SOURCE: LSB Corporation

October 25, 2007 17:00 ET

LSB Corporation Announces Third Quarter 2007 and Year-to-Date Financial Results, Quarterly Cash Dividend

NORTH ANDOVER, MA--(Marketwire - October 25, 2007) - LSB Corporation (NASDAQ: LSBX) (the "Corporation" or the "Company") today announced third quarter 2007 net income of $1.0 million, or $0.22 per diluted share, as compared to net income of $808,000, or $0.18 per diluted share, for the third quarter of 2006. Net income for the nine months ended September 30, 2007, totaled $2.6 million, or $0.57 per diluted share, as compared to a net loss of $874,000, or $0.19 per diluted share, for the year-to-date period ended September 30, 2006.

The largest factors in the year-to-date results for 2006 were the 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) accompanied by other costs incurred in 2006 relating to the name change of the Company's subsidiary bank to River Bank and former employee severance payments; the combination of which totaled approximately $1.2 million on a pre-tax basis (after-tax charge of $780,000, or $0.17 per diluted share).

The improved results in the third quarter of 2007 resulted from settlement gains of $357,000 recorded in connection with the pension termination announced in October 2006. The pre-tax gain is due to the reversal of the accrued pension liability. Partially offsetting the settlement gains, the Company recorded a provision for loan losses of $250,000 in the third quarter of 2007, or approximately $100,000 higher than the second quarter of 2007. The increases in the provision for loan losses in both quarters are primarily due to the continued, sustained corporate loan growth.

The Company's net interest margin increased from 2.67% in the first nine months of 2006 to 2.78% for the comparable period in 2007. This increase reflects the Company's continued success in generating new loan growth and replacing maturing investments with higher-yielding loans. However, the Company expects that the current interest rate environment will continue to exert pressures on its deposit and borrowing costs, which may decrease the Company's net interest margin in future periods.

Total assets increased $66.2 million from December 31, 2006 to $609.1 million as of September 30, 2007. The increase in 2007 reflected the strong loan growth since year end 2006, partially offset by a decline in the investment portfolio from December 31, 2006.

Total loans of $349.3 million as of September 30, 2007 increased $61.1 million from December 31, 2006. The increase was primarily in the corporate loan portfolio. As of September 30, 2007, non-performing loans equaled 0.10% of total loans while the allowance for loan losses as a proportion of total loans equaled 1.36% as compared to 0.37% and 1.50%, respectively, as of December 31, 2006.

Total deposits increased $31.0 million from December 31, 2006 and totaled $326.6 million as of September 30, 2007. Due to aggressive promotional campaigns targeting new customers, certificates of deposit increased 24.3% from December 31, 2006. Money market investment accounts and NOW accounts increased modestly offset by decreases in savings accounts and demand deposit accounts. Brokered certificates of deposit totaled $5.5 million at September 30, 2007. Total borrowed funds increased during the first nine months of 2007 by $34.9 million or 18.9% and totaled $219.6 million as of September 30, 2007.

President and CEO Gerald T. Mulligan stated, "I am pleased by the 27% increase in the corporate loan growth which has been achieved without a diminution in credit quality. In light of recent evidence of asset quality concerns at other financial institutions, we have maintained a high allowance coverage ratio of 1.36% of all loans."

The Company also announced today a quarterly cash dividend of $0.14 to be paid on November 23, 2007 to shareholders of record as of November 8, 2007. This dividend represents a 3.49% annualized dividend yield based on the closing stock price of $16.04 on September 30, 2007.

Under the previously approved common stock repurchase program, the Company has repurchased approximately 60,000 shares of the Company's outstanding common stock since the program's inception. The timing and amount of future stock repurchases will depend upon market conditions, securities law limitations and other corporate considerations; the Company has placed no deadline on the duration of the repurchase program.

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 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  Nine months ended
                                  ---------------     ---------------
(At or for the periods ending)  Sept. 30, Sept. 30,  Sept. 30, Sept. 30,
                                   2007     2006       2007     2006
                                  ------   ------     ------   ------
Performance ratios (annualized):
Efficiency ratio                   65.91%   66.86%     67.40%   89.28%
Return on average assets            0.69%    0.62%      0.62%   (0.22%)
Return on average stockholders
 equity                             7.06%    5.83%      6.03%   (2.04%)
Net interest margin                 2.66%    2.86%      2.78%    2.67%
Interest rate spread (int.
 bearing only)                      2.16%    2.33%      2.23%    2.23%

Dividends paid per share during
 period                           $ 0.14   $ 0.14     $ 0.42   $ 0.42


                                           ------     ------   ------
(At)                                      Sept. 30,  Dec. 31, Sept. 30,
                                            2007       2006     2006
                                           ------     ------   ------

Capital Ratio:
Stockholders equity to total assets          9.67%     10.78%   10.95%
Leverage ratio                              10.02%     11.18%   11.35%

Risk Based Capital Ratio:
Tier one                                    13.99%     15.73%    17.05%
Total risk based                            15.11%     16.86%    18.26%

Asset Quality:
Allowance for loan losses as a percent
 of total loans                              1.36%      1.50%     1.59%
Non-performing loans as a percent of
 total loans                                 0.10%      0.37%     0.43%

Per Share Data:
Book value per share                       $12.94     $12.74    $12.49
Tangible book value per share
 (excludes accumulated other comp. loss)   $13.16     $13.05    $12.94
Market value per share                     $16.04     $16.57    $17.00


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

                                    ----------  ----------  ----------
(At)                                 Sept. 30,   Dec. 31,    Sept. 30,
                                        2007       2006        2006
                                    ----------  ----------  ----------
 Retail loans                       $   98,995  $   91,190  $   88,094
Corporate loans                        250,311     196,973     176,492
                                    ----------  ----------  ----------
Total loans                            349,306     288,163     264,586
                                    ----------  ----------  ----------
Allowance for loan losses               (4,763)     (4,309)     (4,214)
                                    ----------  ----------  ----------
Investments available for sale         215,747     218,682     228,384
FHLB stock                              10,185      10,046       9,347
                                    ----------  ----------  ----------
Total investments                      225,932     228,728     237,731
Federal funds sold                      10,294      11,871       2,354
Other assets                            28,368      18,512      21,128
                                    ----------  ----------  ----------
Total assets                        $  609,137  $  542,965  $  521,585
                                    ==========  ==========  ==========
Deposits                            $  326,617  $  295,662  $  301,810
Borrowed funds                         219,649     184,782     157,377
Other liabilities                        3,967       3,990       5,286
                                    ----------  ----------  ----------
Total liabilities                      550,233     484,434     464,473
                                    ----------  ----------  ----------
Common stock                               456         459         457
Additional paid-in capital              60,830      61,578      61,190
Retained earnings (loss)                (1,392)     (2,090)     (2,449)
Accumulated other comprehensive loss      (990)     (1,416)     (2,086)
                                    ----------  ----------  ----------
Total stockholders' equity              58,904      58,531      57,112
                                    ----------  ----------  ----------
Total liabilities and stockholders'
 equity                             $  609,137  $  542,965  $  521,585
                                    ==========  ==========  ==========



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

                       Three months ended             Nine months ended
                    --------------------------  --------------------------
(For the period      Sept. 30,      Sept. 30,    Sept. 30,     Sept. 30,
 ended)                2007           2006         2007          2006
                    ------------  ------------  ------------  ------------
Interest income     $      9,100  $      7,553  $     25,704  $     21,135
Interest expense           5,262         3,924        14,249        10,908
                    ------------  ------------  ------------  ------------
Net interest income        3,838         3,629        11,455        10,227
Provision for loan
 losses                      250            30           465            60
                    ------------  ------------  ------------  ------------
Net interest income
 after provision
 for loan losses           3,588         3,599        10,990        10,167
Loss on sale of
 investments                  --            --            --        (2,417)
Settlement gains on
 pension                     357            --           357            --
Other non-interest
 income                      568           327         1,356           999
Salary & employee
 benefits expense          1,718         1,656         5,098         5,660
Other non-interest
 expense                   1,186           989         3,537         4,357
                    ------------  ------------  ------------  ------------
  Total
   non-interest
   expense                 2,904         2,645         8,635        10,017
Net income (loss)
 before income
 taxes                     1,609         1,281         4,068        (1,268)
Income tax expense
 (benefit)                   577           473         1,440          (394)
                    ------------  ------------  ------------  ------------
Net income (loss)   $      1,032  $        808  $      2,628  $       (874)
                    ============  ============  ============  ============

Basic earnings
 (loss) per share   $       0.23  $       0.18  $       0.57  $      (0.19)
Diluted earnings
 (loss) per share   $       0.22  $       0.18  $       0.57  $      (0.19)

End of period
 shares outstanding    4,550,961     4,573,117     4,550,961     4,573,117

Average shares
 outstanding:
Basic                  4,573,371     4,559,260     4,591,186     4,531,934
Diluted                4,599,329     4,597,383     4,619,416     4,581,190

Contact Information

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