Exhibit: 99.1
MASSBANK CORP. | July 21, 2005 | |
Reading, MA |
FOR IMMEDIATE RELEASE
MASSBANK CORP. REPORTS 7.7% INCREASE IN EARNINGS PER SHARE
FOR THE SECOND QUARTER 2005
MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,857,000 or $0.42 in basic and diluted earnings per share for the second quarter 2005, compared with net income of $1,734,000 or $0.39 in basic and diluted earnings per share in the second quarter of 2004. This represents an increase of 7.7% over the earnings per share results of the prior year. For the six months ended June 30, 2005, the Company reported net income of $3,551,000 or $0.80 in diluted earnings per share ($0.81 in basic earnings per share) compared to $3,683,000 or $0.81 in diluted earnings per share ($0.83 in basic earnings per share) for the six months ended June 30, 2004.
Income Statement
Net interest income, the Company’s core earnings, totaled $5,395,000 for the second quarter of 2005, up $370,000 or 7.4% from the same quarter in 2004. This is the third consecutive quarter that the Company has reported a year-over-year improvement in net interest income. The net interest margin in the recent quarter improved 26 basis points to 2.36% from 2.10% in the second quarter of 2004. This is an increase of 12.4% over the same quarter last year. The Company continues to benefit from rising 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 nine times since the end of June 2004, increasing the rate from 1.00% to 3.25%.
Balance Sheet
The Company’s total assets decreased $47.4 million to $933.1 million at June 30, 2005 from $980.5 at June 30, 2004. Deposits decreased $43.0 million or 5.0% year-over-year from $860.2 million at June 30, 2004 to $817.2 million at June 30, 2005. Stockholders’ equity was $108.4 million at June 30, 2005, representing a book value of $24.83 per share. This compares to $107.7 million at June 30, 2004, representing a book value of $24.51 per share.
July 21, 2005
Page Two
The Company’s non-accrual loans remain low totaling $343,000 at June 30, 2005, representing 0.15% of total loans. This compares to $398,000 representing 0.16% of total loans at June 30, 2004. At June 30, 2005, the Bank’s allowance for loan losses totaled $1.253 million representing 0.54% of total loans compared to $1.439 million representing 0.59% of total loans at June 30, 2004. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $585,000 at June 30, 2005 compared to $616,000 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-sixth consecutive dividend, will be payable on August 18, 2005 to stockholders of record at the close of business on August 3, 2005.
Stock Repurchase Program
During the three months ended June 30, 2005, the Company continued the repurchase of its common stock by acquiring 51,300 shares. As of June 30, 2005, there were 63,817 shares available for repurchase in the current program.
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.
July 21, 2005
Page Three
MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
For the Period Ended | ||||||||||||||||
Total interest and dividend income | $ | 9,069 | $ | 8,121 | $ | 17,834 | $ | 16,466 | ||||||||
Total interest expense | 3,674 | 3,096 | 7,135 | 6,200 | ||||||||||||
Net interest income | 5,395 | 5,025 | 10,699 | 10,266 | ||||||||||||
Provision (credit) for loan losses | — | (51 | ) | (53 | ) | (113 | ) | |||||||||
Net interest income after provision (credit) for loan losses | 5,395 | 5,076 | 10,752 | 10,379 | ||||||||||||
Gains on securities, net | 244 | 186 | 188 | 760 | ||||||||||||
Other non-interest income | 341 | 342 | 594 | 629 | ||||||||||||
Non-interest expense | 3,172 | 2,964 | 6,203 | 6,124 | ||||||||||||
Income tax expense | 951 | 906 | 1,780 | 1,961 | ||||||||||||
Net income | $ | 1,857 | $ | 1,734 | $ | 3,551 | $ | 3,683 | ||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||
Basic | 4,390,071 | 4,416,159 | 4,394,908 | 4,421,777 | ||||||||||||
Diluted | 4,452,405 | 4,501,866 | 4,462,343 | 4,523,552 | ||||||||||||
Per Common Share | ||||||||||||||||
Earnings: | ||||||||||||||||
Basic | $ | 0.42 | $ | 0.39 | $ | 0.81 | $ | 0.83 | ||||||||
Diluted | 0.42 | 0.39 | 0.80 | 0.81 | ||||||||||||
Cash dividends paid | 0.26 | 0.25 | 0.52 | 0.50 | ||||||||||||
Book value (period end) | 24.83 | 24.51 | ||||||||||||||
Ratios (1) | ||||||||||||||||
Return on average assets | 0.79 | % | 0.70 | % | 0.75 | % | 0.75 | % | ||||||||
Return on average equity | 6.89 | 6.33 | 6.55 | 6.65 | ||||||||||||
Net interest margin | 2.36 | 2.10 | 2.32 | 2.14 | ||||||||||||
Total equity to assets (period end) | 11.62 | 10.98 | ||||||||||||||
At June 30, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
At Period End | ||||||||||||||||
Assets | $ | 933,064 | $ | 980,450 | ||||||||||||
Deposits | 817,189 | 860,233 | ||||||||||||||
Total loans | 229,930 | 244,722 | ||||||||||||||
Stockholders’ equity | $ | 108,441 | $ | 107,669 | ||||||||||||
Common shares outstanding | 4,366,617 | 4,393,425 | ||||||||||||||
Asset Quality | ||||||||||||||||
Non-accrual loans | $ | 343 | $ | 398 | ||||||||||||
Real estate acquired through foreclosure | — | — | ||||||||||||||
Total non-performing assets | $ | 343 | $ | 398 | ||||||||||||
Allowance for loan losses | $ | 1,253 | $ | 1,439 | ||||||||||||
Non-accrual loans to total loans | 0.15 | % | 0.16 | % |
(1) | Ratios are presented on an annualized basis with the exception of equity to assets. |
July 21, 2005
Page Four
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in thousands except share data)
At June 30, | At June 30, 2004 | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 9,377 | $ | 7,374 | ||||
Interest-bearing deposits in banks | 1,553 | 6,507 | ||||||
Federal funds sold | 204,955 | 148,546 | ||||||
Short-term investments | — | 987 | ||||||
Debt securities available for sale: | ||||||||
Mortgage-backed securities | 130,847 | 119,996 | ||||||
Other securities | 294,366 | 336,114 | ||||||
Equity securities available for sale | 8,066 | 8,644 | ||||||
Mortgage-backed securities held-to-maturity | 4,595 | 4,911 | ||||||
Trading securities | 30,785 | 78,209 | ||||||
Loans: | ||||||||
Mortgage loans | 220,087 | 234,132 | ||||||
Other loans | 9,843 | 10,590 | ||||||
Total loans | 229,930 | 244,722 | ||||||
Allowance for loan losses | (1,253 | ) | (1,439 | ) | ||||
Net loans | 228,677 | 243,283 | ||||||
Premises and equipment | 6,266 | 6,667 | ||||||
Accrued interest receivable | 3,520 | 3,724 | ||||||
Goodwill | 1,090 | 1,090 | ||||||
Current income tax asset, net | 342 | 160 | ||||||
Deferred income tax asset, net | 1,465 | 1,750 | ||||||
Other assets | 7,160 | 12,488 | ||||||
Total assets | $ | 933,064 | $ | 980,450 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits: | ||||||||
Demand and NOW | $ | 85,798 | $ | 83,504 | ||||
Savings | 497,391 | 586,314 | ||||||
Time certificates of deposit | 234,000 | 190,415 | ||||||
Total deposits | 817,189 | 860,233 | ||||||
Escrow deposits of borrowers | 901 | 949 | ||||||
Allowance for loan losses on off-balance sheet credit exposures | 585 | 616 | ||||||
Other liabilities | 5,948 | 10,983 | ||||||
Total liabilities | 824,623 | 872,781 | ||||||
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, 7,783,680 and 7,717,305 shares issued, respectively | 7,784 | 7,717 | ||||||
Additional paid-in capital | 56,440 | 54,946 | ||||||
Retained earnings | 103,267 | 100,506 | ||||||
167,491 | 163,169 | |||||||
Treasury stock at cost 3,417,063 and 3,323,880 shares, respectively | (59,033 | ) | (55,650 | ) | ||||
Accumulated other comprehensive income (loss): | ||||||||
Net unrealized gains (losses) on securities available for sale, net of tax effect | (17 | ) | 150 | |||||
Shares held in rabbi trust at cost 14,744 and 26,600 shares, respectively | (321 | ) | (567 | ) | ||||
Deferred compensation obligation | 321 | 567 | ||||||
Total stockholders’ equity | 108,441 | 107,669 | ||||||
Total liabilities and stockholders’ equity | $ | 933,064 | $ | 980,450 | ||||
July 21, 2005
Page Five
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Three Months Ended | |||||||
June 30, 2005 | June 30, 2004 | ||||||
Interest and dividend income: | |||||||
Mortgage loans | $ | 3,038 | $ | 3,445 | |||
Other loans | 164 | 166 | |||||
Securities available for sale: | |||||||
Mortgage-backed securities | 1,756 | 1,492 | |||||
Other securities | 2,393 | 2,127 | |||||
Mortgage-backed securities held-to-maturity | 60 | 48 | |||||
Trading securities | 185 | 309 | |||||
Federal funds sold | 1,458 | 439 | |||||
Other investments | 15 | 95 | |||||
Total interest and dividend income | 9,069 | 8,121 | |||||
Interest expense: | |||||||
Deposits | 3,674 | 3,096 | |||||
Total interest expense | 3,674 | 3,096 | |||||
Net interest income | 5,395 | 5,025 | |||||
Provision (credit) for loan losses | — | (51 | ) | ||||
Net interest income after provision (credit) for loan losses | 5,395 | 5,076 | |||||
Non-interest income: | |||||||
Deposit account service fees | 101 | 112 | |||||
Gains on securities available for sale, net | 72 | 679 | |||||
Gains (losses) on trading securities, net | 172 | (493 | ) | ||||
Other | 240 | 230 | |||||
Total non-interest income | 585 | 528 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 1,974 | 1,831 | |||||
Occupancy and equipment | 529 | 522 | |||||
Data processing | 126 | 123 | |||||
Professional services | 135 | 103 | |||||
Advertising and marketing | 40 | 31 | |||||
Deposit Insurance | 37 | 42 | |||||
Other | 331 | 312 | |||||
Total non-interest expense | 3,172 | 2,964 | |||||
Income before income taxes | 2,808 | 2,640 | |||||
Income tax expense | 951 | 906 | |||||
Net income | $ | 1,857 | $ | 1,734 | |||
Weighted average common shares outstanding: | |||||||
Basic | 4,390,071 | 4,416,159 | |||||
Diluted | 4,452,405 | 4,501,866 | |||||
Earnings per share (in dollars): | |||||||
Basic | $ | 0.42 | $ | 0.39 | |||
Diluted | 0.42 | 0.39 |
July 21, 2005
Page Six
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Six Months Ended | ||||||||
June 30, 2005 | June 30, 2004 | |||||||
Interest and dividend income: | ||||||||
Mortgage loans | $ | 6,150 | $ | 7,027 | ||||
Other loans | 326 | 335 | ||||||
Securities available for sale: | ||||||||
Mortgage-backed securities | 3,474 | 2,977 | ||||||
Other securities | 4,708 | 4,388 | ||||||
Mortgage-backed securities held-to-maturity | 122 | 48 | ||||||
Trading securities | 433 | 594 | ||||||
Federal funds sold | 2,588 | 925 | ||||||
Other investments | 33 | 172 | ||||||
Total interest and dividend income | 17,834 | 16,466 | ||||||
Interest expense: | ||||||||
Deposits | 7,135 | 6,200 | ||||||
Total interest expense | 7,135 | 6,200 | ||||||
Net interest income | 10,699 | 10,266 | ||||||
Provision (credit) for loan losses | (53 | ) | (113 | ) | ||||
Net interest income after provision (credit) for loan losses | 10,752 | 10,379 | ||||||
Non-interest income: | ||||||||
Deposit account service fees | 201 | 233 | ||||||
Gains (losses) on trading securities, net | 58 | (283 | ) | |||||
Gains on securities available for sale, net | 130 | 1,043 | ||||||
Other | 393 | 396 | ||||||
Total non-interest income | 782 | 1,389 | ||||||
Non-interest expense: | ||||||||
Salaries and employee benefits | 3,749 | 3,728 | ||||||
Occupancy and equipment | 1,128 | 1,120 | ||||||
Data processing | 267 | 260 | ||||||
Professional services | 265 | 240 | ||||||
Advertising and marketing | 60 | 48 | ||||||
Deposit Insurance | 75 | 83 | ||||||
Other | 659 | 645 | ||||||
Total non-interest expense | 6,203 | 6,124 | ||||||
Income before income taxes | 5,331 | 5,644 | ||||||
Income tax expense | 1,780 | 1,961 | ||||||
Net income | $ | 3,551 | $ | 3,683 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 4,394,908 | 4,421,777 | ||||||
Diluted | 4,462,343 | 4,523,552 | ||||||
Earnings per share (in dollars): | ||||||||
Basic | $ | 0.81 | $ | 0.83 | ||||
Diluted | 0.80 | 0.81 |