Newbridge Bancorp (NBBC) 8-K LSB Bancshares Reports 3rd Quarter Financial Results

	News Release
	LSBTheBank —P.O. Box 867
	Lexington, NC 27293-0867 — www.lsbnc.com

For Immediate Release

CONTACT: Monty J. Oliver, EVP & CFO; 336-242-6207 or 336-248-6500 or 1-800-876-6505, ext. 207

LSB Bancshares Reports 3rd Quarter Financial Results

     LEXINGTON, N.C., October 14, 2004 — LSB Bancshares, Inc. (Nasdaq: LXBK), parent company of Lexington State Bank, reported net income in the third quarter of 2004 of $1,777,000, or $0.21 per diluted share, compared to $2,525,000, or $0.29 per diluted share, in the third quarter of 2003.

     The decline in earnings was primarily due to lower net interest income, a higher provision for loan losses and a decline in noninterest income, the latter of which reflected the ongoing slowdown in mortgage origination activity. Net interest income decreased 4% to $9,788,000 in the third quarter of 2004 from $10,147,000 in the year-ago period, all of which was due to lower margins, as average earning assets increased. The provision for loan losses was $1,104,000 in 2004’s third quarter, up 32% from $839,000 in the third quarter of 2003, while noninterest income decreased 8% to $3,540,000 in 2004’s third quarter versus $3,838,000 in the year-ago quarter. Excluding gains on the sale of mortgages, noninterest income would have declined less than 1% in the third quarter relative to the year-ago level.

     For the nine months ended September 30, 2004, net income was $6,166,000, or $0.72 per diluted share, compared to $7,776,000, or $0.91 per diluted share, in the first nine months of 2003. Net interest income decreased 4% to $28,869,000 in the nine months ended September 30, 2004 versus the year-ago period. Noninterest income for the first nine months of the year, which included a nonrecurring gain on

the sale of real estate in the second quarter of 2004, decreased approximately 1% over this period. As was the case with the quarterly results, the decline in noninterest income was attributable to the slowdown in mortgage-related income. Noninterest expense was up 3%, while the provision for loan losses increased approximately 25% on a year-over-year basis.

     The Bank achieved year-over-year balance sheet growth in most key areas, and asset quality improved from the year-ago level. As of September 30, 2004, total assets were approximately $912 million, while deposits were $732 million and net loans were $694 million. Nonperforming assets, including nonaccruing loans, accruing loans more than 90 days past due, restructured loans and other real estate owned, decreased 8% to $5.7 million at September 30, 2004 from $6.2 million at the year-ago date. The reserve for loan losses at the end of 2004’s third quarter was $8,006,000 or 1.14% of loans. Shareholders’ equity totaled $90.2 million, and represented an equity-to-assets ratio of 9.9%.

     “Despite the lower earnings, there were a number of positives in the quarter,” said LSB Bancshares Chairman, President and CEO Robert F. Lowe. “For example, asset quality improved relative to the year-ago and prior sequential quarterly levels. Additionally, we were able to contain annual expense growth at 3%, despite normal cost pressures and the mounting regulatory burden from the Sarbanes-Oxley Act of 2002. The Bank completed a computer conversion in the third quarter, which should improve our long-term efficiency. Lowe concluded, “While margins are likely to remain tight near-term, we remain confident about our long-term opportunities for growth.”

     LSB Bancshares recently declared a quarterly dividend of $0.16 per share, which will be paid October 15, 2004 to shareholders of record as of October 1, 2004.

     Lexington State Bank, which opened on July 5, 1949, is a community bank based in the Piedmont region of North Carolina. The Bank owns two subsidiaries: LSB Investment Services, Inc., which offers non-deposit, non-insured investment

alternatives such as mutual funds and annuities; and Peoples Finance Co. of Lexington, Inc., which offers small loans and dealer financing.

     Common stock of the bank’s parent company, LSB Bancshares, Inc., is traded on the National Market and is quoted electronically under the NASDAQ symbol LXBK. The LSB website, which links online banking users to LSB By Net, is www.lsbnc.com.

     Market makers include: Davenport & Company LLC; Friedman Billings Ramsey & Co.; FTN Midwest Research Secs.; Goldman, Sachs & Co.; Keefe, Bruyette & Woods, Inc.; Morgan Keegan & Co., Inc.; Morgan Stanley & Co., Inc.; Moors & Cabot, Inc.; The Robinson Humphrey Co.; Sandler O’Neill & Partners, and Schwab Capital Markets.

(END)

Information in this press release contains forward-looking statements. These statements are identified by words such as “expects,” “anticipates,” “should,” or other similar statements about future events. These forward-looking statements involve estimates, assumptions by management, risks, and uncertainties that could cause actual results to differ materially from current projections, including without limitations, the effects of future economic conditions, legislative and regulatory changes, and the effects of competition. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in LSB’s filings with the Securities and Exchange Commission, including without limitation, its annual report on Form 10-K, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. LSB undertakes no obligations to revise these statements following the date of this news release.

LSB Bancshares, Inc.
Consolidated Balance Sheets
(In Thousands)

	September 30
	2004			2003
Assets
Cash and Due from Banks	$	38,581		$	42,265
Interest-Bearing Bank Balances		1,222			3,113
Federal Funds Sold		20,206			15,302
Investment Securities:
Held to Maturity, at Amortized Cost		28,541			36,798
Available for Sale, at Market Value		99,533			97,132
Loans		701,961			673,719
Less, Reserve for Loan Losses		(8,006	)		(7,795	)
Net Loans		693,955			665,924
Premises and Equipment		17,289			14,548
Other Assets		12,563			11,441
Total Assets	$	911,890		$	886,523
Liabilities
Deposits:
Demand	$	92,255		$	89,303
Savings, N.O.W. and Money Market Accounts		426,496			418,391
Certificates of Deposit of less than $100,000		118,403			131,751
Certificates of Deposit of $100,000 or more		95,279			82,409
Total Deposits		732,433			721,854
Securities Sold Under Agreements to Repurchase		1,307			1,688
Borrowings from the Federal Home Loan Bank		83,000			68,000
Other Liabilities		4,955			5,791
Total Liabilities		821,695			797,333
Shareholders’ Equity
Preferred Stock, Par Value $.01 Per Share:
Authorized 10,000,000 shares; none issued		0			0
Common Stock, Par Value $5 Per Share:
Authorized 50,000,000 Shares; Issued 8,579,468 Shares in 2004 and 8,535,255 Shares in 2003		42,897			42,676
Paid-In Capital		10,397			10,083
Directors’ Deferred Plan		(1,186	)		(1,095	)
Retained Earnings		37,754			36,267
Accumulated Other Comprehensive Income		333			1,259
Total Shareholders’ Equity		90,195			89,190
Total Liabilities and Shareholders’ Equity	$	911,890		$	886,523
Memorandum: Standby Letters of Credit	$	6,138		$	4,141

LSB Bancshares, Inc.
Consolidated Statements of Income
(In Thousands Except Share Data and Note)

	Three Months Ended				Nine Months Ended
	September 30				September 30
	2004		2003		2004		2003
Interest Income
Interest and Fees on Loans	$	11,068	$	11,318	$	32,510	$	34,151
Interest on Investment Securities:
Taxable		853		963		2,444		3,026
Tax Exempt		370		426		1,124		1,229
Interest-Bearing Bank Balances		41		35		127		133
Fed Funds Sold		71		46		156		207
Total Interest Income		12,403		12,788		36,361		38,746
Interest Expense
Deposits		1,783		1,853		5,025		6,319
Securities Sold Under Agreements to Repurchase		1		2		6		10
Borrowings for the Federal Home Loan Bank		831		786		2,461		2,330
Total Interest Expense		2,615		2,641		7,492		8,659
Net Interest Income		9,788		10,147		28,869		30,087
Provision for Loan Losses		1,104		839		2,396		1,913
Net Interest Income After Provision for Loan Losses		8,684		9,308		26,473		28,174
Noninterest Income
Service Charges on Deposit Accounts		1,875		1,824		5,381		5,147
Gains on Sales of Mortgages		133		403		390		1,140
Other Operating Income		1,532		1,611		5,014		4,615
Total Noninterest Income		3,540		3,838		10,785		10,902
Noninterest Expense
Personnel Expense		5,026		5,376		15,135		15,691
Occupancy Expense		437		440		1,317		1,218
Equipment Depreciation and Maintenance		615		549		1,708		1,523
Other Operating Expense		3,576		2,995		10,066		8,994
Total Noninterest Expense		9,654		9,360		28,226		27,426
Income Before Income Taxes		2,570		3,786		9,032		11,650
Income Taxes		793		1,261		2,866		3,874
Net Income	$	1,777	$	2,525	$	6,166	$	7,776
Earnings Per Share
Basic	$	0.21	$	0.30	$	0.72	$	0.91
Diluted	$	0.21	$	0.29	$	0.72	$	0.91
Weighted Average Shares Outstanding
Basic		8,579,468		8,534,255		8,573,443		8,506,558
Diluted		8,616,515		8,613,409		8,620,923		8,575,203

LSB Bancshares, Inc.
Financial Highlights
(In Thousands Except Ratios)

	Three Months Ended September 30
	2004			2003			Change
Financial Ratios
Return On Average Assets		0.79			1.14			(35	)BP
Return On Average Shareholders’ Equity		7.84			11.45			(361	)
Net Interest Margin (FTE):		4.76			4.95			(19	)
Average Balances
Loans	$	692,001		$	677,106			2.2	%
Earning Assets		840,742			829,096			1.4
Total Assets		899,907			887,536			1.4
Interest-Bearing Deposits		638,474			640,814			(0.4	)
Total Deposits		727,561			732,646			(0.7	)
Allowance For Loan Losses
Beginning Balance	$	8,112		$	7,724			5.0	%
Provision For Loan Losses		1,104			839			31.6
Loans Charged Off		(1,297	)		(954	)		36.0
Recoveries		87			186			(53.2	)
Ending Balance		8,006			7,795			2.7

LSB Bancshares, Inc.
Financial Highlights
(In Thousands Except Ratios)

	Nine Months Ended September 30
	2004			2003			Change
Financial Ratios
Return On Average Assets		0.93			1.18			(25	)BP
Return On Average Shareholders’ Equity		9.13			11.78			(265	)
Net Interest Margin (FTE):
Quarterly		4.76			4.95			(19	)
Year To Date		4.74			4.96			(22	)
Average Balances
Loans		683,490			662,927			3.1	%
Earning Assets		827,497			826,060			0.2
Total Assets		884,736			880,153			0.5
Interest-Bearing Deposits		627,630			637,236			(1.5	)
Total Deposits		713,745			724,125			(1.4	)
Allowance For Loan Losses
Beginning Balance		7,846			7,282			7.7	%
Provision For Loan Losses		2,396			1,913			25.2
Loans Charged Off		(2,861	)		(1,715	)		66.8
Recoveries		625			315			98.4
Ending Balance		8,006			7,795			2.7
Nonperforming Assets
Nonperforming Loans:
Past Due 90 Days Or More		1,728			1,375			25.7	%
Nonaccrual Loans		1,825			2,171			(15.9	)
Restructured Loans		588			1,136			(48.2	)
Total Nonperforming Loans		4,141			4,682			(11.6	)
Other Real Estate		1,577			1,550			1.7
Total Nonperforming Assets		5,718			6,232			(8.2	)
Asset Quality Ratios
Nonperforming Loans To Total Loans		0.81			0.93			(0.12	)BP
Nonperforming Loans To Total Assets		0.63			0.70			(0.07	)
Allowance For Loan Losses To Total Loans		1.14			1.16			(0.02	)
Net Charge-offs To Average Loans		0.33			0.21			0.12
Allowance For Loan Losses To Nonperforming Loans		1.93	x		1.66	x