READING, MA , the Holding Company for MASSBANK, today reported
net income of $2,102,000 for the quarter ended December 31, 2007
compared to $1,731,000 for the quarter ended December 31, 2006, an
increase of $371,000 or 21.4%. Diluted and basic earnings per share
were $0.49 for the fourth quarter of 2007 compared to $0.40 for the
same quarter of 2006, an increase of 22.5%.
For the year ended December 31, 2007, the Company reported net
income of $7,731,000 compared to $7,027,000 for the year ended
December 31, 2006, an increase of $704,000 or 10.0%. Diluted
earnings per share for 2007 increased 10.6% to $1.78 from $1.61 for
the prior year. Basic earnings per share for 2007 increased 11.1%
to $1.80 from $1.62 per share for 2006.
The Company's return on average assets and return on average
equity for the recent quarter showed marked improvement. Return on
average assets and return on average equity for the fourth quarter
2007 were 1.05% and 7.87%, respectively, up from 0.83% and 6.52%
for the comparable quarter of 2006. Book value per share also
increased $0.93 or 3.8% reaching a new high of $25.69 per share at
December 31, 2007, from $24.76 per share at December 31, 2006.
In commenting on the past year, Gerard H. Brandi, CEO of the
Company, noted that, "These strong financial results in the face of
a very challenging banking environment are a validation of
MASSBANK's long-standing strategy of maintaining high levels of
liquidity and capital. As we said in last year's Annual Report, our
philosophy is to 'go against the tide when we feel the tide is
going in the wrong direction.' We also stated then that while we
would 'sacrifice a degree of growth when we feel that the cost of
growth is too high,' we emphasized that we were not willing to
'sacrifice asset quality for a modest increase in yield.' By
consistently adhering to these strategies, MASSBANK avoided
virtually all of the current turmoil in the residential mortgage
market and was one of the few banks to achieve significantly
improved financial results in 2007. I am confident that our
consistent business philosophies will position us for further solid
results in the years to come."
Income Statement
The growth in net income during the recent quarter compared to
the same quarter last year resulted primarily from an increase in
non-interest income and a decrease in non-interest expense,
partially offset by a decrease in net interest income.
Non-interest income for the three months ended December 31, 2007
was $1,517,000 compared to $736,000 for the same period in 2006, an
increase of $781,000 or 106.1% over the three months ended December
31, 2006. The growth in non-interest income was mainly due to an
increase in net securities gains of $889,000 resulting primarily
from an increase in net gains on trading securities of $1,108,000.
The strong performance of the Company's trading securities
portfolio in the recent quarter reflects an increase in the fair
value of the trading securities portfolio of $1,023,000 over the
same quarter last year and an increase in gains on sales of trading
securities of $85,000.
All other non-interest income in the recent quarter decreased
$108,000 when compared to the same quarter last year. This was due
essentially to the market value of the Company's deferred
compensation plan assets having declined in the recent quarter
compared to having appreciated in market value in the same quarter
of 2006. This decease of $130,000 in deferred compensation plan
income, however, is offset by a corresponding decrease in deferred
compensation plan expense.
Non-interest expense was $2,841,000 for the three months ended
December 31, 2007 compared to $3,053,000 for the same period in
2006, a decrease of $212,000 or 6.9%. The decreases were
predominately in compensation related costs.
Salaries and employee benefits decreased $127,000 due
principally to a reduction in the amount previously accrued for a
profit sharing and incentive compensation bonus plan distribution
to Company employees at year-end based on the Company's earnings
performance, partially offset by the increased costs of employee
benefits.
Deferred compensation plan expense decreased $131,000 in the
recent quarter due principally to the decrease in market value of
plan assets.
Net interest income for the three months ended December 31, 2007
decreased $410,000 to $4,569,000 from $4,979,000 for the same
period in 2006. The decrease in net interest income results
primarily from a decrease in both average earning assets and net
interest margin. The Company's average earning assets for the
fourth quarter of 2007 were $776.7 million compared to $833.8
million in the same quarter of 2006. The net interest margin for
the recent quarter was 2.36% compared to 2.47% in the fourth
quarter of 2006.
Balance Sheet
The Company's total assets decreased $41.7 million to $801.8
million at December 31, 2007, from $843.5 million at December 31,
2006. Deposits decreased $40.7 million year-over-year from $723.3
million at December 31, 2006 to $682.6 million at December 31,
2007. The decrease in deposits is due in part to continued intense
competition for relatively expensive short term deposits. Because
of its high liquidity position, the Company can tolerate outflows
when the cost of retaining deposits cannot be justified by the
availability of appropriately priced assets, as measured on a
risk-adjusted basis. Stockholders' equity increased $2.1 million to
$109.0 million at December 31, 2007, from $106.9 million at
December 31, 2006.
The Company's non-accrual loans remain near historical lows
totaling $199,000 at December 31, 2007, representing 0.10% of total
loans. This compares to $137,000 representing 0.07% of total loans
at December 31, 2006. Net charge-offs were $3,000 in 2007 compared
to net recoveries of $6,000 in 2006.
At December 31, 2007, the Company's allowance for loan losses
totaled $1.369 million representing 0.71% of total loans compared
to $1.382 million representing 0.66% of total loans at December 31,
2006. In addition, the Company's allowance for loan losses on
off-balance sheet credit exposures totaled $345,000 at December 31,
2007 and 2006. This is intended to protect the Company against
possible 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 $0.29 per common share. This, the Company's
eighty-sixth consecutive dividend, will be payable on February 15,
2008 to stockholders of record at the close of business on January
31, 2008.
Stock Repurchase Program
During the three months ended December 31, 2007, the Company
continued the repurchase of its common stock by acquiring 33,500
shares. As of December 31, 2007, there were 117,017 shares
available for repurchase in the current program.
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, 2006.
MASSBANK CORP.
FINANCIAL HIGHLIGHTS
($ in thousands except share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2007 2006 2007 2006
--------- --------- --------- ---------
For the Period Ended
Total interest and dividend
income $ 9,734 $ 10,085 $ 39,782 $ 39,939
Total interest expense 5,165 5,106 21,013 18,951
--------- --------- --------- ---------
Net interest income 4,569 4,979 18,769 20,988
Provision (credit) for loan
losses -- (9) (10) 123
--------- --------- --------- ---------
Net interest income after
provision (credit) for loan
losses 4,569 4,988 18,779 20,865
Gains on securities, net 1,148 259 4,381 797
Other non-interest income 369 477 1,517 1,408
Non-interest expense 2,841 3,053 12,792 12,360
Income tax expense 1,143 940 4,154 3,683
--------- --------- --------- ---------
Net income $ 2,102 $ 1,731 $ 7,731 $ 7,027
Weighted Average Common Shares
Outstanding
Basic 4,257,185 4,319,795 4,305,894 4,325,879
Diluted 4,289,163 4,352,680 4,333,789 4,360,688
Per Common Share
Earnings:
Basic $ 0.49 $ 0.40 $ 1.80 $ 1.62
Diluted 0.49 0.40 1.78 1.61
Cash dividends paid 0.29 0.28 1.13 1.09
Book value (period end) 25.69 24.76
Ratios (1)
Return on average assets 1.05% 0.83% 0.95% 0.82%
Return on average equity 7.87 6.52 7.23 6.74
Net interest margin 2.36 2.47 2.38 2.53
Total equity to assets (period
end) 13.59 12.67
At
December 31,
2007 2006
--------- ---------
At Period End
Assets $ 801,799 $ 843,522
Deposits 682,561 723,332
Total loans 191,567 208,927
Stockholders' equity $ 108,961 $ 106,885
Common shares outstanding 4,241,779 4,317,654
Asset Quality
Non-accrual loans $ 199 $ 137
Real estate acquired through
foreclosure -- --
--------- ---------
Total non-performing assets $ 199 $ 137
Allowance for loan losses $ 1,369 $ 1,382
Percent of non-accrual loans to
total loans 0.10% 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
December 31, December 31,
2007 2006
------------ ------------
Assets:
Cash and due from banks $ 6,126 $ 8,650
Short-term investments 150,978 139,240
------------ ------------
Total cash and cash equivalents 157,104 147,890
Term federal funds sold 91,000 41,000
Securities available for sale, at fair value
(amortized cost of $127,205 in 2007 and
$407,154 in 2006) 128,710 402,629
Securities held to maturity, at amortized
cost (market value of $8,120 in 2007 and
$5,276 in 2006) 8,098 5,396
Trading securities, at fair value: 206,566 1,931
Loans:
Mortgage loans 181,945 199,253
Other loans 9,622 9,674
------------ ------------
Total loans 191,567 208,927
Allowance for loan losses (1,369) (1,382)
------------ ------------
Net loans 190,198 207,545
------------ ------------
Premises and equipment 8,163 7,085
Real estate held for resale 425 425
Accrued interest and income receivable 4,061 5,083
Goodwill 1,090 1,090
Income tax receivable, net 1 88
Deferred income tax asset, net 661 3,347
Other assets 5,722 20,013
------------ ------------
Total assets $ 801,799 $ 843,522
------------ ------------
Liabilities and Stockholders' Equity:
Deposits:
Demand and NOW $ 71,687 $ 78,860
Savings 307,322 344,808
Time certificates of deposit 303,552 299,664
------------ ------------
Total deposits 682,561 723,332
Escrow deposits of borrowers 968 1,006
Allowance for loan losses on off-balance
sheet credit exposures 345 345
Other liabilities 8,964 11,954
------------ ------------
Total liabilities 692,838 736,637
------------ ------------
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, 7,880,642
and 7,850,317 shares issued, respectively 7,881 7,850
Additional paid-in capital 58,773 57,953
Retained earnings 107,674 107,055
------------ ------------
174,328 172,858
Treasury stock at cost 3,638,863 and
3,532,663 shares, respectively (66,597) (62,902)
Accumulated other comprehensive income (loss) 1,230 (3,071)
Shares held in rabbi trust at cost, 20,194 and
17,944 shares, respectively (503) (426)
Deferred compensation obligation 503 426
------------ ------------
Total stockholders' equity 108,961 106,885
------------ ------------
Total liabilities and stockholders'
equity $ 801,799 $ 843,522
------------ ------------
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
($ in thousands except share data)
Three Months Ended
December 31, December 31,
2007 2006
------------ ------------
Interest and dividend income:
Mortgage loans $ 2,493 $ 2,751
Other loans 184 195
Securities available for sale:
Mortgage-backed securities 1,620 1,824
Other securities 110 3,037
Mortgage-backed securities held to maturity 112 70
Trading securities 2,401 1
Federal funds sold 2,056 2,004
Other investments 758 203
------------ ------------
Total interest and dividend income 9,734 10,085
------------ ------------
Interest expense:
Deposits 5,165 5,106
------------ ------------
Total interest expense 5,165 5,106
------------ ------------
Net interest income 4,569 4,979
Provision (credit) for loan losses -- (9)
------------ ------------
Net interest income after provision
(credit) for loan losses 4,569 4,988
------------ ------------
Non-interest income:
Deposit account service fees 80 85
Gains on securities available for sale, net 88 307
Gains on trading securities, net 1,060 (48)
Option fees 150 150
Deferred compensation plan income (loss) (60) 70
Other 199 172
------------ ------------
Total non-interest income 1,517 736
------------ ------------
Non-interest expense:
Salaries and employee benefits 1,667 1,794
Deferred compensation plan expense (40) 91
Occupancy and equipment 541 474
Data processing 152 166
Professional services 141 139
Advertising and marketing 41 37
Deposit insurance 26 30
Other 313 322
------------ ------------
Total non-interest expense 2,841 3,053
------------ ------------
Income before income taxes 3,245 2,671
Income tax expense 1,143 940
------------ ------------
Net income $ 2,102 $ 1,731
------------ ------------
Weighted average common shares outstanding:
Basic 4,257,185 4,319,795
Diluted 4,289,163 4,352,680
Earnings per share (in dollars):
Basic $ 0.49 $ 0.40
Diluted 0.49 0.40
MASSBANK CORP. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
($ in thousands except share data)
Twelve Months Ended
December 31, December 31,
2007 2006
----------- ------------
Interest and dividend income:
Mortgage loans $ 10,313 $ 11,305
Other loans 768 765
Securities available for sale:
Mortgage-backed securities 6,857 7,293
Other securities 207 12,062
Mortgage-backed securities held to maturity 353 299
Trading securities 10,323 195
Federal funds sold 8,494 7,731
Other investments 2,467 289
----------- ------------
Total interest and dividend income 39,782 39,939
----------- ------------
Interest expense:
Deposits 21,009 18,951
Borrowed funds 4 --
----------- ------------
Total interest expense 21,013 18,951
----------- ------------
Net interest income 18,769 20,988
Provision (credit) for loan losses (10) 123
----------- ------------
Net interest income after provision
(credit) for loan losses 18,779 20,865
----------- ------------
Non-interest income:
Deposit account service fees 325 343
Gains on securities available for sale, net 272 736
Gains on trading securities, net 4,109 61
Option fees 375 150
Deferred compensation plan income 58 178
Other 759 737
----------- ------------
Total non-interest income 5,898 2,205
----------- ------------
Non-interest expense:
Salaries and employee benefits 7,699 7,338
Deferred compensation plan expense 264 263
Occupancy and equipment 2,094 2,176
Data processing 588 583
Professional services 612 553
Advertising and marketing 166 139
Deposit insurance 109 126
Other 1,260 1,182
----------- ------------
Total non-interest expense 12,792 12,360
----------- ------------
Income before income taxes 11,885 10,710
Income tax expense 4,154 3,683
----------- ------------
Net income $ 7,731 $ 7,027
----------- ------------
Weighted average common shares outstanding:
Basic 4,305,894 4,325,879
Diluted 4,333,789 4,360,688
Earnings per share (in dollars):
Basic $ 1.80 $ 1.62
Diluted 1.78 1.61
For further information contact: Reginald E. Cormier Senior Vice
President, Treasurer and CFO (781) 942-8192
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