Exhibit 99.1
MASSBANK CORP. Reading, MA | July 17, 2003 |
FOR IMMEDIATE RELEASE
MASSBANK CORP. REPORTS SECOND QUARTER 2003 EARNINGS OF
$1.986 MILLION OR $0.44 PER SHARE
AND DECLARES CASH DIVIDEND
MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,986,000 or $0.44 in diluted earnings per share for the second quarter 2003, compared with net income of $2,702,000 or $0.56 in diluted earnings per share in the second quarter of 2002. The second quarter earnings of $0.44 represents an increase of $0.02 per share over the first quarter of this year. Basic earnings per share in the recent quarter were $0.45 per share compared to $0.57 per share in the second quarter of last year. For the six months ended June 30, 2003, the Company reported net income of $3,931,000 or $0.86 in diluted earnings per share ($0.88 in basic earnings per share). This compares to $5,352,000 or $1.10 in diluted earnings per share ($1.13 in basic earnings per share) for the six months ended June 30, 2002.
The decline in the Company’s net income of $716,000 in the second quarter 2003 compared to the second quarter of 2002 is primarily due to a decrease in securities gains of $726,000. In the second quarter 2003, the Company recorded net gains on securities of $192,000 compared to net securities gains of $918,000 in the same quarter last year. Net securities gains in the recent quarter consisted of net losses on securities available for sale of $159,000 and net gains on trading securities of $351,000. Net losses on securities available for sale in the second quarter 2003 were comprised of $38,000 in gains on debt securities and $197,000 in losses on equity securities. This compares to $106,000 in gains on debt securities and $644,000 in gains on equity securities for the same quarter of 2002.
At the end of the recent quarter the Company’s net unrealized gains on securities available for sale, net of tax effect, totaled $6.0 million compared to $6.5 million at June 30, 2002. These net unrealized gains are primarily in the Company’s debt securities portfolio that has increased in value due to a decline in interest rates.
The Company’s total assets increased $12.1 million or 1.2% to $1.009 billion at June 30, 2003 from $996.4 million at June 30, 2002. Deposits increased $18.4 million or 2.1% year-over-year reaching $892.3 million as of June 30, 2003. Stockholders’ equity was $110.1 million at June 30, 2003, representing a book value of $25.20 per share. This compares to $116.5 million at June 30, 2002 representing a book value of $24.80 per share.
July 17, 2003
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The Company’s non-performing assets remain low totaling $367,000 at June 30, 2003 representing 0.04% of total assets. This compares to $403,000 representing 0.04% of total assets at June 30, 2002.
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 $0.23 per share. This, the Company’s sixty-eight consecutive dividend, will be payable on August 13, 2003 to stockholders of record at the close of business on July 30, 2003.
Stock Repurchase Program
During the three months ended June 30, 2003, the Company repurchased 177,751 shares of its common stock. This completes the stock repurchase program approved by the Board of Directors in January 2003.
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 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 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, adverse impacts resulting from the continuing war on terrorism, the impact of 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, 2002.
For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192.
July 17, 2003
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MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
For the Period Ended | ||||||||||||||||
Total interest and dividend income | $ | 9,860 | $ | 11,950 | $ | 20,221 | $ | 23,990 | ||||||||
Total interest expense | 4,136 | 5,943 | 8,749 | 12,037 | ||||||||||||
Net interest income | 5,724 | 6,007 | 11,472 | 11,953 | ||||||||||||
Provision for loan losses | — | — | — | — | ||||||||||||
Gains on securities, net | 192 | 918 | 232 | 1,851 | ||||||||||||
Other non-interest income | 400 | 318 | 666 | 641 | ||||||||||||
Non-interest expense | 3,229 | 2,987 | 6,278 | 6,022 | ||||||||||||
Income tax expense | 1,101 | 1,554 | 2,161 | 3,071 | ||||||||||||
Net income | 1,986 | 2,702 | 3,931 | 5,352 | ||||||||||||
Weighted Average Common Shares Outstanding (1) | ||||||||||||||||
Basic | 4,428,159 | 4,724,320 | 4,492,377 | 4,729,024 | ||||||||||||
Diluted | 4,530,748 | 4,859,530 | 4,583,407 | 4,860,566 | ||||||||||||
Per Common Share (1) | ||||||||||||||||
Earnings: | ||||||||||||||||
Basic | $ | 0.45 | $ | 0.57 | $ | 0.88 | $ | 1.13 | ||||||||
Diluted | 0.44 | 0.56 | 0.86 | 1.10 | ||||||||||||
Cash dividends paid | 0.23 | 0.22 | 0.46 | 0.44 | ||||||||||||
Book value (period end) | 25.20 | 24.80 | ||||||||||||||
Ratios (2) | ||||||||||||||||
Return on average assets | 0.79 | % | 1.09 | % | 0.78 | % | 1.09 | % | ||||||||
Return on average equity | 7.11 | 9.29 | 6.92 | 9.20 | ||||||||||||
Interest rate spread | 2.13 | 2.20 | 2.11 | 2.18 | ||||||||||||
Net interest margin | 2.32 | 2.49 | 2.33 | 2.49 | ||||||||||||
Total equity to assets (period end) | 10.92 | 11.69 | ||||||||||||||
At June 30, | ||||||||||||||||
2003 | 2002 | |||||||||||||||
At Period End | ||||||||||||||||
Assets | $ | 1,008,533 | $ | 996,439 | ||||||||||||
Deposits | 892,279 | 873,880 | ||||||||||||||
Loans | 286,536 | 328,965 | ||||||||||||||
Total stockholders’ equity | $ | 110,138 | $ | 116,518 | ||||||||||||
Common shares outstanding | 4,370,125 | 4,698,850 | ||||||||||||||
Asset Quality | ||||||||||||||||
Non-accrual loans | $ | 367 | $ | 403 | ||||||||||||
Real estate acquired through foreclosure | — | — | ||||||||||||||
Total non-performing assets | $ | 367 | $ | 403 | ||||||||||||
Allowance for loan losses | $ | 2,653 | $ | 2,642 | ||||||||||||
Non-accrual loans to total loans | 0.13 | % | 0.12 | % | ||||||||||||
Non-performing assets to total assets | 0.04 | % | 0.04 | % | ||||||||||||
Allowance for loan losses as a % of non-accrual loans | 722.9 | % | 655.6 | % | ||||||||||||
Allowance for loan losses as a % of non-performing assets | 722.9 | % | 655.6 | % |
(1) | Current and prior year share data reflects the three-for-two stock split of April 19, 2002. |
(2) | Ratios are presented on an annualized basis with the exception of equity to assets. |
July 17, 2003
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MASSBANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in thousands except share data)
At | At | |||||||
June 30, | June 30, | |||||||
2003 | 2002 | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 8,979 | $ | 10,418 | ||||
Interest-bearing deposits in banks | 6,117 | 4,322 | ||||||
Federal funds sold | 206,379 | 182,913 | ||||||
Short-term investments | 23,220 | 24,872 | ||||||
Debt securities available for sale | 384,664 | 380,048 | ||||||
Equity securities available for sale | 12,272 | 11,331 | ||||||
Trading securities | 67,940 | 34,560 | ||||||
Loans: | ||||||||
Mortgage loans | 273,137 | 310,525 | ||||||
Other loans | 13,399 | 18,440 | ||||||
Total loans | 286,536 | 328,965 | ||||||
Allowance for loan losses | (2,653 | ) | (2,642 | ) | ||||
Net loans | 283,883 | 326,323 | ||||||
Premises and equipment | 7,176 | 6,763 | ||||||
Accrued interest receivable | 3,568 | 4,890 | ||||||
Goodwill | 1,090 | 1,090 | ||||||
Current income tax asset, net | 717 | 377 | ||||||
Other assets | 2,528 | 8,532 | ||||||
Total assets | $ | 1,008,533 | $ | 996,439 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits: | ||||||||
Demand and NOW | $ | 83,984 | $ | 84,373 | ||||
Savings | 598,059 | 471,061 | ||||||
Time certificates of deposit | 210,236 | 318,446 | ||||||
Total deposits | 892,279 | 873,880 | ||||||
Escrow deposits of borrowers | 1,219 | 1,245 | ||||||
Employee stock ownership plan liability | — | 156 | ||||||
Deferred income taxes | 1,999 | 2,181 | ||||||
Other liabilities | 2,898 | 2,459 | ||||||
Total liabilities | 898,395 | 879,921 | ||||||
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, 7,651,005 and 7,569,479 shares issued, respectively | 7,651 | 7,569 | ||||||
Additional paid-in capital | 54,050 | 52,480 | ||||||
Retained earnings | 97,122 | 92,829 | ||||||
158,823 | 152,878 | |||||||
Treasury stock at cost 3,306,080 and 2,893,829 shares, respectively | (54,691 | ) | (42,719 | ) | ||||
Accumulated other comprehensive income: | ||||||||
Net unrealized gains on securities available for sale, net of tax effect | 6,006 | 6,515 | ||||||
Common stock acquired by ESOP | — | (156 | ) | |||||
Total stockholders’ equity | 110,138 | 116,518 | ||||||
Total liabilities and stockholders’ equity | $ | 1,008,533 | $ | 996,439 | ||||
July 17, 2003
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MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Three Months Ended | |||||||
June 30, | June 30, | ||||||
2003 | 2002 | ||||||
Interest and dividend income: | |||||||
Mortgage Loans | $ | 4,668 | $ | 5,222 | |||
Other loans | 221 | 387 | |||||
Securities available for sale: | |||||||
Mortgage-backed securities | 2,216 | 3,900 | |||||
Other securities | 1,649 | 1,362 | |||||
Trading securities | 306 | 195 | |||||
Federal funds sold | 689 | 724 | |||||
Other investments | 111 | 160 | |||||
Total interest and dividend income | 9,860 | 11,950 | |||||
Interest expense: | |||||||
Deposits | 4,136 | 5,943 | |||||
Total interest expense | 4,136 | 5,943 | |||||
Net interest income | 5,724 | 6,007 | |||||
Provision for loan losses | — | — | |||||
Net interest income after provision for loan losses | 5,724 | 6,007 | |||||
Non-interest income: | |||||||
Deposit account service fees | 133 | 141 | |||||
Gains (losses) on securities available for sale, net | (159 | ) | 750 | ||||
Gains on trading securities, net | 351 | 168 | |||||
Other | 267 | 177 | |||||
Total non-interest income | 592 | 1,236 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 1,969 | 1,800 | |||||
Occupancy and equipment | 536 | 473 | |||||
Data processing | 130 | 132 | |||||
Professional services | 108 | 152 | |||||
Advertising and marketing | 45 | 35 | |||||
Deposit insurance | 45 | 46 | |||||
Other | 396 | 349 | |||||
Total non-interest expense | 3,229 | 2,987 | |||||
Income before income taxes | 3,087 | 4,256 | |||||
Income tax expense | 1,101 | 1,554 | |||||
Net income | $ | 1,986 | $ | 2,702 | |||
Weighted average common shares outstanding: | |||||||
Basic | 4,428,159 | 4,724,320 | |||||
Diluted | 4,530,748 | 4,859,530 | |||||
Earnings per share (in dollars): | |||||||
Basic | $ | 0.45 | $ | 0.57 | |||
Diluted | 0.44 | 0.56 |
July 17, 2003
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MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Six Months Ended | |||||||
June 30, | June 30, | ||||||
2003 | 2002 | ||||||
Interest and dividend income: | |||||||
Mortgage Loans | $ | 9,599 | $ | 10,404 | |||
Other loans | 460 | 788 | |||||
Securities available for sale: | |||||||
Mortgage-backed securities | 4,906 | 8,045 | |||||
Other securities | 3,142 | 2,593 | |||||
Trading securities | 569 | 323 | |||||
Federal funds sold | 1,310 | 1,449 | |||||
Other investments | 235 | 388 | |||||
Total interest and dividend income | 20,221 | 23,990 | |||||
Interest expense: | |||||||
Deposits | 8,749 | 12,037 | |||||
Total interest expense | 8,749 | 12,037 | |||||
Net interest income | 11,472 | 11,953 | |||||
Provision for loan losses | — | — | |||||
Net interest income after provision for loan losses | 11,472 | 11,953 | |||||
Non-interest income: | |||||||
Deposit account service fees | 270 | 287 | |||||
Gains (losses) on securities available for sale, net | (41 | ) | 1,749 | ||||
Gains on trading securities, net | 273 | 102 | |||||
Other | 396 | 354 | |||||
Total non-interest income | 898 | 2,492 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 3,811 | 3,626 | |||||
Occupancy and equipment | 1,109 | 994 | |||||
Data processing | 274 | 260 | |||||
Professional services | 219 | 296 | |||||
Advertising and marketing | 70 | 76 | |||||
Deposit insurance | 90 | 92 | |||||
Other | 705 | 678 | |||||
Total non-interest expense | 6,278 | 6,022 | |||||
Income before income taxes | 6,092 | 8,423 | |||||
Income tax expense | 2,161 | 3,071 | |||||
Net income | $ | 3,931 | $ | 5,352 | |||
Weighted average common shares outstanding: | |||||||
Basic | 4,492,377 | 4,729,024 | |||||
Diluted | 4,583,407 | 4,860,566 | |||||
Earnings per share (in dollars): | |||||||
Basic | $ | 0.88 | $ | 1.13 | |||
Diluted | 0.86 | 1.10 |