Lawrence Savings Bank Second Quarter Results 1997.

NORTH ANDOVER, Mass.--(BUSINESS WIRE)--July 15, 1997--Lawrence Savings Bank (NASDAQ:LSBX) today announced results for the quarter ended June 30, 1997.

Lawrence Savings Bank reported net income of $1,435,000 or $0.32 per share for the second quarter of 1997. This amount compares to net income of $1,014,000 or $0.24 per share for the same period of 1996. Net income for the six months ended June 30, 1997 was $2,738,000 or $0.62 per share as compared to $1,996,000 or $0.47 per share for the same six months of 1996.

Net interest income for the second quarter of 1997 was $2,834,000 as compared to $2,407,000 for the same quarter of 1996. Net interest income was $5,650,000 and $4,719,000 for the first six months of 1997 and 1996. Net interest income has increased due to purchases of investment securities and originations of commercial real estate and commercial loans funded by increases in deposits or borrowing from the Federal Home Loan Bank (FHLB) and entering into agreements to sell securities under agreements to repurchase them.

The provision for loan losses for the quarter ended June 30, 1997 was a credit of $100,000 as compared to a credit to $300,000 for the same quarter of 1996. The provision for loan losses for the six months ended June 30, 1997 and 1996 was a credit of $200,000 and $600,000, respectively. The credit provision of $200,000 and $600,000 for the six months ended June 30, 1997 and 1996 reflected net recoveries of $215,000 and $246,000 on loans previously charged-off and a reduction in non-performing loans to $568,000 and $1,890,000 at June 30, 1997 and 1996, respectively. Net recoveries for the second quarter of 1997 were $203,000 as compared to net charge offs of $52,000 for the same period of 1996.

Non-interest income for the quarter ended June 30, 1997 and 1996 was $293,000 and $268,000, respectively. Non-interest income was $575,000 for the six months ended June 30, 1997 as compared to $509,000 for the same period of 1996. The increase in non-interest income is attributable to net gains of $36,000 on the sales of mortgage loans in the first six months of 1997 compared to net losses of $50,000 in the same period of 1996. Deposit fees were reduced by $20,000 in 1997 from 1996 in the first six months.

Non-interest expense was $1,892,000 and $2,061,000 for the second quarter of 1997 and 1996, respectively. Non-interest expense for the first six months ended June 30, 1997 was $3,887,000 as compared to $4,032,000 for the same period of 1996. Professional fees decreased to $316,000 in the first half of 1997 from $610,000 in the same period of 1996. Included in professional expenses are legal fees of $95,000 received due to collection efforts. Salaries and employee benefits increased to $2,217,000 in the first six months of 1997 from $1,914,000 for the same period in 1996 due to normal raises and changes to the employee benefits plans. Occupancy and equipment expenses decreased to $401,000 in 1997 compared to $450,000 in 1996 due to lower equipment cost and increased rental income. Other expenses decreased due to lower Federal Deposit Insurance Corporation "FDIC" premiums for deposit insurance paid by the bank during 1997 and lower expenses associated with the annual stockholders' meeting of the bank.

Income tax benefits of $100,000 were recorded during the second quarter of 1997 and 1996, respectively. Income tax benefits of $200,000 were recorded in the six months ended June 30, 1997 and 1996. The income tax benefits recorded were due to the recognition of a deferred tax asset.

The bank has continued to reduce total risk assets, which decreased by 41 percent since Dec. 31, 1996. Non-performing loans decreased to $568,000 at June 30, 1997 as compared to $1,153,000 at Dec. 31, 1996 and $1,890,000 at June 30, 1996. Other real estate owned (OREO) decreased to $541,000 at June 30, 1997 from $739,000 at Dec. 31, 1996 and $1,564,000 at June 30, 1996.

Gross loans at June 30, 1997 were $159.6 million up from $153.6 million at Dec. 31, 1996 and up from $149.7 million at June 30, 1996. The allowance for loan losses remained fairly flat at $3,648,000 from $3,663,000 at Dec. 31, 1996 and from $3,665,000 at June 30, 1996.

Total assets increased to $366.3 million at June 30, 1997 from $337.9 million at Dec. 31, 1996 and $333.0 million at June 30, 1996. The increase in asset size during the first half of 1997 primarily occurred because the bank used the proceeds from $22.0 million borrowed funds to increase commercial real estate and commercial loans by $7.5 million and purchase $19.3 million of investment securities. Deposits increased by $3.5 million to help fund this asset growth.

Total deposits at June 30, 1997 were $249.5 million up from $246.1 million at Dec. 31, 1996 and $237.8 million at June 30, 1996. Increases in certificates of deposits and Individual Retirement Accounts (IRA's) were attributed to two new products that offer very attractive interest rates to our customers. This increase was offset by decreases in money market and NOW accounts.

Stockholders' equity was $31.8 million at June 30, 1997 as compared to $29.0 million at Dec. 31, 1996 and $25.3 million at June 30, 1996. The increase of $2.8 million during the first half of 1997 is attributable to $2.7 million of net income and $0.1 million from the exercise of stock options and a minimal decrease in value of investment securities available for sale. The bank exceeds all regulatory minimum capital ratio requirements as defined by the FDIC. The leverage ratio was 9.07 percent, 8.61 percent, and 7.96 percent at June 30, 1997, Dec. 31, 1996, and June 30, 1996, respectively.

The financial results for the first half of 1997 indicated that the bank is improving profitability, reducing risk assets and borrowing to fund investment and loan growth. Our staff, management, and board of directors will continue in 1997 to work to further enhance shareholders' value.

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                       LAWRENCE SAVINGS BANK
               CONDENSED CONSOLIDATED BALANCE SHEET (a)
                 (In thousands, except per share data)

                                June. 30, 1997      Dec. 31, 1996

Loans                            $  159,626          $  153,603
Allowance for loan losses            (3,648)             (3,633)
Investments held to maturity        136,692             124,045
Investments available for sale       52,710              46,091
OREO                                    541                 739
Other assets                         20,397              17,011
Total assets                     $  366,318          $  337,856

Deposits                         $  249,541          $  246,063
Borrowed funds                       81,000              59,030
Other liabilities                     3,949               3,753
Stockholders' equity                 31,828              29,010
Total liability and
  stockholders' equity           $  366,318          $  337,856
Book value per share             $     7.45          $     6.83


                                 June 30, 1996


Loans                            $  149,658
Allowance for loan losses            (3,665)
Investments held to maturity        121,853
Investments available for sale       45,940
OREO                                  1,564
Other assets                         17,606
Total assets                     $  332,956

Deposits                         $  237,768
Borrowed funds                       65,820
Other liabilities                     4,113
Stockholders' equity                 25,255
Total liability and
  stockholders' equity           $  332,956
Book value per share             $     5.95


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               CONDENSED CONSOLIDATED INCOME STATEMENT (a)
                  (In thousands, except per share data)

                            Three months ended     Six months ended
                           June 30,   June 30,    June 30,   June 30,
                             1997       1996        1997       1996

Interest income           $ 6,433    $ 5,621    $ 12,646   $ 11,007
Interest expense            3,599      3,214       6,996      6,288
Net Interest income         2,834      2,407       5,650      4,719
Provision for loan losses    (100)      (300)       (200)      (600)
Net interest income after
  provision for loan losses 2,934      2,707       5,850      5,319
Non-interest income           293        268         575        509
Non-interest expense        1,892      2,061       3,887      4,032
Net Income before
 income taxes               1,335        914       2,538      1,796
Income tax benefit            100        100         200        200
Net income                $ 1,435    $ 1,014     $ 2,738    $ 1,996
Net income per
 common and common
 equivalent share         $  0.32    $  0.24     $  0.62    $  0.47


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                  SELECTED FINANCIAL INFORMATION (a)

                             Three months ended     Six months ended
                            June 30,   June 30,    June 30,   June 30,
                              1997       1996        1997       1996
Selected financial ratios:
  Return on average assets    1.63%      1.26%       1.58%      1.28%
  Return on average
    stockholders'
    equity                   18.83%     16.60%      18.46%     16.48%


                                    June 30,   Dec. 31,   June 30,
                                      1997       1996       1996
Capital ratios:
  Shareholders' equity to total
   assets ratio                      8.69%       8.59%     7.59%
 Tier 1 leverage capital ratio       9.07%       8.61%     7.96%
 Total risk-based capital ratio     17.71%      17.42%    16.68%
Asset quality ratios:
  Allowance for loan losses to
   non-performing loans             642.3%      315.1%    193.9%
 Risk assets to total assets          0.3%        0.6%      1.0%
Risk assets:
Non-performing loans               $   568    $  1,153   $  1,890
Other real estate owned                541         739      1,564
Total risk assets                  $ 1,109    $  1,892   $  3,454

(a) Unaudited

CONTACT: Lawrence Savings Bank

Paul A. Miller, 508/725-7555