Lawrence Savings Bank Third Quarter Results 1998.NORTH ANDOVER North Andover (ăn`dōvər), town (1990 pop. 22,792), Essex co., NE Mass., on the Merrimack River, in a dairy and farm area; settled c.1644, set off from Andover and inc. 1855. , Mass.--(BUSINESS WIRE)--Oct. 20, 1998--Lawrence Savings Bank savings bank, financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. , (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :LSBX), today announced results for the quarter ended September September: see month. 30, 1998. Lawrence Lawrence. 1 City (1990 pop. 26,763), Marion co., central Ind., a residential suburb of Indianapolis, on the West Fork of the White River. It has light manufacturing. 2 City (1990 pop. 65,608), seat of Douglas co., NE Kans. Savings Bank reported net income of $2,635,000 or $0.60 basic earnings per share ($0.58 diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ) for the third quarter of 1998. This amount compares to net income of $1,570,000 or $0.37 basic earnings per share ($0.35 diluted earnings per share) for the same period of 1997. Net income for the nine months ended September 30, 1998 was $6,449,000 or $1.49 basic earnings per share ($1.42 diluted earnings per share) as compared to $4,308,000 or $1.01 basic earnings per share ($0.96 diluted earnings per share) for the same nine months of 1997. Net interest income for the third quarter of 1998 and 1997 was $2,934,000 and $2,669,000, respectively. Net interest income was $8,751,000 and $8,319,000 for the first nine months of 1998 and 1997. Net interest income has increased due to originations of commercial real estate and construction loans and the reduction of borrowed funds as they became due, using funds from maturities of investment securities. The provision for loan losses for the quarter ended September 30, 1998 was $125,000 compared to zero for the quarter ended September 30, 1997. The provision for loan losses for the nine months ended September 30, 1998 and 1997 was a charge of $325,000 and a credit of $200,000, respectively. Net charge-offs were $201,000 in the first nine months of 1998 compared to net recoveries of $245,000 in the first nine months of 1997. Non-interest income for the quarters ended September 30, 1998 and 1997 was $520,000 and $494,000, respectively. Non-interest income was $1,131,000 for the nine months ended September 30, 1998 as compared to $1,060,000 for the same period of 1997. The increase in non-interest income is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to net gains on sales of mortgage loans of $247,000 in the first nine months of 1998 compared to $54,000 in the same period 1997. Offsetting this increase, loan fees decreased by $80,000 and deposit fees decreased by $42,000 in the first nine months of 1998 from 1997. Non-interest expense was $2,134,000 and $1,893,000 for the third quarter of 1998 and 1997, respectively. Non-interest expense for the nine months ended September 30, 1998 was $6,548,000 as compared to $5,771,000 for the same period of 1997. Professional fees increased to $817,000 during the first nine months of 1998 from $554,000 for the same period of 1997 due to legal expenses. Salaries and employee benefits increased to $3,643,000 in the first nine months of 1998 from $3,306,000 for the same period in 1997 due to normal raises and bonuses. Occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy and equipment expenses increased to $648,000 in 1998 from $572,000 in 1997 due to the relocation RELOCATION, Scotch law, contracts. To let again to renew a lease, is called a relocation. 2. When a tenant holds over after the expiration of his lease, with the consent of his landlord, this will amount to a relocation. of a branch office. Income tax benefits of $1,440,000 and $300,000 were recorded during the third quarter of 1998 and 1997, respectively. Income tax benefits of $3,440,000 and $500,000 were recorded in the nine months ended September 30, 1998 and 1997. The income tax benefits recognized reflect management's assessment that future taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. will be realized to utilize the benefits of prior operating losses operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. . In making this assessment, management considered the Bank's asset quality and capital levels as well as current economic conditions. The Bank expects to provide for Federal and State income taxes during 1999. The level of risk assets at September 30, 1998 was below 1% of total assets. Non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. decreased to $347,000 at September 30, 1998 as compared to $1,053,000 at December December: see month. 31, 1997 and $1,779,000 at September 30, 1997. Other real estate owned Real Estate Owned Property owned by a lender - usually a bank - after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most (OREO) decreased to $566,000 at September 30, 1998 from $809,000 at December 31, 1997 and $685,000 at September 30, 1997. Gross loans at September 30, 1998 were $185,502,000 up from $164,500,000 at December 31, 1997 and up from $156,259,000 at September 30, 1997. The allowance for loan losses remained fairly level at $3,268,000 at September 30, 1998, $3,144,000 at December 31, 1997 and down from $3,678,000 at September 30, 1997. Total assets decreased to $339,832,000 at September 30, 1998 from $359,855,000 at December 31, 1997 and $352,980,000 at September 30, 1997. The decrease in asset size during the first nine months of 1998 primarily occurred because the Bank used the proceeds from investment maturities to pay down Federal Home Loan Bank advances as they became due. Total deposits at September 30, 1998 were $256,594,000 up from $254,462,000 at December 31, 1997 and $251,141,000 at September 30, 1997. Increases in Money market investment accounts and demand deposit accounts were slightly offset by decreases in certificate of deposit accounts. The Bank exceeds all regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. minimum capital ratio requirements as defined by the FDIC FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (FDIC). . The leverage ratio was 11.16%, 9.85%, and 9.45% at September 30, 1998, December 31, 1997, and September 30, 1997, respectively. The financial results for the third quarter of 1998 indicated that the Bank is maintaining profitability and a low level of risk assets while funding loan growth with maturities of investment securities and growth from deposits. Our staff, management, and Board of Directors will continue in 1998 to work to further enhance shareholders' value. This press release may include forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those forward-looking statements. Those factors include fluctuations in interest rate, inflation, government regulations and economic conditions and competition in the geographic geographic /geo·graph·ic/ (je?o-graf´ik) in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map. geographic pertaining to geography. and business areas in which the Bank conducts its operations. -0-
LAWRENCE SAVINGS BANK
CONDENSED CONSOLIDATED BALANCE SHEET(1)
(In thousands, except per share data)
Sept. 30, 1998 Dec. 31, 1997 Sept. 30, 1997
Loans $ 185,502 $ 164,500 $ 156,259
Allowance for
loan losses (3,268) (3,144) (3,678)
Investments held
to maturity 88,244 129,539 126,565
Investments available
for sale 43,527 47,567 55,050
Federal Home Loan Bank stock 4,300 4,300 4,300
OREO 566 809 685
Other assets 20,961 16,284 13,799
Total assets $ 339,832 $ 359,855 $ 352,980
Deposits $ 256,594 $ 254,462 $ 251,141
Borrowed funds 34,224 63,396 64,000
Other liabilities 4,528 4,387 4,233
Stockholders' equity 44,486 37,610 33,606
Total liabilities and
stockholders' equity $ 339,832 $ 359,855 $ 352,980
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Book value per share $ 10.27 $ 8.77 $ 7.84
CONDENSED CONSOLIDATED INCOME STATEMENT(1)
(In thousands, except per share data)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Interest income $ 6,223 $ 6,375 $ 19,039 $ 19,021
Interest expense 3,289 3,706 10,288 10,702
Net interest income 2,934 2,669 8,751 8,319
Provision for loan losses 125 -- 325 (200)
Net interest income after provision
for loan losses 2,809 2,669 8,426 8,519
Non-interest income 520 494 1,131 1,060
Non-interest expense 2,134 1,893 6,548 5,771
Net income before
income taxes 1,195 1,270 3,009 3,808
Income tax benefit 1,440 300 3,440 500
Net income $2,635 $ 1,570 $ 6,449 $ 4,308
Basic earnings per share $ 0.60 $ 0.37 $ 1.49 $ 1.01
Diluted earnings per
share $ 0.58 $ 0.35 $ 1.42 $ 0.96
SELECTED FINANCIAL INFORMATION(1)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Select financial ratios:
Return on average assets 3.04% 1.75% 2.44% 1.64%
Return on average
stockholders' equity 18.74% 19.17% 21.29% 18.71%
Sept. 30, Dec. 31, Sept. 30,
1998 1997 1997
Capital ratios:
Shareholders' equity to
total assets ratio 13.09% 10.45% 9.52%
Tier 1 leverage capital ratio 11.16% 9.85% 9.45%
Total risk-based capital ratio 18.12% 18.14% 18.54%
Asset quality ratios:
Reserve for loan loss
to non-performing loans 941.8% 298.6% 206.7%
Risk assets to total assets 0.3% 0.5% 0.7%
Risk assets:
Non-performing loans $ 347 $ 1,053 $ 1,779
Other real estate owned 566 809 685
Total risk assets $ 913 $ 1,862 $ 2,464
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(1)Unaudited
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