458
     
9,656,774
     
8,966,088
 
Common shares outstanding
   
9,665,394
     
9,665,394
     
9,664,972
     
9,664,972
     
9,673,523
     
9,665,394
     
9,673,523
 
                             
KEY RATIOS
                           
Return on average assets (2)
   
0.48
%
   
0.67
%
   
0.66
%
   
0.53
%
   
0.55
%
   
0.59
%
   
0.51
%
Return on average common equity (2)
   
5.22
%
   
7.43
%
   
7.47
%
   
6.11
%
   
6.16
%
   
6.55
%
   
5.62
%
Efficiency ratio
   
77.24
%
   
70.57
%
   
69.57
%
   
73.65
%
   
72.16
%
   
72.77
%
   
72.88
%
Noninterest expense to average assets (2)
   
3.19
%
   
2.85
%
   
2.85
%
   
2.91
%
   
2.92
%
   
2.95
%
   
2.89
%
Average equity to average assets
   
9.25
%
   
9.07
%
   
8.79
%
   
8.64
%
   
8.99
%
   
8.94
%
   
9.02
%
Net interest margin (FTE) (1)
   
3.22
%
   
3.15
%
   
3.27
%
   
3.21
%
   
3.20
%
   
3.21
%
   
3.19
%
Common stock dividend payout ratio
   
19.36
%
   
4.63
%
   
4.79
%
   
6.18
%
   
6.10
%
   
8.04
%
   
6.56
%
Common stock market capitalization
 
$
174,267
   
$
138,118
   
$
117,719
   
$
110,374
   
$
97,025
   
$
174,267
   
$
97,025
 
                             
                             
ASSET QUALITY
                           
Allowance for Loan Losses
                           
Allowance for loan losses, beginning of period
 
$
17,432
   
$
17,430
   
$
17,497
   
$
17,505
   
$
17,791
   
$
17,505
   
$
17,637
 
Provision for loan losses
   
600
     
720
     
893
     
900
     
1,025
     
3,113
     
4,375
 
Charge-offs
   
937
     
856
     
1,033
     
998
     
1,570
     
3,825
     
6,019
 
Recoveries
   
321
     
138
     
73
     
90
     
259
     
623
     
1,512
 
Net charge-offs
   
616
     
718
     
960
     
908
     
1,311
     
3,202
     
4,507
 
Allowance for loan losses, end of period
 
$
17,416
   
$
17,432
   
$
17,430
   
$
17,497
   
$
17,505
   
$
17,416
   
$
17,505
 
                             
Nonperforming Assets
                           
Nonperforming loans
 
$
16,578
   
$
18,193
   
$
19,907
   
$
20,918
   
$
21,986
   
$
16,578
   
$
21,986
 
Other real estate owned
   
772
     
745
     
1,016
     
979
     
579
     
772
     
579
 
Total nonperforming assets
 
$
17,350
   
$
18,938
   
$
20,923
   
$
21,897
   
$
22,565
   
$
17,350
   
$
22,565
 
                             
Ratios
                           
Total nonperforming loans to total loans
   
1.78
%
   
1.97
%
   
2.19
%
   
2.30
%
   
2.44
%
   
1.78
%
   
2.44
%
Total nonperforming assets to total assets
   
1.40
%
   
1.53
%
   
1.69
%
   
1.74
%
   
1.83
%
   
1.40
%
   
1.83
%
Net charge-offs to average loans (2)
   
0.26
%
   
0.31
%
   
0.42
%
   
0.41
%
   
0.58
%
   
0.35
%
   
0.51
%
Provision for loan losses to average loans (2)
   
0.26
%
   
0.31
%
   
0.39
%
   
0.40
%
   
0.45
%
   
0.34
%
   
0.49
%
Allowance for loan losses to portfolio loans
   
1.87
%
   
1.89
%
   
1.92
%
   
1.92
%
   
1.94
%
   
1.87
%
   
1.94
%
Allowance to nonperforming loans
   
105.05
%
   
95.82
%
   
87.56
%
   
83.65
%
   
79.62
%
   
105.05
%
   
79.62
%
Allowance to nonperforming assets
   
100.38
%
   
92.05
%
   
83.31
%
   
79.91
%
   
77.58
%
   
100.38
%
   
77.58
%
                             
CAPITAL & LIQUIDITY
                           
Period-end tangible common equity to assets**
   
7.69
%
   
7.47
%
   
7.29
%
   
6.90
%
   
6.77
%
   
7.69
%
   
6.77
%
Average equity to assets
   
9.25
%
   
9.07
%
   
8.79
%
   
8.64
%
   
8.99
%
   
8.94
%
   
9.02
%
Average equity to loans
   
12.35
%
   
12.16
%
   
11.96
%
   
11.76
%
   
12.20
%
   
12.06
%
   
12.36
%
Average loans to deposits
   
88.21
%
   
87.72
%
   
85.96
%
   
85.88
%
   
86.38
%
   
86.98
%
   
85.60
%
Tier 1 leverage ratio (3)
   
9.10
%
   
9.01
%
   
8.77
%
   
8.61
%
   
9.22
%
   
9.10
%
   
9.22
%
Tier 1 risk-based capital ratio (3)
   
11.26
%
   
11.09
%
   
11.17
%
   
10.90
%
   
11.63
%
   
11.26
%
   
11.63
%
Total risk-based capital ratio (3)
   
12.51
%
   
12.34
%
   
12.43
%
   
12.15
%
   
12.89
%
   
12.51
%
   
12.89
%
                                                         

(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized
(3) 12-31-14 ratio is estimated.
(4) Net interest income on a fully tax-equivalent basis ("FTE") plus noninterest income from operations
* Earning Assets includes Loans Held for Sale
** Non-GAAP measures.
 
 
 

 
 
**Non-GAAP Financial Measures - Statements included in this press release include non-GAAP financial measures. The Company’s management uses these non-GAAP financial measures, including the period-end tangible common equity to assets ratio, in analyzing the Company's performance. Period-end tangible common equity excludes preferred stock as well as goodwill and other intangible assets, net, from total stockholders' equity. Management believes that these non-GAAP financial measures provide additional useful information to investors in evaluating the ongoing performance of the Company. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
 
CONTACT:
LNB Bancorp, Inc.
Peter R. Catanese, Senior Vice President, 440-244-7126
 
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