LXBK Lsb Bancshares (MM)

LEXINGTON, N.C., Oct. 17 /PRNewswire-FirstCall/ -- LSB Bancshares, Inc. (NASDAQ:LXBK), parent company of Lexington State Bank, reported net income in the third quarter of 2006 of $2,375,000, or $0.28 per diluted share, compared to $2,500,000, or $0.29 per diluted share, in the third quarter of 2005. The decrease in earnings was primarily due to lower net interest income, which declined 4% to $10,792,000 in the third quarter of 2006 from $11,206,000 in the year-ago period. The weakness in net interest income primarily emanated from a lower net interest margin, as competitive pressures have significantly increased funding costs for the Bank over the past year. The provision for loan losses was $565,000 in 2006's third quarter, down 21% from $715,000 in the third quarter of 2005. Noninterest income increased 5% to $3,567,000 in 2006's third quarter versus $3,398,000 in the year-ago quarter, while noninterest expense increased 1% to $10,200,000 in the third quarter of 2006 from $10,087,000 in the third quarter of 2005. For the nine months ended September 30, 2006, net income was $5,662,000, or $0.66 per diluted share, compared to $7,162,000, or $0.83 per diluted share, in the first nine months of 2005. Net interest income was essentially unchanged at $32,698,000 in the nine months ended September 30, 2006, versus $32,610,000 for the year-ago period, while noninterest income for the first nine months of the year increased approximately 2% over this period. Noninterest expense was up 8%, and the provision for loan losses increased 12% relative to the respective year-ago level. As of September 30, 2006, total assets were approximately $992 million, net loans were $752 million and deposits were $815 million. All three were essentially unchanged from levels at September 30, 2005. Shareholders' equity at the end of 2006's third quarter totaled $91.9 million, up from $91.5 million at the year-ago date, and represented an equity-to-assets ratio of 9.3%. Nonperforming assets, including nonaccruing loans, accruing loans more than 90 days past due, restructured loans and other real estate owned, were $8.7 million at September 30, 2006, versus $8.5 million at the year-ago date. Included in the $8.7 million was $3.7 million in other real estate owned, $2.0 million 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 2006's third quarter was $8,461,000 or 1.11% of loans. Commenting on the results, LSB Bancshares Chairman, President and CEO Robert F. Lowe stated, "Competitive pressures on funding and pockets of economic weakness in several of our markets has squeezed our margins and restrained balance sheet growth. To combat the negative impact of these factors on earnings, we have worked diligently to hold down costs, as evidenced by the modest increase of 1% in the third quarter's noninterest expense relative to the previous year's third quarter level. Our efforts also remain focused on improving asset quality. While nonperforming assets were up at September 30, 2006 relative to the year-ago level, they did improve relative to the level at the end of 2006's second quarter." LSB Bancshares recently declared a quarterly dividend of $0.17 per share, payable on October 15, 2006 to shareholders of record on October 1, 2006. This level is unchanged from the level at the year-ago date. 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 and is quoted electronically under the Nasdaq 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. 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) September 30 2006 2005 Assets Cash and Due from Banks $38,251 $42,069 Interest-Bearing Bank Balances 647 2,590 Federal Funds Sold 14,153 25,802 Investment Securities: Held to Maturity, at Amortized Cost 29,901 27,432 Available for Sale, at Market Value 119,070 102,745 Loans 760,764 763,211 Less, Allowance for Loan Losses (8,461) (8,684) Net Loans 752,303 754,527 Premises and Equipment 19,781 18,671 Other Assets 17,828 17,989 Total Assets 991,934 991,825 Liabilities Deposits: Demand 146,496 127,382 Savings, N.O.W. and Money Market Accounts 400,299 411,668 Certificates of Deposit 268,389 278,672 Total Deposits 815,184 817,722 Securities Sold Under Agreements to Repurchase 883 1,474 Borrowings from the Federal Home Loan Bank 76,000 75,000 Other Liabilities 8,005 6,156 Total Liabilities 900,072 900,352 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 8,442,864 Shares in 2006 and 8,525,846 Shares in 2005 42,214 42,629 Paid-In Capital 8,386 9,462 Directors' Deferred Plan (1,376) (1,313) Retained Earnings 43,755 41,398 Accumulated Other Comprehensive Income (1,117) (703) Total Shareholders' Equity 91,862 91,473 Total Liabilities and Shareholders' Equity $991,934 $991,825 Memorandum: Standby Letters of Credit $4,591 $5,522 LSB Bancshares Inc. Consolidated Statements of Income (In thousands, except share data) Three Months Ended Nine Months Ended September 30 September 30 2006 2005 2006 2005 Interest Income Interest and Fees on Loans $15,509 $14,261 $45,015 $40,060 Interest on Investment Securities: Taxable 1,197 916 3,312 2,672 Tax Exempt 298 366 923 1,080 Interest-Bearing Bank Balances 90 92 255 285 Federal Funds Sold 193 145 665 326 Total Interest Income 17,287 15,780 50,170 44,423 Interest Expense Deposits 5,652 3,658 15,320 8,980 Securities Sold Under Agreements to Repurchase and Federal Funds Purchased 2 4 9 9 Borrowings from the Federal Home Loan Bank 841 912 2,143 2,824 Total Interest Expense 6,495 4,574 17,472 11,813 Net Interest Income 10,792 11,206 32,698 32,610 Provision for Loan Losses 565 715 2,583 2,314 Net Interest Income After Provision for Loan Losses 10,227 10,491 30,115 30,296 Noninterest Income Service Charges on Deposit Accounts 1,798 1,774 5,233 5,027 Gains on Sales of Mortgages 114 105 293 383 Other Operating Income 1,655 1,519 4,826 4,731 Total Noninterest Income 3,567 3,398 10,352 10,141 Noninterest Expense Personnel Expense 5,500 5,443 16,768 16,129 Occupancy Expense 495 454 1,452 1,374 Equipment Depreciation and Maintenance 575 555 1,640 1,722 Other Operating Expense 3,630 3,635 12,310 10,433 Total Noninterest Expense 10,200 10,087 32,170 29,658 Income Before Income Taxes 3,594 3,802 8,297 10,779 Income Taxes 1,219 1,302 2,635 3,617 Net Income $2,375 $2,500 $5,662 $7,162 Earnings Per Share Basic $0.28 $0.29 $0.67 $0.84 Diluted $0.28 $0.29 $0.66 $0.83 Weighted Average Shares Outstanding Basic 8,462,176 8,534,578 8,500,038 8,558,693 Diluted 8,480,912 8,575,859 8,529,695 8,599,251 LSB Bancshares, Inc. Financial Highlights (In thousands, except ratios) Three Months Ended September 30 2006 2005 Change Financial Ratios: Return on average assets 0.96% 1.01% (5) BP Return on average shareholders' equity 10.26% 10.77% (51) Net Interest Margin (FTE) 4.70% 4.92% (22) Average Balances: Loans $756,545 $764,035 (1.0) % Earning assets 918,145 914,606 0.4 Total assets 982,086 983,754 (0.2) Interest-bearing deposits 678,983 678,866 0.0 Total deposits 821,690 800,611 2.6 Allowance for loan losses: Beginning balance $8,502 $8,466 0.4 % Provision for loan losses 565 715 (21.0) Loans charged off (766) (635) 20.6 Recoveries 160 138 15.9 Ending balance 8,461 8,684 (2.6) LSB Bancshares, Inc. Financial Highlights (In thousands, except ratios) Nine Months Ended September 30 2006 2005 Change Financial Ratios: Return on average assets 0.77% 1.00% (23) BP Return on average shareholders' equity 8.16% 10.45% (229) Net Interest Margin (FTE) 4.81% 4.93% (12) Average Balances: Loans $755,488 $749,715 0.8 % Earning assets $916,839 896,847 2.2 Total assets $982,435 959,887 2.3 Interest-bearing deposits $690,065 661,687 4.3 Total deposits $827,024 770,823 7.3 Allowance for loan losses: Beginning balance $8,440 $7,962 6.0 % Provision for loan losses 2,583 2,314 11.6 Loans charged off (3,464) (1,977) 75.2 Recoveries 902 385 134.3 Ending balance 8,461 8,684 (2.6) Nonperforming assets Nonperforming Loans: Past due 90 days or more $1,412 $2,390 (40.9) % Nonaccrual loans 2,972 492 504.1 Restructured loans 607 858 (29.3) Total nonperforming loans 4,991 3,740 33.4 Other real estate 3,703 4,713 (21.4) Total nonperforming assets 8,694 8,453 2.9 Asset Quality Ratios Nonperforming loans to total loans 0.66% 0.49% 17 BP Nonperforming loans to total assets 0.50% 0.38% 12 Allowance for loan losses to total loans 1.11% 1.14% (3) Net charge-offs to average loans 0.34% 0.21% 13 Allowance for loan losses to nonperforming loans 1.70 X 2.32 X BP-- Denotes Basis Points DATASOURCE: LSB Bancshares, Inc. Contact: Monty J. Oliver, EVP & CFO 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/

Copyright