READING, MA , the Holding Company for MASSBANK, today reported
net income of $181,000 or $0.04 in basic and diluted earnings per
share for the first quarter of 2008, compared with net income of
$2,081,000 or $0.48 in basic and diluted earnings per share in the
first quarter of 2007. The results in the first quarter of 2008
were adversely affected by the incurrence in the quarter of
$1,392,000 of expenses relating to a proxy contest instituted by a
dissident stockholder, litigation initiated by that dissident
stockholder, the Company's merger with Eastern Corporation
announced on March 10, 2008 and litigation challenging that merger.
Excluding these expenses, the Company's net income would have been
$1,100,000 or $0.26 per share in the first quarter of 2008.
The Company's earnings performance for the recent quarter was
also adversely impacted by a decrease in net interest income and
non-interest income compared to the same quarter last year.
Net interest income, the Company's core earnings, for the three
months ended March 31, 2008 decreased $776,000 or 16.2% to
$4,015,000 from $4,791,000 for the same quarter last year. The
decrease in net interest income results primarily from a decrease
in average earning assets and net interest margin. The Company's
average earning assets for the first quarter of 2008 were $778.2
million compared to $803.4 million in the same quarter of 2007. The
net interest margin for the recent quarter was 2.07% compared to
2.39% in the first quarter of 2007.
Non-interest income for the recent quarter decreased $553,000 to
$937,000 from $1,490,000 for the same quarter of last year due
essentially to a decrease in securities gains. Gains on securities
available for sale and trading declined $467,000 to $667,000 in the
first quarter of 2008 from $1,134,000 in the first quarter of
2007.
Balance Sheet
The Company's total assets decreased $28.0 million to $800.1
million at March 31, 2008 from $828.1 at March 31, 2007. Deposits
decreased $32.3 million or 4.5% year-over-year from $714.3 million
at March 31, 2007 to $682.0 million at March 31, 2008 due in part
to increased competition for relatively expensive short term
deposits. Stockholders' equity was $108.1 million at March 31,
2008, representing a book value of $25.53 per share. This compares
to $108.6 million at March 31, 2007 representing a book value of
$25.04 per share.
The Company's non-accrual loans are near historical lows
totaling $46,000 at March 31, 2008 representing 0.02% of total
loans. This compares to $148,000 representing 0.07% of total loans
at March 31, 2007. At March 31, 2008, the Bank's allowance for loan
losses totaled $1.397 million representing 0.73% of total loans
compared to $1.382 million representing 0.68% of total loans at
March 31, 2007. In addition, the Bank's allowance for loan losses
on off-balance sheet credit exposures totaled $317,000 at March 31,
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
Dividend Declaration
MASSBANK Corp. today announced a quarterly cash dividend on its
common stock of $0.29 per share. This, the Company's eighty-seventh
consecutive dividend, will be payable on May 19, 2008 to
stockholders of record at the close of business on May 2, 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;
(b) the possibility that the Company's stockholders will not approve
the merger agreement;
(c) 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;
(d) the outcome of any legal proceeding that has been
or may be instituted against us, Eastern or others relating to the
merger agreement, including the terms of any settlement of such
legal proceedings that may be subject to court approval.
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
March 31,
2008 2007
---------- ----------
For the Period Ended
Total interest and dividend income $ 8,762 $ 9,979
Total interest expense 4,747 5,188
---------- ----------
Net interest income 4,015 4,791
Provision (credit) for loan losses 28 --
---------- ----------
Net interest income after provision (credit) for
loan losses 3,987 4,791
Gains on securities, net 667 1,134
Other non-interest income 270 356
Non-interest expense 4,608 3,100
Income tax expense 135 1,100
---------- ----------
Net income $ 181 $ 2,081
Weighted Average Common Shares Outstanding
Basic 4,241,937 4,335,589
Diluted 4,272,073 4,361,453
Per Common Share
Earnings:
Basic $ 0.04 $ 0.48
Diluted 0.04 0.48
Cash dividends paid 0.29 0.28
Book value (period end) 25.53 25.04
Ratios (1)
Return on average assets 0.09% 1.01%
Return on average equity 0.67 7.79
Net interest margin 2.07 2.39
Total equity to assets (period end) 13.51 13.12
At
March 31,
2008 2007
---------- ----------
At Period End
Assets $ 800,076 $ 828,181
Deposits 682,048 714,298
Total loans 191,810 203,370
Stockholders' equity $ 108,054 $ 108,626
Common shares outstanding 4,233,079 4,338,154
Asset Quality
Non-accrual loans $ 46 $ 148
Real estate acquired through foreclosure -- --
---------- ----------
Total non-performing assets $ 46 $ 148
Allowance for loan losses $ 1,397 $ 1,382
Percent of non-accrual loans to total loans 0.02% 0.07%
(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
March 31, March 31,
2008 2007
---------- ---------
Assets:
Cash and due from banks $ 5,495 $ 7,464
Short-term investments 222,850 163,698
--------- ---------
Total cash and cash equivalents 228,345 171,162
Term federal funds sold 110,000 50,000
Trading securities, at fair value 114,232 240,042
Securities available for sale, at fair value
(amortized cost of $125,021 in 2008 and
$140,743 in 2007) 127,463 139,965
Securities held to maturity, at amortized cost
(market value of $7,650 in 2008 and $5,101
in 2007) 7,537 5,208
Loans:
Mortgage loans 182,532 193,661
Other loans 9,278 9,709
--------- ---------
Total loans 191,810 203,370
Allowance for loan losses (1,397) (1,382)
--------- ---------
Net loans 190,413 201,988
--------- ---------
Real estate held for resale 425 425
Accrued interest and income receivable 3,408 4,726
Income tax receivable, net 266 --
Deferred income tax asset, net 46 2,620
Premises and equipment 8,063 7,238
Goodwill 1,090 1,090
Other assets 8,788 3,717
--------- ---------
Total assets $ 800,076 $ 828,181
--------- ---------
Liabilities and Stockholders' Equity:
Deposits:
Demand and NOW $ 76,025 $ 75,967
Savings 302,096 333,266
Time certificates of deposit 303,927 305,065
--------- ---------
Total deposits 682,048 714,298
Escrow deposits of borrowers 990 993
Accrued income taxes, net -- 419
Allowance for loan losses on off-balance sheet
credit exposures 317 345
Other liabilities 8,667 3,500
--------- ---------
Total liabilities 692,022 719,555
--------- ---------
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 7,870,817 shares issued,
respectively 7,901 7,871
Additional paid-in capital 59,379 58,401
Retained earnings 106,622 105,686
--------- ---------
173,902 171,958
Treasury stock at cost 3,667,863 and
3,532,663 shares, respectively (67,673) (62,902)
Accumulated other comprehensive income
(loss) 1,825 (430)
Shares held in rabbi trust at cost, 20,194
and 17,944 shares, respectively (503) (426)
Deferred compensation obligation 503 426
--------- ---------
Total stockholders' equity 108,054 108,626
--------- ---------
Total liabilities and stockholders'
equity $ 800,076 $ 828,181
--------- ---------
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
($ in thousands except share data)
Three Months Ended
March 31, March 31,
2008 2007
---------- -----------
Interest and dividend income:
Mortgage loans $ 2,490 $ 2,676
Other loans 161 193
Securities available for sale:
Mortgage-backed securities 1,589 1,806
Other securities 27 31
Mortgage-backed securities held to maturity 115 69
Trading securities 1,665 2,637
Federal funds sold 1,869 2,180
Other investments 846 387
---------- -----------
Total interest and dividend income 8,762 9,979
---------- -----------
Interest expense:
Deposits 4,663 5,188
Borrowed funds 84 --
---------- -----------
Total interest expense 4,747 5,188
---------- -----------
Net interest income 4,015 4,791
Provision (credit) for loan losses 28 --
---------- -----------
Net interest income after provision
(credit) for loan losses 3,987 4,791
---------- -----------
Non-interest income:
Deposit account service fees 77 83
Gains (losses) on securities available for
sale, net (45) 85
Gains on trading securities, net 712 1,049
Option fees 75 75
Deferred compensation plan income (loss) (49) 25
Other 167 173
---------- -----------
Total non-interest income 937 1,490
---------- -----------
Non-interest expense:
Salaries and employee benefits 1,940 1,884
Deferred compensation plan expense (21) 48
Occupancy and equipment 593 531
Data processing 149 146
Professional services 669 128
Merger related expense 903 --
Advertising and marketing 38 33
Deposit insurance 26 28
Other 311 302
---------- -----------
Total non-interest expense 4,608 3,100
---------- -----------
Income before income taxes 316 3,181
Income tax expense 135 1,100
---------- -----------
Net income $ 181 $ 2,081
---------- -----------
Weighted average common shares outstanding:
Basic 4,241,937 4,335,589
Diluted 4,272,073 4,361,453
Earnings per share (in dollars):
Basic $ 0.04 $ 0.48
Diluted 0.04 0.48
Contact: Reginald E. Cormier Senior Vice President, Treasurer
and CFO (781) 942-8192
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