LNCB Lincoln Bancorp Ind (MM)

PLAINFIELD, Ind., April 21 /PRNewswire-FirstCall/ -- Lincoln Bancorp (NASDAQ:LNCB) (the "Company"), the holding company of Lincoln Bank (the "Bank"), announced today that net income for the first quarter ended March 31, 2006 was $779,000, or $.15 for both basic and diluted earnings per share. This compared to net income for the comparable period in 2005 of $979,000, or $.20 for basic and $.19 diluted earnings per share. Return on assets was .36% and return on equity was 3.09% for the first quarter of 2006 compared to .48% and 3.80%, respectively, for the same period last year. Assets totaled $867.9 million at March 31, 2006, an increase from December 31, 2005 of $23.4 million. The increase in assets occurred in net loans, up $9.2 million, and investment securities available for sale, up $14.1 million. Loan growth was experienced in residential mortgage loans, up $9.3 million, and commercial loans, up $3.2 million. This growth was partially offset by a decline in home equity loans, down $2.4 million from the end of 2005 through the end of the first quarter in 2006. Total deposits were $637.5 million at March 31, 2006, an increase of $36.9 million from the $600.6 million at December 31, 2005. Growth occurred in money market deposits, up $15.0 million, savings accounts, up $22.5 million and certificates of deposit, up $9.7 million, while noninterest bearing deposits declined by $4.0 million and interest bearing demand deposits declined by $6.3 million. The growth occurred as customers shifted funds into our higher competitively priced money market and premium savings deposits and shorter term certificate of deposit specials. Borrowed funds declined by $15.1 million from year end 2005 to $122.1 million at March 31, 2006. The increased deposit growth provided an opportunity to repay some of our Federal Home Loan Bank debt. Net interest income for the first quarter of 2006 was $5,593,000 compared to $5,567,000 for the same period in 2005. Net interest margin was 2.81% for the three-month period ended March 31, 2006 compared to 3.00% for the same period in 2005. The average yield on earning assets increased 58 basis points in the first quarter 2006 compared to the same period in 2005 while the average cost of interest-bearing liabilities increased 88 basis points for the same period. This decreased the interest rate spread from 2.71% at March 31, 2005 to 2.41% at March 31, 2006, or 30 basis points. The Bank faced a narrowing net interest margin and decreasing interest rate spread as a flattening of the interest rate curve resulted in repricing our shorter term deposits upward while longer term loans and investments repriced at a slower pace. This is reflected by the fact that the 3-month Treasury bill yields increased from 2.76% to 4.60%, up nearly 184 basis points from March 31, 2005 to March 31, 2006, while the 30-year Treasury note was up only about 14 basis points for the same period from 4.75% to 4.89%. The prime rate increased 200 basis points during the same period from 5.75% to 7.75%, but many commercial customer notes priced on the prime rate have repricing terms longer than one year reflecting the slower pace of increase in the yield of our loan portfolio. The Bank's provision for loan losses for the first quarter of 2006 was $235,000 compared to $14,000 for the same period in 2005. Nonperforming loans to total loans at March 31, 2006 decreased slightly to .54% from .59% at December 31, 2005. Nonperforming assets to total assets were .45% at March 31, 2006 and .45% at December 31, 2005. The allowance for loan losses as a percent of loans was .96% at March 31, 2006 compared to .97% at December 31, 2005. During the first quarter of 2006, the Bank recognized $222,000 in net charged-off loans compared to a $31,000 net recovery of previously charged-off loans in the first quarter of 2005. Other income for the three months ended March 31, 2006 was $1,198,000 compared to $1,226,000 for the same quarter of 2005. The most significant change from the first quarter of 2005 to the first quarter of 2006 was a $160,000 decrease in net gains on sales of loans to $55,000 in 2006 from $215,000 in 2005. The decrease was the result of fewer sales of loans during the first quarter of 2006 as a result of the Bank placing nearly all residential real estate mortgage loan production into the loan portfolio versus selling this production in the mortgage market. Other expenses were $5,581,000 for the three months ended March 31, 2006 compared to $5,505,000 for the same three months of 2005. The largest increase was in salaries and employee benefits totaling $2,812,000 for the first quarter of 2006 compared to $2,635,000 during the same quarter of 2005, an increase of $177,000. The primary reason for the increase was due to the increase of full-time equivalent employees from 221 during the first quarter of 2005 to 235 during the same quarter of 2006. Also, professional fees increased $102,000 for the quarter to $226,000 for the three months ending March 31, 2006 from $124,000 for the same quarter in 2005. Most of this increase related to higher collection expenses and regulatory compliance issues. Other expenses decreased $223,000 for the first quarter of 2006 from $913,000 compared to $690,000. Reductions in the following expense categories represented the majority of this change: amortization of mortgage servicing rights, OREO expense, office supplies and telephone expenses. The effective Income tax rate was approximately 20% and 23% of pretax income for the first quarter of 2006 and 2005, respectively. The book value of Lincoln Bancorp common stock was $18.46 per share at March 31, 2006 compared to $18.55 at December 31, 2005. Lincoln Bancorp and Lincoln Bank are headquartered in Plainfield, Indiana with additional offices in Avon, Bargersville, Brownsburg, Crawfordsville, Frankfort, Franklin, Greenwood, Mooresville, Morgantown, Nashville and Trafalgar. Statements contained in this press release that are not historical facts may constitute forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended) which involve significant risks and uncertainties. The companies intend such forward-looking statements to be covered in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of invoking these safe harbor provisions. The companies' ability to predict results or the actual effect of future plans or strategies is inherently uncertain and involves a number of risks and uncertainties, some of which have been set forth in the companies' most recent annual reports on Form 10-K, which disclosures are incorporated by reference herein. The fact that there are various risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. LINCOLN BANCORP SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY (Unaudited) (Dollars in Thousands, Except Per Share Amounts) March 31 December 31 2006 2005 Balance Sheet Data: Total assets $867,869 $844,454 Loans, net (including loans held for sale) 604,136 594,974 Cash and cash equivalents 16,335 16,736 Investment securities available for sale 165,713 151,565 Deposits 637,466 600,572 Borrowings 122,056 137,136 Stockholders' equity 99,659 99,940 Book value per common share $18.46 $18.55 Shares outstanding 5,398,828 5,386,153 Equity to assets 11.48% 11.83% Non-performing assets to total assets 0.45% 0.45% Non-performing loans to total loans 0.54% 0.59% Allowance for loan losses to total loans 0.96% 0.97% Three Months Ended March 31 2006 2005 Operating Data: Interest Income: Loans $9,736 $8,741 Investment securities 1,924 1,186 Deposits with financial institutions and federal funds sold 208 72 Dividend income 136 110 Total interest income 12,004 10,109 Interest Expense: Deposits 5,034 2,516 Borrowings 1,377 2,026 Total interest expense 6,411 4,542 Net Interest Income 5,593 5,567 Provision for loan losses 235 14 Net Interest Income After Provision for Loan Losses 5,358 5,553 Other Income: Service charges on deposit accounts 488 457 Net gains on sales of loans 55 215 Net realized gains (losses) on sale of available for sale securities 4 - Equity in income (losses) of limited partnership 41 (45) Point of sale income 167 119 Loan servicing fees 90 106 Increase in cash value of life insurance 162 226 Other 191 148 Total other income 1,198 1,226 Other Expenses: Salaries and employee benefits 2,812 2,635 Net occupancy expenses 535 438 Equipment expenses 372 409 Data processing expense 632 622 Professional fees 226 124 Advertising and business development 152 171 Core deposit intangible amortization 162 193 Other 690 913 Total other expenses 5,581 5,505 Income before income taxes 975 1,274 Income taxes 196 295 Net income $779 $979 Basic earnings per share $0.15 $0.20 Diluted earnings per share $0.15 $0.19 Other Data: Interest rate spread 2.41% 2.71% Net interest margin 2.81% 3.00% Return on average assets 0.36% 0.48% Return on average equity 3.09% 3.80% DATASOURCE: Lincoln Bancorp CONTACT: Jerry R. Engle, President / CEO of Lincoln Bancorp, +1-317-839-6539 Web site: http://www.lincolnbankonline.com/

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