LXBK Lsb Bancshares (MM)

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/

Copyright