SOURCE: LSB Corporation

October 22, 2009 16:04 ET

LSB Corporation Announces Solid Third Quarter 2009 Financial Results, 2009 Deposit and Loan Growth of 15%, Declares Quarterly Cash Dividend

NORTH ANDOVER, MA--(Marketwire - October 22, 2009) - LSB Corporation (NASDAQ: LSBX) (the "Company") today announced third quarter 2009 net income available to common shareholders of $1.3 million, or $0.30 per diluted common share, as compared to a net loss of $(8.3) million, or $(1.85) per diluted common share, for the third quarter of 2008. Net income available to common shareholders for the nine months ended September 30, 2009 totaled $3.0 million, or $0.66 per diluted common share, versus a net loss of $(6.4) million, or $(1.42) per diluted common share, for the same period in 2008. Excluding the impact of the non-cash impairment charge incurred in 2008, normalized net income available to common shareholders for the third quarter of 2008 would have been $1.1 million while the third quarter of 2009 saw improved results to $1.3 million, an improvement of $213,000 or 18.8%. The normalized return on average assets for the three months ended September 30 was 0.78% in 2009 as compared to 0.63% in 2008, excluding the impact of the 2008 non-cash impairment charge.

Total assets increased by $45.6 million or 6.0% from December 31, 2008 to $807.0 million as of September 30, 2009. The 2009 increase reflected local loan growth of $65.8 million or 14.5% from December 31, 2008. The corporate loan portfolio increased by $43.0 million or 13.5% in the first nine months of 2009 while the retail loan portfolio increased by $22.8 million or 17.0% over the same period. This loan growth was offset by maturities and regular amortization of collateralized mortgage obligations and mortgage-backed securities totaling $64.2 million and sales of investments of $19.3 million.

Deposits totaled $471.4 million at September 30, 2009, an increase of $62.7 million or 15.3% from December 31, 2008. River Bank's focus on attracting and retaining core deposits has produced favorable results in 2009. During the first nine months of 2009, savings accounts, money market accounts, NOW accounts and demand deposit accounts increased by $29.5 million, $12.8 million, $2.1 million and $10.2 million, respectively. Certificates of deposit increased by $8.1 million since December 31, 2008. Total borrowed funds decreased during the first nine months of 2009 by $21.7 million or 7.8% and totaled $254.8 million as of September 30, 2009.

President and CEO Gerald T. Mulligan stated, "Our attention to customer service and competitive pricing continues to produce substantial growth in both credit-worthy, locally-based loans and attractive, local, core deposits. In spite of the challenging economic environment, we have been able to maintain modest levels of non-performing assets while continuing to build our loan loss reserves. We have been successful in gaining loan and deposit market share from large multi-national competitors that are otherwise distracted by economic challenges elsewhere. This increase in market share improves our long-term franchise value and permits us to do well in this uncertain economy.

"Additionally, I am pleased to report that on October 20, 2009, River Bank borrowed $6 million in a subordinated debt transaction intended to qualify as 'term subordinated debt' within the meaning of the FDIC's regulatory capital requirements and is, therefore, eligible as Tier 2 capital within the meaning of those regulations. We expect all of the $6 million subordinated debt, which will mature on October 20, 2016, will be included in River Bank's Tier 2 capital as of December 31, 2009. This additional regulatory capital will afford the Bank an increased ability to pursue strategic opportunities."

The largest negative factor affecting net income in 2009 is the increase in FDIC deposit insurance premiums which totaled $262,000 for the third quarter of 2009 as compared to $18,000 in the comparable quarter in 2008. More than offsetting the impact of the increased deposit insurance premiums were gains on sales of investments of $572,000 in the third quarter of 2009 as compared to none in the third quarter of 2008. Included in the year-to-date results for 2009 were total FDIC deposit insurance premiums of $1.0 million, which included a charge for the special FDIC deposit assessment of $370,000. Total deposit insurance expenses were $47,000 in the comparable period of 2008. Partially offsetting the significant deposit insurance costs for the nine months ended September 30, 2009 were gains on sales of investments totaling $1.0 million as compared to none in the comparable period of 2008.

The cause for the net loss in both the quarter and the year-to-date results in 2008 was the other-than-temporary impairment write-downs of investments in Fannie Mae and Freddie Mac preferred stock, the value of which was adversely affected by events surrounding the September 7, 2008 appointment of a conservator for Fannie Mae and Freddie Mac. The non-cash charge of $(9.4) million or $(2.10) per diluted share, pre-tax, reduced earnings in both the quarter and the year-to-date periods ended September 30, 2008.

The Company recorded a provision for loan losses of $400,000 in the third quarter of 2009 as compared to $330,000 for the third quarter of 2008 and $460,000 in the second quarter of 2009. The increase in the provision for loan losses in 2009 is due to continued corporate and retail loan growth coupled with an increase in non-performing loans. Annualized net loan charge-offs as a percentage of average loans totaled 10 basis points for the first nine months of 2009 as compared to 4 basis points in the comparable period in 2008.

The Company's net interest margin remained stable at 2.53% for the first nine months of 2009 and 2008, respectively. However, there was an increase in the net interest margin from 2.52% in the second quarter of 2009 to 2.59% in the third quarter of 2009. The Company is continually monitoring ways to maintain or improve the net interest margin as market interest rates continue to decline. The improvement in the margin is partially caused by a shift in the mix of assets as higher yielding loans replace maturing investments.

At September 30, 2009, non-performing loans totaled $3.5 million and 0.68% of total loans as compared to $4.1 million and 0.82%, respectively, as of June 30, 2009 and $2.6 million and 0.58%, respectively, as of December 31, 2008. The allowance for loan losses in total and as a proportion of total loans as of September 30, 2009 equaled $6.6 million and 1.28%, respectively, as compared to $5.9 million and 1.30%, respectively, as of December 31, 2008. Non-performing assets, which include non-performing loans and other real estate owned, totaled $3.7 million at September 30, 2009 for an increase of $942,000 from December 31, 2008. The increase in non-performing loans during the nine months of 2009 resulted from multiple properties, including both commercial and residential real estate collateral. Total loan delinquencies under 90 days at September 30, 2009 amounted to $761,000 as compared to $2.1 million as of June 30, 2009 and $500,000 at December 31, 2008.

The Company also announced today a quarterly cash dividend of $0.05 per share to be paid on November 19, 2009 to shareholders of record as of November 5, 2009. This dividend represents a 1.9% annualized dividend yield based on the closing stock price of $10.75 on October 21, 2009.

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 sole subsidiary, River Bank (the "Bank"). 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 2 full-service banking offices in New Hampshire in Derry and Salem.

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, changes in real estate valuations, general economic conditions (either nationally or regionally), regulatory considerations and competition. For more information about these factors, please see our recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q 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  Nine months ended
                                   ------------------  ------------------
                                   Sept. 30, Sept. 30, Sept. 30, Sept. 30,
(For the periods ending)             2009      2008      2009      2008
                                   --------  --------  --------  --------

Performance ratios (annualized):
Efficiency ratio                      58.70%    59.96%    65.02%    62.34%
Return on average assets               0.78%    (4.57)%    0.61%   (1.25)%
Return on average stockholders
 equity                                8.31%   (57.08)%    6.55%   (14.30)%
Net interest margin                    2.59%     2.54%     2.53%     2.53%
Interest rate spread (int.
 bearing only)                         2.26%     2.21%     2.19%     2.15%

Dividends paid per share during
 period                            $   0.05  $   0.15  $   0.25  $   0.43

                                   --------------------------------------
(At)                                        Sept. 30,  Dec. 31,  Sept. 30,
                                               2009      2008      2008
                                   --------  --------  --------  --------
                                   "Well
                                Capitalized"
                                  Minimums

Capital Ratios:
Stockholders' equity to total
 assets                              N/A         9.46%     9.48%     7.02%
RiverBank Tier 1 leverage ratio      5.0%        8.17%     8.18%     7.36%

Risk-Based Capital Ratio:
LSB Corporation Tier 1 risk-based    6.0%       12.64%    13.30%    10.62%
RiverBank Tier 1 risk-based          6.0%       11.54%    11.83%    10.47%
RiverBank total risk-based          10.0%       12.72%    12.97%    11.57%

Asset Quality:
Allowance for loan losses as a
 percent of total loans                          1.28%     1.30%     1.27%
Allowance as a percent of
 non-performing loans                          187.03%   225.83%   895.63%
Non-performing loans as a percent
 of total loans                                  0.68%     0.58%     0.14%
Non-performing assets as a percent
 of total assets                                 0.45%     0.36%     0.21%

Per Share Data:
Book value per share including CPP           $  16.97  $  16.14  $  11.47
Book value per share excluding CPP           $  13.64  $  12.78  $  11.47
Tangible book value per share including CPP  $  15.79  $  15.40  $  11.37
Tangible book value per share excluding CPP  $  12.46  $  12.04  $  11.37



          Reconciliation Table - Non-GAAP Financial Information
             (Dollars in thousands, except per share data)
                            (unaudited)

                                   Three months ended  Nine months ended
                                   ------------------  ------------------
                                   Sept. 30, Sept. 30, Sept. 30, Sept. 30,
(For the periods ended)              2009      2008      2009      2008
                                   --------  --------  --------  --------

Net income (loss) to common
  shareholders per GAAP            $  1,346  $ (8,250) $  2,998  $ (6,391)
Add: Impairment of investments           --     9,383        --     9,383
                                   --------  --------  --------  --------
Net operating earnings to common
 shareholders (non-GAAP)           $  1,346  $  1,133  $  2,998  $  2,992
                                   ========  ========  ========  ========

Diluted net operating earnings
 per common share                  $   0.30  $   0.25  $   0.66  $   0.67

Return on average assets               0.78%     0.63%     0.61%     0.58%
Return on average stockholders'
 equity                                8.31%     7.84%     6.55%     6.69%



                              LSB CORPORATION
                   CONDENSED CONSOLIDATED BALANCE SHEET
                             (In thousands)
                               (unaudited)

                                        Sept. 30,    Dec. 31,    Sept. 30,
(At)                                       2009        2008        2008
                                        ----------  ----------  ----------
Retail loans                            $  156,855  $  134,079  $  130,147
Corporate loans                            361,587     318,542     306,645
                                        ----------  ----------  ----------
Total loans                                518,442     452,621     436,992
                                        ----------  ----------  ----------
Allowance for loan losses                   (6,636)     (5,885)     (5,535)
                                        ----------  ----------  ----------
Investments available for sale             240,341     264,561     242,256
FHLB stock                                  11,825      11,825      11,787
                                        ----------  ----------  ----------
Total investments                          252,166     276,386     254,043
                                        ----------  ----------  ----------
Federal funds sold                          10,218       6,469      13,617
Other assets                                32,763      31,733      30,093
                                        ----------  ----------  ----------
Total assets                            $  806,953  $  761,324  $  729,210
                                        ==========  ==========  ==========
Core deposits                           $  232,255  $  177,639  $  185,482
Term deposits                              239,096     231,024     214,879
                                        ----------  ----------  ----------
Total deposits                             471,351     408,663     400,361
                                        ----------  ----------  ----------
Borrowed funds                             254,815     276,490     272,803
Other liabilities                            4,427       4,029       4,869
                                        ----------  ----------  ----------
Total liabilities                          730,593     689,182     678,033
                                        ----------  ----------  ----------
Total stockholders' equity                  76,360      72,142      51,177
                                        ----------  ----------  ----------
Total liabilities and stockholders'
 equity                                  $ 806,953   $ 761,324   $ 729,210
                                        ==========  ==========  ==========



            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             (Dollars in thousands, except per share data)
                              (unaudited)

                           Three months ended        Nine months ended
                        ------------------------  ------------------------
(For the period ended)   Sept. 30,   Sept. 30,     Sept. 30,    Sept. 30,
                           2009         2008          2009        2008
                        -----------  -----------  -----------  -----------
Interest income         $    10,268  $     9,925  $    30,400  $    28,768
Interest expense              5,226        5,482       16,058       16,212
                        -----------  -----------  -----------  -----------
Net interest income           5,042        4,443       14,342       12,556
Provision for loan
 losses                         400          330        1,100          835
                        -----------  -----------  -----------  -----------
Net interest income
 after provision
 for loan losses              4,642        4,113       13,242       11,721
Impairment of investments        --       (9,383)          --       (9,383)
Gain on sales of
 investments                    572           --        1,030           --
Other non-interest income       524          535        1,571        1,540
Salary & employee
 benefits expense             1,643        1,692        5,013        4,963
Other non-interest
 expense                      1,624        1,293        5,333        3,825
                        -----------  -----------  -----------  -----------
   Total non-interest
    expense                   3,267        2,985       10,346        8,788
                        -----------  -----------  -----------  -----------
Net income (loss) before
 income taxes                 2,471       (7,720)       5,497       (4,910)
Income tax expense
 (benefit)                      910          530        1,911        1,481
                        -----------  -----------  -----------  -----------
Net income (loss)
 before preferred stock
 dividends and accretion      1,561       (8,250)       3,586       (6,391)
Preferred stock
 dividends and
 accretion                     (215)          --         (588)          --
                        -----------  -----------  -----------  -----------
Net income (loss)
 available to common
 shareholders           $     1,346  $    (8,250) $     2,998  $    (6,391)
                        ===========  ===========  ===========  ===========

Basic earnings (loss)
 per common share       $      0.30  $     (1.85)  $     0.66  $     (1.43)
Diluted earnings (loss)
 per common share       $      0.30  $     (1.85)  $     0.66  $     (1.42)
End of period common
 shares outstanding       4,499,936    4,461,441    4,499,936    4,461,441

Weighted average common
 shares outstanding:
Basic                     4,495,356    4,456,821    4,479,316    4,469,884
Diluted                   4,496,680    4,469,482    4,463,995    4,489,765

Contact Information

  • CONTACT:
    Gerald T. Mulligan
    President & CEO
    (978) 725-7555