EXHIBIT 99.1
FOR IMMEDIATE RELEASE COMPANY CONTACT: Paul A. Miller
(978) 725-7555
LSB CORPORATION
FOURTH QUARTER RESULTS 2003
NORTH ANDOVER, MA, -- (BUSINESS WIRE) - January 16, 2004 - LSB Corporation, (the
"Corporation" or the "Company") (NASDAQ-LSBX), today announced results for the
quarter ended and year ended December 31, 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 $2,297,000 or $0.52 diluted earnings per
share for the fourth quarter of 2003. This amount compares to net income of
$770,000 or $0.17 diluted earnings per share for the same period of 2002. Net
income for the year ended December 31, 2003 totaled $4,136,000 or $0.94 diluted
earnings per share compared to $3,100,000 or $0.69 diluted earnings per share
for the year ended December 31, 2002.
On October 21, 2003 the Massachusetts Appeals Court rendered a favorable opinion
on a lawsuit in which the Corporation's wholly owned subsidiary, Lawrence
Savings Bank, (the "Bank") was the plaintiff. The Bank received judgment in the
amount of $1,996,000 on October 30, 2003. This payment received was recorded in
non-interest income. The after tax impact is approximately $1,251,000 which
represents approximately $0.29 per basic earnings per share.
Net income for the quarter ended December 31, 2003 increased primarily
attributable to the favorable resolution of the lawsuit. Net interest income for
the quarter declined by $192,000 compared to last year. Also non-interest income
decreased by $105,000 (excluding the impact of the lawsuit) and non-interest
expenses declined by $289,000. The decrease in non-interest income of $105,000
for the fourth quarter of 2003 from $392,000 in the same quarter of 2002 was
primarily due to a decrease in the gains on sales of mortgage loans to $10,000
from $206,000 in the fourth quarter of 2003 and 2002, respectively. Partially
offsetting this decline was a lower loss on loan fees to $33,000 in 2003
compared to a loss of $131,000 in 2002. The loss in loan fees for the fourth
quarters can be attributed to provisions for losses on mortgage servicing rights
(MSR's) of $30,000 and $135,000 in the fourth quarters of 2003 and 2002,
respectively, 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 $2,277,000 in the fourth quarter of 2003
compared to $2,566,000 for the same quarter of 2002. This decrease in the fourth
quarter of 2003 is primarily due to a reduction in professional fees to $93,000
from $176,000 in the fourth quarter of 2002 resulting from a reduction in legal
expenses. Salaries and employee benefits declined to $1,435,000 from $1,480,000
in the fourth quarter of 2003 due to the salary reduction initiatives and lower
headcount. Administrative
expenses, included in other expenses, totaled $64,000 in the fourth quarter of
2003 down from $105,000 in 2002's fourth quarter.
Net income for the year ended 2003 increased due primarily to the favorable
resolution of the lawsuit. Net interest income decreased by $1,216,000 for the
year ended 2003 compared to 2002. Non-interest income increased by $115,000
(excluding the payment from the lawsuit) for the year ended 2003 compared to
$1,493,000 in 2002. This increase was mainly attributable to increased income on
loan fees to $20,000 in 2003 compared to a loss of $145,000 in 2002. The current
year's income on loan fees can be attributed to $186,000 in commercial loan
prepayment penalties for the year ended 2003. Also contributing to the increase
were deposit fees of $713,000 in 2003 compared to $665,000 in the same period of
2002. Partially offsetting these increases was a reduction in gains on the sale
of mortgage loans to $467,000 from $529,000 in 2003 and 2002, respectively.
Non-interest expenses decreased to $9,738,000 down from $10,155,000 in 2002.
This decline is primarily attributable to a reduction in professional fees to
$643,000 from $806,000 resulting from lower legal fees. Salaries and employee
benefits decreased to $5,923,000 from $6,006,000 resulting from the salary
reduction initiatives and lower headcount. Other expenses decreased $148,000
mainly attributable to reductions in marketing, professional development and
administrative expenses due to expense reduction efforts.
Net interest income decreased to $3,284,000 for the fourth quarter 2003 compared
to $3,476,000 in the same quarter in 2002. Net interest income declined by
$1,216,000 for the year ended December 31, 2003 compared to the same period in
2002. Interest income during the year 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 2.00% at December 31,
2003 from 1.71% at December 31, 2002 attributable to lower loan balances.
Interest expense was also affected by 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 2.90% from 3.20% 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 December 31,
2003 and 2002. Non-performing loans totaled zero and $1,000 at December 31, 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 increased to $466,108,000 at December 31, 2003 up from $439,134,000
at December 31, 2002. The increase in asset size at December 31, 2003 from
December 31, 2002 is due to an increase of $66,469,000 in investment securities.
The cash used for this net security purchase increase came from the payoff of
loans which declined by $31,624,000, the reduction of $8,744,000 in Federal
funds and an increase in borrowed funds of $31,761,000 since December 31, 2002.
Total deposits at December 31, 2003 were $272,540,000 down from $279,465,000 at
December 31, 2002. The change from December 31, 2002 is due to a decrease in
certificates of deposit accounts partially offset by an increase in money market
investment accounts. The mix of deposits changed from higher interest bearing
deposits to lower interest bearing accounts.
At December 31, 2003, the Company's stockholder's equity was $55,002,000 as
compared to $54,059,000 at December 31, 2002. The change during 2003 occurred
due to net income of $4,136,000 and the exercise of stock options of $511,000,
which increased stockholders' equity. The following items decreased
stockholders' equity: a $659,000 decrease in market values on securities
available for sale (net of taxes), the declaration of dividends of $2,023,000
and stock repurchases of $1,022,000. The Corporation's leverage ratio was 12.11%
and 12.10% at December 31, 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)
December 31, 2003 December 31, 2002
----------------- -----------------
Loans $211,503 $243,127
Allowance for loan losses (4,220) (4,167)
Investments held to maturity 184,286 113,325
Investments available for sale 48,592 53,084
Federal Home Loan Bank Stock 6,593 5,950
Federal funds sold 889 9,633
Other assets 18,465 18,182
-------- --------
Total assets $466,108 $439,134
======== ========
Deposits $272,540 $279,465
Borrowed funds 133,352 101,591
Other liabilities 5,214 4,019
Stockholders' equity 55,002 54,059
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Total liabilities and stockholders' equity $466,108 $439,134
======== ========
Book value per share $ 12.99 $ 12.71
-------- --------
CONDENSED CONSOLIDATED INCOME STATEMENT*
(In thousands, except share data)
Three months ended Twelve months ended
------------------ -------------------
December 31, 2003 December 31, 2002 December 31, 2003 December 31, 2002
----------------- ----------------- ----------------- -----------------
Interest income $ 5,381 $ 6,079 $ 21,334 $ 25,138
Interest expense 2,097 2,603 8,977 11,565
---------- ---------- ---------- ----------
Net interest income 3,284 3,476 12,357 13,573
Provision for loan losses -- -- -- --
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 3,284 3,476 12,357 13,573
Non-interest income 287 392 1,608 1,493
Lawsuit judgment collected 1,996 -- 1,996 --
Non-interest expense 2,277 2,566 9,738 10,155
---------- ---------- ---------- ----------
Net income before income taxes 3,290 1,302 6,223 4,911
Income tax expense 993 532 2,087 1,811
---------- ---------- ---------- ----------
Net income $ 2,297 $ 770 $ 4,136 $ 3,100
========== ========== ========== ==========
Basic earnings per share $ 0.54 $ 0.18 $ 0.98 $ 0.71
Diluted earnings per share $ 0.52 $ 0.17 $ 0.94 $ 0.69
========== ========== ========== ==========
Average shares outstanding 4,229,326 4,283,770 4,215,944 4,348,085
Average diluted shares outstanding 4,431,309 4,441,919 4,391,812 4,518,649
========== ========== ========== ==========
SELECT FINANCIAL INFORMATION*
(Dollars in thousands)
Three months ended Twelve months ended
------------------ -------------------
December 31, 2003 December 31, 2002 December 31, 2003 December 31, 2002
----------------- ----------------- ----------------- -----------------
Select financial ratios:
Return on average assets 2.01% 0.70% 0.94% 0.71%
Return on average stockholders' equity 16.92% 5.64% 7.76% 5.72%
December 31, 2003 December 31, 2002
----------------- -----------------
Capital ratios:
Shareholders' equity to total assets ratio 11.80% 12.31%
Risk-based ratio
Leverage ratio 12.11% 12.10%
Total capital ratio 20.50% 17.74%
Asset quality ratios:
Allowance for loan losses to loans 2.00% 1.71%
Risk assets to total assets 0.00% 0.00%
Risk assets:
Non-performing loans $ - $ 1
Other real estate owned 2 12
------ ------
Total risk assets $ 2 $ 13
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*Unaudited