4. LNB Bancorp
of Lorain, Ohio, closed at $6.12 Friday, returning 31% year-to-date, following a 5% decline last year.
The shares trade for 73% of tangible book value, and for eight times the consensus 2013 earnings estimate of 74 cents. The consensus 2012 EPS estimate is 61 cents.
LNB Bancorp owes $25.2 million in TARP money. The U.S. Treasury on Monday initiated a second round of auctions of TARP preferred shares, for a group of seven banks, including LNB Bancorp. Bidding for the government-held preferred shares will end at 6:30PM, Eastern Standard Time, on Wednesday.
The company had $1.2 billion in total assets as of March 31 and reported first-quarter net income available to common shareholders of $1.2 million, or 15 cents a share, compared to $811 thousand, or 10 cents a share, in the fourth quarter, and $1.1 million, or 15 cents a share, in the first quarter of 2011. LNB Bancorp's first-quarter ROA was 0.51%, and the ROA has ranged from 0.24% to 0.57% over the past five quarters, according to Thomson Reuters Bank Insight.
KBW analyst John Barber on May 20 initiated his firm's coverage of LNB Bancorp with a "Market Perform" rating and a $7.00 price target, saying that TARP remains an overhang, and the increase in the dividend rate on preferred shares held by the government "from 5% to 9% in December 2013 represents a significant earnings event."
Barber said that he expects "LNB to continue building capital as our current estimates assume the company organically increases its tangible common equity (TCE) ratio over 6% by mid-2013 from 5.7% in 1Q12," adding that he believes "the company will be patient in its approach towards redeeming TARP; however, all strategic options remain on the table."
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