EXHIBIT 99.1
FOR IMMEDIATE RELEASE COMPANY CONTACT: Paul A. Miller
(978)725-7555
LSB CORPORATION
SECOND QUARTER RESULTS 2003
NORTH ANDOVER, MA, -- (BUSINESS WIRE) - July 18, 2003 - LSB Corporation, (the
"Corporation" or the "Company") (NASDAQ-LSBX), today announced results for the
three and six months ended June 30, 2003. Press releases and SEC filings can be
viewed on the internet at our website (www.LawrenceSavings.com/press-main.asp)
or www.LawrenceSavings.com/stockholder-info.asp), respectively.
The Corporation reported net income of $635,000 or $0.15 diluted earnings per
share for the second quarter of 2003. This amount compares to net income of
$819,000 or $0.18 diluted earnings per share for the same period of 2002. Net
income for the six months ended June 30, 2003 totaled $1,185,000 or $0.27
diluted earnings per share compared to $1,635,000 or $0.36 diluted earnings per
share for the six months ended June 30, 2002.
Net income for the quarter ended June 30, 2003 decreased due to net interest
income declining by $546,000. Partially offsetting this decline was non-interest
income increasing by $34,000 and non-interest expenses declining by $229,000.
The increase to non-interest income of $34,000 for the second quarter of 2003
from $349,000 in the same quarter of 2002 was primarily due to gains on the sale
of mortgage loans of $165,000 in the second quarter of 2003 up from $65,000 in
2002. Partially offsetting this increase was a decrease in loan fees to a loss
of $50,000 in 2003 compared to income of $12,000 in 2002. The loss in loan fees
can be attributed to provisions for losses on mortgage servicing rights (MSR's)
of $72,000 in the second quarter of 2003 due to higher than normal prepayment
speeds used in the fair value calculation of MSR's caused by the current low
interest rate environment on mortgage loans. Non-interest expenses were
$2,372,000 in the second quarter of 2003 compared to $2,601,000 for the same
quarter of 2002. This decrease in the second quarter of 2003 is primarily due to
salaries and employee benefits decreasing to $1,420,000 in 2003 down from
$1,482,000 in 2002. The Company instituted several salary reduction initiatives
during the second quarter of 2003 as a result of the net interest margin
declining to 2.86%. Professional expenses decreased to $162,000 for the second
quarter 2003 from $220,000 for the same period in 2002 due to decreased legal
expenses. Data processing expenses totaled $179,000 in the second quarter of
2003 down from $203,000 in 2002's second quarter and marketing expenses declined
by $55,000 in 2003 from $68,000 in 2002, which are included in other expenses.
Net income for the first six months of 2003 declined due to net interest income
decreasing by $601,000 for the first six months of 2003 compared to 2002.
Non-interest income decreased to $663,000 for the first half of 2003 compared to
$778,000 in 2002. This decrease was mainly attributable to a decrease in loan
fees to a loss of $180,000 in the first half of 2003 from income of $88,000 in
2002. Partially offsetting this decrease were gains on the sale of mortgage
loans totaling $314,000 in the first half of 2003 compared to $176,000 in 2002.
Non-interest expenses remained fairly consistent for the first six months of
2003 at $5,044,000 compared to $5,060,000 in the first half of 2002. Other
expenses decreased $82,000 mainly attributable to a reduction in marketing
expenses. Partially offsetting this decrease were salary and employee benefits
which increased $52,000 in 2003's first half compared to 2002.
Net interest income decreased to $2,998,000 for the second quarter 2003 compared
to $3,544,000 in the same quarter in 2002. Net interest income declined by
$601,000 for the six months ended June 30, 2003 compared to the same period in
2002. Interest income in the second quarter and first six months of 2003
experienced an overall decrease due to a declining interest rate environment on
interest earning assets and a lower average balance of loans from the same
periods in 2002. Interest expense incurred a similar decline in interest rates
resulting in lower rates paid on deposits and borrowed funds; however, the rates
paid on borrowed funds have declined at a slower pace than deposit rates. As a
result, the net interest margin decreased year to date in 2003 to 3.00% from
3.27% in 2002.
The Corporation continues to look for quality assets and seeks to maintain a low
level of risk assets as it grows the loan portfolios. Non-performing loans
totaled $23,000 and $1,000 at June 30, 2003 and December 31, 2002, respectively.
The Company has not acquired property through foreclosure in the past five
years.
Total assets decreased to $428,991,000 at June 30, 2003 down from $439,134,000
at December 31, 2002. The decrease in asset size at June 30, 2003 from December
31, 2002 is due to the paydown of $10,469,000 in borrowed funds as these became
due. The cash used came from the payoff of loans which declined by $27,828,000
and the reduction of $3,177,000 in Federal funds. The additional cash was used
to purchase investment securities, which increased by $21,550,000 since December
31, 2002.
Total deposits at June 30, 2003 were $280,338,000 up from $279,465,000 at
December 31, 2002. The change from December 31, 2002 is due to an increase in
money market investment accounts partially offset by a decrease in certificates
of deposit accounts. Although the total balance of deposits remained fairly
level, the mix of deposits changed from higher interest bearing deposits to
lower interest bearing accounts.
At June 30, 2003, the Company's stockholder's equity was $53,376,000 as compared
to $54,059,000 at December 31, 2002. The change during the first six months of
2003 occurred due to net income of $1,185,000 and the exercise of stock options
of $177,000, which increased stockholders' equity. The following items decreased
stockholders' equity: a $14,000 decrease in market values on securities
available for sale (net of taxes), the declaration of dividends of $1,009,000
and stock repurchases of $1,022,000. The Corporation's leverage ratio was 12.18%
and 12.10% at June 30, 2003 and December 31, 2002, respectively. The Corporation
exceeds all regulatory minimum capital ratio requirements as defined by the
Federal Reserve Bank as of and for all periods presented. The Bank exceeds all
regulatory minimum capital ratio requirements as defined by the FDIC as of and
for all periods presented.
Lawrence Savings Bank, the Company's wholly-owned subsidiary, is a
Massachusetts-chartered savings bank organized in 1868 and headquartered at 30
Massachusetts Avenue, North Andover, Massachusetts, approximately 25 miles north
of downtown Boston. Lawrence Savings Bank operates 5 banking offices in Andover,
Lawrence, Methuen, and North Andover. Go to www.LawrenceSavings.com for all your
Internet Banking needs. Please visit it today.
This press release may contain certain statements that are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended. Such statements
are not historical facts and include expressions of management's expectations at
a specific point in time regarding future relationships, structures,
opportunities and market conditions. Such expectations may or may not be
realized, depending on a number of variable factors, including but not limited
to, changes in interest rates, disruptions in credit markets, changes in
regional and local economic conditions, changes in the regulatory environment,
and changes in the competitive environment in which the Company operates. As a
result of such risks and uncertainties, the Company's actual results may differ
materially from such forward-looking statements. The Company does not undertake,
and specifically disclaims any obligation to publicly release revisions to any
such forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statement.
LSB CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET*
(In thousands, except per share data)
June 30,2003 December 31,2002
------------ ----------------
Loans $ 215,299 $ 243,127
Allowance for loan losses (4,176) (4,167)
Investments held to maturity 120,680 113,325
Investments available for sale 67,279 53,084
Federal Home Loan Bank Stock 5,950 5,950
Federal funds sold 6,456 9,633
Other assets 17,503 18,182
--------- ---------
Total assets $ 428,991 $ 439,134
========= =========
Deposits $ 280,338 $ 279,465
Borrowed funds 91,122 101,591
Other liabilities 4,155 4,019
Stockholders' equity 53,376 54,059
--------- ---------
Total liabilities and stockholders' equity $ 428,991 $ 439,134
========= =========
Book value per share $ 12.70 $ 12.71
========= =========
CONDENSED CONSOLIDATED INCOME STATEMENT*
(In thousands, except share data)
Three months ended Six months ended
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
------------- ------------- ------------- -------------
Interest income $ 5,314 $ 6,480 $ 10,976 $ 12,901
Interest expense 2,316 2,936 4,715 6,039
---------- ---------- ---------- ----------
Net interest income 2,998 3,544 6,261 6,862
Provision for loan losses -- -- -- --
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 2,998 3,544 6,261 6,862
Non-interest income 383 349 663 778
Non-interest expense 2,372 2,601 5,044 5,060
---------- ---------- ---------- ----------
Net income before income taxes 1,009 1,292 1,880 2,580
Income tax expense 374 473 695 945
---------- ---------- ---------- ----------
Net income $ 635 $ 819 $ 1,185 $ 1,635
========== ========== ========== ==========
Basic earnings per share $ 0.15 $ 0.19 $ 0.28 $ 0.37
Diluted earnings per share $ 0.15 $ 0.18 $ 0.27 $ 0.36
========== ========== ========== ==========
Average shares outstanding 4,204,362 4,384,686 4,209,335 4,383,337
Average diluted shares outstanding 4,364,480 4,567,062 4,361,182 4,559,019
========== ========== ========== ==========
SELECT FINANCIAL INFORMATION*
(Dollars in thousands)
Three months ended Six months ended
----------------------------------------------------------------
June 30, 2003 June 30, 2002 June 30, 2003 June 30, 2002
------------- ------------- ------------- -------------
Select financial ratios:
Return on average assets 0.59% 0.75% 0.55% 0.75%
Return on average stockholders' equity 4.80% 6.05% 4.49% 6.09%
June 30, 2003 December 31, 2002
------------- -----------------
Capital ratios:
Shareholders' equity to total assets ratio 12.44% 12.31%
Risk-based ratio
Leverage ratio 12.18% 12.10%
Total capital ratio 20.19% 17.74%
Asset quality ratios:
Allowance for loan losses to loans 1.94% 1.71%
Risk assets to total assets 0.01% 0.00%
Risk assets:
Non-performing loans $ 23 $ 1
Other real estate owned 7 12
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Total risk assets $ 30 $ 13
========== =======
*Unaudited