LNB Bancorp, Inc. (NASDAQ: LNBB) announced today that it plans to retire the remaining 9,147 shares of its fixed rate cumulative perpetual preferred stock, Series B (“Series B Preferred Stock”). 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.
In connection with funding the retirement of Series B Preferred Stock, LNB announced today that it has completed the sale of newly issued LNB common shares to certain institutional investors, other third-party investors and certain directors of LNB in a private placement for approximately $3.68 million in gross proceeds. LNB issued an aggregate of 367,321 of its common shares at a price of $9.91 per share to the third-party investors and $10.30 per share to the directors. LNB intends to repurchase and/or redeem all of its remaining outstanding shares of Series B Preferred stock prior to February 15, 2014 using the proceeds of the private placement along with cash from approximately $3,000,000 in borrowings under a line of credit with an unaffiliated financial institution and from LNB’s accumulated earnings and excess capital. This announcement is not a notice of redemption under the terms of the Series B Preferred Stock. Any such notice, should LNB choose to exercise its redemption rights under the Series B Preferred Stock, will be issued and announced separately.
Daniel E. Klimas, president and chief executive officer, commented, “We are excited that we are in the final steps of retiring the Series B Preferred Stock. When completed, we expect that these transactions will be accretive to both tangible book value per share and earnings per share. We believe that these transactions will strengthen LNB and position us for future growth.”
At September 30, 2013, the Company had a tangible common equity ratio of 6.46%, which increases to 6.77% on a pro-forma basis after the completion of the retirement of the Series B Preferred Stock. In addition, the Company expects to save approximately $777,500 in dividends that otherwise would have been payable on the Series B Preferred Stock during 2014.