LSB Corporation (NASDAQ: LSBX) (the "Company") today announced
second quarter 2010 net income of $1.6 million, or $0.35 per
diluted common share, as compared to $846,000, or $0.19 per diluted
common share, for the second quarter of 2009. Net income for the
six months ended June 30, 2010, totaled $3.1 million, or $0.70 per
diluted share versus $1.7 million, or $0.36 per diluted share, for
the same period of 2009. These quarterly results correspond to a
return on average assets and average equity of 0.80% and 10.26% in
the second quarter of 2010, respectively, as compared to 0.55% and
5.81% in the second quarter of 2009, respectively. These six months
results correspond to a return on average assets and average equity
of 0.78% and 10.24% in the first six months of 2010, respectively,
as compared to 0.53% and 5.64% for the first six months of 2009,
respectively. On July 15, 2010, the Company entered into an
Agreement and Plan of Merger with People's United Financial, Inc.
(NASDAQ: PBCT) to acquire the Company in an all-cash transaction
valued at $96 million, or $21.00 per share.
President and CEO Gerald T. Mulligan stated, "I am pleased to
report earnings of $0.35 per diluted share for the second quarter
of 2010. Despite the slowdown in the economy, we have been able to
sustain our growth, with loans and core deposits up 2% and 17%,
respectively, on an annualized basis. The focus on our community
banking strategy has been the key to our success.
"Especially gratifying is the stability in our delinquencies and
non-performing loans and the confidence we have in the
collectibility of the principal balances. There are two
relationships that received a debt modification in 2010 that will
continue to negatively impact the Bank. Unfortunately, as long as
the unemployment level remains high, we will continue to see
payment stress in our residential portfolio and are working with
these borrowers as needed.
"We are excited by the opportunities presented by our pending
merger with People's United. We look forward to the ability to
offer our retail customers an expanded array of products and
services and larger loan limits and other ancillary products for
our commercial customers.
"I am also pleased to announce the early August opening of our
new branch at 9 Jackson Street in Methuen which will greatly
enhance the customer experience with additional services and nearly
double the space of our old location."
At June 30, 2010, assets totaled $796.9 million, a decrease of
$19.7 million or 2.4% from December 31, 2009. The decline in total
assets was a measured effort to reduce wholesale funding amid
continued deposit growth. The Company experienced local loan growth
of $5.9 million or 1.1% from December 31, 2009. The corporate loan
portfolio increased by $1.1 million or 0.3% while the retail loan
portfolio increased by $4.8 million or 3.0%. This loan growth was
partially funded by maturities and regular amortization of
collateralized mortgage obligations and mortgage-backed securities
totaling $46.0 million and sales of investments of $25.6
million.
At June 30, 2010, deposits totaled $492.5 million, a slight
decrease of $247,000 from December 31, 2009. River Bank's focus on
attracting and retaining core deposits produced favorable results
in the first six months of 2010. Core deposits (savings, money
market, NOW and demand deposit accounts) increased by $10.6
million, $4.4 million, and $6.4 million, respectively, for a total
of $21.4 million or 8.5% from December 31, 2009. Certificates of
deposit decreased $21.7 million from December 31, 2009, including
matured brokered certificates of deposit of $8.9 million. Total
borrowed funds decreased by $23.0 million or 8.9% from December 31,
2009 and totaled $236.1 million at June 30, 2010. During the first
six months of 2010, $28.0 million in long-term advances matured and
the Company prepaid $5.0 million in long-term advances with a
penalty of $149,000.
Gains on sales of investments totaled $679,000 and $1.4 million
in the second quarter and first six months of 2010, respectively,
as compared to $232,000 and $458,000 in the second quarter and
first six months of 2009, respectively.
The Company's net interest margin increased to 2.79% for the six
months ended June 30, 2010, from 2.50% for the six months ended
June 30, 2009. The margin improvement was partially caused by a
shift in the mix of assets as higher yielding loans replaced
maturing investments and the replacement of higher-cost wholesale
funding with lower cost deposits.
At June 30, 2010, non-performing loans totaled $6.1 million and
1.12% of total loans as compared to $6.0 million and 1.12%,
respectively, as of December 31, 2009, and $4.8 million and 0.88%,
respectively, as of March 31, 2010. There was one loan for $1.2
million that moved from non-performing status as of year-end 2009
into performing status as of March 31, 2010, and back into
non-performing status as of June 30, 2010. Management believes that
the underlying collateral value is strong and an unrelated entity
with a security position inferior to ours is initiating foreclosure
on the property. Management anticipates full collection of
principal and interest. In addition, another non-performing loan
for $415,000 is protected by a guaranty by the SBA. Total loan
delinquencies under 90 days at June 30, 2010, amounted to $4.6
million as compared to $5.7 million at December 31, 2009, and $4.2
million as of March 31, 2010. The Company experienced further
strains in its residential mortgage portfolio and several
additional loans were past due as of June 30, 2010.
The allowance for loan losses in total and as a proportion of
total loans as of June 30, 2010, equaled $7.5 million and 1.38%,
respectively, as compared to $7.2 million and 1.34%, respectively,
as of December 31, 2009. The Company recorded a provision for loan
losses of $1.4 million in the first six months of 2010 as compared
to $700,000 in the first six months of 2009. The increase in the
provision for loan losses in 2010 is due to the higher level of
charge-offs coupled with continued loan growth. The Company
recorded a charge-off of $750,000 in the first six months of 2010
on one commercial construction loan that was foreclosed in July
2010 and the remaining balance of $1.2 million was transferred into
other real estate owned at that time. Annualized net loan
charge-offs as a percentage of average loans totaled 41 basis
points for the six months ended June 30, 2010, as compared to 8
basis points in the comparable period in 2009.
The Company also announced today a quarterly cash dividend of
$0.09 per share to be paid on August 19, 2010, to shareholders of
record as of August 5, 2010.
Press releases and SEC filings can be viewed on our website
www.RiverBk.com under the "About Us" tab.
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 2 full-service banking offices in New Hampshire in Derry and
Salem.
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.
Forward-looking statements include, but are not limited to,
statements concerning LSB Corporation's belief, expectations or
intentions concerning LSB Corporation's future performance and the
likelihood that the acquisition of LSB Corporation by People's
United Financial, Inc. (the "Acquisition") will in fact occur in a
timely manner. 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, competition, obtaining
regulatory approvals related to the Acquisition in a timely fasion,
obtaining the timely approval of LSB Corporation's shareholders for
the Acquisition, absence of a material adverse effect on LSB
Corporation, satisfaction of other conditions to the Acquisition
and timely closing of the Acquisition by both parties to the
Acquisition. For more information about these factors, please see
our recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q 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)
(Dollars in thousands, except per share data)
Three months ended Six months ended
---------------------------- ------------------
(For the periods ended) 06/30/10 03/31/10 06/30/09 06/30/10 06/30/09
Performance ratios
(annualized):
Efficiency ratio 58.38% 60.23% 65.60% 59.27% 68.42%
Return on average assets 0.80% 0.77% 0.55% 0.78% 0.53%
Return on average
stockholders equity 10.26% 10.22% 5.81% 10.24% 5.64%
Net interest margin 2.90% 2.69% 2.52% 2.79% 2.50%
Interest rate spread (int.
bearing only) 2.67% 2.44% 2.17% 2.55% 2.15%
Dividends paid per share $ 0.09 $ 0.07 $ 0.05 $ 0.16 $ 0.20
(At) 06/30/10 12/31/09 06/30/09
-------- -------- --------
"Well Capitalized"
Minimums
Capital Ratios:
Stockholders' equity to
total assets N/A 8.04% 7.41% 9.37%
RiverBank Tier 1 leverage
ratio 5.0% 7.25% 6.85% 8.14%
Risk-Based Capital Ratio:
LSB Corporation Tier 1
risk-based 6.0% 10.31% 9.74% 12.72%
RiverBank Tier 1 risk-based 6.0% 10.14% 9.57% 11.55%
RiverBank total risk-based 10.0% 12.44% 11.84% 12.73%
Asset Quality:
Non-performing loans $6,053 $6,003 $4,139
Non-performing assets 6,053 6,003 4,259
Delinquent loans past due 30-89 days 4,594 5,723 2,126
Net charge-offs (quarterly) 510 8 150
Allowance for loan losses as a percent
of total loans 1.38% 1.34% 1.28%
Allowance as a percent of non-performing
loans 123.36% 119.41% 154.60%
Non-performing loans as a percent of total
loans 1.12% 1.12% 0.82%
Non-performing assets as a percent of total
assets 0.76% 0.74% 0.54%
Net charge-offs to average loans (quarterly,
annualized) 0.38% 0.01% 0.12%
Per Share Data:
Book value per share (excluding CPP) $14.22 $13.43 $13.15
Tangible book value per share (excluding CPP) 13.11 12.57 12.22
LSB CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
(At) 06/30/10 03/31/10 12/31/09 06/30/09
-------- -------- -------- --------
Retail loans $163,865 $162,257 $159,101 $150,194
Corporate loans 378,648 382,196 377,518 351,552
-------- -------- -------- --------
Total loans 542,513 544,453 536,619 501,746
-------- -------- -------- --------
Allowance for loan losses (7,467) (7,277) (7,168) (6,399)
-------- -------- -------- --------
Investments available for sale 202,270 206,450 230,533 228,920
FHLB stock 11,825 11,825 11,825 11,825
-------- -------- -------- --------
Total investments 214,095 218,275 242,358 240,745
-------- -------- -------- --------
Federal funds sold 10,222 13,423 6,597 17,916
Other assets 37,554 37,693 38,192 34,146
-------- -------- -------- --------
Total assets $796,917 $806,567 $816,598 $788,154
======== ======== ======== ========
Core deposits $273,805 $277,762 $252,389 $202,029
Term deposits 218,742 226,556 240,405 246,702
-------- -------- -------- --------
Total deposits 492,547 504,318 492,794 448,731
-------- -------- -------- --------
Borrowed funds 236,098 236,025 259,082 261,194
Other liabilities 4,185 4,185 4,202 4,385
-------- -------- -------- --------
Total liabilities 732,830 744,528 756,078 714,310
-------- -------- -------- --------
Total stockholders' equity 64,087 62,039 60,520 73,844
-------- -------- -------- --------
Total liabilities and stockholders'
equity $796,917 $806,567 $816,598 $788,154
======== ======== ======== ========
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(unaudited)
Three months ended Six months ended
----------------------------- ------------------
(For the periods ended) 06/30/10 03/31/10 06/30/09 06/30/10 06/30/09
--------- --------- --------- -------- ---------
Interest income $ 9,979 $ 10,093 $ 10,087 $ 20,072 $ 20,132
Interest expense 4,374 4,858 5,359 9,232 10,832
--------- --------- --------- -------- ---------
Net interest income 5,605 5,235 4,728 10,840 9,300
Provision for loan losses 700 700 460 1,400 700
--------- --------- --------- -------- ---------
Net interest income after
provision for loan losses 4,905 4,535 4,268 9,440 8,600
Gain on sales of
investments 679 697 232 1,376 458
Prepayment penalty on FHLB
advances -- (149) -- (149) --
Other non-interest income 559 543 542 1,102 1,047
Salary & employee benefits
expense 1,929 1,816 1,627 3,745 3,370
FDIC deposit insurance
premium 200 211 369 411 760
Other non-interest expense 1,469 1,453 1,461 2,922 2,949
--------- --------- --------- -------- ---------
Total non-interest
expense 3,598 3,480 3,457 7,078 7,079
--------- --------- --------- -------- ---------
Net income before income
taxes 2,545 2,146 1,585 4,691 3,026
Income tax expense 946 600 524 1,546 1,001
--------- --------- --------- -------- ---------
Net income before preferred
stock dividends and
accretion 1,599 1,546 1,061 3,145 2,025
Preferred stock dividends
and accretion -- -- (215) -- (374)
--------- --------- --------- -------- ---------
Net income available to
common shareholders $ 1,599 $ 1,546 $ 846 $ 3,145 $ 1,651
========= ========= ========= ========= =========
Basic earnings per common
share $ 0.35 $ 0.34 $ 0.19 $ 0.70 $ 0.36
Diluted earnings per
common share $ 0.35 $ 0.34 $ 0.19 $ 0.70 $ 0.36
End of period common
shares outstanding 4,506,686 4,506,686 4,474,286 4,506,686 4,474,286
Weighted average common
shares outstanding:
Basic 4,506,686 4,506,686 4,471,382 4,506,686 4,471,163
Diluted 4,510,224 4,509,011 4,473,065 4,509,621 4,472,045
CONTACT: Gerald T. Mulligan President & CEO (978)
725-7555
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