LXBK Lsb Bancshares (MM)

LEXINGTON, N.C., Jan. 17 /PRNewswire-FirstCall/ -- LSB Bancshares, Inc. (NASDAQ:LXBK), parent company of Lexington State Bank, reported net income in the fourth quarter of 2005 of $2,475,000, or $0.29 per diluted share, compared to $2,214,000, or $0.26 per diluted share, for the fourth quarter of 2004. The improvement in earnings was primarily due to higher net interest income and noninterest income, combined with modest growth in noninterest expense. Net interest income increased 10% to $11,089,000 in the fourth quarter of 2005 from $10,083,000 in the year-ago period, and benefited from an improvement in the net interest margin as well as growth in earning assets. The provision for loan losses was $905,000 in 2005's fourth quarter, up from $621,000 in the fourth quarter of 2004. Noninterest income was $3,651,000 in 2005's fourth quarter, an increase of 11% from $3,278,000 in the year-ago period, while noninterest expense increased 7% to $10,112,000 from $9,461,000 over the same period. For the twelve months ended December 31, 2005, net income was $9,637,000, or $1.12 per diluted share, compared to $8,380,000, or $0.97 per diluted share, in 2004. Net interest income increased 12% to $43,699,000 in the twelve months ended December 31, 2005 from the year-ago period. Noninterest income for the full year 2005 declined approximately 2% from the level in the year-ago period, although the year-ago figure included a $292,000 nonrecurring gain on the sale of real estate. Excluding that gain, noninterest income would have been essentially unchanged in 2005 relative to the figure in 2004. Noninterest expense in 2005 was up 6%, while the provision for loan losses increased to $3,219,000 in 2005 from $3,017,000 in 2004. The Bank achieved year-over-year balance sheet growth in most key areas, with that growth being led by the increase in deposits. As of December 31, 2005, total assets were approximately $976 million, up 7% from the year-ago level, while deposits increased 14% to $822 million. Net loans were $747 million, an increase of 6% from the year-ago level. Nonperforming assets, including nonaccruing loans, accruing loans more than 90 days past due, restructured loans and other real estate owned, totaled $8.1 million at December 31, 2005, down from $8.5 million at September 30, 2005 but up from $4.1 million at the year-ago date. Included in the $8.1 million was $4.4 million in other real estate owned, most of which related to the previously disclosed acquisition, by means of deed-in-lieu of foreclosure, of coastal property by the Bank during the second quarter of 2005. The reserve for loan losses at the end of 2005 was $8.4 million, or 1.12% of loans, versus $8.0 million, or 1.12% of gross loans, at the end of 2004. Shareholders' equity totaled $91.8 million, and represented an equity-to-assets ratio of 9.4%. "We concluded 2005 with a good deal of positive momentum," said LSB Bancshares Chairman, President and CEO Robert F. Lowe. "Earnings improved and our balance sheet continued to expand, with particularly gratifying growth in deposits. At the same time, asset quality began to improve at the end of 2005 relative to the level at the end of the third quarter of 2005. Fundamentally, the Bank remains soundly capitalized and is well positioned to have another successful year in 2006." LSB Bancshares recently declared a quarterly cash dividend of $0.17 per share of common stock, payable on January 15, 2006, to shareholders of record on January 1, 2006. This represents an increase of 6% compared to the same period one year ago. LSB The Bank is one of the largest community banks in North Carolina, with 25 offices in Davidson, Forsyth, Guilford, Randolph and Stokes counties and a mortgage origination office in Wake County. Services are also available through 31 ATMs and cash dispensers, "LSB By Net" online banking and 24-hour "LSB By Phone" banking. LSB 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 the bank's parent company, LSB Bancshares, Inc., is traded on the Nasdaq National Market and is quoted under the symbol LXBK. Additional information about LSB is available on its web site, http://www.lsbnc.com/. Market makers include: Davenport & Company LLC; Friedman Billings Ramsey & Co.; FTN Midwest Research Secs.; Goldman, Sachs & Co.; Keefe, Bruyette & Woods, Inc.; Morgan Keegan & Co., Inc.; Morgan Stanley & Co., Inc.; Moors & Cabot, Inc.; The Robinson Humphrey Co.; 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. NOTE: For more information, please contact Monty J. Oliver, EVP & Chief Financial Officer @ 336-242-6207 or 336-248-6500 or 1-800-876-6505, ext. 207 LSB Bancshares Inc. Consolidated Balance Sheets (In thousands) December 31 2005 2004 Assets Cash and Due from Banks $45,600 $35,407 Interest-Bearing Bank Balances 1,385 2,115 Federal Funds Sold 16,355 14,246 Investment Securities: Held to Maturity, at Amortized Cost 27,427 28,539 Available for Sale, at Market Value 100,732 100,655 Loans 755,398 712,185 Less, Allowance for Loan Losses (8,440) (7,962) Net Loans 746,958 704,223 Premises and Equipment 19,358 17,390 Other Assets 17,980 12,413 Total Assets 975,795 914,988 Liabilities Deposits: Demand 131,515 88,805 Savings, N.O.W. and Money Market Accounts 409,928 417,584 Certificates of Deposit of less than $100,000 140,700 118,569 Certificates of Deposit of $100,000 or more 140,030 97,317 Total Deposits 822,173 722,275 Securities Sold Under Agreements to Repurchase 1,657 1,536 Borrowings from the Federal Home Loan Bank 53,000 95,000 Other Liabilities 7,136 5,435 Total Liabilities 883,966 824,246 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 8,524,033 Shares in 2005 and 8,590,184 Shares in 2004 42,620 42,951 Paid-In Capital 9,430 10,482 Directors' Deferred Plan (1,334) (1,197) Retained Earnings 42,424 38,592 Accumulated Other Comprehensive Income (1,311) (86) Total Shareholders' Equity 91,829 90,742 Total Liabilities and Shareholders' Equity $975,795 $914,988 Memorandum: Standby Letters of Credit $5,831 $4,980 LSB Bancshares Inc. Consolidated Statements of Income (In thousands, except share data) Three Months Ended Twelve Months Ended December 31 December 31 2005 2004 2005 2004 Interest Income Interest and Fees on Loans $14,508 $11,627 $54,568 $44,137 Interest on Investment Securities: Taxable 938 841 3,610 3,285 Tax Exempt 306 356 1,386 1,480 Interest-Bearing Bank Balances 55 49 340 176 Federal Funds Sold 195 85 521 241 Total Interest Income 16,002 12,958 60,425 49,319 Interest Expense Deposits 4,140 1,997 13,120 7,022 Securities Sold Under Agreements to Repurchase and Federal Funds Purchased 3 4 12 10 Borrowings from the Federal Home Loan Bank 770 874 3,594 3,335 Total Interest Expense 4,913 2,875 16,726 10,367 Net Interest Income 11,089 10,083 43,699 38,952 Provision for Loan Losses 905 621 3,219 3,017 Net Interest Income After Provision for Loan Losses 10,184 9,462 40,480 35,935 Noninterest Income Service Charges on Deposit Accounts 1,789 1,544 6,816 6,925 Gains on Sales of Mortgages 171 140 554 530 Other Operating Income 1,691 1,594 6,422 6,608 Total Noninterest Income 3,651 3,278 13,792 14,063 Noninterest Expense Personnel Expense 5,297 5,119 21,426 20,254 Occupancy Expense 493 462 1,867 1,779 Equipment Depreciation and Maintenance 541 588 2,263 2,296 Other Operating Expense 3,781 3,292 14,214 13,358 Total Noninterest Expense 10,112 9,461 39,770 37,687 Income Before Income Taxes 3,723 3,279 14,502 12,311 Income Taxes 1,248 1,065 4,865 3,931 Net Income $2,475 $2,214 $9,637 $8,380 Earnings Per Share Basic $0.29 $0.26 $1.13 $0.98 Diluted $0.29 $0.26 $1.12 $0.97 Weighted Average Shares Outstanding Basic 8,523,548 8,584,107 8,547,282 8,576,109 Diluted 8,562,563 8,620,530 8,587,537 8,620,713 LSB Bancshares, Inc. Financial Highlights (In thousands, except ratios) Three Months Ended December 31 2005 2004 Change Financial Ratios: Return on average assets 1.01% 0.97% 4 BP Return on average shareholders' equity 10.60% 9.63% 97 Net Interest Margin (FTE) 4.87% 4.77% 10 Average Balances: Loans $760,505 $705,541 7.8 % Earning assets 912,049 853,891 6.8 Total assets 975,802 912,271 7.0 Interest-bearing deposits 682,577 634,770 7.5 Total deposits 809,496 731,897 10.6 Allowance for loan losses: Beginning balance $8,684 $8,006 8.5 % Provision for loan losses 905 621 45.7 Loans charged off (1,262) (785) 60.8 Recoveries 113 120 (5.8) Ending balance 8,440 7,962 6.0 Twelve Months Ended December 31 2005 2004 Change Financial Ratios: Return on average assets 1.00% 0.94% 6 BP Return on average shareholders' equity 10.49% 9.26% 123 Net Interest Margin (FTE): 4.91% 4.75% 16 Average Balances: Loans $752,420 $689,034 9.2 % Earning assets 900,664 834,133 8.0 Total assets 963,888 891,577 8.1 Interest-bearing deposits 666,952 629,425 6.0 Total deposits 780,562 717,209 8.8 Allowance for loan losses: Beginning balance $7,962 $7,846 1.5 % Provision for loan losses 3,219 3,017 6.7 Loans charged off (3,239) (3,646) (11.2) Recoveries 498 745 (33.2) Ending balance 8,440 7,962 6.0 Nonperforming assets Nonperforming Loans: Past due 90 days or more $1,911 $1,313 45.5 % Nonaccrual loans 929 685 35.6 Restructured loans 856 582 47.1 Total nonperforming loans 3,696 2,580 43.3 Other real estate 4,391 1,531 186.8 Total nonperforming assets 8,087 4,111 96.7 Asset Quality Ratios Nonperforming loans to total loans 0.49% 0.58% (9) BP Nonperforming loans to total assets 0.38% 0.45% (7) Allowance for loan losses to total loans 1.12% 1.12% - Net charge-offs to average loans 0.36% 0.42% (6) Allowance for loan losses to nonperforming loans 2.28 X 3.09 X BP-- Denotes Basis Points First Call Analyst: FCMN Contact: DATASOURCE: LSB Bancshares, Inc. Contact: Monty J. Oliver, EVP & Chief Financial Officer of LSB Bancshares, Inc., +1-336-242-6207, or +1-336-248-6500, or +1-800-876-6505, ext. 207 Web site: http://www.lsbnc.com/

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