Exhibit: 99.1
MASSBANK CORP. | April 21, 2005 | |
Reading, MA |
FOR IMMEDIATE RELEASE
MASSBANK CORP. REPORTS FIRST QUARTER 2005 EARNINGS OF
$1.7 MILLION OR $0.38 PER SHARE
AND DECLARES CASH DIVIDEND
MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,694,000 or $0.38 in diluted earnings per share for the first quarter 2005, compared with net income of $1,949,000 or $0.43 in diluted earnings per share in the first quarter of 2004. Basic earnings per share in the recent quarter were $0.39 per share compared to $0.44 per share in the first quarter of last year.
Income Statement
Net interest income totaled $5,304,000 for the first quarter of 2005, up $63,000 from the same quarter in 2004. The net interest margin improved to 2.28% in the recent quarter as compared to 2.17% in the first quarter of last year. The 11 basis point improvement is primarily the result of a rise in 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 seven times since the end of June 2004, increasing the rate from 1.00% to 2.75%. A further “measured rate” of increases is expected by most economists to continue in 2005. This will likely have a positive affect on the bank’s future net interest income and net interest margin.
The negative provisions for loan losses in the first quarter of 2005 and 2004 of $53,000 and $62,000, respectively, are due to reductions in the size of the bank’s loan portfolio and a low level of problem loans.
Non-interest income for the first quarter of 2005 totaled $197,000, compared to $861,000 for the same period in 2004. The decrease of $664,000 is due primarily to lower securities gains in the recent quarter compared to the same quarter of 2004.
Non-interest expense in the first quarter of 2005 decreased $129,000 compared to the same quarter in 2004. This is attributable to a decrease in salaries and employee benefits due in part to a reduction in the number of bank employees.
Balance Sheet
The Company’s total assets decreased $35.2 million to $971.5 million at March 31, 2005 from $1.007 billion at March 31, 2004. Deposits decreased $33.3 million or 3.8% year-over-year from $870.9 million at March 31, 2004 to $837.6 million at March 31, 2005. Stockholders’ equity was $107.7 million at March 31, 2005, representing a book value of $24.43 per share. This compares to $113.2 million at March 31, 2004 representing a book value of $25.56 per share.
April 21, 2005
Page Two
The Company’s non-accrual loans remain low totaling $128,000 at March 31, 2005, representing 0.06% of total loans. This compares to $205,000 representing 0.08% of total loans at March 31, 2004. At March 31, 2005, the Bank’s allowance for loan losses totaled $1.253 million representing 0.54% of total loans compared to $1.491 million representing 0.60% of total loans at March 31, 2004. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $605,000 at March 31, 2005, compared to $626,000 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 $0.26 per share. This, the Company’s seventy-fifth consecutive dividend, will be payable on May 19, 2005 to stockholders of record at the close of business on May 4, 2005.
Stock Repurchase Program
During the three months ended March 31, 2005, the Company continued the repurchase of its common stock by acquiring 11,060 shares. As of March 31, 2005 there were 115,117 shares available for repurchase in the current program.
Annual Meeting of Stockholders
At the Annual Meeting of Stockholders of MASSBANK Corp. held on April 19, 2005 stockholders voted affirmatively to elect Gerard H. Brandi, William F. Rucci, Jr. and O. Bradley Latham to serve as Directors of the Company until the 2008 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, 2004.
For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192.
April 21, 2005
Page Three
MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended March 31, | ||||||||
2005 | 2004 | |||||||
For the Period Ended | ||||||||
Total interest and dividend income | $ | 8,765 | $ | 8,345 | ||||
Total interest expense | 3,461 | 3,104 | ||||||
Net interest income | 5,304 | 5,241 | ||||||
Provision (credit) for loan losses | (53 | ) | (62 | ) | ||||
Net interest income after provision (credit) for loan losses | 5,357 | 5,303 | ||||||
Gains (losses) on securities, net | (56 | ) | 574 | |||||
Other non-interest income | 253 | 287 | ||||||
Non-interest expense | 3,031 | 3,160 | ||||||
Income tax expense | 829 | 1,055 | ||||||
Net income | $ | 1,694 | $ | 1,949 | ||||
Weighted Average Common Shares Outstanding | ||||||||
Basic | 4,399,798 | 4,427,395 | ||||||
Diluted | 4,469,753 | 4,545,237 | ||||||
Per Common Share | ||||||||
Earnings: | ||||||||
Basic | $ | 0.39 | $ | 0.44 | ||||
Diluted | 0.38 | 0.43 | ||||||
Cash dividends paid | 0.26 | 0.25 | ||||||
Book value (period end) | 24.43 | 25.56 | ||||||
Ratios (1) | ||||||||
Return on average assets | 0.71 | % | 0.79 | % | ||||
Return on average equity | 6.21 | 6.98 | ||||||
Net interest margin | 2.28 | 2.17 | ||||||
Total equity to assets (period end) | 11.08 | 11.24 | ||||||
At March 31, | ||||||||
2005 | 2004 | |||||||
At Period End | ||||||||
Assets | $ | 971,475 | $ | 1,006,670 | ||||
Deposits | 837,581 | 870,901 | ||||||
Total loans | 230,301 | 246,546 | ||||||
Stockholders’ equity | $ | 107,678 | $ | 113,168 | ||||
Common shares outstanding | 4,407,292 | 4,428,175 | ||||||
Asset Quality | ||||||||
Non-accrual loans | $ | 128 | $ | 205 | ||||
Real estate acquired through foreclosure | — | — | ||||||
Total non-performing assets | $ | 128 | $ | 205 | ||||
Allowance for loan losses | $ | 1,253 | $ | 1,491 | ||||
Non-accrual loans to total loans | 0.06 | % | 0.08 | % |
(1) | Ratios are presented on an annualized basis with the exception of equity to assets. |
April 21, 2005
Page Four
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in thousands except share data)
At March 31, | At March 31, | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 9,748 | $ | 7,633 | ||||
Interest-bearing deposits in banks | 2,066 | 6,888 | ||||||
Federal funds sold | 198,926 | 213,055 | ||||||
Short-term investments | — | 24,573 | ||||||
Debt securities available for sale: | ||||||||
Mortgage-backed securities | 128,132 | 100,612 | ||||||
Other securities | 310,412 | 295,867 | ||||||
Equity securities available for sale | 7,646 | 10,694 | ||||||
Mortgage-backed securities held-to-maturity | 4,859 | — | ||||||
Trading securities | 41,317 | 70,505 | ||||||
Loans: | ||||||||
Mortgage loans | 220,352 | 235,762 | ||||||
Other loans | 9,949 | 10,784 | ||||||
Total loans | 230,301 | 246,546 | ||||||
Allowance for loan losses | (1,253 | ) | (1,491 | ) | ||||
Net loans | 229,048 | 245,055 | ||||||
Premises and equipment | 6,332 | 6,770 | ||||||
Accrued interest receivable | 4,056 | 4,137 | ||||||
Goodwill | 1,090 | 1,090 | ||||||
Deferred income tax asset, net | 2,436 | —�� | ||||||
Other assets | 25,407 | 19,791 | ||||||
Total assets | $ | 971,475 | $ | 1,006,670 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits: | ||||||||
Demand and NOW | $ | 85,267 | $ | 84,037 | ||||
Savings | 534,068 | 597,973 | ||||||
Time certificates of deposit | 218,246 | 188,891 | ||||||
Total deposits | 837,581 | 870,901 | ||||||
Escrow deposits of borrowers | 988 | 1,117 | ||||||
Current income tax liability | 120 | 483 | ||||||
Deferred income tax liability | — | 1,453 | ||||||
Allowance for loan losses on off-balance sheet credit exposures | 605 | 626 | ||||||
Other liabilities | 24,503 | 18,922 | ||||||
Total liabilities | 863,797 | 893,502 | ||||||
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, 7,773,055 and 7,714,055 shares issued, respectively | 7,773 | 7,714 | ||||||
Additional paid-in capital | 56,175 | 54,865 | ||||||
Retained earnings | 102,555 | 99,880 | ||||||
166,503 | 162,459 | |||||||
Treasury stock at cost 3,365,763 and 3,285,880 shares, respectively | (57,206 | ) | (54,372 | ) | ||||
Accumulated other comprehensive income (loss): | ||||||||
Net unrealized gains (losses) on securities available for sale, net of tax effect | (1,619 | ) | 5,081 | |||||
Shares held in rabbi trust at cost 14,744 and 26,200 shares, respectively | (321 | ) | (554 | ) | ||||
Deferred compensation obligation | 321 | 554 | ||||||
Total stockholders’ equity | 107,678 | 113,168 | ||||||
Total liabilities and stockholders’ equity | $ | 971,475 | $ | 1,006,670 | ||||
April 21, 2005
Page Five
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Three Months Ended | ||||||||
March 31, 2005 | March 31, 2004 | |||||||
Interest and dividend income: | ||||||||
Mortgage loans | $ | 3,112 | $ | 3,582 | ||||
Other loans | 162 | 169 | ||||||
Securities available for sale: | ||||||||
Mortgage-backed securities | 1,718 | 1,485 | ||||||
Other securities | 2,315 | 2,261 | ||||||
Mortgage-backed securities held-to-maturity | 62 | — | ||||||
Trading securities | 248 | 285 | ||||||
Federal funds sold | 1,130 | 486 | ||||||
Other investments | 18 | 77 | ||||||
Total interest and dividend income | 8,765 | 8,345 | ||||||
Interest expense: | ||||||||
Deposits | 3,461 | 3,104 | ||||||
Total interest expense | 3,461 | 3,104 | ||||||
Net interest income | 5,304 | 5,241 | ||||||
Provision (credit) for loan losses | (53 | ) | (62 | ) | ||||
Net interest income after provision (credit) for loan losses | 5,357 | 5,303 | ||||||
Non-interest income: | ||||||||
Deposit account service fees | 100 | 121 | ||||||
Gains on securities available for sale, net | 58 | 364 | ||||||
Gains (losses) on trading securities, net | (114 | ) | 210 | |||||
Other | 153 | 166 | ||||||
Total non-interest income | 197 | 861 | ||||||
Non-interest expense: | ||||||||
Salaries and employee benefits | 1,775 | 1,897 | ||||||
Occupancy and equipment | 599 | 598 | ||||||
Data processing | 141 | 137 | ||||||
Professional services | 130 | 137 | ||||||
Advertising and marketing | 20 | 17 | ||||||
Deposit insurance | 38 | 41 | ||||||
Other | 328 | 333 | ||||||
Total non-interest expense | 3,031 | 3,160 | ||||||
Income before income taxes | 2,523 | 3,004 | ||||||
Income tax expense | 829 | 1,055 | ||||||
Net income | $ | 1,694 | $ | 1,949 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 4,399,798 | 4,427,395 | ||||||
Diluted | 4,469,753 | 4,545,237 | ||||||
Earnings per share (in dollars): | ||||||||
Basic | $ | 0.39 | $ | 0.44 | ||||
Diluted | 0.38 | 0.43 |