Exhibit 99.1
MASSBANK CORP. | January 23, 2006 | |
Reading, MA |
FOR IMMEDIATE RELEASE
MASSBANK CORP. REPORTS INCREASE IN EARNINGS PER SHARE
FOR THE FOURTH QUARTER 2005
MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,888,000 or $0.43 in diluted earnings per share for the fourth quarter 2005, compared with net income of $1,886,000 or $0.42 in diluted earnings per share in the fourth quarter of 2004. Basic earnings per share in the recent quarter were $0.44 per share compared to $0.43 per share in the fourth quarter of the prior year. This is the Company’s third consecutive quarter of year-over-year earnings per share increases.
For the year ended December 31, 2005, the Company reported net income of $7,323,000 or $1.66 in diluted earnings per share ($1.68 in basic earnings per share) compared to $7,380,000 or $1.64 in diluted earnings per share ($1.67 in basic earnings per share) for the year ended December 31, 2004.
Income Statement
Net interest income, the Company’s core earnings, totaled $5,493,000 for the fourth quarter of 2005, up $118,000 or 2.2% from the same quarter in 2004. This is the fifth 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 24 basis points to 2.53% from 2.29% in the fourth quarter of 2004. This is an increase of 10.5% 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 eight times since the end of December 2004, increasing the rate from 2.25% to 4.25%.
Return on average assets and return on average equity for the fourth quarter 2005 were 0.84% and 7.23%, respectively, up from 0.78% and 6.86% for the comparable quarter in 2004.
Balance Sheet
The Company’s total assets decreased $77.5 million to $898.7 million at December 31, 2005 from $976.2 million at December 31, 2004. Deposits decreased approximately $64.8 million or 7.6% year-over-year from $849.5 million at December 31, 2004 to $784.7 million at December 31, 2005. Stockholders’ equity was $105.3 million at December 31, 2005, representing a book value of $24.32 per share. This compares to $110.0 million at December 31, 2004, representing a book value of $25.11 per share.
The Company’s non-accrual loans remain low totaling $257,000 at December 31, 2005, representing 0.11% of total loans. This compares to $74,000 representing 0.03% of total loans at December 31, 2004. At December 31, 2005, the Bank’s allowance for loan losses totaled $1.253 million representing 0.56% of total loans compared to $1.307 million representing 0.55% of total loans at December 31, 2004. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $517,000 at December 31, 2005 compared to $588,000 a year earlier. This is intended to protect the bank against losses on loan commitments made to customers that have not yet been drawn down.
January 23, 2006
Page Two
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 $0.27 per share. This, the Company’s seventy-eighth consecutive dividend, will be payable on February 20, 2006 to stockholders of record at the close of business on February 3, 2006.
Stock Repurchase Program
During the three months ended December 31, 2005, the Company continued the repurchase of its common stock by acquiring 10,600 shares in the open market. As of December 31, 2005 there were 122,717 shares available for repurchase in the current program.
Date Set for Annual Meeting
The Company also announced that the Annual Meeting of Stockholders will be held at the Sheraton Ferncroft Resort, 50 Ferncroft Road, Danvers, Massachusetts on Tuesday, April 18, 2006 at 10:00 a.m. Only stockholders of record at the close of business on February 27, 2006 are entitled to notice of and to vote at the Annual Meeting.
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 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.
January 23, 2006
Page Three
MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
For the Period Ended | ||||||||||||||||
Total interest and dividend income | $ | 9,621 | $ | 8,679 | $ | 36,801 | $ | 33,581 | ||||||||
Total interest expense | 4,128 | 3,304 | 15,141 | 12,729 | ||||||||||||
Net interest income | 5,493 | 5,375 | 21,660 | 20,852 | ||||||||||||
Provision (credit) for loan losses | — | (55 | ) | (53 | ) | (242 | ) | |||||||||
Net interest income after provision (credit) for loan losses | 5,493 | 5,430 | 21,713 | 21,094 | ||||||||||||
Gains on securities, net | 253 | 287 | 679 | 1,229 | ||||||||||||
Other non-interest income | 275 | 361 | 1,185 | 1,257 | ||||||||||||
Non-interest expense | 3,082 | 3,200 | 12,461 | 12,302 | ||||||||||||
Income tax expense | 1,051 | 992 | 3,793 | 3,898 | ||||||||||||
Net income | $ | 1,888 | $ | 1,886 | $ | 7,323 | $ | 7,380 | ||||||||
Weighted Average Common Shares Outstanding | ||||||||||||||||
Basic | 4,331,984 | 4,391,567 | 4,365,932 | 4,408,293 | ||||||||||||
Diluted | 4,371,312 | 4,476,938 | 4,422,529 | 4,501,537 | ||||||||||||
Per Common Share | ||||||||||||||||
Earnings: | ||||||||||||||||
Basic | $ | 0.44 | $ | 0.43 | $ | 1.68 | $ | 1.67 | ||||||||
Diluted | 0.43 | 0.42 | 1.66 | 1.64 | ||||||||||||
Cash dividends paid | 0.27 | 0.25 | 1.05 | 1.00 | ||||||||||||
Book value (period end) | 24.32 | 25.11 | ||||||||||||||
Ratios (1) | ||||||||||||||||
Return on average assets | 0.84 | % | 0.78 | % | 0.79 | % | 0.75 | % | ||||||||
Return on average equity | 7.23 | 6.86 | 6.84 | 6.71 | ||||||||||||
Net interest margin | 2.53 | 2.29 | 2.40 | 2.19 | ||||||||||||
Total equity to assets (period end) | 11.71 | 11.27 | ||||||||||||||
At December 31, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
At Period End | ||||||||||||||||
Assets | $ | 898,679 | $ | 976,168 | ||||||||||||
Deposits | 784,728 | 849,465 | ||||||||||||||
Total loans | 225,730 | 236,198 | ||||||||||||||
Stockholders’ equity | $ | 105,264 | $ | 110,015 | ||||||||||||
Common shares outstanding | 4,328,517 | 4,381,727 | ||||||||||||||
Asset Quality | ||||||||||||||||
Non-accrual loans | $ | 257 | $ | 74 | ||||||||||||
Real estate acquired through foreclosure | — | — | ||||||||||||||
Total non-performing assets | $ | 257 | $ | 74 | ||||||||||||
Allowance for loan losses | $ | 1,253 | $ | 1,307 | ||||||||||||
Non-accrual loans to total loans | 0.11 | % | 0.03 | % |
(1) | Ratios are presented on an annualized basis with the exception of equity to assets. |
January 23, 2006
Page Four
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in thousands except share data)
At December 31, 2005 | At December 31, 2004 | |||||||
Assets: | ||||||||
Cash and due from banks | $ | 9,590 | $ | 9,829 | ||||
Interest-bearing deposits in banks | 900 | 2,938 | ||||||
Federal funds sold | 167,785 | 193,728 | ||||||
Short-term investments | — | 302 | ||||||
Debt securities available for sale: | ||||||||
Mortgage-backed securities | 135,432 | 122,709 | ||||||
Other securities | 310,653 | 313,616 | ||||||
Equity securities available for sale | 7,387 | 7,428 | ||||||
Mortgage-backed securities held-to-maturity | 6,137 | 4,877 | ||||||
Trading securities | 9,282 | 59,013 | ||||||
Loans: | ||||||||
Mortgage loans | 215,904 | 226,197 | ||||||
Other loans | 9,826 | 10,001 | ||||||
Total loans | 225,730 | 236,198 | ||||||
Allowance for loan losses | (1,253 | ) | (1,307 | ) | ||||
Net loans | 224,477 | 234,891 | ||||||
Premises and equipment | 6,525 | 6,464 | ||||||
Accrued interest receivable | 3,898 | 3,416 | ||||||
Goodwill | 1,090 | 1,090 | ||||||
Current income tax asset, net | — | 164 | ||||||
Deferred income tax asset, net | 3,240 | 588 | ||||||
Other assets | 12,283 | 15,115 | ||||||
Total assets | $ | 898,679 | $ | 976,168 | ||||
Liabilities and Stockholders’ Equity: | ||||||||
Deposits: | ||||||||
Demand and NOW | $ | 82,250 | $ | 87,653 | ||||
Savings | 441,541 | 561,313 | ||||||
Time certificates of deposit | 260,937 | 200,499 | ||||||
Total deposits | 784,728 | 849,465 | ||||||
Escrow deposits of borrowers | 1,059 | 1,074 | ||||||
Accrued income taxes | 35 | — | ||||||
Allowance for loan losses on off-balance sheet credit exposures | 517 | 588 | ||||||
Other liabilities | 7,076 | 15,026 | ||||||
Total liabilities | 793,415 | 866,153 | ||||||
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, 7,811,680 and 7,736,430 shares issued, respectively | 7,812 | 7,736 | ||||||
Additional paid-in capital | 57,067 | 55,313 | ||||||
Retained earnings | 104,743 | 102,003 | ||||||
169,622 | 165,052 | |||||||
Treasury stock at cost 3,483,163 and 3,354,703 shares, respectively | (61,281 | ) | (56,794 | ) | ||||
Accumulated other comprehensive income (loss): | ||||||||
Net unrealized gains (losses) on securitiesavailable for sale, net of tax effect | (3,077 | ) | 1,757 | |||||
Shares held in rabbi trust at cost 15,644 and 25,804 shares, respectively | (351 | ) | (553 | ) | ||||
Deferred compensation obligation | 351 | 553 | ||||||
Total stockholders’ equity | 105,264 | 110,015 | ||||||
Total liabilities and stockholders’ equity | $ | 898,679 | $ | 976,168 | ||||
January 23, 2006
Page Five
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Three Months Ended | |||||||
December 31, 2005 | December 31, 2004 | ||||||
Interest and dividend income: | |||||||
Mortgage loans | $ | 2,963 | $ | 3,209 | |||
Other loans | 174 | 167 | |||||
Securities available for sale: | |||||||
Mortgage-backed securities | 1,750 | 1,709 | |||||
Other securities | 2,705 | 2,354 | |||||
Mortgage-backed securities held-to-maturity | 75 | 62 | |||||
Trading securities | 140 | 250 | |||||
Federal funds sold | 1,806 | 898 | |||||
Other investments | 8 | 30 | |||||
Total interest and dividend income | 9,621 | 8,679 | |||||
Interest expense: | |||||||
Deposits | 4,128 | 3,304 | |||||
Total interest expense | 4,128 | 3,304 | |||||
Net interest income | 5,493 | 5,375 | |||||
Provision (credit) for loan losses | — | (55 | ) | ||||
Net interest income after provision (credit) for loan losses | 5,493 | 5,430 | |||||
Non-interest income: | |||||||
Deposit account service fees | 92 | 106 | |||||
Gains on securities available for sale, net | 208 | 205 | |||||
Gains on trading securities, net | 45 | 82 | |||||
Deferred compensation plan income | 25 | 84 | |||||
Other | 158 | 171 | |||||
Total non-interest income | 528 | 648 | |||||
Non-interest expense: | |||||||
Salaries and employee benefits | 1,891 | 1,819 | |||||
Deferred compensation plan expense | 47 | 98 | |||||
Occupancy and equipment | 563 | 525 | |||||
Data processing | 136 | 130 | |||||
Professional services | 105 | 248 | |||||
Advertising and marketing | 51 | 31 | |||||
Deposit Insurance | 35 | 38 | |||||
Other | 254 | 311 | |||||
Total non-interest expense | 3,082 | 3,200 | |||||
Income before income taxes | 2,939 | 2,878 | |||||
Income tax expense | 1,051 | 992 | |||||
Net income | $ | 1,888 | $ | 1,886 | |||
Weighted average common shares outstanding: | |||||||
Basic | 4,331,984 | 4,391,567 | |||||
Diluted | 4,371,312 | 4,476,938 | |||||
Earnings per share (in dollars): | |||||||
Basic | $ | 0.44 | $ | 0.43 | |||
Diluted | 0.43 | 0.42 |
January 23, 2006
Page Six
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
($ in thousands except share data)
Twelve Months Ended | ||||||||
December 31, 2005 | December 31, 2004 | |||||||
Interest and dividend income: | ||||||||
Mortgage loans | $ | 12,111 | $ | 13,578 | ||||
Other loans | 681 | 669 | ||||||
Securities available for sale: | ||||||||
Mortgage-backed securities | 6,961 | 6,398 | ||||||
Other securities | 9,863 | 8,941 | ||||||
Mortgage-backed securities held-to-maturity | 256 | 173 | ||||||
Trading securities | 760 | 1,145 | ||||||
Federal funds sold | 6,116 | 2,438 | ||||||
Other investments | 53 | 239 | ||||||
Total interest and dividend income | 36,801 | 33,581 | ||||||
Interest expense: | ||||||||
Deposits | 15,141 | 12,729 | ||||||
Total interest expense | 15,141 | 12,729 | ||||||
Net interest income | 21,660 | 20,852 | ||||||
Provision (credit) for loan losses | (53 | ) | (242 | ) | ||||
Net interest income after provision (credit) for loan losses | 21,713 | 21,094 | ||||||
Non-interest income: | ||||||||
Deposit account service fees | 393 | 448 | ||||||
Gains on securities available for sale, net | 515 | 1,361 | ||||||
Gains (losses) on trading securities, net | 164 | (132 | ) | |||||
Deferred compensation plan income | 84 | 108 | ||||||
Other | 708 | 701 | ||||||
Total non-interest income | 1,864 | 2,486 | ||||||
Non-interest expense: | ||||||||
Salaries and employee benefits | 7,463 | 7,261 | ||||||
Deferred compensation plan expense | 172 | 167 | ||||||
Occupancy and equipment | 2,212 | 2,169 | ||||||
Data processing | 540 | 521 | ||||||
Professional services | 485 | 631 | ||||||
Advertising and marketing | 155 | 110 | ||||||
Deposit Insurance | 145 | 160 | ||||||
Other | 1,289 | 1,283 | ||||||
Total non-interest expense | 12,461 | 12,302 | ||||||
Income before income taxes | 11,116 | 11,278 | ||||||
Income tax expense | 3,793 | 3,898 | ||||||
Net income | $ | 7,323 | $ | 7,380 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 4,365,932 | 4,408,293 | ||||||
Diluted | 4,422,529 | 4,501,537 | ||||||
Earnings per share (in dollars): | ||||||||
Basic | $ | 1.68 | $ | 1.67 | ||||
Diluted | 1.66 | 1.64 |