NORTH ANDOVER, MA (the "Corporation" or the "Company") today
announced fourth quarter 2007 net income of $1.1 million, or $0.24
per diluted share, as compared to net income of $1.0 million, or
$0.22 per diluted share, for the fourth quarter of 2006. Net income
for the year ended December 31, 2007, totaled $3.7 million, or
$0.81 per diluted share, as compared to net income of $126,000, or
$0.03 per diluted share, for the year-to-date period ended December
31, 2006.
The largest factors in the annual results for 2006 were the
balance sheet restructuring whereby $80 million of investments were
sold at a pre-tax loss of $2.4 million (after-tax charge of $1.6
million, or $0.35 per diluted share) accompanied by other costs
incurred in 2006 relating to the name change of the Company's
subsidiary bank to River Bank and former employee severance
payments; the combination of which totaled approximately $1.2
million on a pre-tax basis (after-tax charge of $780,000, or $0.17
per diluted share).
The results in the fourth quarter of 2007 reflect the final
settlement gain of $405,000 recorded in connection with the pension
plan termination announced in October 2006 as compared to a
curtailment gain of $602,000 incurred in the fourth quarter of
2006. The pre-tax settlement gain is due to the reversal of the
accrued pension liability. Partially offsetting the settlement
gain, the Company recorded a provision for loan losses of $180,000
in the fourth quarter of 2007 as compared to a provision of
$100,000 recorded for the fourth quarter of 2006. The increase in
the provision for loan losses in 2007 is due to the continued,
sustained corporate loan growth rather than credit quality
deterioration.
The Company's net interest margin increased to 2.72% for the
2007 year compared to 2.68% for 2006. This increase reflects the
Company's continued success in generating new loan growth and
replacing maturing investments with higher-yielding loans. However,
the Company expects that the current interest rate levels and
fierce competition for retail deposits will continue to exert
pressures on its deposit and borrowing costs, which will likely
decrease the Company's net interest margin in future periods. For
the fourth quarter of 2007, the Company's net interest margin was
2.58% as compared to 2.72% for the comparable period of 2006.
Total assets increased $78.7 million from December 31, 2006 to
$621.7 million as of December 31, 2007. The 2007 increase primarily
reflected the strong loan growth and an increase in the investment
portfolio.
Total loans were $358.1 million as of December 31, 2007, for an
increase of $70.0 million from December 31, 2006. The growth was
primarily in the corporate loan portfolio, which increased 29% over
the same time period. As of December 31, 2007, non-performing loans
equaled 0.43% of total loans while the allowance for loan losses as
a proportion of total loans equaled 1.34% as compared to 0.37% and
1.50%, respectively, as of December 31, 2006.
Total deposits increased $26.4 million from December 31, 2006
and totaled $322.1 million as of December 31, 2007. Due to
aggressive promotional campaigns targeting new customers,
certificates of deposit increased 23.3% from December 31, 2006.
Money market investment accounts and NOW accounts increased
modestly offset by decreases in savings accounts and demand deposit
accounts. Brokered certificates of deposit totaled $5.5 million at
December 31, 2007. Total borrowed funds increased during the twelve
months of 2007 by $50.6 million or 27.4% and totaled $235.4 million
as of December 31, 2007.
President and CEO Gerald T. Mulligan stated, "Our improvement in
annual results for 2007 was due to many factors including a
decrease in non-interest expenses, higher fee income on our deposit
accounts and increases in the total yield on earning assets to
6.22% in 2007 from 5.63% in 2006. Offsetting the progress in
improving the yield on total assets was a significant increase in
the cost of funds from 3.41% in 2006 to 4.03% in 2007. Presently,
deposit rate competition, mostly from large national competitors,
is keeping deposit costs from falling as rapidly as asset yields
which are generally tied directly to market indices. If those
conditions persist, deterioration in the net interest margin is
likely. While much of the industry is experiencing credit concerns,
I am heartened by the low level of non-performing loans at the Bank
and the continued strong level of allowance coverage at 1.34% of
total loans."
The Company also announced today a quarterly cash dividend of
$0.14 to be paid on February 21, 2008 to shareholders of record as
of February 7, 2008. This dividend represents a 3.5% annualized
dividend yield based on the closing stock price of $16.00 on
December 31, 2007.
Under the previously approved common stock repurchase program,
the Company has repurchased 90,356 shares, or approximately 40% of
its targeted goal, of the Company's outstanding common stock since
the program's inception at an average cost of $16.19 per share. The
timing and amount of future stock repurchases will depend upon
market conditions, securities law limitations and other corporate
considerations; the Company has placed no deadline on the duration
of the repurchase program.
Press releases and SEC filings can be viewed on the internet at
our website www.RiverBk.com/press-main.html or
www.RiverBk.com/stockholder-info.html, respectively.
LSB Corporation is a Massachusetts corporation that conducts all
of its operations through its sole subsidiary, River Bank (the
"Bank"). The Bank offers a range of commercial and consumer loan
and deposit products and is headquartered at 30 Massachusetts
Avenue, North Andover, Massachusetts, approximately 25 miles north
of Boston. River Bank operates 5 full-service banking offices in
Massachusetts in Andover, Lawrence, Methuen (2) and North Andover
and 1 full-service banking office in Salem, New Hampshire.
The reader is cautioned that this press release may contain
certain statements that are "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements are expressions of management's
expectations as of the date of this press release regarding future
events or trends and which do not relate to historical matters.
Such expectations may or may not be realized, depending on a number
of variable factors, including but not limited to, changes in
interest rates, changes in real estate valuations, general economic
conditions (either nationally or regionally), regulatory
considerations and competition. For more information about these
factors, please see our recent Annual Report on Form 10-K on file
with the SEC, including the sections entitled "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations". As a result of such risk factors and
uncertainties, the Company's actual results may differ materially
from such forward-looking statements. The Company does not
undertake and specifically disclaims any obligation to publicly
release updates or revisions to any such forward-looking statements
as a result of new information, future events or otherwise.
LSB Corporation
Select Financial Data
(unaudited)
Three months ended Twelve months ended
-------------------- --------------------
(At or for the periods ending) Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006
--------- --------- --------- ---------
Performance ratios (annualized):
Efficiency ratio 65.84% 75.41% 67.00% 85.66%
Return on average assets 0.70% 0.74% 0.64% 0.02%
Return on average stockholders'
equity 7.29% 6.93% 6.35% 0.22%
Net interest margin 2.58% 2.72% 2.72% 2.68%
Interest rate spread (int.
bearing only) 2.09% 2.13% 2.19% 2.22%
Dividends paid per share during
period $ 0.14 $ 0.14 $ 0.56 $ 0.56
(At) Dec. 31, 2007 Dec. 31, 2006
------------- -------------
Capital Ratio:
Stockholders' equity to total assets 9.70% 10.78%
Leverage ratio 9.72% 11.18%
Risk Based Capital Ratio:
Tier one 13.45% 15.73%
Total risk based 14.53% 16.86%
Asset Quality:
Allowance for loan losses as a percent of
total loans 1.34% 1.50%
Non-performing loans as a percent of total loans 0.43% 0.37%
Per Share Data:
Book value per share $ 13.35 $ 12.74
Tangible book value per share (excludes
accumulated other comp. income or loss) $ 13.26 $ 13.05
Market value per share $ 16.00 $ 16.57
LSB Corporation
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
(At) Dec. 31, 2007 Dec. 31, 2006
------------- -------------
Retail loans $ 103,796 $ 91,190
Corporate loans 254,317 196,973
------------- -------------
Total loans 358,113 288,163
------------- -------------
Allowance for loan losses (4,810) (4,309)
------------- -------------
Investments available for sale 230,596 218,682
FHLB stock 10,185 10,046
------------- -------------
Total investments 240,781 228,728
Federal funds sold 56 11,871
Other assets 27,511 18,512
------------- -------------
Total assets $ 621,651 $ 542,965
============= =============
Deposits $ 322,083 $ 295,662
Borrowed funds 235,351 184,782
Other liabilities 3,919 3,990
------------- -------------
Total liabilities 561,353 484,434
------------- -------------
Common stock 452 459
Additional paid-in capital 60,382 61,578
Retained earnings (loss) (934) (2,090)
Accumulated other comprehensive income (loss) 398 (1,416)
------------- -------------
Total stockholders' equity 60,298 58,531
------------- -------------
Total liabilities and stockholders' equity $ 621,651 $ 542,965
============= =============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
Three months ended Twelve months ended
------------------- -------------------
(For the period ended) Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2007 2006 2007 2006
--------- --------- --------- ---------
Interest income $ 9,304 $ 7,821 $ 35,008 $ 28,956
Interest expense 5,432 4,253 19,681 15,160
--------- --------- --------- ---------
Net interest income 3,872 3,568 15,327 13,796
Provision for loan losses 180 100 645 160
--------- --------- --------- ---------
Net interest income after provision
for loan losses 3,692 3,468 14,682 13,636
Loss on sale of investments -- -- -- (2,417)
Gains on pension plan termination 405 602 762 602
Other non-interest income 566 410 1,922 1,410
Salary & employee benefits expense 1,739 1,739 6,836 7,399
Other non-interest expense 1,183 1,261 4,721 5,621
--------- --------- --------- ---------
Total non-interest expense 2,922 3,000 11,557 13,020
Net income before income tax expense 1,741 1,480 5,809 211
Income tax expense 651 480 2,091 85
--------- --------- --------- ---------
Net income $ 1,090 $ 1,000 $ 3,718 $ 126
========= ========= ========= =========
Basic earnings per share $ 0.24 $ 0.22 $ 0.81 $ 0.03
Diluted earnings per share $ 0.24 $ 0.22 $ 0.81 $ 0.03
End of period shares outstanding 4,516,561 4,593,617 4,516,561 4,593,617
Average shares outstanding:
Basic 4,527,750 4,576,834 4,575,197 4,543,251
Diluted 4,553,121 4,609,059 4,602,706 4,600,765
CONTACT: Gerald T. Mulligan President & CEO (978)
725-7555
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