LNB Bancorp, Inc. ( NASDAQ: LNBB) announced today that it has 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, $1,000 per share liquidation preference (“Series B Preferred Stock”) held by certain holders of the Series B Preferred Stock 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 Series B Preferred Stock at a price of 100% of par value, or $1,000 per share.
Following the completion of the exchange, approximately $9.2 million in par value of the Series B Preferred Stock remains outstanding. The Series B Preferred Stock was originally issued by LNB in December 2008 as part of the U.S. Department of the Treasury’s Capital Purchase Program. The Treasury sold all of the Series B Preferred Stock to private investors through a modified Dutch auction that was completed in June 2012.
Daniel E. Klimas, president and chief executive officer commented, “This is the latest step in our intention to eventually repurchase or redeem all of the Series B Preferred Stock that was originally issued to the Treasury. This transaction is consistent with our stated intention to carefully balance our need to maintain a strong capital position with our objectives of building shareholder value and protecting the interests of our shareholders. While we continue to consider all of our alternatives for financing the retirement of the remaining Series B Preferred Stock, this transaction puts us in a position where we expect that our retained earnings can play a more significant role in the funding of any redemption or repurchasing activity going forward.”
At December 31, 2012, the Company had a tangible common equity ratio of 5.98%, which increases to 6.82% on a pro-forma basis after giving effect to the exchange. In addition, the Company expects to save $487,000 in dividends that otherwise would have been payable on the Series B Preferred Stock during 2013, as a result of the aforementioned repurchase and exchange.