MASB Massbank Corp Read Mass (MM)

MASSBANK Corp. (NASDAQ - MASB), the Holding Company for MASSBANK, today reported net income of $1,888,000 or $0.43 in diluted earnings per share for the fourth quarter 2005, compared with net income of $1,886,000 or $0.42 in diluted earnings per share in the fourth quarter of 2004. Basic earnings per share in the recent quarter were $0.44 per share compared to $0.43 per share in the fourth quarter of the prior year. This is the Company's third consecutive quarter of year-over-year earnings per share increases. For the year ended December 31, 2005, the Company reported net income of $7,323,000 or $1.66 in diluted earnings per share ($1.68 in basic earnings per share) compared to $7,380,000 or $1.64 in diluted earnings per share ($1.67 in basic earnings per share) for the year ended December 31, 2004. Income Statement Net interest income, the Company's core earnings, totaled $5,493,000 for the fourth quarter of 2005, up $118,000 or 2.2% from the same quarter in 2004. This is the fifth consecutive quarter that the Company has reported a year-over-year improvement in net interest income. The net interest margin in the recent quarter improved 24 basis points to 2.53% from 2.29% in the fourth quarter of 2004. This is an increase of 10.5% over the same quarter last year. The Company continues to benefit from rising short-term interest rates. The Federal Reserve Bank Board's Federal Open Market Committee (FOMC) has raised the target rate for Federal Funds by 25 basis points eight times since the end of December 2004, increasing the rate from 2.25% to 4.25%. Return on average assets and return on average equity for the fourth quarter 2005 were 0.84% and 7.23%, respectively, up from 0.78% and 6.86% for the comparable quarter in 2004. Balance Sheet The Company's total assets decreased $77.5 million to $898.7 million at December 31, 2005 from $976.2 million at December 31, 2004. Deposits decreased approximately $64.8 million or 7.6% year-over-year from $849.5 million at December 31, 2004 to $784.7 million at December 31, 2005. Stockholders' equity was $105.3 million at December 31, 2005, representing a book value of $24.32 per share. This compares to $110.0 million at December 31, 2004, representing a book value of $25.11 per share. The Company's non-accrual loans remain low totaling $257,000 at December 31, 2005, representing 0.11% of total loans. This compares to $74,000 representing 0.03% of total loans at December 31, 2004. At December 31, 2005, the Bank's allowance for loan losses totaled $1.253 million representing 0.56% of total loans compared to $1.307 million representing 0.55% of total loans at December 31, 2004. In addition, the Bank's allowance for loan losses on off-balance sheet credit exposures totaled $517,000 at December 31, 2005 compared to $588,000 a year earlier. This is intended to protect the bank against losses on 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 $0.27 per share. This, the Company's seventy-eighth consecutive dividend, will be payable on February 20, 2006 to stockholders of record at the close of business on February 3, 2006. Stock Repurchase Program During the three months ended December 31, 2005, the Company continued the repurchase of its common stock by acquiring 10,600 shares in the open market. As of December 31, 2005 there were 122,717 shares available for repurchase in the current program. Date Set for Annual Meeting The Company also announced that the Annual Meeting of Stockholders will be held at the Sheraton Ferncroft Resort, 50 Ferncroft Road, Danvers, Massachusetts on Tuesday, April 18, 2006 at 10:00 a.m. Only stockholders of record at the close of business on February 27, 2006 are entitled to notice of and to vote at the Annual Meeting. 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 the strength of the local economy and the U.S. economy in general, unexpected fluctuations in market interest rates, unexpected fluctuations in the markets for equities, bonds, federal funds and other financial instruments, an increase in the level of non-performing assets, an increase in competitive pricing pressures within the Company's market, adverse legislative or regulatory developments, a significant decline in residential real estate values in the Company's market area, adverse impacts resulting from the continuing war on terrorism, an increase in employee-related costs, the impact of deflation or inflation, 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, 2004. For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192. -0- *T MASSBANK CORP. FINANCIAL HIGHLIGHTS ($ in thousands except share data) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 For the Period Ended Total interest and dividend income $ 9,621 $ 8,679 $ 36,801 $ 33,581 Total interest expense 4,128 3,304 15,141 12,729 Net interest income 5,493 5,375 21,660 20,852 Provision (credit) for loan losses -- (55) (53) (242) Net interest income after provision (credit) for loan losses 5,493 5,430 21,713 21,094 Gains on securities, net 253 287 679 1,229 Other non-interest income 275 361 1,185 1,257 Non-interest expense 3,082 3,200 12,461 12,302 Income tax expense 1,051 992 3,793 3,898 Net income $ 1,888 $ 1,886 $ 7,323 $ 7,380 Weighted Average Common Shares Outstanding Basic 4,331,984 4,391,567 4,365,932 4,408,293 Diluted 4,371,312 4,476,938 4,422,529 4,501,537 Per Common Share Earnings: Basic $ 0.44 $ 0.43 $ 1.68 $ 1.67 Diluted 0.43 0.42 1.66 1.64 Cash dividends paid 0.27 0.25 1.05 1.00 Book value (period end) 24.32 25.11 Ratios (1) Return on average assets 0.84% 0.78% 0.79% 0.75% Return on average equity 7.23 6.86 6.84 6.71 Net interest margin 2.53 2.29 2.40 2.19 Total equity to assets (period end) 11.71 11.27 At December 31, 2005 2004 At Period End Assets $ 898,679 $ 976,168 Deposits 784,728 849,465 Total loans 225,730 236,198 Stockholders' equity $ 105,264 $ 110,015 Common shares outstanding 4,328,517 4,381,727 Asset Quality Non-accrual loans $ 257 $ 74 Real estate acquired through foreclosure -- -- Total non-performing assets $ 257 $ 74 Allowance for loan losses $ 1,253 $ 1,307 Non-accrual loans to total loans 0.11% 0.03% (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 December 31, December 31, 2005 2004 Assets: Cash and due from banks $ 9,590 $ 9,829 Interest-bearing deposits in banks 900 2,938 Federal funds sold 167,785 193,728 Short-term investments -- 302 Debt securities available for sale: Mortgage-backed securities 135,432 122,709 Other securities 310,653 313,616 Equity securities available for sale 7,387 7,428 Mortgage-backed securities held-to- maturity 6,137 4,877 Trading securities 9,282 59,013 Loans: Mortgage loans 215,904 226,197 Other loans 9,826 10,001 Total loans 225,730 236,198 Allowance for loan losses (1,253) (1,307) Net loans 224,477 234,891 Premises and equipment 6,525 6,464 Accrued interest receivable 3,898 3,416 Goodwill 1,090 1,090 Current income tax asset, net -- 164 Deferred income tax asset, net 3,240 588 Other assets 12,283 15,115 Total assets $ 898,679 $ 976,168 Liabilities and Stockholders' Equity: Deposits: Demand and NOW $ 82,250 $ 87,653 Savings 441,541 561,313 Time certificates of deposit 260,937 200,499 Total deposits 784,728 849,465 Escrow deposits of borrowers 1,059 1,074 Accrued income taxes 35 -- Allowance for loan losses on off- balance sheet credit exposures 517 588 Other liabilities 7,076 15,026 Total liabilities 793,415 866,153 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, 7,811,680 and 7,736,430 shares issued, respectively 7,812 7,736 Additional paid-in capital 57,067 55,313 Retained earnings 104,743 102,003 169,622 165,052 Treasury stock at cost 3,483,163 and 3,354,703 shares, respectively (61,281) (56,794) Accumulated other comprehensive income (loss): Net unrealized gains (losses) on securities available for sale, net of tax effect (3,077) 1,757 Shares held in rabbi trust at cost 15,644 and 25,804 shares, respectively (351) (553) Deferred compensation obligation 351 553 Total stockholders' equity 105,264 110,015 Total liabilities and stockholders' equity $ 898,679 $ 976,168 MASSBANK CORP. AND SUBSIDIARIES Consolidated Statements of Income ($ in thousands except share data) Three Months Ended December 31, December 31, 2005 2004 Interest and dividend income: Mortgage loans $ 2,963 $ 3,209 Other loans 174 167 Securities available for sale: Mortgage-backed securities 1,750 1,709 Other securities 2,705 2,354 Mortgage-backed securities held-to- maturity 75 62 Trading securities 140 250 Federal funds sold 1,806 898 Other investments 8 30 Total interest and dividend income 9,621 8,679 Interest expense: Deposits 4,128 3,304 Total interest expense 4,128 3,304 Net interest income 5,493 5,375 Provision (credit) for loan losses -- ( 55) Net interest income after provision (credit) for loan losses 5,493 5,430 Non-interest income: Deposit account service fees 92 106 Gains on securities available for sale, net 208 205 Gains on trading securities, net 45 82 Deferred compensation plan income 25 84 Other 158 171 Total non-interest income 528 648 Non-interest expense: Salaries and employee benefits 1,891 1,819 Deferred compensation plan expense 47 98 Occupancy and equipment 563 525 Data processing 136 130 Professional services 105 248 Advertising and marketing 51 31 Deposit Insurance 35 38 Other 254 311 Total non-interest expense 3,082 3,200 Income before income taxes 2,939 2,878 Income tax expense 1,051 992 Net income $ 1,888 $ 1,886 Weighted average common shares outstanding: Basic 4,331,984 4,391,567 Diluted 4,371,312 4,476,938 Earnings per share (in dollars): Basic $ 0.44 $ 0.43 Diluted 0.43 0.42 MASSBANK CORP. AND SUBSIDIARIES Consolidated Statements of Income ($ in thousands except share data) Twelve Months Ended December 31, December 31, 2005 2004 Interest and dividend income: Mortgage loans $ 12,111 $ 13,578 Other loans 681 669 Securities available for sale: Mortgage-backed securities 6,961 6,398 Other securities 9,863 8,941 Mortgage-backed securities held-to- maturity 256 173 Trading securities 760 1,145 Federal funds sold 6,116 2,438 Other investments 53 239 Total interest and dividend income 36,801 33,581 Interest expense: Deposits 15,141 12,729 Total interest expense 15,141 12,729 Net interest income 21,660 20,852 Provision (credit) for loan losses (53) (242) Net interest income after provision (credit) for loan losses 21,713 21,094 Non-interest income: Deposit account service fees 393 448 Gains on securities available for sale, net 515 1,361 Gains (losses) on trading securities, net 164 (132) Deferred compensation plan income 84 108 Other 708 701 Total non-interest income 1,864 2,486 Non-interest expense: Salaries and employee benefits 7,463 7,261 Deferred compensation plan expense 172 167 Occupancy and equipment 2,212 2,169 Data processing 540 521 Professional services 485 631 Advertising and marketing 155 110 Deposit Insurance 145 160 Other 1,289 1,283 Total non-interest expense 12,461 12,302 Income before income taxes 11,116 11,278 Income tax expense 3,793 3,898 Net income $ 7,323 $ 7,380 Weighted average common shares outstanding: Basic 4,365,932 4,408,293 Diluted 4,422,529 4,501,537 Earnings per share (in dollars): Basic $ 1.68 $ 1.67 Diluted 1.66 1.64 *T