LEXINGTON, N.C., July 19 /PRNewswire-FirstCall/ -- LSB Bancshares,
Inc. (NASDAQ:LXBK), the parent company of Lexington State Bank,
reported net income in the second quarter of 2007 of $1,709,000, or
$0.20 per diluted share, compared to $1,546,000, or $0.18 per
diluted share, in the second quarter of 2006. As is discussed more
fully below, the increase in earnings was primarily due to lower
noninterest expense. Net interest income, which was affected by a
significantly lower net interest margin, decreased 6% to
$10,248,000 in the second quarter of 2007 from $10,951,000 in the
year-ago period. The provision for loan losses was $1,191,000 in
2007's second quarter, versus $611,000 in the second quarter of
2006, while noninterest income declined 4% to $3,425,000, versus
$3,586,000 in 2006's second quarter. Noninterest expense in 2007's
second quarter declined to $9,966,000 in the second quarter of 2007
from $11,688,000 in 2006's second quarter. The reduction in
noninterest expense is a result of ongoing cost-cutting initiatives
as well as a $1 million write-down on a residential condominium
development on the South Carolina coast that was taken in the
second quarter of 2006. For the six months ended June 30, 2007, net
income was $3,479,000, or $0.41 per diluted share, compared to
$3,287,000, or $0.38 per diluted share, in the first half of 2006.
Net interest income decreased 6% to $20,497,000 in the six months
ended June 30, 2007 versus $21,906,000 in the year-ago period.
Noninterest income for the first six months of 2007 was $6,808,000,
essentially unchanged from $6,785,000 in the first six months of
2006, while noninterest expense decreased 9% to $20,031,000 from
$21,970,000 over the same respective periods. The provision for
loan losses increased approximately 6% to $2,148,000 for the first
half of 2007. As of June 30, 2007, total assets were approximately
$1.019 billion, up from $986 million at the year-ago date, while
deposits at the end of 2007's second quarter were $853 million,
reflecting growth of 3% from June 30, 2006. Net loans were $784
million at June 30, 2007, up 5% from the amount at June 30, 2006.
The allowance for loan losses at the end of 2007's second quarter
was $10.1 million or 1.27% of loans. Shareholders' equity totaled
$89.6 million, and represented an equity-to-assets ratio of 8.8%.
Nonperforming assets, which includes nonaccrual loans, accruing
loans more than 90 days past due, other real estate owned and
renegotiated debt, totaled $10.5 million at June 30, 2007, versus
$8.9 million at June 30, 2006. Commenting on the results, LSB
Bancshares Chairman, President and CEO Robert F. Lowe stated, "One
of the more gratifying aspects of the second quarter was the
progress made containing expenses, which will likely remain a key
component of our earnings growth going forward. We expect
additional cost savings, as well as revenue enhancements, to result
from the upcoming merger with FNB Financial Services Corp., which
will be voted upon at our upcoming Annual Meeting." LSB Bancshares
recently declared a quarterly cash dividend of $0.17 per share of
common stock, payable on July 15, 2007, to shareholders of record
on July 1, 2007. LSB Bancshares, Inc. is the parent company of
Lexington State Bank. Lexington State Bank, which opened on July 5,
1949, is a community bank based in the Piedmont region of North
Carolina. The Bank owns two subsidiaries: LSB Investment Services,
Inc., which offers non-deposit, non-insured investment alternatives
such as mutual funds and annuities; and Peoples Finance Co. of
Lexington, Inc., which offers small loans and dealer financing.
Common stock of LSB Bancshares, Inc. is traded on the Nasdaq Stock
Market under the symbol "LXBK." The LSB website, which links online
banking users to LSB by Internet, is http://www.lsbnc.com/. Market
makers include: Davenport & Company LLC; Friedman Billings
Ramsey & Co.; FTN Financial Securities Corp.; Goldman Sachs
& Co.; Keefe, Bruyette & Woods, Inc.; Morgan Keegan &
Co., Inc.; Morgan Stanley & Co., Inc.; Moors & Cabot, Inc.;
SunTrust Robinson Humphrey; Sandler O'Neill & Partners, and
Schwab Capital Markets. Information in this press release contains
forward-looking statements. These statements are identified by
words such as "expects," "anticipates," "should," or other similar
statements about future events. These forward- looking statements
involve estimates, assumptions by management, risks, and
uncertainties that could cause actual results to differ materially
from current projections, including without limitations, the
effects of future economic conditions, legislative and regulatory
changes, and the effects of competition. Additional factors that
could cause actual results to differ materially from those
anticipated by forward-looking statements are discussed in LSB's
filings with the Securities and Exchange Commission, including
without limitation, its annual report on Form 10-K, its Quarterly
Reports on Form 10-Q and its Current Reports on Form 8-K. LSB
undertakes no obligations to revise these statements following the
date of this news release. Additional Information and Where To Find
It In connection with the merger with FNB Financial Services Corp.
("FNB"), LSB Bancshares, Inc. ("LSB") filed a registration
statement, which includes a joint proxy statement/prospectus which
was sent to each company's shareholders on or about June 18, 2007.
Each of LSB and FNB may file other relevant documents concerning
the merger with the Securities and Exchange Commission (the "SEC").
Stockholders are urged to read the registration statement and the
joint proxy statement/prospectus regarding the merger and any other
relevant documents filed with the SEC, as well as any amendments or
supplements to those documents, because they contain important
information. You may obtain a free copy of the joint proxy
statement/prospectus, as well as other filings containing
information about LSB and FNB, at the SEC's website
(http://www.sec.gov/). You may also obtain these documents, free of
charge, by accessing LSB's website (http://www.lsbnc.com/), or by
accessing FNB's website (http://www.fnbsoutheast.com/).
Participants in the Solicitation LSB and FNB and their respective
directors and executive officers may be deemed to be participants
in the solicitation of proxies from the shareholders of LSB and/or
FNB in connection with the merger. Information about the directors
and executive officers of LSB is set forth in the joint proxy
statement/prospectus, as filed with the SEC on June 18, 2007.
Information about the directors and executive officers of FNB is
set forth in the joint proxy statement/prospectus, as filed with
the SEC on June 18, 2007. Additional information regarding the
interests of those participants and other persons who may be deemed
participants in the transaction may be obtained by reading the
joint proxy statement/prospectus regarding the merger. You may
obtain free copies of these documents as described above. CONTACT:
Monty J. Oliver, EVP & CFO; 336-242-6207 or 336-248-6500 or
1-800-876-6505, ext 207. LSB Bancshares Inc. Consolidated Balance
Sheets (In thousands) June 30 2007 2006 Assets Cash and Due from
Banks $31,656 $38,118 Interest-Bearing Bank Balances 863 1,220
Federal Funds Sold 11,359 17,118 Investment Securities: Held to
Maturity, at Amortized Cost 27,916 27,610 Available for Sale, at
Market Value 124,786 116,832 Loans 794,481 756,845 Less, Allowance
for Loan Losses (10,094) (8,502) Net Loans 784,387 748,343 Premises
and Equipment 19,798 19,622 Other Assets 17,827 17,407 Total Assets
$1,018,592 $986,270 Liabilities Deposits: Demand $158,009 $149,653
Savings, N.O.W. and Money Market Accounts 390,010 396,558
Certificates of Deposit of less than $100,000 146,054 136,932
Certificates of Deposit of $100,000 or more 158,721 145,568 Total
Deposits 852,794 828,711 Securities Sold Under Agreements to
Repurchase 718 909 Borrowings from the Federal Home Loan Bank
69,000 59,000 Unfunded Projected Pension and Other Postretirement
Benefit Obligation 1,149 - Other Liabilities 5,317 6,558 Total
Liabilities 928,978 895,178 Shareholders' Equity Preferred Stock,
Par Value $.01 Per Share: Authorized 10,000,000 shares; None Issued
- - Common Stock, Par Value $5 Per Share: Authorized 50,000,000
Shares; Issued 8,390,748 Shares in 2007 and 8,507,355 Shares in
2006 41,954 42,537 Paid-In Capital 7,941 9,146 Directors' Deferred
Plan (1,076) (1,361) Retained Earnings 43,283 42,815 Accumulated
Other Comprehensive Income (2,488) (2,045) Total Shareholders'
Equity 89,614 91,092 Total Liabilities and Shareholders' Equity
$1,018,592 $986,270 Memorandum: Standby Letters of Credit $4,249
$5,206 LSB Bancshares Inc. Consolidated Statements of Income In
thousands, except share data) Three Months Ended Six Months Ended
June 30 June 30 2007 2006 2007 2006 Interest Income Interest and
Fees on Loans $15,660 $15,017 $30,998 $29,506 Interest on
Investment Securities: Taxable 1,253 1,137 2,488 2,115 Tax Exempt
297 306 615 625 Interest-Bearing Bank Balances 89 83 190 165
Federal Funds Sold 118 223 220 472 Total Interest Income 17,417
16,766 34,511 32,883 Interest Expense Deposits 6,319 5,119 12,335
9,668 Securities Sold Under Agreements to Repurchase and Federal
Funds Purchased 2 2 4 7 Borrowings from the Federal Home Loan Bank
848 694 1,675 1,302 Total Interest Expense 7,169 5,815 14,014
10,977 Net Interest Income 10,248 10,951 20,497 21,906 Provision
for Loan Losses 1,191 611 2,148 2,018 Net Interest Income After
Provision for Loan Losses 9,057 10,340 18,349 19,888 Noninterest
Income Service Charges on Deposit Accounts 1,675 1,843 3,158 3,435
Gains on Sales of Mortgages 76 101 152 179 Other Operating Income
1,674 1,642 3,498 3,171 Total Noninterest Income 3,425 3,586 6,808
6,785 Noninterest Expense Personnel Expense 5,291 5,545 10,609
11,268 Occupancy Expense 496 478 999 957 Equipment Depreciation and
Maintenance 593 535 1,192 1,065 Other Operating Expense 3,586 5,130
7,231 8,680 Total Noninterest Expense 9,966 11,688 20,031 21,970
Income Before Income Taxes 2,516 2,238 5,126 4,703 Income Taxes 807
692 1,647 1,416 Net Income $1,709 $1,546 $3,479 $3,287 Earnings Per
Share Basic $0.20 $0.18 $0.41 $0.39 Diluted $0.20 $0.18 $0.41 $0.38
Weighted Average Shares Outstanding Basic 8,400,721 8,518,434
8,408,925 8,522,718 Diluted 8,404,524 8,549,643 8,418,100 8,560,576
LSB Bancshares, Inc. Financial Highlights (In thousands, except
ratios) Three Months Ended June 30 2007 2006 Change Financial
Ratios: Return on average assets 0.69% 0.63% 6 BP Return on average
shareholders' equity 7.56% 6.65% 91 Net Interest Margin (FTE) 4.40%
4.83% (43) Average Balances: Loans $784,526 $755,220 3.9% Earning
assets 942,586 918,984 2.6 Total assets 998,437 985,937 1.3
Interest-bearing deposits 685,920 689,215 (0.5) Total deposits
838,883 830,437 1.0 Allowance for loan losses: Beginning balance
$9,722 $8,392 15.8% Provision for loan losses 1,191 611 94.9 Loans
charged off (973) (1,153) (15.6) Recoveries 154 652 (76.4) Ending
balance 10,094 8,502 18.7 Six Months Ended June 30 2007 2006 Change
Financial Ratios: Return on average assets 0.71% 0.67% 4 BP Return
on average shareholders' equity 7.75% 7.11% 64 Net Interest Margin
(FTE): 4.46% 4.87% (41) Average Balances: Loans $777,566 $754,952
3.0% Earning assets 935,041 916,176 2.1 Total assets 991,084
982,612 0.9 Interest-bearing deposits 679,382 695,698 (2.3) Total
deposits 832,133 829,734 0.3 Allowance for loan losses: Beginning
balance $9,564 $8,440 13.3% Provision for loan losses 2,148 2,018
6.4 Loans charged off (2,053) (2,698) (23.9) Recoveries 435 742
(41.4) Ending balance 10,094 8,502 18.7 Nonperforming assets
Nonperforming Loans: Past due 90 days or more $2,020 $1,534 31.7%
Nonaccrual loans 3,960 2,956 34.0 Restructured loans 96 612 (84.3)
Total nonperforming loans 6,076 5,102 19.1 Other real estate 4,392
3,755 17.0 Total nonperforming assets 10,468 8,857 18.2 Asset
Quality Ratios Nonperforming loans to total loans 0.76% 0.67% 9 BP
Nonperforming loans to total assets 0.60% 0.52% 8 Allowance for
loan losses to total loans 1.27% 1.12% 15 Net charge-offs to
average loans 0.21% 0.26% (5) Allowance for loan losses to
nonperforming loans 1.66 X 1.67 X BP-- Denotes Basis Points
DATASOURCE: LSB Bancshares, Inc. Contact: Monty J. Oliver, EVP
& CFO of LSB Bancshares, Inc., +1-336 248-6500 Ext 207 or
+1-800-876-6505 Ext 207 Web site: http://www.lsbnc.com/
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