LSB BANCSHARES INC /NC/ - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q


(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2003

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from _______________ to _______________

Commission file number 0-11448

LSB BANCSHARES, INC.
(Exact Name of Registrant as Specified in Its Charter)


North Carolina		56-1348147
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

LSB BANCSHARES, INC.
ONE LSB PLAZA
LEXINGTON, NORTH CAROLINA 27292
(Address of Principal Executive Offices)
(Zip Code)

(336) 248-6500
(Registrant’s Telephone Number, Including Area Code)

Indicate by check ü whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes þ No o

Indicate by check ü whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o

LSB Bancshares, Inc. has 8,533,255 shares of common stock outstanding as of July 31, 2003.

LSB BANCSHARES, INC.

FORM 10-Q

INDEX


Part I		Financial Information

Item 1.		Financial Statements

		Consolidated Balance Sheets June 30, 2003 and 2002, and December 31, 2002

		Consolidated Statements of Income Three Months Ended June 30, 2003 and 2002 Six Months Ended June 30, 2003 and 2002

		Consolidated Statements of Changes in Shareholders’ Equity Six Months Ended June 30, 2003 and 2002

		Consolidated Statements of Cash Flows Six Months Ended June 30, 2003 and 2002

		Notes to Consolidated Financial Statements Six Months Ended June 30, 2003 and 2002

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.		Quantitative and Qualitative Disclosures about Market Risk

Part II		Other Information

Item 1.		Legal Proceedings

Item 2.		Changes in Securities and Use of Proceeds

Item 3.		Defaults Upon Senior Securities

Item 4.		Submission of Matters to a Vote of Security Holders

Item 5.		Other Information

Item 6.		Exhibits and Reports on Form 8-K

Signatures

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

LSB Bancshares, Inc.
Consolidated Balance Sheets
(In Thousands)


			(Unaudited)						(Unaudited)
			June 30			December 31			June 30
			2003			2002			2002

Assets
Cash and Due From Banks			$	49,895		$	41,522		$	41,510
Interest-Bearing Bank Balances				4,430			5,550			4,046
Federal Funds Sold				15,050			13,384			11,735
Investment Securities:
	Held to Maturity, Market Value $42,807, $46,013 and $48,660			40,426			44,030			47,041
	Available for Sale, at Market Value			92,582			84,372			99,803
Loans				674,391			645,548			605,264
Less, Reserve for Loan Losses				(7,724	)		(7,284	)		(6,948	)

		Net Loans		666,667			638,264			598,316
Premises and Equipment				14,250			13,490			13,178
Other Assets				11,361			11,181			11,708

		Total Assets	$	894,661		$	851,793		$	827,337


Liabilities
Deposits
	Demand		$	101,798		$	94,612		$	83,802
	Savings, NOW and Money Market Accounts			401,573			385,981			365,493
	Certificates of Deposit of less than $100,000			136,711			145,669			169,227
	Certificates of Deposit of $100,000 or more			101,742			70,219			56,551

		Total Deposits		741,824			696,481			675,073
Securities Sold Under Agreements to Repurchase				1,068			1,529			1,342
Borrowings from the Federal Home Loan Bank				58,000			63,000			63,000
Other Liabilities				5,337			5,276			5,318

		Total Liabilities		806,229			766,286			744,733

Shareholders’ Equity
Preferred Stock, Par Value $.01 Per Share:
	Authorized 10,000,000 shares; none issued			0			0			0
Common Stock, Par Value $5 Per Share:
Authorized 50,000,000 Shares; Issued 8,522,590 Shares in 2003 and 8,472,518 and 8,483,095 shares in 2002				42,613			42,363			42,415
Paid-In Capital				9,974			9,729			9,983
Common Stock Acquired for Directors’ Deferred Plan				(1,085	)		(995	)		(968	)
Retained Earnings				35,109			32,578			30,075
Accumulated Other Comprehensive Income				1,821			1,832			1,099

		Total Shareholders’ Equity		88,432			85,507			82,604

		Total Liabilities and Shareholders’ Equity	$	894,661		$	851,793		$	827,337


Memorandum: Standby Letters of Credit			$	3,628		$	4,138		$	5,839

Notes to consolidated financial statements are an integral part hereof.

LSB Bancshares, Inc.
Consolidated Statements of Income
(In Thousands except Share Data)
(Unaudited)


			Three Months Ended				Six Months Ended
			June 30				June 30

			2003		2002		2003		2002

Interest Income
	Interest and Fees on Loans		$	11,522	$	10,927	$	22,833	$	22,155
	Interest on Investment Securities:
		Taxable		1,021		1,439		2,063		2,942
		Tax Exempt		398		404		803		837
	Interest-Bearing Bank Balances			44		74		98		152
	Federal Funds Sold			64		107		161		283

		Total Interest Income		13,049		12,951		25,958		26,369

Interest Expense
	Deposits			2,167		2,995		4,466		6,356
	Securities Sold Under Agreements to Repurchase			3		5		8		33
	Borrowings from the Federal Home Loan Bank			769		788		1,544		1,566

		Total Interest Expense		2,939		3,788		6,018		7,955

Net Interest Income				10,110		9,163		19,940		18,414
	Provision for Loan Losses			487		682		1,074		1,062

	Net Interest Income After Provision for Loan Losses			9,623		8,481		18,866		17,352

Noninterest Income
	Service Charges on Deposit Accounts			1,716		1,646		3,323		3,069
	Gains on Sales of Mortgages			379		145		737		329
	Other Operating Income			1,620		1,332		3,004		2,393

		Total Noninterest Income		3,715		3,123		7,064		5,791

Noninterest Expense
	Personnel Expense			5,299		4,347		10,315		8,529
	Occupancy Expense			394		354		778		710
	Equipment Depreciation and Maintenance			499		446		974		876
	Other Operating Expense			3,117		2,615		5,999		5,317

		Total Noninterest Expense		9,309		7,762		18,066		15,432

	Income Before Income Taxes			4,029		3,842		7,864		7,711
	Income Taxes			1,332		1,273		2,613		2,542

Net Income			$	2,697	$	2,569	$	5,251	$	5,169

Earnings Per Share:
	Basic		$	0.32	$	0.30	$	0.62	$	0.61
	Diluted			0.31		0.30		0.61		0.61

Weighted Average Shares Outstanding:
	Basic			8,510,088		8,471,507		8,492,709		8,456,677
	Diluted			8,571,002		8,564,855		8,556,098		8,530,096

Cash Dividends Declared per Share			$	0.16	$	0.15	$	0.32	$	0.30

Notes to consolidated financial statements are an integral part hereof.

LSB Bancshares, Inc.
Consolidated Statements of
Changes in Shareholders’ Equity
(In Thousands)
(Unaudited)


												Accumulated
						Directors'						Other			Total
		Common		Paid-In		Deferred			Retained			Comprehensive			Shareholders'
		Stock		Capital		Plan			Earnings			Income			Equity

Balances at December 31, 2001		$	42,209	$	9,860	$	(878	)	$	27,444		$	708		$	79,343
Net Income										5,169						5,169
Change in unrealized loss on securities available for sale, net of deferred income taxes													391			391

	Comprehensive income															5,560
Cash dividends declared on common stock										(2,538	)					(2,538	)
Common stock issued for stock options exercised			206		123											329
Common stock acquired							(90	)								(90	)

Balances at June 30, 2002		$	42,415	$	9,983	$	(968	)	$	30,075		$	1,099		$	82,604


Balances at December 31, 2002		$	42,363	$	9,729	$	(995	)	$	32,578		$	1,832		$	85,507
Net Income										5,251						5,251
Change in unrealized gain on securities available for sale, net of deferred income taxes													(11	)		(11	)

	Comprehensive income															5,240
Cash dividends declared on common stock										(2,720	)					(2,720	)
Common stock issued for stock options exercised			250		245											495
Common stock acquired							(90	)								(90	)