EXHIBIT 99.1
LSB Bancshares Reports 2nd Quarter Financial Results
LEXINGTON, N.C., July 15, 2005 — LSB Bancshares, Inc. (Nasdaq: LXBK), parent company of Lexington State Bank, reported net income in the second quarter of 2005 of $2,430,000, or $0.28 per diluted share, compared to $2,236,000, or $0.26 per diluted share, in the second quarter of 2004.
The increase in earnings was primarily due to higher net interest income, which was favorably impacted by strong growth in average earning assets and a modest recovery in the net interest margin. Net interest income increased 15% to $11,051,000 in the second quarter of 2005 from $9,647,000 in the year-ago period, and more than offset a higher provision for loan losses, which was $1,060,000 in 2005’s second quarter, versus $781,000 in the second quarter of 2004. Noninterest income in the second quarter of 2005 was $3,481,000, versus $3,889,000 in 2004’s second quarter, though part of the decline was due to a $292,000 nonrecurring gain on the sale of real estate in the 2004 figures. Noninterest expense increased 4% to $9,808,000 in the second quarter of 2005 from $9,468,000 in 2004’s second quarter.
For the six months ended June 30, 2005, net income was $4,662,000, or $0.54 per diluted share, compared to $4,389,000, or $0.51 per diluted share, in the first half of 2004. Net interest income increased 12% to $21,404,000 in the six months ended June 30, 2005 versus $19,081,000 in the year-ago period. Noninterest income for the first six months of 2005 was $6,743,000, versus $7,245,000 in the first six months of 2004, while noninterest expense increased 5% to $19,571,000 from $18,572,000 over the same respective periods. The provision for loan losses increased approximately 24% to $1,599,000 for the first half of 2005.
As of June 30, 2005, total assets were approximately $989 million, an increase of 10% from the year-ago level, while deposits at that date were $790 million, reflecting growth of 11% from June 30, 2004. Net loans were $759 million at June 30, 2005, an increase of 12% from the amount at June 30, 2004. The allowance for loan losses at the end of 2005’s second quarter was $8.5 million or 1.10% of loans. Shareholders’ equity totaled $91.1 million, and represented an equity-to-assets ratio of 9.2%.
Nonperforming assets, which includes nonaccrual loans, accruing loans more than 90 days past due, other real estate owned and renegotiated debt, totaled $7.7 million at June 30, 2005, as compared to $6.0 million at June 30, 2004. Substantially all of the increase resulted from a loan to a long-term customer of the Bank, secured by condominiums in a coastal community. Upon default by the customer, during the second quarter the Bank acquired the condominiums, by means of a deed-in-lieu of foreclosure, and booked this asset in other real estate owned in the amount of $3.0 million.
Since acquiring the condominiums, the Bank has learned that some of the condominiums were damaged by water intrusion problems resulting from construction and design defects and storm damage. With the help of appropriate experts, the Bank is aggressively and thoroughly evaluating the extent and cause of the water intrusion problems, the repairs that will be required to keep the problems from recurring, the parties responsible for the problems and possible remedies available to the Bank. At this time, it is not possible to determine the extent of additional loss that will be incurred by the Bank.
Commenting on the results, LSB Bancshares Chairman, President and CEO Robert F. Lowe stated, “One of the areas we have been most pleased with has been the acceleration in the growth of our balance sheet. Our total assets have nearly exceeded the $1 billion milestone, which reflects that many of our strategic growth initiatives are succeeding. The strong balance sheet growth has fueled an acceleration in net interest income growth, and cost
saving initiatives, such as our Lexington branch consolidation, has allowed much of this increase in net interest income to flow through to the bottom line.”
LSB Bancshares recently declared a quarterly dividend of $0.17 per share, which will be paid July 15, 2005 to shareholders of record as of July 1, 2005. This level of dividend represents a 6% increase from the level at the year-ago date.
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.
NOTE: For more information, please contact Monty J. Oliver, EVP & Chief Financial Officer @ 336-242-6207 or 336-248-6500 or 1-800-876-6505, ext. 207
This news release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Please refer to LSB’s filings with the Securities and Exchange Commission for a summary of important factors that could affect LSB’s forward-looking statements. LSB undertakes no obligation to revise these statements following the date of the news release.
