Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACT: GERALD T. MULLIGAN
President & CEO
(978) 725-7555
LSB CORPORATION ANNOUNCES SECOND QUARTER 2006 FINANCIAL RESULTS AND
QUARTERLY DIVIDEND
NORTH ANDOVER, MA, -- (MARKET WIRE) - July 27, 2006 - LSB Corporation, (the
"Corporation" or the "Company") (NASDAQ-LSBX), today announced a second quarter
2006 net loss of $1.9 million, or $0.42 per diluted share, as compared to net
income of $758,000, or $0.17 per diluted share, for the second quarter of 2005.
In the first six months of 2006 the net loss was $1.7 million, or $0.37 per
diluted share, versus net income of $1.6 million, or $0.36 per diluted share, in
the first six months of 2005. The largest factor in both the quarter and the
year to date results was the previously announced balance sheet restructuring
whereby $80 million of investments were sold at a pre-tax loss of $2.4 million
(after-tax charge of $1.6 million, or $0.35 per diluted share). Other costs
incurred in the second quarter of 2006 were related to the name change of the
Company's subsidiary bank to River Bank and former employee severance payments;
the combination of which totaled approximately $800,000 on a pre-tax basis
(after-tax charge of $525,000, or $0.11 per diluted share).
The Company believes that the most significant challenge in the current interest
rate environment is to increase net interest income while also maintaining
competitive deposit interest rates The Company continued to experience
compression of its net interest margin from 2.70% in the first six months of
2005 to 2.57% in the same period of 2006, for a decline of 13 basis points.
Although the Company expects the balance sheet restructuring to have a positive
impact on its net interest margin in the long-term, much of the restructuring
was not completed until late in the quarter and thus, its effect on the margin
during the quarter ended June 30, 2006 was minimal. In addition, a change in the
timing of the FHLBB (Federal Home Loan Bank of Boston) dividend resulted in no
dividend income on that investment this quarter. The Company expects, however,
that even taking into account the full impact of the balance sheet restructuring
and a normalized FHLBB dividend, deposit and borrowing interest rate increases
will continue to exert downward pressure on its net interest margin.
President Gerald T. Mulligan stated, "I believe that many of the one time
charges incurred this quarter will provide us with an improved competitive
posture and leave us better positioned for any interest rate increases. We are
pleased by the local reception of our name change and are optimistic that our
new name, enhanced marketing, and improved product pricing will lead to
continuing deposit and loan growth. Our increases in all loan categories this
quarter are encouraging."
Total loans increased $13.4 million from December 31, 2005 to $248.0 million as
of June 30, 2006. The increase was in all loan categories and total loans
exceeded total investments for the first time since December 2002. As of June
30, 2006, non-performing loans equaled 0.04% of total loans while the allowance
for loan losses as a proportion of total loans equaled 1.69%.
Total assets decreased $5.9 million from December 31, 2005 to $515.9 million as
of June 30, 2006. The decrease reflected the balance sheet restructuring whereby
a portion of the investment proceeds were used to reduce the Company's reliance
on borrowed funds.
Total deposits increased $1.8 million from December 31, 2005 and totaled $304.9
million as of June 30, 2006. Total borrowed funds decreased during the first six
months of 2006 by $2.5 million or 1.6% and totaled $150.9 million as of June 30,
2006.
The Company also announced a quarterly dividend of $0.14 to be paid on August
24, 2006 to shareholders of record as of August 10, 2006. This dividend
represents a 3.21% annualized dividend yield based on the closing stock price of
$17.44 on June 30, 2006.
Press releases and SEC filings can be viewed on the internet at our website
www.RiverBk.com/press-main.html or www.RiverBk.com/stockholder-info.html,
respectively.
LSB Corporation is a Massachusetts corporation that conducts all of its
operations through its subsidiary, River Bank (the "Bank"). River Bank is the
new name of the former Lawrence Savings Bank, a Massachusetts-chartered savings
bank organized in 1868, which changed its name effective June 26, 2006. The Bank
offers a range of commercial and consumer loan and deposit products and is
headquartered at 30 Massachusetts Avenue, North Andover, Massachusetts,
approximately 25 miles north of Boston. River Bank operates 5 full service
banking offices in Massachusetts in Andover, Lawrence, Methuen (2) and North
Andover and 1 full service banking office in Salem, New Hampshire.
The reader is cautioned that 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 forward-looking statements are expressions of management's
expectations as of the date of this press release regarding future events or
trends and which do not relate to historical matters. Such expectations may or
may not be realized, depending on a number of variable factors, including but
not limited to, changes in interest rates, general economic conditions,
regulatory considerations and competition. For more information about these
factors, please see our recent Annual Report on Form 10-K on file with the SEC,
including the sections entitled "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations". As a result of such
risk factors 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 updates or
revisions to any such forward-looking statements as a result of new information,
future events or otherwise.
LSB CORPORATION
SELECT FINANCIAL DATA
(unaudited)
Three months ended Six months ended
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(At or for the periods ending) June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
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Performance ratios (annualized):
Return on average assets (1.44%) 0.55% (0.64%) 0.60%
Return on average stockholders equity (13.72%) 5.24% (5.82%) 5.63%
Net interest margin 2.54% 2.62% 2.57% 2.70%
Interest rate spread 2.16% 2.32% 2.19% 2.41%
Dividends paid per share during period $ 0.14 $ 0.14 $ 0.28 $ 0.28
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(At) June 30, 2006 December 31, 2005 June 30, 2005
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CAPITAL RATIO:
Stockholders equity to total assets 10.50% 11.48% 10.76%
Leverage ratio 10.70% 11.34% 10.50%
RISK BASED CAPITAL RATIO:
Tier one 17.46% 19.09% 18.24%
Total risk based 18.71% 20.34% 19.49%
ASSET QUALITY:
Allowance for loan losses as a percent of total loans 1.69% 1.76% 1.73%
Non-performing loans as a percent of total loans 0.04% 0.01% 0.01%
PER SHARE DATA:
Book value per share $ 11.91 $ 13.42 $ 13.20
Tangible book value per share
(excludes accumulated other comp. loss) 12.89 13.58 13.30
Market value per share 17.44 17.35 16.20
LSB CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
(At) June 30, 2006 December 31, 2005 June 30, 2005
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Retail loans $ 78,046 $ 73,539 $ 72,113
Corporate loans 169,957 161,072 166,784
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Total loans 248,003 234,611 238,897
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Allowance for loan losses (4,184) (4,126) (4,135)
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Investments available for sale 232,305 46,363 49,739
Investments held to maturity -- 213,683 229,146
FHLB stock 9,359 10,097 10,097
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Total investments 241,664 270,143 288,982
Federal funds sold 7,559 198 1,370
Other assets 22,843 20,974 20,349
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Total assets $ 515,885 $ 521,800 $ 545,463
==========================================================================================================================
Deposits $ 304,882 $ 303,087 $ 307,142
Borrowed funds 150,856 153,380 175,821
Other liabilities 5,964 5,411 3,814
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Total liabilities 461,702 461,878 486,777
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Common stock 455 446 466
Additional paid-in capital 60,807 59,856 59,651
Retained earnings (loss) (2,620) 326 (987)
Accumulated other comprehensive loss (4,459) (706) (444)
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Total stockholders' equity 54,183 59,922 58,686
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Total liabilities and stockholders' equity $ 515,885 $ 521,800 $ 545,463
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three months ended Six months ended
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(For the period ended) June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
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Interest income $ 7,047 $ 6,495 $ 13,583 $ 12,604
Interest expense 3,744 2,964 6,985 5,519
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Net interest income 3,303 3,531 6,598 7,085
Provision for loan losses 30 -- 30 --
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Net interest income after provision
for loan losses 3,273 3,531 6,568 7,085
Loss on sale of investments (2,417) -- (2,417) --
Other non-interest income 343 387 673 752
Salary & employee expense 1,936 1,608 4,004 3,184
Other non-interest expense 2,213 1,152 3,369 2,157
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Total non-interest expense 4,149 2,760 7,373 5,341
Net income (loss) before income taxes (2,950) 1,158 (2,549) 2,496
Income tax expense (benefit) (1,008) 400 (867) 879
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Net income (loss) $ (1,942) $ 758 $ (1,682) $ 1,617
==========================================================================================================================
Basic earnings per share $ (0.43) $ 0.17 $ (0.37) $ 0.37
Diluted earnings per share $ (0.42) $ 0.17 $ (0.37) $ 0.36
End of period shares outstanding 4,548,867 4,445,314 4,548,867 4,445,314
Average shares outstanding:
Basic 4,539,834 4,423,467 4,518,045 4,394,673
Diluted 4,590,283 4,505,478 4,573,004 4,519,115