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EX-10.1 - EX-10.1 SUBORDINATED DEBT AGREEMENT DATED OCTOBER 20, 2009 - LSB CORP | b77790exv10w1.htm |
8-K - LSB CORPORATION - LSB CORP | b77790e8vk.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
|
CONTACT: Gerald T. Mulligan President & CEO (978) 725-7555 |
LSB Corporation Announces Solid Third Quarter 2009 Financial Results,
2009 Deposit and Loan Growth of 15%,
Declares Quarterly Cash Dividend
2009 Deposit and Loan Growth of 15%,
Declares Quarterly Cash Dividend
NORTH ANDOVER, MA, (MARKET WIRE) 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 Banks 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 FDICs 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 Banks
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 Companys 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 managements 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 Managements Discussion and Analysis of Financial Condition and Results of Operations. As a result of such risk factors and uncertainties, the Companys 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)
Select Financial Data
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
(For the periods ending) | Sept. 30, 2009 | Sept. 30, 2008 | Sept. 30, 2009 | Sept. 30, 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, 2009 | Dec. 31, 2008 | Sept. 30, 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)
(Dollars in thousands, except per share data)
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
(For the periods ended) | Sept. 30, 2009 | Sept. 30, 2008 | Sept. 30, 2009 | Sept. 30, 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)
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands)
(unaudited)
(At) | Sept. 30, 2009 | Dec. 31, 2008 | Sept. 30, 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)
(Dollars in thousands, except per share data)
(unaudited)
Three months ended | Nine months ended | |||||||||||||||
(For the period ended) | Sept. 30, 2009 | Sept. 30, 2008 | Sept. 30, 2009 | Sept. 30, 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 |