EXHIBIT 99.1
FOR IMMEDIATE RELEASE COMPANY CONTACT: Paul A. Miller
(978) 725-7555
LSB CORPORATION
THIRD QUARTER RESULTS 2003
NORTH ANDOVER, MA, -- (BUSINESS WIRE) - October 17, 2003 - LSB Corporation, (the
"Corporation" or the "Company") (NASDAQ-LSBX), today announced results for the
three and nine months ended September 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 $654,000 or $0.15 diluted earnings per
share for the third quarter of 2003. This amount compares to net income of
$695,000 or $0.15 diluted earnings per share for the same period of 2002. Net
income for the nine months ended September 30, 2003 totaled $1,839,000 or $0.42
diluted earnings per share compared to $2,330,000 or $0.51 diluted earnings per
share for the nine months ended September 30, 2002.
Net income for the quarter ended September 30, 2003 decreased due to net
interest income declining by $423,000. Offsetting this decline was non-interest
income increasing by $335,000 and non-interest expenses declining by $112,000.
The increase in non-interest income of $335,000 for the third quarter of 2003
from $323,000 in the same quarter of 2002 was primarily due to increased income
on loan fees to $233,000 in 2003 compared to a loss of $102,000 in 2002. The
current year's income on loan fees for the third quarter can be attributed to
$120,000 in commercial loan prepayment penalties in the third quarter of 2003.
Last year's loss in loan fees for the third quarter can be attributed to
provisions for losses on mortgage servicing rights (MSR's) of $98,000 in the
third quarter of 2002 due to higher than normal prepayment speeds used in the
fair value calculation of MSR's caused by the low interest rate environment on
mortgage loans. Non-interest expenses were $2,417,000 in the third quarter of
2003 compared to $2,529,000 for the same quarter of 2002. This decrease in the
third quarter of 2003 is primarily due to salaries and employee benefits
decreasing to $1,417,000 in 2003 down from $1,507,000 in 2002. The Company
instituted several salary reduction initiatives during the third quarter of 2003
as a result of the net interest margin declining to 2.66%. Occupancy and
equipment expenses decreased to $159,000 for the third quarter of 2003 from
$182,000 in 2002 due to a decrease in depreciation expenses and a reduction in
building repairs and maintenance. Professional expenses increased to $187,000
for the third quarter 2003 from $170,000 for the same period in 2002 due to a
rise in audit fees and legal expenses. Data processing expenses totaled $186,000
in the third quarter of 2003 down from $200,000 in 2002's third quarter.
Net income for the first nine months of 2003 declined due to net interest income
decreasing by $1,024,000 for the first nine months of 2003 compared to 2002.
Non-interest income increased to $1,321,000 for the first nine months of 2003
compared to $1,101,000 in 2002. This increase
was mainly attributable to gains on the sale of mortgage loans totaling $457,000
in the first nine months of 2003 compared to $323,000 in 2002. Also contributing
to the increase were loan fees of $53,000 in the first nine months of 2003
compared to a loss of $14,000 in the same period of 2002. Non-interest expenses
remained fairly consistent for the first nine months of 2003 at $7,461,000 down
from $7,589,000 in the first nine months of 2002. Other expenses decreased
$98,000 mainly attributable to reductions in marketing and professional
development expenses. Contributing to this decrease were salary and employee
benefits which decreased $38,000 in 2003's first nine months compared to 2002.
Net interest income decreased to $2,812,000 for the third quarter 2003 compared
to $3,235,000 in the same quarter in 2002. Net interest income declined by
$1,024,000 for the nine months ended September 30, 2003 compared to the same
period in 2002. Interest income in the third quarter of 2003 and the first nine
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. The coverage of the allowance for loan losses to total
loans has increased to 2.04% at September 30, 2003 from 1.71% at December 31,
2002 attributable to lower loan balances. Interest expense incurred a similar
decline in interest rates resulting in lower rates paid on deposits and borrowed
funds; however, the rates paid on deposits and borrowed funds have declined at a
slower pace during 2003 from 2002. As a result, the net interest margin
decreased year to date in 2003 to 2.89% from 3.17% in 2002.
The Corporation continues to look for quality assets and seeks to maintain a low
level of risk assets and to grow the loan portfolio profitably. This is evident
by the low level of delinquencies and non-performing loans as of September 30,
2003 and 2002. Non-performing loans totaled $22,000 and $1,000 at September 30,
2003 and December 31, 2002, respectively. The Company has made zero provisions
for loan losses in 2003 and 2002. The Company has not acquired property through
foreclosure in the past five years.
Total assets decreased to $427,861,000 at September 30, 2003 down from
$439,134,000 at December 31, 2002. The decrease in asset size at September 30,
2003 from December 31, 2002 is due to the paydown of $11,307,000 in borrowed
funds as these became due. The cash used came from the payoff of loans which
declined by $37,345,000 and the reduction of $9,633,000 in Federal funds. The
additional cash was used to purchase investment securities, which increased by
$35,870,000 since December 31, 2002.
Total deposits at September 30, 2003 were $280,531,000 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 September 30, 2003, the Company's stockholder's equity was $53,019,000 as
compared to $54,059,000 at December 31, 2002. The change during the first nine
months of 2003 occurred due to net income of $1,839,000 and the exercise of
stock options of $275,000, which increased stockholders' equity. The following
items decreased stockholders' equity: a $617,000 decrease
in market values on securities available for sale (net of taxes), the
declaration of dividends of $1,515,000 and stock repurchases of $1,022,000. The
Corporation's leverage ratio was 12.26% and 12.10% at September 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)
September 30, 2003 December 31, 2002
- ---------------------------------------------------------------------------------------------------------
Loans $205,782 $243,127
Allowance for loan losses (4,209) (4,167)
Investments held to maturity 144,505 113,325
Investments available for sale 57,774 53,084
Federal Home Loan Bank Stock 5,950 5,950
Federal funds sold -- 9,633
Other assets 18,059 18,182
- ---------------------------------------------------------------------------------------------------------
Total assets $427,861 $439,134
=========================================================================================================
Deposits $280,531 $279,465
Borrowed funds 90,284 101,591
Other liabilities 4,027 4,019
Stockholders' equity 53,019 54,059
- ---------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $427,861 $439,134
=========================================================================================================
Book value per share $ 12.56 $ 12.71
- ---------------------------------------------------------------------------------------------------------
CONDENSED CONSOLIDATED INCOME STATEMENT*
(In thousands, except share data)
Three months ended Nine months ended
---------------------------------------- -----------------------------------------
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
- -------------------------------------------------------------------------------------------------------------------------------
Interest income $ 4,977 $ 6,158 $ 15,953 $ 19,059
Interest expense 2,165 2,923 6,880 8,962
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income 2,812 3,235 9,073 10,097
Provision for loan losses -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 2,812 3,235 9,073 10,097
Non-interest income 658 323 1,321 1,101
Non-interest expense 2,417 2,529 7,461 7,589
- -------------------------------------------------------------------------------------------------------------------------------
Net income before income taxes 1,053 1,029 2,933 3,609
Income tax expense 399 334 1,094 1,279
- -------------------------------------------------------------------------------------------------------------------------------
Net income $ 654 $ 695 $ 1,839 $ 2,330
===============================================================================================================================
Basic earnings per share $ 0.16 $ 0.16 $ 0.44 $ 0.53
Diluted earnings per share $ 0.15 $ 0.15 $ 0.42 $ 0.51
===============================================================================================================================
Average shares outstanding 4,214,501 4,343,045 4,211,435 4,369,759
Average diluted shares outstanding 4,412,909 4,515,517 4,378,550 4,544,412
===============================================================================================================================
SELECT FINANCIAL INFORMATION*
(Dollars in thousands)
Three months ended Nine Months Ended
---------------------------------------- ----------------------------------------
September 30, 2003 September 30, 2002 September 30, 2003 September 30, 2002
- ---------------------------------------------------------------------------------- ----------------------------------------
Select financial ratios:
Return on average assets 0.60% 0.62% 0.57% 0.71%
Return on average stockholders' equity 4.90% 5.07% 4.63% 5.74%
September 30, 2003 December 31, 2002
- -------------------------------------------------------------------------------------------------------------------------------
Capital ratios:
Shareholders' equity to total assets ratio 12.39% 12.31%
Risk-based ratio
Leverage ratio 12.25% 12.10%
Total capital ratio 20.65% 17.74%
Asset quality ratios:
Allowance for loan losses to loans 2.05% 1.71%
Risk assets to total assets 0.01% 0.00%
Risk assets:
Non-performing loans $ 22 $ 1
Other real estate owned 4 12
- -------------------------------------------------------------------------------------------------------------------------------
Total risk assets $ 26 $ 13
===============================================================================================================================
*Unaudited