8-K

SECURITIES 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): October 23, 2003

MASSBANK Corp.

(Exact name of Registrant as specified in its charter)

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

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 October 23, 2003

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

On October 23, 2003, MASSBANK Corp. issued a Press Release reporting financial results for the third 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.

October 27, 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: October 27, 2003

MASSBANK Corp.
By:	/s/ Reginald E. Cormier
Name:	Reginald E. Cormier
Title:	Sr. V.P., Treasurer and CFO

EX-99.1

Exhibit 99.1

MASSBANK CORP. Reading, MA October 23, 2003

FOR IMMEDIATE RELEASE

MASSBANK CORP. REPORTS INCREASE IN EARNINGS PER SHARE

FOR THE THIRD QUARTER 2003

MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $2,137,000 or $0.48 in diluted earnings per share for the third quarter 2003, compared with net income of $2,210,000 or $0.46 in diluted earnings per share in the third quarter of 2002. Basic earnings per share in the recent quarter were $0.49 per share compared to $0.47 per share in the third quarter of last year. This represents an increase of $0.04 in both basic and diluted earnings per share over the second quarter of this year. For the nine months ended September 30, 2003, the Company reported net income of $6,068,000 or $1.33 in diluted earnings per share ($1.36 in basic earnings per share). This compares to $7,562,000 or $1.56 in diluted earnings per share ($1.61 in basic earnings per share) for the nine months ended September 30, 2002.

The Company’s favorable earnings per share (“EPS”) performance in the recent quarter was positively affected by the reduced number of average common shares outstanding as a result of the Company’s repurchase of 377,251 shares of its common stock in the last twelve months pursuant to its stock repurchase program.

The Company’s net income in the third quarter 2003 compared to the same quarter of 2002 includes a negative provision for loan losses of $450,000 due to a decline in the loan portfolio and an improvement in loan quality. The loan portfolio totaled $260.7 million at September 30, 2003 reflecting a decrease of $66.9 million or 20.4% from $327.6 million at September 30, 2002.

Additionally, earnings results reflect a decrease in net interest income of $522,000 due to a decline in net interest margin resulting largely from prepayments of mortgage loans and mortgage-backed securities and lower interest rates compared to the same quarter last year. Third quarter 2003 earnings results also reflect an increase in non-interest expense of $203,000. However, this is essentially offset by an increase in non-interest income of $146,000 and a decrease in income tax expense of $56,000 due to lower income before taxes and a decline in the Company’s effective income tax rate.

The Company’s total assets increased $10.9 million or 1.1% to $1.015 billion at September 30, 2003 from $1.004 billion at September 30, 2002. Deposits increased $19.5 million or 2.2% year-over-year reaching $899.0 million as of September 30, 2003. Stockholders’ equity was $110.3 million at September 30, 2003, representing a book value of $25.16 per share. This compares to $117.7 million at September 30, 2002 representing a book value of $25.18 per share.

October 23, 2003

Page Two

The Company’s non-accrual loans remain low totaling $234,000 at September 30, 2003 representing 0.09% of total loans. This compares to $327,000 representing 0.10% of total loans at September 30, 2002. At September 30, 2003 MASSBANK’s allowance for loan losses totaled $1.605 million representing 686% of non-accrual loans compared to $2.261 million representing 691% of non-accrual loans at September 30, 2002. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $610,000 at September 30, 2003 compared to $380,000 a year earlier. This is an increase of $230,000 in reserves for outstanding loan commitments from a year earlier. The allowance for loan losses reported at September 30, 2002 has been reclassified to adjust for the allowance for loan losses on off-balance sheet credit exposures (shown separately) to conform to the 2003 presentation.

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-ninth consecutive dividend, will be payable on November 20, 2003 to stockholders of record at the close of business on November 5, 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.

October 23, 2003

Page Three

MASSBANK CORP.

FINANCIAL HIGHLIGHTS

(Unaudited)

($ in thousands except share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2003			2002			2003			2002
For the Period Ended
Total interest and dividend income	$	9,226		$	11,728		$	29,447		$	35,718
Total interest expense		3,622			5,602			12,371			17,639
Net interest income		5,604			6,126			17,076			18,079
Provision for loan losses		(450	)		—			(450	)		—
Gains (losses) on securities, net		72			(50	)		304			1,801
Other non-interest income		271			247			937			888
Non-interest expense		3,133			2,930			9,411			8,952
Income tax expense		1,127			1,183			3,288			4,254
Net income	$	2,137		$	2,210		$	6,068		$	7,562
Weighted Average Common Shares Outstanding (1)
Basic		4,378,050			4,669,659			4,453,849			4,709,018
Diluted		4,490,325			4,795,193			4,452,039			4,838,536
Per Common Share (1)
Earnings:
Basic	$	0.49		$	0.47		$	1.36		$	1.61
Diluted		0.48			0.46			1.33			1.56
Cash dividends paid		0.23			0.22			0.69			0.66
Book value (period end)								25.16			25.18
Ratios (2)
Return on average assets		0.85	%		0.89	%		0.80	%		1.02	%
Return on average equity		7.93			7.53			7.24			8.64
Interest rate spread		2.15			2.26			2.13			2.20
Net interest margin		2.28			2.51			2.31			2.50
Total equity to assets (period end)								10.87			11.72
							At September 30,
							2003			2002
At Period End
Assets							$	1,015,125		$	1,004,200
Deposits								898,982			879,516
Total loans								260,684			327,588
Total stockholders’ equity							$	110,297		$	117,669
Common shares outstanding								4,384,900			4,673,700
Asset Quality
Non-accrual loans							$	234		$	327
Real estate acquired through foreclosure								—			—
Total non-performing assets							$	234		$	327
Allowance for loan losses (3)							$	1,605		$	2,261
Non-accrual loans to total loans								0.09	%		0.10	%
Allowance for loan losses as a % of non-accrual loans								685.9	%		691.4	%

(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.

(3) Amount reported for prior year has been reclassified to adjust for allowance for loan losses on off-balance sheet credit exposures to conform to the 2003 presentation.

October 23, 2003

Page Four

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

($ in thousands except share data)

	At September 30, 2003			At September 30, 2002
Assets:
Cash and due from banks	$	9,267		$	10,116
Interest-bearing deposits in banks		6,156			4,102
Federal funds sold		195,437			200,265
Short-term investments		23,278			24,983
Debt securities available for sale		429,737			382,143
Equity securities available for sale		11,301			13,297
Trading securities		62,950			27,390
Loans:
Mortgage loans		248,915			309,559
Other loans		11,769			18,029
Total loans		260,684			327,588
Allowance for loan losses		(1,605	)		(2,261	)
Net loans		259,079			325,327
Premises and equipment		7,100			6,767
Accrued interest receivable		4,240			4,198
Goodwill		1,090			1,090
Income tax receivable, net		84			203
Other assets		5,406			4,319
Total assets	$	1,015,125		$	1,004,200
Liabilities and Stockholders’ Equity:
Deposits:
Demand and NOW	$	84,244		$	82,512
Savings		614,928			515,535
Time certificates of deposit		199,810			281,469
Total deposits		898,982			879,516
Escrow deposits of borrowers		1,204			1,400
Employee stock ownership plan liability		0			156
Deferred income taxes		1,218			2,445
Allowance for loan losses on off-balance sheet credit exposures		610			380
Other liabilities		2,814			2,634
Total liabilities		904,828			886,531
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, 7,665,780 and 7,577,329 shares issued, respectively		7,666			7,577
Additional paid-in capital		53,869			52,260
Retained earnings		98,254			94,014
		159,789			153,851
Treasury stock at cost 3,280,880 and 2,903,629 shares, respectively		(54,176	)		(43,196	)
Accumulated other comprehensive income:
Net unrealized gains on securities available for sale, net of tax effect		4,684			7,170
Shares held in rabbi trust at cost 25,200 and 23,400 shares, respectively		(515	)		(458	)
Deferred compensation obligation		515			458
Common stock acquired by ESOP		0			(156	)
Total stockholders’ equity		110,297			117,669
Total liabilities and stockholders’ equity	$	1,015,125		$	1,004,200

October 23, 2003

Page Five

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

($ in thousands except share data)

	Three Months Ended
	September 30, 2003			September 30, 2002
Interest and dividend income:
Mortgage Loans	$	4,343		$	5,166
Other loans		199			297
Securities available for sale:
Mortgage-backed securities		1,783			3,625
Other securities		2,050			1,511
Trading securities		261			158
Federal funds sold		491			822
Other investments		99			149
Total interest and dividend income		9,226			11,728
Interest expense:
Deposits		3,622			5,602
Total interest expense		3,622			5,602
Net interest income		5,604			6,126
Provision for loan losses		(450	)		—
Net interest income after provision for loan losses		6,054			6,126
Non-interest income:
Deposit account service fees		112			140
Gains (losses) on securities available for sale, net		206			(80	)
Gains (losses) on trading securities, net		(134	)		30
Other		159			107
Total non-interest income		343			197
Non-interest expense:
Salaries and employee benefits		1,916			1,734
Occupancy and equipment		570			497
Data processing		126			134
Professional services		86			128
Advertising and marketing		21			53
Deposit insurance		45			45
Other		369			339
Total non-interest expense		3,133			2,930
Income before income taxes		3,264			3,393
Income tax expense		1,127			1,183
Net income	$	2,137		$	2,210
Weighted average common shares outstanding:
Basic		4,378,050			4,669,659
Diluted		4,490,325			4,795,193
Earnings per share (in dollars):
Basic	$	0.49		$	0.47
Diluted		0.48			0.46

October 23, 2003

Page Six

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

($ in thousands except share data)

	Nine Months Ended
	September 30, 2003			September 30, 2002
Interest and dividend income:
Mortgage Loans	$	13,942		$	15,570
Other loans		659			1,085
Securities available for sale:
Mortgage-backed securities		6,689			11,670
Other securities		5,192			4,104
Trading securities		830			481
Federal funds sold		1,801			2,271
Other investments		334			537
Total interest and dividend income		29,447			35,718
Interest expense:
Deposits		12,371			17,639
Total interest expense		12,371			17,639
Net interest income		17,076			18,079
Provision for loan losses		(450	)		—
Net interest income after provision for loan losses		17,526			18,079
Non-interest income:
Deposit account service fees		382			427
Gains on securities available for sale, net		165			1,669
Gains on trading securities, net		139			132
Other		555			461
Total non-interest income		1,241			2,689
Non-interest expense:
Salaries and employee benefits		5,727			5,360
Occupancy and equipment		1,679			1,491
Data processing		400			394
Professional services		305			424
Advertising and marketing		91			129
Deposit insurance		135			137
Other		1,074			1,017
Total non-interest expense		9,411			8,952
Income before income taxes		9,356			11,816
Income tax expense		3,288			4,254
Net income	$	6,068		$	7,562
Weighted average common shares outstanding:
Basic		4,453,849			4,709,018
Diluted		4,552,039			4,838,536
Earnings per share (in dollars):
Basic	$	1.36		$	1.61
Diluted		1.33			1.56