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 March 31, 2004

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

LSB Bancshares, Inc. had 8,593,409 shares of common stock outstanding as of April 30, 2004.

LSB BANCSHARES, INC.

FORM 10-Q

INDEX


Part I		Financial Information

Item 1.		Financial Statements.

		Consolidated Balance Sheets March 31,2004 and 2003, and December 31,2003

		Consolidated Statements of Income Three Months Ended March 31, 2004 and 2003

		Consolidated Statements of Changes in Shareholders’ Equity Three Months Ended March 31,2004 and 2003

		Consolidated Statements of Cash Flows Three Months Ended March 31,2004 and 2003

		Notes to Consolidated Financial Statements Three Months Ended March 31,2004 and 2003

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

Item 3.		Quantitative and Qualitative Disclosures about Market Risk

Item 4.		Controls and Procedures

Part II		Other Information

Item 1.		Legal Proceedings

Item 2.		Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities

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)
			March 31			December 31			March 31
			2004			2003			2003

Assets
Cash and Due From Banks			$	35,585		$	36,418		$	40,221
Interest-Bearing Bank Balances				1,493			2,267			4,819
Federal Funds Sold				17,458			25,886			33,370
Investment Securities:
	Held to Maturity, Market Value $29,633, $30,711 & $42,522			27,891			29,078			40,676
	Available for Sale			96,532			92,013			98,888
Loans				678,980			663,446			658,275
Less, Allowance for Loan Losses				(8,224	)		(7,846	)		(7,394	)

		Net Loans		670,756			655,600			650,881
Premises and Equipment				15,995			14,951			14,004
Other Assets				11,613			11,693			11,217

		Total Assets	$	877,323		$	867,906		$	894,076


Liabilities
Deposits:
	Demand		$	83,857		$	82,588		$	89,023
	Savings, NOW and Money Market Accounts			400,309			411,322			401,728
	Certificates of Deposit of less than $100,000			121,966			126,343			141,957
	Certificates of Deposit of $100,000 or more			94,005			82,249			101,980

		Total Deposits		700,137			702,502			734,688
Securities Sold Under Agreements to Repurchase				1,345			2,032			1,703
Borrowings from the Federal Home Loan Bank				80,000			70,000			63,000
Other Liabilities				6,287			4,812			8,331

		Total Liabilities		787,769			779,346			807,722

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 8,560,254 Shares in 2004 and 8,548,942 and 8,480,955 shares in 2003				42,801			42,745			42,405
Paid-In Capital				10,294			10,205			9,772
Directors’ Deferred Plan				(1,162	)		(1,101	)		(1,125	)
Retained Earnings				36,487			35,702			33,775
Accumulated Other Comprehensive Income				1,134			1,009			1,527

		Total Shareholders’ Equity		89,554			88,560			86,354

		Total Liabilities and Shareholders’ Equity	$	877,323		$	867,906		$	894,076


Memorandum: Standby Letters of Credit			$	4,605		$	4,098		$	3,708

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
			March 31

			2004		2003

Interest Income
	Interest and Fees on Loans		$	10,594	$	11,311
	Interest on Investment Securities:
		Taxable		820		1,042
		Tax Exempt		382		405
	Interest-Bearing Bank Balances			49		54
	Federal Funds Sold			46		97

		Total Interest Income		11,891		12,909

Interest Expense
	Deposits			1,645		2,299
	Securities Sold Under Agreements to Repurchase			3		5
	Borrowings from the Federal Home Loan Bank			809		775

		Total Interest Expense		2,457		3,079

Net Interest Income				9,434		9,830
	Provision for Loan Losses			511		587

	Net Interest Income After Provision for Loan Losses			8,923		9,243

Noninterest Income
	Service Charges on Deposit Accounts			1,671		1,607
	Gains on Sales of Mortgages			110		358
	Other Operating Income			1,575		1,384

		Total Noninterest Income		3,356		3,349

Noninterest Expense
	Personnel Expense			5,147		5,016
	Occupancy Expense			460		384
	Equipment Depreciation and Maintenance			539		475
	Other Operating Expense			2,958		2,882

		Total Noninterest Expense		9,104		8,757

	Income Before Income Taxes			3,175		3,835
	Income Taxes			1,022		1,281

Net Income			$	2,153	$	2,554

Earnings Per Share:
	Basic		$	0.25	$	0.30
	Diluted			0.25		0.30

Weighted Average Shares Outstanding:
	Basic			8,553,379		8,475,330
	Diluted			8,631,926		8,540,543

Cash Dividends Declared per Share			$	0.16	$	0.16

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, 2002		$	42,363	$	9,729	$	(995	)	$	32,578		$	1,832		$	85,507
Net Income										2,554						2,554
Change in unrealized gain on securities available for sale, net of deferred income taxes													(305	)		(305	)

	Comprehensive income															2,249
Cash dividends declared on common stock										(1,357	)					(1,357	)
Common stock issued for stock options exercised			42		43											85
Common stock acquired							(130	)								(130	)

Balances at March 31, 2003		$	42,405	$	9,772	$	(1,125	)	$	33,775		$	1,527		$	86,354


Balances at December 31, 2003		$	42,745	$	10,205	$	(1,101	)	$	35,702		$	1,009		$	88,560
Net Income										2,153						2,153
Change in unrealized gain on securities available for sale, net of deferred income taxes													125			125

	Comprehensive income															2,278
Cash dividends declared on common stock										(1,368	)					(1,368	)
Common stock issued for stock options exercised			56		89											145
Common stock acquired							(61	)								(61	)

Balances at March 31, 2004		$	42,801	$	10,294	$	(1,162	)	$	36,487		$	1,134		$	89,554

Notes to consolidated financial statements are an integral part hereof.

LSB Bancshares, Inc.
Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)


		Three Months Ended March 31

		2004		2003

Cash Flow from Operating Activities
Net Income		$	2,153	$	2,554
Adjustments to reconcile net income to net cash:
	Depreciation and amortization		500		441
	Securities premium amortization and discount accretion, net		25		18
	(Increase) decrease in loans held for sale		4,038		(2,884	)