Exhibit 99.1
FOR IMMEDIATE RELEASE COMPANY CONTACT: Paul A. Miller
(978) 725-7555
LSB CORPORATION
THIRD QUARTER RESULTS 2004
NORTH ANDOVER, MA, -- (BUSINESS WIRE) - October 22, 2004 - LSB Corporation, (the
"Corporation" or the "Company") (NASDAQ-LSBX), today announced results for the
three and nine months ended September 30, 2004. 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 $697,000 or $0.16 diluted earnings per
share for the third quarter of 2004. This amount compares to net income of
$654,000 or $0.15 diluted earnings per share for the same period of 2003. Net
income for the nine months ended September 30, 2004 totaled $3,840,000 or $0.86
diluted earnings per share compared to $1,839,000 or $0.42 diluted earnings per
share for the nine months ended September 30, 2003.
Net income for the three months ended September 30, 2004 increased by $43,000
primarily due to an increase in net interest income of $580,000 or 20.6% to
$3,392,000 compared to the same period in 2003. Higher average investment
security balances for the three months ended 2004 compared to 2003 resulted in a
rise of $385,000 to interest income coupled with a rise in yields on investment
securities contributing $265,000 for the same periods. This was offset by a
decrease in non-interest income of $310,000 and non-interest expenses increasing
by $289,000. The decrease in non-interest income of $310,000 was primarily due
to loan fees decreasing by $214,000 in 2004 compared to 2003. The decrease in
loan fees for the third quarter 2004 can be attributed to a decrease of $81,000
in prepayment penalties and late charges on commercial real estate loans and to
a decrease in net fair value on mortgage servicing rights ("MSR") resulting in a
$33,000 increase to the valuation allowance in 2004 compared to a decrease in
the valuation allowance of $102,000 in the third quarter of 2003.
Non-interest expenses were $2,706,000 in the third quarter of 2004 compared to
$2,417,000 for the same quarter of 2003. The increase in the third quarter of
2004 is primarily due to salaries and employee benefits rising to $1,655,000 in
2004 from $1,417,000 in 2003 due to normal salary increases and the addition to
headcount for the new Salem, New Hampshire branch. Occupancy and equipment
increased to $219,000 from $159,000 due to higher rent expense and depreciation
expense in the third quarter of 2004.
Net income for the nine months ended September 30, 2004 increased by $2,001,000
due primarily to the receipt of $2,528,000 on a U.S. Bankruptcy Judge's Order to
make an interim distribution in a case in which the Company's wholly owned
subsidiary, Lawrence Savings Bank (the "Bank"), is a secured creditor. The Bank
recognized $253,000 of the interim distribution as a recovery to the allowance
for loan losses on amounts previously charged off and the remaining $2,275,000
as a lawsuit judgment collected in non-interest income. The Bank recorded a
negative provision for loan losses of $300,000 in the quarter ended June 30,
2004.
Net interest income for the nine months ended September 30, 2004 increased by
$1,108,000 or 12.2% to $10,181,000 from $9,073,000 in 2003. The net interest
margin for the first nine months of 2004, compared to the first nine months of
2003, increased slightly to 2.91% from 2.89%, respectively. The increase in net
interest income can be attributed to the purchases of investment securities
funded primarily from Federal Home Loan Bank ("FHLB") advances. Average balances
for investment securities have increased by $57,992,000 in 2004 from 2003. Other
factors contributing to a higher net interest income were lower interest expense
on deposits and borrowed funds due to lower interest rates and a shift in the
mix of deposits and borrowings to lower interest rate products.
Partially offsetting these increased revenues for the nine months ended 2004 was
a decrease in non-interest income of $146,000, an increase in non-interest
expenses of $504,000 and an increase in the provision for income taxes of
$1,032,000 attributable to the recovery mentioned above.
Non-interest income decreased by $146,000 to $1,175,000 from $1,321,000 in the
first nine months of 2004 as a result of a decrease in gains on loan sales of
$393,000 in 2004 from the first nine months of 2003 due to a lower level of loan
sales in 2004. Partially offsetting this decrease were increases in loan fees of
$109,000 and deposit account fees increasing by $142,000 in the first nine
months of 2004 from 2003.
Non-interest expenses increased by $504,000 to $7,965,000 for the first nine
months of 2004 compared to $7,461,000 in the first nine months of 2003. This
increase was mainly attributable to salaries and benefits increasing to
$4,904,000 from $4,488,000 in the first nine months of 2004 from 2003,
respectively, and occupancy and equipment expense of $77,000 in 2004 due to an
increase in rent expense associated with the new branch and other occupancy
costs. Professional fees declined to $472,000 in 2004 from $550,000 in 2003
attributable to a reduction in legal expenses. Data processing expenses
increased by $123,000 to $670,000 in 2004 from $547,000 in 2003 due to increased
service bureau charges. Marketing expenses increased to $172,000 in 2004 from
$60,000 in 2003, due to increased advertising for the new Salem, New Hampshire
branch and promotions for new product lines.
The Corporation continues to look for quality assets, seeks to maintain a low
level of risk assets and seeks to grow the loan portfolio profitably. This is
evident by the low level of delinquencies and non-performing loans as of
September 30, 2004 and December 31, 2003. Non-performing loans totaled $247,000
and zero at September 30, 2004 and December 31, 2003, respectively. The coverage
of the allowance for loan losses to total loans has decreased slightly to 1.91%
at September 30, 2004 from 2.00% at December 31, 2003.
Total assets increased to $500,989,000 at September 30, 2004 up from
$466,108,000 at December 31, 2003. The increase in asset size at September 30,
2004 from December 31, 2003 is mainly attributable to an increase of $27,964,000
in investment securities, $5,165,000 in loan growth and $1,101,000 increase in
Federal Home Loan Bank stock. The funding for these assets came from an increase
in deposits of $29,141,000 and borrowed funds of $4,192,000 during 2004.
Total deposits at September 30, 2004 were $301,681,000 up from $272,540,000 at
December 31, 2003. The change from December 31, 2003 is due primarily to
increases in certificates of
deposit, demand deposit accounts and money market investment accounts. All other
deposit categories experienced slight increases.
At September 30, 2004, the Company's stockholders' equity was $57,497,000 as
compared to $55,002,000 at December 31, 2003. The increase during 2004 occurred
due to net income of $3,840,000 and proceeds from the exercise of stock options
of $452,000. Offsetting these increases were the declaration of cash dividends
to shareholders of $1,673,000 and a decrease in the market values of securities
available for sale (net of taxes) of $124,000. The Corporation's leverage ratio
was 11.78% and 12.11% at September 30, 2004 and December 31, 2003, 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 Massachusetts in
Andover, Lawrence, Methuen, and North Andover and 1 banking office in Salem, New
Hampshire. 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, 2004 December 31, 2003
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Loans $ 216,668 $ 211,503
Allowance for loan losses (4,139) (4,220)
Investments held to maturity 200,608 184,286
Investments available for sale 60,234 48,592
Federal Home Loan Bank stock 7,694 6,593
Federal funds sold 128 889
Other assets 19,796 18,465
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Total assets $ 500,989 $ 466,108
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Deposits $ 301,681 $ 272,540
Borrowed funds 137,544 133,352
Other liabilities 4,267 5,214
Stockholders' equity 57,497 55,002
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Total liabilities and stockholders' equity $ 500,989 $ 466,108
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Book value per share $ 13.31 $ 12.99
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Select financial ratios: September 30, 2004 December 31, 2003
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Capital ratios:
Stockholders' equity to total assets ratio 11.48% 11.80%
Risk-based ratio
Leverage ratio 11.78% 12.11%
Total capital ratio 19.94% 20.50%
Asset quality ratios:
Allowance for loan losses to loans 1.91% 2.00%
Risk assets to total assets 0.05% 0.00%
Risk assets:
Non-performing loans $ 247 $ --
Other real estate owned -- 2
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Total risk assets $ 247 $ 2
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CONDENSED CONSOLIDATED INCOME STATEMENT*
(In thousands, except share data)
Three months ended Nine months ended
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September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
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Interest income $ 5,488 $ 4,977 $ 16,391 $ 15,953
Interest expense 2,096 2,165 6,210 6,880
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Net interest income 3,392 2,812 10,181 9,073
Provision (credit) for loan losses -- -- (300) --
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Net interest income after provision (credit)
for loan losses 3,392 2,812 10,481 9,073
Non-interest income 348 658 1,175 1,321
Lawsuit judgment collected -- -- 2,275 --
Non-interest expense 2,706 2,417 7,965 7,461
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Net income before income taxes 1,034 1,053 5,966 2,933
Income tax expense 337 399 2,126 1,094
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Net income $ 697 $ 654 $ 3,840 $ 1,839
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Basic earnings per share $ 0.16 $ 0.16 $ 0.89 $ 0.44
Diluted earnings per share $ 0.16 $ 0.15 $ 0.86 $ 0.42
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Average shares outstanding 4,312,649 4,214,501 4,293,362 4,211,435
Average diluted shares outstanding 4,482,075 4,412,909 4,452,403 4,378,550
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Three months ended Nine months ended
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September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
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Select financial ratios:
Return on average assets 0.58% 0.60% 1.07% 0.57%
Return on average stockholders' equity 4.88% 4.90% 9.20% 4.63%
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*Unaudited