##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20529
 FORM 10-Q
 þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2008
 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 000-32955
 LSB Corporation
  
 Massachusetts
(State or other jurisdiction of 
incorporation or organization)
    
    04-3557612
(I.R.S. Employer
Identification Number)30 Massachusetts Avenue, North Andover, MA
(Address of principal executive offices)
    
    01845
(Zip Code)
 (978) 725-7500
  þ o
  Large accelerated filer
o
    
    Accelerated filer
o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ
  Class
    
    Outstanding as of May 8, 2008Common Stock, par value $.10 per share
    
    4,453,941 shares




---



##### 



Page:PART I  FINANCIAL INFORMATIONITEM 1 FINANCIAL STATEMENTSConsolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Changes in Stockholders Equity
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-9ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
    
    
    9-18ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
    
    
    18ITEM 4.T CONTROLS AND PROCEDURES
    
    
    18PART II  OTHER INFORMATIONITEM 1 LEGAL PROCEEDINGS
    
    
    19ITEM 1A RISK FACTORS
    
    
    19ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    19ITEM 3 DEFAULTS UPON SENIOR SECURITIES
    
    
    19ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    19-20ITEM 5 OTHER INFORMATION
    
    
    20ITEM 6 EXHIBITS
    
    
    20SIGNATURES
    
    
    21EXHIBIT INDEX
    
    
    22EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 906 CERTIFICATION OF THE CEOEX-32.2 SECTION 906 CERTIFICATION OF THE CFO
  2




---



##### Table of Contents



PART 1  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
  
 
 March 31,
    
    
    December 31,2008
    
    
    2007(In thousands, except share data)ASSETSAssets:Cash and due from banks
    
    $
    6,326
    
    
    $
    7,494Federal funds sold
    
    
    5,256
    
    
    
    56Total cash and cash equivalents
    
    
    11,582
    
    
    
    7,550Investment securities available for sale (amortized cost of
$260,558 in 2008 and $229,885 in 2007)
    
    
    264,240
    
    
    
    230,596Federal Home Loan Bank stock, at cost
    
    
    11,570
    
    
    
    10,185Loans, net of allowance for loan losses
    
    
    367,741
    
    
    
    353,303Premises and equipment
    
    
    4,155
    
    
    
    3,590Accrued interest receivable
    
    
    2,483
    
    
    
    2,453Deferred income tax asset, net
    
    
    1,488
    
    
    
    2,485Bank-owned life insurance
    
    
    10,296
    
    
    
    10,200Other real estate owned
    
    
    612
    
    
    
    Other assets
    
    
    1,397
    
    
    
    1,289Total assets
    
    $
    675,564
    
    
    $
    621,651LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Deposits
    
    $
    330,364
    
    
    $
    322,083Long-term borrowed funds
    
    
    271,341
    
    
    
    227,378Short-term borrowed funds
    
    
    7,675
    
    
    
    7,973Advance payments by borrowers for taxes and insurance
    
    
    786
    
    
    
    647Other liabilities
    
    
    3,727
    
    
    
    3,272Total liabilities
    
    
    613,893
    
    
    
    561,353Stockholders equity:Preferred stock, $.10 par value per share:5,000,000 shares authorized, none issued
    
    
    
    
    
    
    Common stock, $.10 par value per share;20,000,000
shares authorized; 4,471,941 and 4,516,561 shares issued and outstanding at March 31, 2008 and December 31, 2007, respectively
    
    
    447
    
    
    
    452Additional paid-in capital
    
    
    59,670
    
    
    
    60,382Accumulated deficit
    
    
    (646
    )
    
    
    (934
    )Accumulated other comprehensive income, net of tax
    
    
    2,200
    
    
    
    398Total stockholders equity
    
    
    61,671
    
    
    
    60,298Total liabilities and stockholders equity
    
    $
    675,564
    
    
    $
    621,651
  3




---



##### Table of Contents



Three months endedMarch 31,2008
    
    
    2007(In thousands,except share data)Interest and dividend income:Loans
    
    $
    6,018
    
    
    $
    5,298Investment securities available for sale
    
    
    3,051
    
    
    
    2,514Federal Home Loan Bank stock
    
    
    154
    
    
    
    160Short-term interest income
    
    
    59
    
    
    
    121Total interest and dividend income
    
    
    9,282
    
    
    
    8,093Interest expense:Deposits
    
    
    2,612
    
    
    
    2,213Long-term borrowed funds
    
    
    2,745
    
    
    
    1,686Short-term borrowed funds
    
    
    36
    
    
    
    420Total interest expense
    
    
    5,393
    
    
    
    4,319Net interest income
    
    
    3,889
    
    
    
    3,774Provision for loan losses
    
    
    105
    
    
    
    60Net interest income after provision for loan losses
    
    
    3,784
    
    
    
    3,714Non-interest income:Deposit account fees
    
    
    245
    
    
    
    186Loan servicing fees, net
    
    
    39
    
    
    
    58Income on bank-owned life insurance
    
    
    96
    
    
    
    Other income
    
    
    114
    
    
    
    110Total non-interest income
    
    
    494
    
    
    
    354Non-interest expense:Salaries and employee benefits
    
    
    1,640
    
    
    
    1,764Occupancy and equipment expense
    
    
    352
    
    
    
    286Data processing expense
    
    
    234
    
    
    
    281Professional expense
    
    
    131
    
    
    
    108Marketing expense
    
    
    53
    
    
    
    29Other expense
    
    
    412
    
    
    
    390Total non-interest expense
    
    
    2,822
    
    
    
    2,858Income before income tax expense
    
    
    1,456
    
    
    
    1,210Income tax expense
    
    
    540
    
    
    
    446Net income
    
    $
    916
    
    
    $
    764Average shares outstanding
    
    
    4,493,523
    
    
    
    4,598,128Common stock equivalents
    
    
    25,025
    
    
    
    30,697Average diluted shares outstanding
    
    
    4,518,548
    
    
    
    4,628,825Basic earnings per share
    
    $
    0.20
    
    
    $
    0.17Diluted earnings per share
    
    $
    0.20
    
    
    $
    0.17
  4




---



##### Table of Contents



(Accumulated
    
    
    AccumulatedAdditional
    
    
    Deficit)/
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Equity(In thousands, except per share data)Balance at December 31, 2006
    
    $
    459
    
    
    $
    61,578
    
    
    $
    (2,090
    )
    
    $
    (1,416
    )
    
    $
    58,531Net income
    
    
    
    
    
    
    
    
    
    
    3,718
    
    
    
    
    
    
    
    3,718Other comprehensive income:Unrealized gain on securities
available for sale, net (tax effect $1,416)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,264
    
    
    
    2,264Pension plan settlement gain
(tax effect $312)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (450
    )
    
    
    (450
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,532Stock-based compensation
    
    
    
    
    
    
    121
    
    
    
    
    
    
    
    
    
    
    
    121Common stock repurchased
(90,356 shares)
    
    
    (9
    )
    
    
    (1,454
    )
    
    
    
    
    
    
    
    
    
    
    (1,463
    )Exercise of stock options
and tax benefit (13,300 shares)
    
    
    2
    
    
    
    137
    
    
    
    
    
    
    
    
    
    
    
    139Dividends declared and paid
($0.56 per share)
    
    
    
    
    
    
    
    
    
    
    (2,562
    )
    
    
    
    
    
    
    (2,562
    )Balance at December 31, 2007
    
    $
    452
    
    
    $
    60,382
    
    
    $
    (934
    )
    
    $
    398
    
    
    $
    60,298
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Accumulated
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Deficit
    
    
    Income
    
    
    Equity(In thousands, except per share data)Balance at December 31, 2007
    
    $
    452
    
    
    $
    60,382
    
    
    $
    (934
    )
    
    $
    398
    
    
    $
    60,298Net income
    
    
    
    
    
    
    
    
    
    
    916
    
    
    
    
    
    
    
    916Other comprehensive income:Unrealized gain on securities
available for sale, net (tax
effect $1,169)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,802
    
    
    
    1,802Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,718Stock-based compensation
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Common stock repurchased
(46,620 shares)
    
    
    (5
    )
    
    
    (746
    )
    
    
    
    
    
    
    
    
    
    
    (751
    )Exercise of stock options
and tax benefit (2,000 shares)
    
    
    
    
    
    
    18
    
    
    
    
    
    
    
    
    
    
    
    18Dividends declared and paid
($0.14 per share)
    
    
    
    
    
    
    
    
    
    
    (628
    )
    
    
    
    
    
    
    (628
    )Balance at March 31, 2008
    
    $
    447
    
    
    $
    59,670
    
    
    $
    (646
    )
    
    $
    2,200
    
    
    $
    61,671
  5




---



##### Table of Contents



Three months ended March 31,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net income
    
    $
    916
    
    
    $
    764Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    105
    
    
    
    60Net amortization (accretion) of investment securities
    
    
    (136
    )
    
    
    12Depreciation and amortization of premises and equipment
    
    
    150
    
    
    
    146Increase in accrued interest receivable
    
    
    (30
    )
    
    
    (206
    )Deferred income tax benefit
    
    
    (172
    )
    
    
    (6
    )Stock-based compensation
    
    
    16
    
    
    
    7Increase in cash surrender value of Bank-owned life insurance
    
    
    (96
    )
    
    
    (Increase) decrease in other assets
    
    
    (108
    )
    
    
    986Increase (decrease) in other liabilities
    
    
    455
    
    
    
    (492
    )Net cash provided by operating activities
    
    
    1,100
    
    
    
    1,271Cash flows from investing activities:Purchases of investment securities available for sale
    
    
    (40,876
    )
    
    
    Redemption of FHLBB stock
    
    
    
    
    
    
    65Purchases of FHLBB stock
    
    
    (1,385
    )
    
    
    Principal payments of investment securities available for sale
    
    
    10,339
    
    
    
    5,521Increase in loans, net
    
    
    (15,155
    )
    
    
    (19,556
    )(Purchases) reductions of premises and equipment
    
    
    (715
    )
    
    
    58Net cash used in investing activities
    
    
    (47,792
    )
    
    
    (13,912
    )Cash flows from financing activities:Net increase in deposits
    
    
    8,281
    
    
    
    11,958Additions to long-term borrowed funds
    
    
    52,000
    
    
    
    33,499Payments on long-term borrowed funds
    
    
    (8,037
    )
    
    
    (10,035
    )Net decrease in short-term borrowed funds
    
    
    (298
    )
    
    
    (19,000
    )Increase in advance payments by borrowers
    
    
    139
    
    
    
    94Dividends paid
    
    
    (628
    )
    
    
    (644
    )Proceeds from exercise of stock options
    
    
    18
    
    
    
    68Tax benefit from exercise of stock options
    
    
    
    
    
    
    22Common stock repurchased
    
    
    (751
    )
    
    
    Net cash provided by financing activities
    
    
    50,724
    
    
    
    15,962Net increase in cash and cash equivalents
    
    
    4,032
    
    
    
    3,321Cash and cash equivalents, beginning of period
    
    
    7,550
    
    
    
    18,767Cash and cash equivalents, end of period
    
    $
    11,582
    
    
    $
    22,088Cash paid during the period for:Interest on deposits
    
    $
    2,612
    
    
    $
    2,213Interest on borrowed funds
    
    
    2,732
    
    
    
    2,137Income taxes
    
    
    431
    
    
    
    28Supplemental noncash investing and financing activities:Transfers to other real estate owned
    
    
    612
    
    
    
    
  6




---



##### Table of Contents



Fair Value Measurements
 The Fair Value Option for Financial Assets and Financial
Liabilities, including an amendment of FASB Statement No. 115
  7




---



##### Table of Contents



Assets atLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair Value(In thousands)Recurring:Investment securities available for sale
    
    $
    18,466
    
    
    $
    245,343
    
    
    $
    431
    
    
    $
    264,240Non-recurring:Impaired loans
    
    
    
    
    
    
    
    
    
    
    490
    
    
    
    490Other real estate owned
    
    
    
    
    
    
    
    
    
    
    612
    
    
    
    612Total assets
    
    $
    18,466
    
    
    $
    245,343
    
    
    $
    1,533
    
    
    $
    265,342
  Three months ended March 31, 2008Investments(In thousands)Balance as of January 1, 2008
    
    $
    431Total realized/unrealized gains (losses)
included in net income
    
    
    Balance as of March 31, 2008
    
    $
    431Change in unrealized gains/(losses) relating to
instruments still held at the reporting date
    
    
    
   Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51 Business
Combinations
 8




---



##### Table of Contents



Disclosures about Derivative Instruments and
Hedging Activities, an amendment of FASB Statement No. 133
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 FORWARD-LOOKING STATEMENTS
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  EXECUTIVE LEVEL OVERVIEW
  9




---



##### Table of Contents



FINANCIAL CONDITION
 SUMMARY
  Investments:
    10




---



##### Table of Contents



3/31/08
    
    
    12/31/07Amortized
    
    
    Unrealized
    
    
    Fair
    
    
    Amortized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)Investment securities
available for sale:U.S. Treasury obligations
    
    $
    5,585
    
    
    $
    200
    
    
    $
    
    
    
    $
    5,785
    
    
    $
    5,589
    
    
    $
    4
    
    
    $
    (52
    )
    
    $
    5,541Government-sponsored
enterprise obligations
    
    
    18,422
    
    
    
    292
    
    
    
    
    
    
    
    18,714
    
    
    
    15,748
    
    
    
    95
    
    
    
    (33
    )
    
    
    15,810U.S. Treasury and government
sponsored enterprise obligations
    
    
    24,007
    
    
    
    492
    
    
    
    
    
    
    
    24,499
    
    
    
    21,337
    
    
    
    99
    
    
    
    (85
    )
    
    
    21,351Mortgage-backed securities
    
    
    160,649
    
    
    
    3,820
    
    
    
    (217
    )
    
    
    164,252
    
    
    
    134,969
    
    
    
    2,208
    
    
    
    (474
    )
    
    
    136,703Collateralized mortgage obligations
    
    
    55,934
    
    
    
    561
    
    
    
    (135
    )
    
    
    56,360
    
    
    
    60,660
    
    
    
    169
    
    
    
    (682
    )
    
    
    60,147Collateralized mortgage obligations
and mortgage-backed securities
    
    
    216,583
    
    
    
    4,381
    
    
    
    (352
    )
    
    
    220,612
    
    
    
    195,629
    
    
    
    2,377
    
    
    
    (1,156
    )
    
    
    196,850Corporate obligations
    
    
    6,388
    
    
    
    62
    
    
    
    (432
    )
    
    
    6,018
    
    
    
    6,373
    
    
    
    30
    
    
    
    (583
    )
    
    
    5,820Mutual funds
    
    
    1,000
    
    
    
    
    
    
    
    (35
    )
    
    
    965
    
    
    
    1,000
    
    
    
    
    
    
    
    (41
    )
    
    
    959Equity securities
    
    
    12,580
    
    
    
    
    
    
    
    (434
    )
    
    
    12,146
    
    
    
    5,546
    
    
    
    70
    
    
    
    
    
    
    
    5,616Corporate and other investment
securities
    
    
    19,968
    
    
    
    62
    
    
    
    (901
    )
    
    
    19,129
    
    
    
    12,919
    
    
    
    100
    
    
    
    (624
    )
    
    
    12,395Total investment securities
available for sale
    
    $
    260,558
    
    
    $
    4,935
    
    
    $
    (1,253
    )
    
    $
    264,240
    
    
    $
    229,885
    
    
    $
    2,576
    
    
    $
    (1,865
    )
    
    $
    230,596
 Loans:
   3/31/08
    
    
    12/31/07(In thousands)Residential mortgage loans
    
    $
    87,367
    
    
    $
    79,743Home equity lines and loans
    
    
    22,368
    
    
    
    23,046Consumer loans
    
    
    887
    
    
    
    1,007Total retail loans
    
    
    110,622
    
    
    
    103,796Construction loans
    
    
    46,542
    
    
    
    47,885Commercial real estate loans
    
    
    188,883
    
    
    
    177,968Commercial loans
    
    
    26,568
    
    
    
    28,464Total corporate loans
    
    
    261,993
    
    
    
    254,317Total loans
    
    
    372,615
    
    
    
    358,113Allowance for loan losses
    
    
    (4,874
    )
    
    
    (4,810
    )Total loans, net
    
    $
    367,741
    
    
    $
    353,303
 11




---



##### Table of Contents



Allowance For Loan Losses:
  Three months ended3/31/08
    
    
    3/31/07(In thousands)Beginning balance
    
    $
    4,810
    
    
    $
    4,309Provision for loan losses
    
    
    105
    
    
    
    60Recoveries on loans previously charged-off
    
    
    1
    
    
    
    5Loans charged-off
    
    
    (42
    )
    
    
    (8
    )Ending balance
    
    $
    4,874
    
    
    $
    4,366
   Risk Assets:
    3/31/08
    
    
    12/31/07
    
    
    3/31/07(Dollars in thousands)Non-performing loans
    
    $
    1,000
    
    
    $
    1,523
    
    
    $
    94Other real estate owned
    
    
    612
    
    
    
    
    
    
    
    Total risk assets
    
    $
    1,612
    
    
    $
    1,523
    
    
    $
    94Risk assets as a percent of total loans and OREO
    
    
    0.43
    %
    
    
    0.43
    %
    
    
    0.03
    %Risk assets as a percent of total assets
    
    
    0.24
    %
    
    
    0.24
    %
    
    
    0.02
    %
 12




---



##### Table of Contents



Deposits:
   3/31/08
    
    
    12/31/07(In thousands)NOW accounts
    
    $
    17,339
    
    
    $
    17,877Demand deposit accounts
    
    
    28,887
    
    
    
    28,851Savings accounts
    
    
    32,179
    
    
    
    28,452Money market accounts
    
    
    75,233
    
    
    
    74,621Brokered certificates of deposit
    
    
    5,461
    
    
    
    5,461Certificates of deposit
    
    
    171,265
    
    
    
    166,821Total deposits
    
    $
    330,364
    
    
    $
    322,083
 Borrowed Funds:
   3/31/08
    
    
    12/31/07(In thousands)Long-term borrowed funds:FHLBB long-term advances
    
    $
    231,341
    
    
    $
    202,378Wholesale repurchase agreements
    
    
    40,000
    
    
    
    25,000271,341
    
    
    
    227,378Short-term borrowed funds:FHLBB Ideal Way advances
    
    
    
    
    
    
    800FHLBB short-term advances
    
    
    3,000
    
    
    
    Customer repurchase agreements
    
    
    4,675
    
    
    
    7,1737,675
    
    
    
    7,973Total borrowed funds
    
    $
    279,016
    
    
    $
    235,351
 13




---



##### Table of Contents



RESULTS OF OPERATIONS
 THREE MONTHS ENDED MARCH 31, 2008 AND 2007
 SUMMARY
  Net Interest Income From Operations:
  Interest Income:
    Interest Expense:
    14




---



##### Table of Contents



Provision for Loan Losses:
  15




---



##### Table of Contents



Three months ended
    
    
    Three months ended3/31/08
    
    
    
    
    
    
    
    
    
    
    
    3/31/07Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    InterestBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)AssetsInvestment securities:Short-term investments
    
    $
    7,612
    
    
    $
    59
    
    
    
    3.12
    %
    
    $
    9,206
    
    
    $
    121
    
    
    
    5.33
    %U. S. Treasury and government-
sponsored enterprise obligations
    
    
    23,430
    
    
    
    244
    
    
    
    4.19
    
    
    
    40,367
    
    
    
    392
    
    
    
    3.94Corporate and other
investment securities
    
    
    23,574
    
    
    
    376
    
    
    
    6.41
    
    
    
    18,861
    
    
    
    271
    
    
    
    5.83Collateralized mortgage obligations and mortgage-
backed securities
    
    
    204,292
    
    
    
    2,585
    
    
    
    5.09
    
    
    
    167,070
    
    
    
    2,011
    
    
    
    4.88Total investment securities
    
    
    258,908
    
    
    
    3,264
    
    
    
    5.07
    
    
    
    235,504
    
    
    
    2,795
    
    
    
    4.81Loans:Residential real estate
    
    
    82,566
    
    
    
    1,161
    
    
    
    5.66
    
    
    
    70,465
    
    
    
    985
    
    
    
    5.67Equity
    
    
    22,444
    
    
    
    321
    
    
    
    5.75
    
    
    
    20,033
    
    
    
    307
    
    
    
    6.22Consumer
    
    
    955
    
    
    
    17
    
    
    
    7.16
    
    
    
    911
    
    
    
    16
    
    
    
    7.12Total retail loans
    
    
    105,965
    
    
    
    1,499
    
    
    
    5.69
    
    
    
    91,409
    
    
    
    1,308
    
    
    
    5.80Construction
    
    
    45,765
    
    
    
    830
    
    
    
    7.29
    
    
    
    46,224
    
    
    
    1,077
    
    
    
    9.45Commercial real estate
    
    
    182,797
    
    
    
    3,208
    
    
    
    7.06
    
    
    
    144,975
    
    
    
    2,635
    
    
    
    7.37Commercial
    
    
    27,900
    
    
    
    481
    
    
    
    6.93
    
    
    
    13,591
    
    
    
    278
    
    
    
    8.30Total corporate loans
    
    
    256,462
    
    
    
    4,519
    
    
    
    7.09
    
    
    
    204,790
    
    
    
    3,990
    
    
    
    7.90Total loans
    
    
    362,427
    
    
    
    6,018
    
    
    
    6.68
    
    
    
    296,199
    
    
    
    5,298
    
    
    
    7.25Total interest-earning assets
    
    
    621,335
    
    
    
    9,282
    
    
    
    6.01
    
    
    
    531,703
    
    
    
    8,093
    
    
    
    6.17
    %Allowance for loan losses
    
    
    (4,848
    )
    
    
    
    
    
    
    
    
    
    
    (4,327
    )Other assets
    
    
    24,469
    
    
    
    
    
    
    
    
    
    
    
    16,286Total assets
    
    $
    640,956
    
    
    
    
    
    
    
    
    
    
    $
    543,662Liabilities and Stockholders EquityDeposits:NOW and super NOW accounts
    
    $
    17,218
    
    
    $
    8
    
    
    
    0.19
    %
    
    $
    17,784
    
    
    $
    8
    
    
    
    0.18
    %Regular savings accounts
    
    
    29,574
    
    
    
    44
    
    
    
    0.60
    
    
    
    32,894
    
    
    
    40
    
    
    
    0.49Money market accounts
    
    
    75,680
    
    
    
    531
    
    
    
    2.82
    
    
    
    73,405
    
    
    
    524
    
    
    
    2.90Certificates of deposit
and escrow
    
    
    174,209
    
    
    
    2,029
    
    
    
    4.68
    
    
    
    146,621
    
    
    
    1,641
    
    
    
    4.54Total interest-bearing deposits
    
    
    296,681
    
    
    
    2,612
    
    
    
    3.54
    
    
    
    270,704
    
    
    
    2,213
    
    
    
    3.32Borrowed funds:Long-term borrowed funds
    
    
    245,156
    
    
    
    2,745
    
    
    
    4.50
    
    
    
    148,752
    
    
    
    1,686
    
    
    
    4.60Short-term borrowed funds
    
    
    6,915
    
    
    
    36
    
    
    
    2.09
    
    
    
    33,442
    
    
    
    420
    
    
    
    5.09Total borrowed funds
    
    
    252,071
    
    
    
    2,781
    
    
    
    4.44
    
    
    
    182,194
    
    
    
    2,106
    
    
    
    4.69Total interest-bearing liabilities
    
    
    548,752
    
    
    
    5,393
    
    
    
    3.95
    %
    
    
    452,898
    
    
    
    4,319
    
    
    
    3.87
    %Non-interest-bearing deposits
    
    
    27,968
    
    
    
    
    
    
    
    
    
    
    
    29,085Other liabilities
    
    
    3,178
    
    
    
    
    
    
    
    
    
    
    
    3,714Total liabilities
    
    
    579,898
    
    
    
    
    
    
    
    
    
    
    
    485,697Stockholders equity
    
    
    61,058
    
    
    
    
    
    
    
    
    
    
    
    57,965Total
liabilities and stockholders equity
    
    $
    640,956
    
    
    
    
    
    
    
    
    
    
    $
    543,662Net interest rate spread
    
    
    
    
    
    
    
    
    
    
    2.06
    %
    
    
    
    
    
    
    
    
    
    
    2.30
    %Net interest income
    
    
    
    
    
    $
    3,889
    
    
    
    
    
    
    
    
    
    
    $
    3,774Net interest margin on average earning assets
    
    
    
    
    
    
    
    
    
    
    2.52
    %
    
    
    
    
    
    
    
    
    
    
    2.88
    %
 16




---



##### Table of Contents



Non-Interest Income:
  Non-Interest Expense:
  Income Taxes:
  LIQUIDITY AND CAPITAL RESOURCES:
    17




---



##### Table of Contents



ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 ITEM 4.T: CONTROLS AND PROCEDURES
   18




---



##### Table of Contents



PART II  OTHER INFORMATION
 
   
   
  (a)
    
    None.(b)
    
    None.(c)
    
    The following table sets forth information with respect to any purchase made by or on
behalf of LSB Corporation or any affiliated purchaser, as defined in 204.10b-18(a)(3)
under the Securities Exchange Act of 1934, of shares of LSB Corporation common stock during
the indicated periods:
 Issuer Purchases of Equity SecuritiesTotal number of shares
    
    
    Maximum number ofWeighted
    
    
    purchased as part of
    
    
    shares that may yet beTotal number of
    
    
    average price paid
    
    
    publicly announced
    
    
    purchased under the2008
    
    shares purchased
    
    
    per share
    
    
    plans or programs
    
    
    plans or program (1)Jan. 1 - Jan. 31
    
    
    5,100
    
    
    $
    16.02
    
    
    
    5,100
    
    
    
    134,544Feb. 1 - Feb. 29
    
    
    29,520
    
    
    $
    16.21
    
    
    
    29,520
    
    
    
    105,024Mar. 1 - Mar. 31
    
    
    12,000
    
    
    $
    15.80
    
    
    
    12,000
    
    
    
    93,024TotalFirst quarter
    
    
    46,620
    
    
    $
    16.08
    
    
    
    46,620
    
    
    
    93,024
 
 (1)
    
    On April 26, 2007, the Company announced a common stock repurchase program to repurchase up to
230,000 shares. During 2007, 90,356 shares were repurchased. The Company has placed no deadline
on the duration of the repurchase program. In addition, the Companys Employee Stock Ownership
Plan (ESOP) purchased 8,600 shares on the open market in 2007 and 5,100 shares in the first
quarter of 2008. Excluding the ESOP shares, there were no shares purchased other than disclosed
above. 
   
   19




---



##### Table of Contents



Director Nominee
    
    For
    
    WithheldFred P. Shaheen
    
    
    3,961,580
    
    
    
    28,851
  Director Nominee
    
    For
    
    WithheldJohn P. Bachini, Jr.
    
    
    3,961,044
    
    
    
    29,387Robert F. Hatem
    
    
    3,942,116
    
    
    
    48,315Gerald T. Mulligan
    
    
    3,958,604
    
    
    
    31,827
  For
    
    
    3,963,917Against
    
    
    21,428Abstain
    
    
    5,086
 
    
  Number
    
    Description31.1
    
    Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as added by
Section 906 of the Sarbanes-Oxley Act of 2002.32.3
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as added by
Section 906 of the Sarbanes-Oxley Act of 2002.
 20




---



##### Table of Contents



LSB CORPORATIONMay 13, 2008
    /s/ Gerald T. MulliganGerald T. MulliganPresident and

Chief Executive Officer May 13, 2008
    /s/ Diane L. WalkerDiane L. WalkerExecutive Vice President, Treasurer and

Chief Financial Officer 21




---



##### Table of Contents



LSB CORPORATION AND SUBSIDIARY
 
 EXHIBIT INDEX
 31.1
    
    Certification of Chief Executive Officer under Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer under Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
added by Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
added by Section 906 of the Sarbanes-Oxley Act of 2002
 22