MASB Massbank Corp Read Mass (MM)

MASSBANK Corp. (NASDAQ - MASB), the Holding Company for MASSBANK, today reported net income of $1,810,000 or $0.41 in diluted earnings per share for the first quarter 2006, compared with net income of $1,694,000 or $0.38 in diluted earnings per share in the first quarter of 2005. Basic earnings per share in the recent quarter were $0.42 per share compared to $0.39 per share in the first quarter of last year. This is the Company's fourth consecutive quarter of year-over-year earnings per share increases. Income Statement Net interest income, the Company's core earnings, totaled $5,441,000 for the recent quarter, up $137,000 or 2.6% from the same quarter in 2005. This is the sixth consecutive quarter that the Company has reported a year-over-year improvement in net interest income. The net interest margin in the recent quarter improved 25 basis points to 2.53% from 2.28% in the first quarter of 2005. This is an increase of 11.0% over the same quarter last year. The Company continues to benefit from rising short-term interest rates. The Federal Reserve Bank Board's Federal Open Market Committee (FOMC) has raised the target rate for Federal Funds by 25 basis points eight times since the end of March 2005, increasing the rate from 2.75% to 4.75%. The existence of a flat yield curve environment (an environment where interest rates offered on assets with longer maturities differ little from rates offered on assets with shorter maturities) however, is making it increasingly difficult to improve the net interest margin. Return on average assets and return on average equity for the first quarter 2006 were 0.82% and 6.91%, respectively, up from 0.71% and 6.21% for the comparable quarter in 2005. Balance Sheet The Company's total assets decreased $81.0 million to $890.5 million at March 31, 2006 from $971.5 million at March 31, 2005. Deposits decreased $62.3 million or 7.4% year-over-year from $837.6 million at March 31, 2005 to $775.2 million at March 31, 2006 due to increased competition for deposits. Stockholders' equity was $104.1 million at March 31, 2006, representing a book value of $24.03 per share. This compares to $107.7 million at March 31, 2005 representing a book value of $24.43 per share. The Company's non-accrual loans are near historical lows totaling $130,000 at March 31, 2006 representing 0.06% of total loans. This compares to $128,000 representing 0.06% of total loans at March 31, 2005. At March 31, 2006, the Bank's allowance for loan losses totaled $1.247 million representing 0.56% of total loans compared to $1.253 million representing 0.54% of total loans at March 31, 2005. In addition, the Bank's allowance for loan losses on off-balance sheet credit exposures totaled $517,000 at March 31, 2006 compared to $605,000 a year earlier. This is intended to protect the bank against loan commitments made to customers that have not yet been drawn down. MASSBANK Corp. is the holding company for MASSBANK a Massachusetts chartered savings bank. The Bank operates fifteen banking offices in Reading, Chelmsford, Dracut, Everett, Lowell, Medford, Melrose, Stoneham, Tewksbury, Westford and Wilmington, providing a variety of deposit, lending and trust services. ADDITIONAL INFORMATION Dividend Declaration MASSBANK Corp. today announced a quarterly cash dividend on its common stock of $0.27 per share. This, the Company's seventy-ninth consecutive dividend, will be payable on May 19, 2006 to stockholders of record at the close of business on May 4, 2006. Stock Repurchase Program During the three months ended March 31, 2006, the Company continued the repurchase of its common stock by acquiring 12,500 shares in the open market. As of March 31, 2006 there were 110,217 shares available for repurchase in the current program. Annual Meeting of Stockholders At the Annual Meeting of Stockholders of MASSBANK Corp. held today, stockholders voted affirmatively to elect Allan S. Bufferd, Kathleen M. Camilli, Stephen W. Carr and Nancy L. Pettinelli to serve as Directors of the Company until the 2009 Annual Meeting of Stockholders. Cautionary Statement This press release may contain forward-looking information, including information concerning the Company's expectations of future business prospects. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results or performance to be materially different from the results and performance expressed or implied by the forward-looking statements. Forward looking statements include, but are not limited to, statements concerning the Company's belief, expectations or intentions concerning the Company's future performance, the financial outlook of the markets it serves and the performance and activities of its competitors. These statements reflect the Company's current views. They are based on numerous assumptions and are subject to numerous risks and uncertainties, including the strength of the local economy and the U.S. economy in general, unexpected fluctuations in market interest rates, unexpected fluctuations in the markets for equities, bonds, federal funds and other financial instruments, an increase in the level of non-performing assets, an increase in competitive pricing pressures within the Company's market, adverse legislative or regulatory developments, a significant decline in residential real estate values in the Company's market area, adverse impacts resulting from the continuing war on terrorism, an increase in other employee-related costs, the impact of deflation or inflation, and other factors described in the Company's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2005. For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192. -0- *T MASSBANK CORP. FINANCIAL HIGHLIGHTS ($ in thousands except share date) Three Months Ended March 31, 2006 2005 ---------- ---------- For the Period Ended Total interest and dividend income $ 9,801 $ 8,765 Total interest expense 4,360 3,461 ------------------------ Net interest income 5,441 5,304 Provision (credit) for loan losses -- (53) ------------------------ Net interest income after provision (credit) for loan losses 5,441 5,357 Gains (losses) on securities, net 251 (56) Other non-interest income 347 253 Non-interest expense 3,294 3,031 Income tax expense 935 829 ------------------------ Net income $ 1,810 $ 1,694 Weighted Average Common Shares Outstanding Basic 4,339,812 4,399,798 Diluted 4,376,936 4,469,753 Per Common Share Earnings: Basic $ 0.42 $ 0.39 Diluted 0.41 0.38 Cash dividends paid 0.27 0.26 Book value (period end) 24.03 24.43 Ratios (1) Return on average assets 0.82 % 0.71 % Return on average equity 6.91 6.21 Net interest margin 2.53 2.28 Total equity to assets (period end) 11.69 11.08 At March 31, 2006 2005 ----------- ----------- At Period End Assets $ 890,509 $ 971,475 Deposits 775,232 837,581 Total loans 222,260 230,301 Stockholders' equity $ 104,121 $ 107,678 Common shares outstanding 4,333,629 4,407,292 Asset Quality Non-accrual loans $ 130 $ 128 Real estate acquired through foreclosure -- -- ----------- ----------- Total non-performing assets $ 130 $ 128 Allowance for loan losses $ 1,247 $ 1,253 Non-accrual loans to total loans 0.06 % 0.06 % (1) Ratios are presented on an annualized basis with the exception of equity to assets. MASSBANK CORP. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) ($ in thousands except share data) At At March 31, March 31, 2006 2005 --------- --------- Assets: Cash and due from banks $ 9,623 $ 9,748 Interest-bearing deposits in banks 644 2,066 Federal funds sold 167,394 198,926 Debt securities available for sale: Mortgage-backed securities 134,928 128,132 Other securities 307,755 310,412 Equity securities available for sale 7,688 7,646 Mortgage-backed securities held-to-maturity 5,910 4,859 Trading securities 8,833 41,317 Loans: Mortgage loans 212,623 220,352 Other loans 9,637 9,949 ---------------------------------------------------------------------- Total loans 222,260 230,301 Allowance for loan losses (1,247) (1,253) ---------------------------------------------------------------------- Net loans 221,013 229,048 Premises and equipment 6,938 6,332 Accrued interest receivable 4,663 4,056 Goodwill 1,090 1,090 Deferred income tax asset, net 4,228 2,436 Other assets 9,802 25,407 ---------------------------------------------------------------------- Total assets $ 890,509 $ 971,475 ---------------------------------------------------------------------- Liabilities and Stockholders' Equity Deposits: Demand and NOW $ 84,188 $ 85,267 Savings 414,408 534,068 Time certificates of deposit 276,636 218,246 ---------------------------------------------------------------------- Total deposits 775,232 837,581 Escrow deposits of borrowers 1,031 988 Accrued income taxes, net 637 120 Allowance for loan losses on off-balance sheet credit exposures 517 605 Other liabilities 8,971 24,503 ---------------------------------------------------------------------- Total liabilities 786,388 863,797 Stockholders' equity: Preferred stock, par value $1.00 per share; 2,000,000 shares authorized, none issued -- -- Common stock, par value $1,00 per share; 10,000,000 shares authorized, 7,829,292 and 7,773,055 shares issued, respectively 7,829 7,773 Additional paid-in capital 57,397 56,175 Retained earnings 105,380 102,555 ---------------------------------------------------------------------- 170,606 166,503 Treasury stock at cost 3,495,663 and 3,365,763 shares, respectively (61,692) (57,206) Accumulated other comprehensive loss: Net unrealized losses on securities available for sale, net of tax effect (4,793) (1,619) Shares held in rabbi trust at cost 15,644 and 14,744 shares,respectively (351) (321) Deferred compensation obligation 351 321 ---------------------------------------------------------------------- Total stockholders' equity 104,121 107,678 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $ 890,509 $ 971,475 ---------------------------------------------------------------------- MASSBANK CORP. AND SUBSIDIARIES Consolidated Statements of Income ($ in thousands except share data) Three Months Ended At At March 31, March 31, 2006 2005 ---------- ---------- Interest and dividend income: Mortgage loans $ 2,890 $ 3,112 Other loans 180 162 Securities available for sale: Mortgage-backed securities 1,798 1,718 Other securities 2,844 2,315 Mortgage -backed securities held-to- maturity 79 62 Trading securities 82 248 Federal funds sold 1,922 1,130 Other investments 6 18 ---------------------------------------------------------------------- Total interest and dividend income 9,801 8,765 ---------------------------------------------------------------------- Interest expense: Deposits 4,360 3,461 ---------------------------------------------------------------------- Total interest expense 4,360 3,461 ---------------------------------------------------------------------- Net interest income 5,441 5,304 Provision (credit) for loan losses -- (53) ---------------------------------------------------------------------- Net interest income after provision (credit) for loan losses 5,441 5,357 ---------------------------------------------------------------------- Non-interest income: Deposit account service fees 90 100 Gains on securities available for sale, net 238 58 Gains (losses) on trading securities, net 13 (114) Deferred compensation plan income (loss) 71 (12) Other 186 165 ---------------------------------------------------------------------- Total non-interest income 598 197 ---------------------------------------------------------------------- Non-interest expense: Salaries and employee benefits 1,868 1,772 Deferred compensation plan expense 92 3 Occupancy and equipment 602 599 Data processing 143 141 Professional services 168 130 Advertising and marketing 37 20 Deposit insurance 34 38 Other 350 328 ---------------------------------------------------------------------- Total non-interest expense 3,294 3,031 ---------------------------------------------------------------------- Income before income taxes 2,745 2,523 Income tax expense 935 829 ---------------------------------------------------------------------- Net income $ 1,810 $ 1,694 ---------------------------------------------------------------------- Weighted average common shares outstanding: Basic 4,339,812 4,399,798 Diluted 4,376,936 4,469,753 Earnings per share (in dollars): Basic $ 0.42 $ 0.39 Diluted 0.41 0.38 *T