LSB Financial Corp. Announces Second Quarter and Year-to-Date Results

Aug 04, 2011, 15:36 ET from LSB Financial Corp.

LAFAYETTE, Ind., Aug. 4, 2011 /PRNewswire/ -- LSB Financial Corp. (NASDAQ: LSBI), the parent company of Lafayette Savings Bank, FSB, today reported quarterly earnings of $477,000 or $0.31 diluted earnings per share compared to $457,000 or $0.29 diluted earnings per share a year earlier.  Year-to-date earnings were $681,000 or $0.44 diluted earnings per share compared to $989,000 or $0.64 per share for the comparable period in 2010.  We believe the fundamentals of the bank are strong.  The largest positive impact on our income comes from low market interest rates which translated into a $579, 000 increase in our net interest margin year-to-date and a $163,000 increase for the quarter, primarily because of lower interest rates on deposits and borrowings.  The largest negative impact continues to come from the provision for loan losses which was $952,000 over last year for the first six months and $210,000 higher for the quarter.  

Randolph F. Williams, president and CEO stated, "Despite additional credit related expenses, including the increased loan loss provision, OREO write downs and appraisal driven value adjustments on non-performing loans, this quarter represents our sixth straight profitable quarter.  Additionally, we increased capital, improved our net interest margin, and further built up our loan loss reserves."

Williams noted, "The bank continues to benefit from lower interest rates in the economy which have resulted in an increase in our net interest margin from 3.54% for the six months ended June 30, 2010 to 3.96% for the same period in 2011.  Additionally, we have kept expenses virtually unchanged for the first six months of 2011, increasing only $27,000 over the first six months of 2010.  Expenses for the second quarter were $149,000 lower than the first quarter of 2010.   We have done this through targeted expense control rather than the reductions in staff that we so frequently see in the mega banks.  Our people are critical to attracting and maintaining customer relationships that are at the heart of the traditional community bank model."

Williams continued, "An area that continues to plague nearly all banks to some extent is problem loans.  At June 30, 2011, our non-performing assets (loans and OREO properties) totaled $21.3 million or 5.92% of total assets, up from the $19.3 million or 5.18% at the end of 2010.  We are encouraged by our success in selling bank properties during the quarter.  We have reduced our level of OREO to $130,000 compared $1.2 million at the start of this year.  While we continually work to reduce problem loan balances, as a community bank we believe that there is little to be gained from routinely putting borrowers on a track to foreclosure at the first sign of delinquency.   Of the $21.2 million of problem loans we held on our books at June 30, 2011, nearly 50% of these borrowers continued to make payments and $3.6 million of those are actually paid current.  In the meantime we will continue to work with our borrowers to bring about the best possible outcome.  To recognize potential losses in our loan portfolio, we have added $1.9 million to our reserve for loan losses in the first six months of 2011, compared to $899,000 for the first six months of 2010.  The contribution to this reserve for the quarter was $675,000 compared to $465,000 last year in the second quarter.  This brings our reserve to $7.0 million or 2.20% of total loans compared to $5.3 million and 1.65% at December 31, 2010.  This equates to 33.2% of our non-performing loans, up from 29.0% last year at the same time.  We believe this amount will be adequate to cover losses based on our quarterly evaluation and loan mix."

The bank continues to maintain a strong capital base with a Tier I capital ratio of 10.09% at June 30, 2011 compared to 9.57% at December 31, 2010.  Mr. Williams stated, "There is considerable uncertainty about where the economy is headed, both nationally and to a lesser extent here in Greater Lafayette. We believe that the combination of our continued profitability, a $7.0 million loan loss reserve and over 10.00% capital should be adequate to allow us to work through the issues presented by this struggling economy."  

"The Company will refrain from paying a quarterly cash dividend again this quarter," Williams stated. "Because the new banking regulations are expected to address and likely revise capital levels for banks, we believe it is prudent to use our earnings to build our capital levels to make sure the bank continues on a firm capital foundation."  

The closing market price of LSB stock on August 3, 2011 was $15.40 per share as reported by the Nasdaq Global Market.

LSB FINANCIAL CORP.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Dollars in thousands except share and per share amounts)

Selected balance sheet data:

Six months ended

June 30, 2011

Year ended

December 31, 2010

Cash and due from banks

$10,061

$10,593

Interest bearing deposits

3,283

2,980

Securities available-for-sale

12,024

11,805

Loans held for sale

1,342

2,265

Net portfolio loans

311,644

320,810

Allowance for loan losses

7,028

5,343

Premises and equipment, net

6,192

6,116

Federal Home Loan Bank stock, at cost

3,185

3,583

Bank owned life insurance

6,348

6,264

Other assets

5,782

7,431

Total assets

359,861

371,847

Deposits

303,779

311,458

Advances from Federal Home Loan Bank

18,000

22,500

Other liabilities

1,756

2,312

Shareholders' equity

36,326

35,577

Book value per share

$23.37

$22.90

Equity / assets

10.09%

9.57%

Total shares outstanding

1,554,275

1,553,525

Asset quality data:

Non-accruing loans

$20,366

$17,370

Loans past due 90 days still on accrual

790

676

Other real estate / assets owned

130

1,214

Total non-performing assets

21,286

19,260

Non-performing assets / total assets

5.92%

5.18%

Allowance for loan losses / non-performing loans

33.22%

29.61%

Allowance for loan losses / non-performing assets

33.02%

27.74%

Allowance for loan losses / total loans

2.20%

1.65%

Loans charged off (quarter-to-date and year-to-date, respectively)

$204

$1,382

Recoveries on loans previously charged off

38

229

Three months ended June 30,

Six months ended June 30,

Selected operating data:

2011

2010

2011

2010

Total interest income

$4,358

$4,721

$8,834

$9,393

Total interest expense

1,046

1,572

2,157

3,295

Net interest income

3,312

3,149

6,677

6,098

Provision for loan losses

675

465

1,851

899

 Net interest income after provision

2,637

2,684

4,826

5,199

Non-interest income:

Deposit account service charges

319

397

611

764

Gain on sale of mortgage loans

226

92

390

177

Gain(loss) on sale of available-for-sale securities

2

0

2

0

Gain(loss) on sale OREO

(311)

(228)

(336)

(261)

Other non-interest income

278

283

538

558

  Total non-interest income

514

544

1,205

1,238

Non-interest expense:

Salaries and benefits

1,372

1,349

2,782

2,641

Occupancy and equipment, net

268

326

596

665

Computer service

147

148

289

275

Advertising

57

78

115

134

FDIC Insurance Premium

134

164

318

323

Other

432

494

900

935

  Total non-interest expense

2,410

2,559

5,000

4,973

Income before income taxes

741

669

1,031

1,464

Income tax expense

264

212

350

475

  Net income

477

457

681

989

Weighted average number of diluted shares

1,556,146

1,553,538

1,556,525

1,553,525

Diluted earnings per share

$0.31

$0.29

$0.44

$0.64

Return on average equity

5.27%

5.31%

3.78%

5.77%

Return on average assets

0.53%

0.48%

0.35%

0.53%

Average earning assets

$333,808

$347,658

$336,854

$344,570

Net interest margin

3.97%

3.62%

3.96%

3.54%

Efficiency ratio

76.48%

79.28%

82.90%

77.26%

www.LSBANK.com

SOURCE LSB Financial Corp.



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http://www.lsbank.com