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

Nov 03, 2011, 11:04 ET from LSB Financial Corp.

LAFAYETTE, Ind., Nov. 3, 2011 /PRNewswire/ -- LSB Financial Corp. (NASDAQ: LSBI), the parent company of Lafayette Savings Bank, FSB, today reported quarterly earnings of $457,000 or $0.29 diluted earnings per share compared to $526,000 or $0.34 diluted earnings per share a year earlier.  Year-to-date earnings were $1.1 million or $0.73 diluted earnings per share compared to $1.5 million or $0.98 per share for the comparable period in 2010.  The largest positive impact on income comes from low market interest rates which translated into a $551,000 increase in net interest margin year-to-date, 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 $927,000 over last year for the first nine months but improved $25,000 over the same quarter last year.  

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 strengthened capital, grew our net interest margin, and further built up our loan loss reserves.  The fundamentals of the bank are sound."

Williams continued, "The bank continues to benefit from lower interest rates in the economy which have resulted in an increase in our net interest margin from 3.64% for the nine months ended September 30, 2010 to 4.00% for the same period in 2011.   We have also increased non-interest income by $74,000 for the first nine months of 2011 over the same period in 2010, and by $106,000 for the quarter ended September 30, 2011 over the same period in 2010.   We have done this through increases in the gain on the sale of mortgage loans and through decreases in the losses on the sale of our OREO properties.  Our people are essential 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 September 30, 2011, our non-performing assets (loans and OREO properties) totaled $16.4 million or 4.50% of total assets, down from the $19.3 million or 5.18% at the end of 2010.  Our non-accruing loans were $14.9 million at September 30, 2011 compared to $18.0 million in December 2011.  Our level of OREOs increased to $1.5 million compared to $1.2 million at the end of last year as we made progress in obtaining control of some properties which had been working through the foreclosure system for months.  While we continually work to reduce problem loan balances, as a hometown, 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.    One thing that helped us was a drop in the unemployment rate to 7.3% in September.  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 $2.7 million to our reserve for loan losses in the first nine months of 2011, compared to $1.8 million for the first nine months of 2010.  The contribution to this reserve for the quarter was $885,000 compared to $910,000 last year in the third quarter.  This brings our reserve to $5.4 million or 1.69% of total loans compared to $5.3 million and 1.65% at December 31, 2010.  This equates to 36.05% of our non-performing loans, up from 29.61% 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 capital ratio of 10.12% at September 30, 2011, comparable to the 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 $5.4 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 closing market price of LSB stock on November 2, 2011 was $13.50 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:

September 30, 2011

December 31, 2010

Cash and due from banks

$12,445

$10,593

Interest bearing deposits

4,711

2,980

Securities available-for-sale

12,747

11,805

Loans held for sale

2,018

2,265

Net portfolio loans

309,206

320,810

Allowance for loan losses

5,366

5,343

Premises and equipment, net

6,201

6,116

Federal Home Loan Bank stock, at cost

3,185

3,583

Bank owned life insurance

6,391

6,264

Other assets

6,942

7,431

Total assets

363,846

371,847

Deposits

306,843

311,458

Advances from Federal Home Loan Bank

18,000

22,500

Other liabilities

2,172

2,312

Shareholders' equity

36,831

35,577

Book value per share

$23.68

$22.90

Equity / assets

10.12%

9.57%

Total shares outstanding

1,555,222

1,553,525

Asset quality data:

Non-accruing loans

$14,885

$17,370

Loans past due 90 days still on accrual

---

676

Other real estate / assets owned

1,479

1,214

Total non-performing assets

16,364

19,260

Non-performing assets / total assets

4.50%

5.18%

Allowance for loan losses / non-performing loans

36.05%

29.61%

Allowance for loan losses / non-performing assets

32.79%

27.74%

Allowance for loan losses / total loans

1.69%

1.65%

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

$2,768

$1,382

Recoveries on loans previously charged off

55

229

Three months ended September 30,

Nine months ended September 30,

Selected operating data:

2011

2010

2011

2010

Total interest income

$4,399

$4,876

$13,233

$14,268

Total interest expense

1,041

1,489

3,198

4,784

Net interest income

3,358

3,387

10,035

9,484

Provision for loan losses

885

910

2,736

1,809

 Net interest income after provision

2,473

2,477

7,299

7,675

Non-interest income:

Deposit account service charges

381

393

992

1,157

Gain on sale of mortgage loans

334

366

724

542

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

5

0

7

0

Gain(loss) on sale OREO

(103)

(189)

(438)

(449)

Other non-interest income

307

248

845

806

 Total non-interest income

924

818

2,130

2,056

Non-interest expense:

Salaries and benefits

1,436

1,372

4,219

4,013

Occupancy and equipment, net

292

321

888

986

Computer service

145

147

434

421

Advertising

95

68

210

203

FDIC Insurance Premium

118

171

436

494

Other

606

428

1,505

1,362

 Total non-interest expense

2,692

2,507

7,692

7,479

Income before income taxes

705

788

1,737

2,252

Income tax expense

248

262

598

737

 Net income

457

526

1,139

1,515

Weighted average number of diluted shares

1,554,060

1,553,525

1,553,972

1,553,525

Diluted earnings per share

$0.29

$0.34

$0.73

$0.98

Return on average equity

5.00%

6.02%

4.19%

5.85%

Return on average assets

0.51%

0.55%

0.42%

0.53%

Average earning assets

$329,296

$353,706

$334,322

$347,706

Net interest margin

4.08%

3.83%

4.00%

3.64%

Efficiency ratio

79.25%

76.08%

81.58%

76.86%

SOURCE LSB Financial Corp.



RELATED LINKS

http://www.lsbank.com