Newbridge Bancorp (NBBC) CORRESP Correspondence with SEC

LSB Bancshares, Inc.
P. O. Box 867
One LSB Plaza
Lexington, North Carolina 27293-0867
(336) 248-6500

August 7, 2007

Ms. Brittany Ebbertt, Staff Accountant
Mr. Paul Cline, Senior Accountant
United States Securities and Exchange Commission
Division of Corporation Finance
Washington, D. C. 20549

Re: Formal response to the inquiry dated July 31, 2007

Dear Ms. Ebbertt and Mr. Cline:

This is our formal response to your letter dated July 31, 2007. You requested that we key our responses to your comments, indicating our intent to include the requested revisions in future filings. Please find this information below. Additionally, we have provided you with drafts of our proposed revised disclosures.

Note 13. Pension and Employee Benefit Plans, Page 56

In reviewing the Consolidated Statements of Changes in Shareholders’ Equity as of December 31, 2006, it was determined that we incorrectly included the SFAS 158 adjustment in the calculation of Comprehensive Income. We have modified the December 31, 2006 Statement to include a column labeled Comprehensive Income that shows the corrected amount. In addition, we will file the corrected December 31, 2006 Consolidated Statements of Changes in Shareholders’ Equity (as attached) in our June 30, 2007 10-Q.

Note 18. Derivatives, Page 64

We expanded our disclosures related to the ICDs as disclosed in the December 31, 2006 Form 10-K. The revised disclosures (as attached) will be included in the June 30, 2007 Form 10-Q and all filings going forward.

The Company acknowledges that we are responsible for the adequacy and accuracy of the disclosures in all of our Company filings. In addition we understand that the staff comments or changes to disclosures in response to staff comments do not foreclose the Commission from taking any action with respect to the filing. The Company also understands that we may not assert staff comments as a defense in any proceeding

Ms. Brittany Ebbertt, Staff Accountant
Mr. Paul Cline, Senior Accountant
Page 2
August 7, 2007

initiated by the Commission or any person under the federal securities laws of the United States.

Please feel free to contact Monty Oliver, CFO or myself with any additional information as it relates to the above items.

Sincerely,

/s/ Robert F. Lowe

Robert F. Lowe
Chairman, President and CEO
LSB Bancshares, Inc.

Consolidated Statements
Of Changes in Shareholders’ Equity
(Unaudited)

																Accumulated
										Directors’						Other			Total			Other
							Paid-in			Deferred			Retained			Comprehensive			Shareholders’			Comprehensive
(Dollars in thousands, except shares)	Shares			Amount			Capital			Plan			Earnings			Income (loss)			Equity			Income
Balances at December 31, 2005		8,524,033		$	42,620		$	9,430		$	(1,334	)	$	42,424		$	(1,311	)	$	91,829
Net Income														3,287						3,287		$	3,287
Change in unrealized gain on securities available for sale, net of deferred income taxes																	(734	)		(734	)		(734	)
Cash dividends declared on common stock														(2,896	)					(2,896	)
Stock-based compensation expense								84												84
Common stock issued for stock options exercised		20,386			102			102												204
Common stock acquired		(37,064	)		(185	)		(470	)		(27	)								(682	)
Balances at June 30, 2006		8,507,355		$	42,537		$	9,146		$	(1,361	)	$	42,815		$	(2,045	)	$	91,092		$	2,553
Balances at December 31, 2005		8,524,033		$	42,620		$	9,430		$	(1,334	)	$	42,424		$	(1,311	)	$	91,829
Net Income														6,000						6,000		$	6,000
Change in unrealized gain on securities available for sale, net of deferred income taxes																	423			423			423
Adjustment to initially apply SFAS No. 158																	(1,372	)		(1,372	)
Cash dividends declared on common stock														(5,755	)					(5,755	)
Stock-based compensation expense								172												172
Common stock issued for stock options exercised		28,511			143			181												324		��
Common stock acquired		(129,934	)		(650	)		(1,606	)		(56	)								(2,312	)
Balances at December 31, 20061		8,422,610		$	42,113		$	8,177		$	(1,390	)	$	42,669		$	(2,260	)	$	89,309		$	6,423
Net Income														3,479						3,479			3,479
Change in unrealized gain on securities available for sale, net of deferred income taxes																	(228	)		(228	)		(228	)
Cash dividends declared on common stock														(2,865	)					(2,865	)
Stock-based compensation expense								80												80
Common stock acquired		(31,862	)		(159	)		(316	)		314									(161	)
Balances at June 30, 2007		8,390,748		$	41,954		$	7,941		$	(1,076	)	$	43,283		$	(2,488	)	$	89,614		$	3,251

¹ The Consolidated Statements of Changes in Shareholders’ Equity for December 31, 2006 has been corrected as shown in the following reconciliation. The correction was made to accurately reflect the components of Comprehensive Income. At December 31, 2006, the SFAS 158 adjustment was incorrectly included in the calculation of Comprehensive Income.

Comprehensive Income as reported at 12/31/06	$	5,051,000
SFAS 158 Adjustment incorrectly posted		1,372,000
Corrected Comprehensive Income at 12/31/06	$	6,423,000

Notes to consolidated financial statements are an integral part hereof.

Note 8 — Derivatives

Bancshares began using derivatives in the fourth quarter of 2005. The derivatives are being used in conjunction with the Bank’s sale of Indexed Certificates of Deposits (“ICD”). The ICDs do not pay periodic interest payments. Instead, any interest earned is paid at maturity and is calculated based on the positive price movements, if any, of the Dow Jones Industrial Average^SM over the entire term of the ICD. In order to manage the interest rate risk associated with this deposit product, the Company has purchased a series of forward option contracts through designated third-party hedge providers. These contracts provide the Company with a rate of return that is commensurate with the return of the Dow Jones Industrial Average^SM from the time of the contract until maturity of the related ICD. These contracts are accounted for as cash flow hedges. The Company has determined that the cash flow hedges are highly effective with no ineffectiveness according to the guidance in SFAS 133. The forward contracts are purchased at the same time that the ICDs are booked. In addition the forward contracts have no value at inception but do at the end of the ICDs’ maturity. The forward option contracts are marked to market on a quarterly basis with all changes being booked directly to earnings.

The following table reflects the information pertaining to the forward option contracts:

	June 30, 2007				June 30, 2006
	Notional		Estimated		Notional		Estimated
(Dollars in thousands)	Amount		Fair Value		Amount		Fair Value
Cash flow liability hedges:
Interest rate option	$	133	$	32	$	92	$	12