LSB Corporation (NASDAQ: LSBX) (the "Company") today announced
first quarter 2009 net income available to common shareholders of
$805,000, or $0.18 per diluted common share, as compared to net
income of $916,000, or $0.20 per diluted common share, for the
first quarter of 2008. The largest factor in the decline in net
income is the increase in FDIC deposit insurance premiums that
totaled $391,000 for the first quarter of 2009 as compared to
$14,000 in the comparable quarter in 2008. This reflects an
estimate for the increased assessment announced by the FDIC in
March 2009. Partially offsetting the impact of the increased
deposit insurance premium were gains on sales of investments of
$227,000 in the first quarter of 2009 as compared to none in the
first quarter of 2008.
The Company recorded a provision for loan losses of $240,000 in
the first quarter of 2009 as compared to $105,000 recorded for the
first quarter of 2008. The increase in the provision for loan
losses in 2009 is due to continued corporate and retail loan growth
rather than deterioration of credit quality. Annualized net loan
charge-offs as a percentage of average loans totaled 3 basis points
for the first quarter of 2009 as compared to 4 basis points in the
first quarter of 2008.
The Company's net interest margin increased to 2.48% for the
first three months of 2009 from 2.39% for the fourth quarter of
2008. The increase in the net interest margin is caused by
liabilities repricing lower more quickly than assets as the general
level of interest rates fall. This improvement in margins has been
aided in part by a shift in the mix of assets as higher yielding
loans replaced investments.
Total assets increased by $17.1 million or 2.3% from December
31, 2008 to $778.5 million as of March 31, 2009. The 2009 increase
reflected local loan growth of $27.3 million from December 31,
2008. The corporate loan portfolio increased by $17.4 million in
the first three months of 2009 while the retail loan portfolio
increased by $9.9 million over the same period for a total of
$479.9 million as of March 31, 2009. This loan growth was partially
offset by payments on collateralized mortgage obligations and
mortgage-backed securities totaling $20.1 million and sales of
investments of $3.5 million.
As of March 31, 2009, non-performing loans totaled $2.6 million
while the $6.1 million allowance for loan losses, as a proportion
of total loans, equaled 1.27% as compared to $2.6 million, $5.9
million and 1.30%, respectively, at December 31, 2008.
Non-performing assets totaled $2.7 million at March 31, 2009 and
declined modestly from December 31, 2008. Total loan delinquencies
under 90 days at March 31, 2009, totaled less than $1.0
million.
Deposits totaled $433.7 million as of March 31, 2009, an
increase of $25.0 million from December 31, 2008. The Bank's focus
on attracting and retaining core deposits has produced favorable
results in 2009. Savings accounts, NOW accounts and demand deposit
accounts increased by $8.0 million, $2.3 million and $1.3 million,
respectively, during the first three months of 2009. Certificates
of deposit increased by $13.6 million since December 31, 2008.
Especially encouraging is the $6.5 million in deposits after only
two months of operation in the new Derry, NH branch. Total borrowed
funds decreased during the first three months of 2009 by $9.4
million or 3.4% and totaled $267.1 million as of March 31,
2009.
The Company also announced today a quarterly cash dividend of
$0.05 per share to be paid on May 21, 2009 to shareholders of
record as of May 7, 2009. This dividend represents a 2.4%
annualized dividend yield based on the closing stock price of $8.47
on April 22, 2009. The Company's most recent dividend was $0.15 per
share paid on February 19, 2009.
President and CEO Gerald T. Mulligan stated, "The significant
increase in both loans and deposits is a reflection of greater
market opportunity and improved execution by Bank personnel. The
greater market opportunity is the result of noticeably less
competition from those larger multinational banking organizations
with a major presence in our market area.
"This improved opportunity for balance sheet growth was the
primary motive for the Bank's acceptance of funding under the TARP
Capital Purchase Program. In the short time since our acceptance of
TARP funding in December 2008, the Capital Purchase Plan has
changed from a positive program only available for strong banks
into a negatively perceived program of federal bailout of troubled
institutions. We believe that in reaction to that changed
perception, Congress and the Treasury have fundamentally altered
the burdens under the Capital Purchase Program, imposing greater
operating restrictions, increased reporting burdens and, more
importantly, putting the Bank and its employees on the defensive in
responding to public inquiry. Accordingly, the Board and management
have determined that repayment of the TARP funding should be
undertaken at the earliest prudent opportunity.
"Given the strong and growing balance sheet, it might appear
incongruous to reduce the shareholder dividend. The Board and
management struggled with the decision to reduce the dividend but
believe that the resulting $1.8 million addition to bank capital is
in the best long-term interests of all shareholders.
"First, as implied above, the Bank has already relied upon the
$15 million of TARP funding to increase loans to our local
community. Thus, while we could repay the full amount of the TARP
funding immediately and still remain 'well capitalized' as defined
by federal and state bank regulators, we would be only just so
without much leeway for any unexpected investment or loan loss.
Additionally, an immediate repayment would require a sharp
curtailment in all lending. Given the improved opportunity for
profitable lending and this rare opportunity for profitable market
share growth, any additional curtailment would be disruptive to our
customers and short-sighted from the perspective of our
shareholders.
"Second, events totally beyond our control have combined to
dramatically increase the expenses of all banks across the country
and reduce the income of most banks in New England. For all of
2008, RiverBank recorded a $60,000 expense for FDIC premiums. In
2009, we project that expense to be $1.4 million. Likewise, in
2008, RiverBank recorded a dividend on its Federal Home Loan Bank
of Boston ('FHLBB') stock of $428,000. The FHLBB has suspended all
dividends indefinitely and certainly for all of 2009.
"The combination of increased FDIC premiums and suspension of
the FHLBB dividend results in an almost $2 million swing in
earnings from 2008 to 2009. Maintenance of our previous dividend of
$0.15 per share would have resulted in a payout ratio this quarter
of 83%. Under a more favorable economic environment and with more
ample capital, such a payout might be appropriate but, given our
determination to repay the TARP funding at the earliest prudent
opportunity, ensure adequate capital during parlous economic
conditions, and fund additional growth, a reduction in the dividend
and retention of capital is the more prudent course.
"After lengthy discussion and with great reluctance, the Board
voted to reduce the shareholder dividend in the firm belief that
the retention of additional capital will not only protect
shareholder investment today but will position the Company for
greater growth in shareholder value."
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
-----------------------------------------------
(For the periods ending) March 31, 2009 Dec. 31, 2008 March 31, 2008
-------------- ------------- --------------
Performance ratios
(annualized):
Efficiency ratio 71.38% 63.08% 64.39%
Return on average assets 0.51% 1.96% 0.57%
Return on average
stockholders equity 5.45% 26.08% 6.03%
Return on average common
stockholders' equity 5.70% 27.69% 6.03%
Net interest margin 2.48% 2.39% 2.52%
Interest rate spread
(int. bearing only) 2.14% 2.09% 2.06%
Dividends paid per common
share during period $ 0.15 $ 0.15 $ 0.14
-------- -------- --------
(At) March 31, Dec. 31, March 31,
2009 2008 2008
-------- -------- --------
"Well Capitalized"
Minimums
Capital Ratios:
Stockholders' equity
to total assets N/A 9.40% 9.48% 9.13%
RiverBank Tier 1
leverage ratio 5.0% 8.00% 8.18% 9.30%
Risk-Based Capital
Ratio:
LSB Corporation Tier 1
risk-based 6.0% 12.87% 13.30% 13.11%
RiverBank Tier 1
risk-based 6.0% 11.59% 11.83% 13.12%
RiverBank total
risk-based 10.0% 12.73% 12.97% 14.19%
Asset Quality:
Allowance for loan losses as a
percent of total loans 1.27% 1.30% 1.31%
Allowance as a percent of
non-performing loans 236.37% 225.83% 487.40%
Non-performing loans as a percent
of total loans 0.54% 0.58% 0.27%
Non-performing assets as a percent
of total assets 0.35% 0.36% 0.24%
Per Share Data:
Book value per share including CPP $16.37 $16.14 $13.79
Book value per share excluding CPP $13.02 $12.78 $13.79
Tangible book value per share
including CPP $15.43 $15.40 $13.30
Tangible book value per share
excluding CPP $12.08 $12.04 $13.30
LSB CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
(At) March 31, 2009 Dec. 31, 2008 March 31, 2008
-------------- ------------- --------------
Retail loans $ 144,010 $ 134,079 $ 110,622
Corporate loans 335,936 318,542 261,993
-------------- ------------- --------------
Total loans 479,946 452,621 372,615
-------------- ------------- --------------
Allowance for loan losses (6,089) (5,885) (4,874)
-------------- ------------- --------------
Investments available for
sale 249,945 264,561 264,240
FHLB stock 11,825 11,825 11,570
-------------- ------------- --------------
Total investments 261,770 276,386 275,810
Federal funds sold 11,041 6,469 5,256
Other assets 31,804 31,733 26,757
-------------- ------------- --------------
Total assets $ 778,472 $ 761,324 $ 675,564
============== ============= ==============
Core deposits $ 189,033 $ 177,639 $ 153,638
Term deposits 244,654 231,024 176,726
-------------- ------------- --------------
Total deposits 433,687 408,663 330,364
Borrowed funds 267,085 276,490 279,016
Other liabilities 4,494 4,029 4,513
-------------- ------------- --------------
Total liabilities 705,266 689,182 613,893
-------------- ------------- --------------
Total stockholders' equity 73,206 72,142 61,671
-------------- ------------- --------------
Total liabilities and
stockholders' equity $ 778,472 $ 761,324 $ 675,564
============== ============= ==============
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(unaudited)
Three months ended
-----------------------------------------------
(For the period ended) March 31, 2009 Dec. 31, 2008 March 31, 2008
-------------- ------------- --------------
Interest income $ 10,045 $ 9,988 $ 9,282
Interest expense 5,473 5,668 5,393
-------------- ------------- --------------
Net interest income 4,572 4,320 3,889
Provision for loan losses 240 450 105
-------------- ------------- --------------
Net interest income after
provision for loan losses 4,332 3,870 3,784
Gain on sales of investments 227 -- --
Impairment of investments -- (722) --
Other non-interest income 504 577 494
Salary & employee benefits
expense 1,743 1,744 1,640
Other non-interest expense 1,880 1,345 1,182
-------------- ------------- --------------
Total non-interest 3,623 3,089 2,822
expense
Net income before income
tax expense 1,440 636 1,456
Income tax expense (benefit) 476 (3,032) 540
-------------- ------------- --------------
Net income before preferred
stock dividends and
accretion 964 3,668 916
Preferred stock dividends
and accretion (159) -- --
-------------- ------------- --------------
Net income available to
common shareholders $ 805 $ 3,668 $ 916
============== ============= ==============
Basic earnings per common
share $ 0.18 $ 0.82 $ 0.20
Diluted earnings per common
share $ 0.18 $ 0.82 $ 0.20
End of period common shares
outstanding 4,470,941 4,470,941 4,471,941
Weighted average common
shares outstanding:
Basic 4,470,941 4,464,332 4,493,523
Diluted 4,471,014 4,468,708 4,518,548
CONTACT: Gerald T. Mulligan President & CEO (978)
725-7555
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