8-K

SECURITES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 17, 2003

MASSBANK Corp.

(Exact name of Registrant as specified in its charter)

Delaware	0-15137	04-2930382
State or other	(Commission File Number)	(I.R.S. Employee
Jurisdiction of		Identification Number)
Incorporation

123 Haven Street

Reading, MA 01867

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (781)662-0100

Form 8-K

Item 7.    Financial Statements and Exhibits

(a) Not applicable

(b) Not applicable

(c) Exhibits

99.1 Press Release, dated July 17, 2003

Item 9.    Regulation FD Disclosure (Information provided under Item 12 – Results of Operations and Financial Condition.)

On July 17, 2003, MASSBANK Corp. issued a Press Release reporting financial results for the second quarter of fiscal year 2003. A copy of the Press Release is being furnished as Exhibit 99.1 to this report and is incorporated into this report by reference.

Item 12 of Form 8-K, “Results of Operations and Financial Condition,” requires the Company to furnish the Press Release to the Securities and Exchange Commission. In accordance with interim guidance issued by the Securities and Exchange Commission in Release No. 33-8216, MASSBANK Corp. is furnishing the Press Release required by Item 12 under Item 9 of this report.

July 18, 2003

Page Two

The information being furnished under Item 9 of this report shall not be considered “filed” for purposes of the Securities Exchange Act of 1934, as amended.

Signatures:

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 18, 2003

MASSBANK Corp.

By: /s/    Reginald E. Cormier                        

Name: Reginald E. Cormier

Title: Sr.V.P.,Treasurer and CFO

2

EX-99.1

Exhibit 99.1

MASSBANK CORP. Reading, MA July 17, 2003

FOR IMMEDIATE RELEASE

MASSBANK CORP. REPORTS SECOND QUARTER 2003 EARNINGS OF

$1.986 MILLION OR $0.44 PER SHARE

AND DECLARES CASH DIVIDEND

MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,986,000 or $0.44 in diluted earnings per share for the second quarter 2003, compared with net income of $2,702,000 or $0.56 in diluted earnings per share in the second quarter of 2002. The second quarter earnings of $0.44 represents an increase of $0.02 per share over the first quarter of this year. Basic earnings per share in the recent quarter were $0.45 per share compared to $0.57 per share in the second quarter of last year. For the six months ended June 30, 2003, the Company reported net income of $3,931,000 or $0.86 in diluted earnings per share ($0.88 in basic earnings per share). This compares to $5,352,000 or $1.10 in diluted earnings per share ($1.13 in basic earnings per share) for the six months ended June 30, 2002.

The decline in the Company’s net income of $716,000 in the second quarter 2003 compared to the second quarter of 2002 is primarily due to a decrease in securities gains of $726,000. In the second quarter 2003, the Company recorded net gains on securities of $192,000 compared to net securities gains of $918,000 in the same quarter last year. Net securities gains in the recent quarter consisted of net losses on securities available for sale of $159,000 and net gains on trading securities of $351,000. Net losses on securities available for sale in the second quarter 2003 were comprised of $38,000 in gains on debt securities and $197,000 in losses on equity securities. This compares to $106,000 in gains on debt securities and $644,000 in gains on equity securities for the same quarter of 2002.

At the end of the recent quarter the Company’s net unrealized gains on securities available for sale, net of tax effect, totaled $6.0 million compared to $6.5 million at June 30, 2002. These net unrealized gains are primarily in the Company’s debt securities portfolio that has increased in value due to a decline in interest rates.

The Company’s total assets increased $12.1 million or 1.2% to $1.009 billion at June 30, 2003 from $996.4 million at June 30, 2002. Deposits increased $18.4 million or 2.1% year-over-year reaching $892.3 million as of June 30, 2003. Stockholders’ equity was $110.1 million at June 30, 2003, representing a book value of $25.20 per share. This compares to $116.5 million at June 30, 2002 representing a book value of $24.80 per share.

July 17, 2003

Page Two

The Company’s non-performing assets remain low totaling $367,000 at June 30, 2003 representing 0.04% of total assets. This compares to $403,000 representing 0.04% of total assets at June 30, 2002.

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 $0.23 per share. This, the Company’s sixty-eight consecutive dividend, will be payable on August 13, 2003 to stockholders of record at the close of business on July 30, 2003.

Stock Repurchase Program

During the three months ended June 30, 2003, the Company repurchased 177,751 shares of its common stock. This completes the stock repurchase program approved by the Board of Directors in January 2003.

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 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 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, adverse impacts resulting from the continuing war on terrorism, the impact of 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, 2002.

For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192.

July 17, 2003

Page Three

MASSBANK CORP.

FINANCIAL HIGHLIGHTS

($ in thousands except share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2003			2002			2003			2002
For the Period Ended
Total interest and dividend income	$	9,860		$	11,950		$	20,221		$	23,990
Total interest expense		4,136			5,943			8,749			12,037
Net interest income		5,724			6,007			11,472			11,953
Provision for loan losses		—			—			—			—
Gains on securities, net		192			918			232			1,851
Other non-interest income		400			318			666			641
Non-interest expense		3,229			2,987			6,278			6,022
Income tax expense		1,101			1,554			2,161			3,071
Net income		1,986			2,702			3,931			5,352
Weighted Average Common Shares Outstanding (1)
Basic		4,428,159			4,724,320			4,492,377			4,729,024
Diluted		4,530,748			4,859,530			4,583,407			4,860,566
Per Common Share (1)
Earnings:
Basic	$	0.45		$	0.57		$	0.88		$	1.13
Diluted		0.44			0.56			0.86			1.10
Cash dividends paid		0.23			0.22			0.46			0.44
Book value (period end)								25.20			24.80
Ratios (2)
Return on average assets		0.79	%		1.09	%		0.78	%		1.09	%
Return on average equity		7.11			9.29			6.92			9.20
Interest rate spread		2.13			2.20			2.11			2.18
Net interest margin		2.32			2.49			2.33			2.49
Total equity to assets (period end)								10.92			11.69
							At June 30,
							2003			2002
At Period End
Assets							$	1,008,533		$	996,439
Deposits								892,279			873,880
Loans								286,536			328,965
Total stockholders’ equity							$	110,138		$	116,518
Common shares outstanding								4,370,125			4,698,850
Asset Quality
Non-accrual loans							$	367		$	403
Real estate acquired through foreclosure								—			—
Total non-performing assets							$	367		$	403
Allowance for loan losses							$	2,653		$	2,642
Non-accrual loans to total loans								0.13	%		0.12	%
Non-performing assets to total assets								0.04	%		0.04	%
Allowance for loan losses as a % of non-accrual loans								722.9	%		655.6	%
Allowance for loan losses as a % of non-performing assets								722.9	%		655.6	%

(1) Current and prior year share data reflects the three-for-two stock split of April 19, 2002.

(2) Ratios are presented on an annualized basis with the exception of equity to assets.

July 17, 2003

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MASSBANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

($ in thousands except share data)

	At			At
	June 30,			June 30,
	2003			2002
Assets:
Cash and due from banks	$	8,979		$	10,418
Interest-bearing deposits in banks		6,117			4,322
Federal funds sold		206,379			182,913
Short-term investments		23,220			24,872
Debt securities available for sale		384,664			380,048
Equity securities available for sale		12,272			11,331
Trading securities		67,940			34,560
Loans:
Mortgage loans		273,137			310,525
Other loans		13,399			18,440
Total loans		286,536			328,965
Allowance for loan losses		(2,653	)		(2,642	)
Net loans		283,883			326,323
Premises and equipment		7,176			6,763
Accrued interest receivable		3,568			4,890
Goodwill		1,090			1,090
Current income tax asset, net		717			377
Other assets		2,528			8,532
Total assets	$	1,008,533		$	996,439
Liabilities and Stockholders’ Equity:
Deposits:
Demand and NOW	$	83,984		$	84,373
Savings		598,059			471,061
Time certificates of deposit		210,236			318,446
Total deposits		892,279			873,880
Escrow deposits of borrowers		1,219			1,245
Employee stock ownership plan liability		—			156
Deferred income taxes		1,999			2,181
Other liabilities		2,898			2,459
Total liabilities		898,395			879,921
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, 7,651,005 and 7,569,479 shares issued, respectively		7,651			7,569
Additional paid-in capital		54,050			52,480
Retained earnings		97,122			92,829
		158,823			152,878
Treasury stock at cost 3,306,080 and 2,893,829 shares, respectively		(54,691	)		(42,719	)
Accumulated other comprehensive income:
Net unrealized gains on securities available for sale, net of tax effect		6,006			6,515
Common stock acquired by ESOP		—			(156	)
Total stockholders’ equity		110,138			116,518
Total liabilities and stockholders’ equity	$	1,008,533		$	996,439

July 17, 2003

Page Five

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Three Months Ended
	June 30,			June 30,
	2003			2002
Interest and dividend income:
Mortgage Loans	$	4,668		$	5,222
Other loans		221			387
Securities available for sale:
Mortgage-backed securities		2,216			3,900
Other securities		1,649			1,362
Trading securities		306			195
Federal funds sold		689			724
Other investments		111			160
Total interest and dividend income		9,860			11,950
Interest expense:
Deposits		4,136			5,943
Total interest expense		4,136			5,943
Net interest income		5,724			6,007
Provision for loan losses		—			—
Net interest income after provision for loan losses		5,724			6,007
Non-interest income:
Deposit account service fees		133			141
Gains (losses) on securities available for sale, net		(159	)		750
Gains on trading securities, net		351			168
Other		267			177
Total non-interest income		592			1,236
Non-interest expense:
Salaries and employee benefits		1,969			1,800
Occupancy and equipment		536			473
Data processing		130			132
Professional services		108			152
Advertising and marketing		45			35
Deposit insurance		45			46
Other		396			349
Total non-interest expense		3,229			2,987
Income before income taxes		3,087			4,256
Income tax expense		1,101			1,554
Net income	$	1,986		$	2,702
Weighted average common shares outstanding:
Basic		4,428,159			4,724,320
Diluted		4,530,748			4,859,530
Earnings per share (in dollars):
Basic	$	0.45		$	0.57
Diluted		0.44			0.56

July 17, 2003

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MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Six Months Ended
	June 30,			June 30,
	2003			2002
Interest and dividend income:
Mortgage Loans	$	9,599		$	10,404
Other loans		460			788
Securities available for sale:
Mortgage-backed securities		4,906			8,045
Other securities		3,142			2,593
Trading securities		569			323
Federal funds sold		1,310			1,449
Other investments		235			388
Total interest and dividend income		20,221			23,990
Interest expense:
Deposits		8,749			12,037
Total interest expense		8,749			12,037
Net interest income		11,472			11,953
Provision for loan losses		—			—
Net interest income after provision for loan losses		11,472			11,953
Non-interest income:
Deposit account service fees		270			287
Gains (losses) on securities available for sale, net		(41	)		1,749
Gains on trading securities, net		273			102
Other		396			354
Total non-interest income		898			2,492
Non-interest expense:
Salaries and employee benefits		3,811			3,626
Occupancy and equipment		1,109			994
Data processing		274			260
Professional services		219			296
Advertising and marketing		70			76
Deposit insurance		90			92
Other		705			678
Total non-interest expense		6,278			6,022
Income before income taxes		6,092			8,423
Income tax expense		2,161			3,071
Net income	$	3,931		$	5,352
Weighted average common shares outstanding:
Basic		4,492,377			4,729,024
Diluted		4,583,407			4,860,566
Earnings per share (in dollars):
Basic	$	0.88		$	1.13
Diluted		0.86			1.10