SOURCE:
MASSBANK Corp.
2008-08-07 07:30:00
MASSBANK Corp. Reports Second Quarter 2008 Earnings Results
READING, MA–(EMWNews – August 7, 2008) – MASSBANK Corp. (
Company for MASSBANK, today reported a net loss of $378,000 or $0.09 in
basic and diluted earnings per share for the second quarter of 2008,
compared with net income of $1,422,000 or $0.33 in basic and diluted
earnings per share in the second quarter of 2007. For the first six months
of 2008, the Company had a net loss of $197,000 or $0.05 in basic and
diluted earnings per share as compared with net income of $3,503,000 or
$0.81 in basic and $0.80 in diluted earnings per share for the first six
months of 2007. The results for the second quarter of 2008 compared to the
second quarter of 2007 were adversely affected by a decline of $1,584,000
in net interest income, an increase in securities losses of $578,000 and
one-time merger expenses of $258,000 associated with the Company’s merger
with Eastern Bank. The decline in net interest income was principally due
to changes in the Company’s investment portfolio as the Company increased
the liquidity of the portfolio as called for by the merger agreement with
Eastern Bank. Consistent with the merger agreement, the percentage of the
Company’s total assets consisting of short-term investments and term
Federal funds sold increased from 26.2% on June 30, 2007 to 47.0% on June
30, 2008.
Balance Sheet
The Company’s total assets decreased $33.9 million to $783.0 million at
June 30, 2008 from $816.9 million at June 30, 2007. Deposits decreased
$31.2 million or 4.4% year-over-year from $704.6 million at June 30, 2007
to $673.4 million at June 30, 2008 due in part to increased competition for
relatively expensive short-term deposits. Stockholders’ equity was $105.2
million at June 30, 2008, representing a book value of $24.85 per share.
This compares to $107.3 million at June 30, 2007 representing a book value
of $24.83 per share.
The Company’s non-accrual loans are near historical lows totaling $26,000
at June 30, 2008 representing 0.01% of total loans. This compares to
$192,000 representing 0.10% of total loans at June 30, 2007. At June 30,
2008, the Bank’s allowance for loan losses totaled $1.411 million
representing 0.69% of total loans compared to $1.372 million representing
0.69% of total loans at June 30, 2007. In addition, the Bank’s allowance
for loan losses on off-balance sheet credit exposures totaled $302,000 at
June 30, 2008 compared to $345,000 a year earlier. This is intended to
protect the bank against loan commitments made to customers that have not
yet been drawn down.
MASSBANK Corp. is the holding company for MASSBANK, a Massachusetts
chartered savings bank. The Bank operates fifteen banking offices in
Reading, Chelmsford, Dracut, Everett, Lowell, Medford, Melrose, Stoneham,
Tewksbury, Westford and Wilmington, providing a variety of deposit, lending
and trust services.
ADDITIONAL INFORMATION
Stockholder approval of Merger
As previously announced, the Company’s stockholders approved on July 15,
2008 the Company’s merger with Eastern Bank Corporation. The merger remains
subject to regulatory approvals. The merger is expected to close during the
third quarter of 2008.
Cautionary Statement
This press release may contain forward-looking information, including
information concerning the Company’s expectations of future business
prospects. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the Company’s actual results
or performance to be materially different from the results and performance
expressed or implied by the forward-looking statements. Forward-looking
statements include, but are not limited to, statements concerning the
Company’s belief, expectations or intentions concerning the Company’s
future performance, the financial outlook of the markets it serves and the
performance and activities of its competitors. These statements reflect the
Company’s current views. They are based on numerous assumptions and are
subject to numerous risks and uncertainties, including but not limited to
the following: (1) changing economic conditions; (2) movements in interest
rates; (3) the credit environment; (4) levels of activity in the capital
markets, including the stock and bond market; (5) changes in the levels of
non-performing assets; (6) changes in the competitive pricing pressures
within the Company’s market which may result in an increase in the
Company’s cost of funds, changes in loan originations, a change in deposits
and assets; (7) adverse legislative and regulatory developments; (8) a
significant decline in residential real estate values in the Company’s
market area; (9) adverse impacts resulting from the continuing war on
terrorism; (10) a significant increase in employee benefit costs; (11) the
impact of changes in accounting principles; (12) the impact of inflation or
deflation; (13) the disruption to the Company’s business as a result of the
announcement and pending merger with Eastern Corporation, including the
Company’s ability to retain depositors and loan relationships and key
personnel; and (14) the Company’s success at managing the risks involved in
the foregoing and other factors described in the Company’s annual report on
Form 10-K filed with the Securities and Exchange Commission for the year
ended December 31, 2007. In addition, the completion of the previously
announced merger with Eastern Corporation is subject to numerous risks and
uncertainties, including: (a) the risk the Company will be unable to
satisfy all of the closing conditions set forth in the merger agreement;
and (b) the possibility that the Company may not obtain the necessary
state and federal regulatory approvals to consummate the merger or that an
adverse regulatory condition will be imposed in connection with those
approvals.
For further information contact Reginald E. Cormier, Senior Vice President,
Treasurer and CFO at (781) 942-8192.
MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
--------- ---------- --------- ----------
For the Period Ended
Total interest and dividend
income $ 7,295 $ 10,056 $ 16,057 $ 20,035
Total interest expense 4,115 5,292 8,862 10,480
--------- ---------- --------- ----------
Net interest income 3,180 4,764 7,195 9,555
Provision (credit) for loan
losses 15 (10) 43 (10)
--------- ---------- --------- ----------
Net interest income after
provision (credit) for
loan losses 3,165 4,774 7,152 9,565
Gains (losses) on
securities, net (584) (6) 83 1,128
Other non-interest income 255 461 525 817
Non-interest expense 3,460 3,091 8,068 6,191
Income tax expense
(benefit) (246) 716 (111) 1,816
--------- ---------- --------- ----------
Net income (loss) $ (378) $ 1,422 $ (197) $ 3,503
Weighted Average Common
Shares Outstanding
Basic 4,233,079 4,331,823 4,237,508 4,333,696
Diluted 4,270,506 4,356,972 4,271,290 4,359,200
Per Common Share
Earnings (loss):
Basic $ (0.09) $ 0.33 $ (0.05) $ 0.81
Diluted (0.09) 0.33 (0.05) 0.80
Cash dividends paid 0.29 0.28 0.58 0.56
Book value (period end) 24.85 24.83
Ratios (1)
Return on average assets (0.19)% 0.69% (0.05)% 0.85%
Return on average equity (1.42) 5.28 (0.37) 6.53
Net interest margin 1.66 2.40 1.87 2.39
Total equity to assets
(period end) 13.43 13.13
At
June 30,
2008 2007
--------- ----------
At Period End
Assets $ 783,031 $ 816,948
Deposits 673,436 704,583
Total loans 203,679 198,458
Stockholders' equity $ 105,172 $ 107,252
Common shares outstanding 4,233,079 4,319,554
Asset Quality
Non-accrual loans $ 26 $ 192
Real estate acquired
through foreclosure -- --
--------- ----------
Total non-performing assets $ 26 $ 192
Allowance for loan losses $ 1,411 $ 1,372
Percent of non-accrual
loans to total loans 0.01% 0.10%
(1) Ratios are presented on an annualized basis with the exception of
equity to assets.
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
($ in thousands except share data)
At At
June 30, June 30,
2008 2007
----------- -----------
Assets:
Cash and due from banks $ 7,476 $ 7,100
Short-term investments 318,183 174,006
----------- -----------
Total cash and cash equivalents 325,659 181,106
Term federal funds sold 50,000 40,000
Securities available for sale, at fair value
(amortized cost of $117,010 in 2008 and
$138,029 in 2007) 117,338 136,144
Securities held to maturity, at amortized cost
(market value of $7,193 in 2008 and
$4,945 in 2007) 7,257 5,188
Trading securities, at fair value: 63,522 236,985
Loans:
Mortgage loans 194,722 188,558
Other loans 8,957 9,900
----------- -----------
Total loans 203,679 198,458
Allowance for loan losses (1,411) (1,372)
----------- -----------
Net loans 202,268 197,086
----------- -----------
Premises and equipment 8,368 8,119
Real estate held for resale -- 425
Accrued interest and income receivable 2,194 4,252
Goodwill 1,090 1,090
Income tax receivable, net 223 19
Deferred income tax asset, net 1,191 3,349
Other assets 3,921 3,185
----------- -----------
Total assets $ 783,031 $ 816,948
----------- -----------
Liabilities and Stockholders' Equity:
Deposits:
Demand and NOW $ 73,247 $ 74,446
Savings 312,694 323,168
Time certificates of deposit 287,495 306,969
----------- -----------
Total deposits 673,436 704,583
Escrow deposits of borrowers 975 921
Allowance for loan losses on off-balance sheet
credit exposures 302 345
Other liabilities 3,146 3,847
----------- -----------
Total liabilities 677,859 709,696
----------- -----------
Stockholders' equity:
Preferred stock, par value $1.00 per
share; 2,000,000 shares authorized,
none issued -- --
Common stock, par value $1.00 per share;
10,000,000 shares authorized, 7,900,942 and
7,871,017 shares issued in 2008 and 2007,
respectively 7,901 7,871
Additional paid-in capital 59,410 58,430
Retained earnings 105,016 105,893
----------- -----------
172,327 172,194
Treasury stock at cost 3,667,863 and
3,551,463 shares in 2008 and 2007,
respectively (67,673) (63,519)
Accumulated other comprehensive income
(loss) 518 (1,423)
Shares held in rabbi trust at cost,
20,194 and 18,944 shares in 2008
and 2007, respectively (503) (458)
Deferred compensation obligation 503 458
----------- -----------
Total stockholders' equity 105,172 107,252
----------- -----------
Total liabilities and stockholders'
equity $ 783,031 $ 816,948
----------- -----------
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
($ in thousands except share data)
Three Months Ended
June 30, June 30,
2008 2007
----------- -----------
Interest and dividend income:
Mortgage loans $ 2,544 $ 2,603
Other loans 152 198
Securities available for sale:
Mortgage-backed securities 1,544 1,729
Other securities 30 32
Mortgage-backed securities held to maturity 106 68
Trading securities 856 2,639
Federal funds sold 1,233 2,200
Other investments 830 587
----------- -----------
Total interest and dividend income 7,295 10,056
----------- -----------
Interest expense:
Deposits 4,115 5,292
----------- -----------
Total interest expense 4,115 5,292
----------- -----------
Net interest income 3,180 4,764
Provision (credit) for loan losses 15 (10)
----------- -----------
Net interest income after provision
(credit) for loan losses 3,165 4,774
----------- -----------
Non-interest income:
Deposit account service fees 69 81
Gains (losses) on securities available for
sale, net (18) 203
Losses on trading securities, net (566) (209)
Option fees -- 75
Deferred compensation plan income (loss) (20) 84
Other 206 221
----------- -----------
Total non-interest income (329) 455
----------- -----------
Non-interest expense:
Salaries and employee benefits 1,941 1,856
Deferred compensation plan expense (income) -- 108
Occupancy and equipment 520 494
Data processing 129 141
Professional services 243 113
Merger related expense 258 --
Advertising and marketing 22 36
Deposit insurance 34 28
Other 313 315
----------- -----------
Total non-interest expense 3,460 3,091
----------- -----------
Income (loss) before income taxes (624) 2,138
Income tax expense (benefit) (246) 716
----------- -----------
Net income (loss) $ (378) $ 1,422
----------- -----------
Weighted average common shares outstanding:
Basic 4,233,079 4,331,823
Diluted 4,270,506 4,356,972
Earnings (loss) per share (in dollars):
Basic $ (0.09) $ 0.33
Diluted (0.09) 0.33
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
($ in thousands except share data)
Six Months Ended
June 30, June 30,
2008 2007
----------- -----------
Interest and dividend income:
Mortgage loans $ 5,034 $ 5,279
Other loans 313 391
Securities available for sale:
Mortgage-backed securities 3,133 3,535
Other securities 57 63
Mortgage-backed securities held to maturity 221 137
Trading securities 2,521 5,276
Federal funds sold 3,102 4,380
Other investments 1,676 974
----------- -----------
Total interest and dividend income 16,057 20,035
----------- -----------
Interest expense:
Deposits 8,778 10,480
Borrowed funds 84 --
----------- -----------
Total interest expense 8,862 10,480
----------- -----------
Net interest income 7,195 9,555
Provision (credit) for loan losses 43 (10)
----------- -----------
Net interest income after provision
(credit) for loan losses 7,152 9,565
----------- -----------
Non-interest income:
Deposit account service fees 146 164
Gains (losses) on securities available for
sale, net (63) 288
Gains on trading securities, net 146 840
Option fees 75 150
Deferred compensation plan income (loss) (69) 109
Other 373 394
----------- -----------
Total non-interest income 608 1,945
----------- -----------
Non-interest expense:
Salaries and employee benefits 3,881 3,740
Deferred compensation plan expense (income) (21) 156
Occupancy and equipment 1,113 1,025
Data processing 278 287
Professional services 912 241
Merger related expense 1,161 --
Advertising and marketing 60 69
Deposit insurance 60 56
Other 624 617
----------- -----------
Total non-interest expense 8,068 6,191
----------- -----------
Income (loss) before income taxes (308) 5,319
Income tax expense (benefit) (111) 1,816
----------- -----------
Net income (loss) $ (197) $ 3,503
----------- -----------
Weighted average common shares outstanding:
Basic 4,237,508 4,333,696
Diluted 4,271,290 4,359,200
Earnings (loss) per share (in dollars):
Basic $ (0.05) $ 0.81
Diluted (0.05) 0.80
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