8-K

UNITED STATES

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): January 23, 2006

MASSBANK Corp.

(Exact name of registrant as specified in its charter)

Delaware	0-15137	04-2930382
(State or other jurisdiction of incorporation or organization)	Commission file number	(I.R.S. Employer Identification No.)

123 Haven Street, Reading, Massachusetts 01867

(Address of principal executive offices) (Zip code)

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

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On January 23, 2006, MASSBANK Corp. (the “Company”) issued a press release discussing the Company’s fourth quarter 2005 earnings results. The press release, attached as Exhibit 99.1 hereto and incorporated herein by reference, is being furnished to the SEC and shall not be deemed to be “filed” for any purpose.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits. The following exhibit is furnished herewith:

99.1    Press Release dated January 23, 2006, of MASSBANK Corp.

SIGNATURES

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

	MASSBANK Corp.
Dated: January 24, 2006	By:	/S/    REGINALD E. CORMIER
		Name: Reginald E. Cormier Title: Senior Vice President, Treasurer and Chief Financial Officer

EXHIBIT INDEX

99.1    Press Release, dated January 23, 2006, of MASSBANK Corp.

EX-99.1

Exhibit 99.1

MASSBANK CORP.	January 23, 2006
Reading, MA

FOR IMMEDIATE RELEASE

MASSBANK CORP. REPORTS INCREASE IN EARNINGS PER SHARE

FOR THE FOURTH QUARTER 2005

MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,888,000 or $0.43 in diluted earnings per share for the fourth quarter 2005, compared with net income of $1,886,000 or $0.42 in diluted earnings per share in the fourth quarter of 2004. Basic earnings per share in the recent quarter were $0.44 per share compared to $0.43 per share in the fourth quarter of the prior year. This is the Company’s third consecutive quarter of year-over-year earnings per share increases.

For the year ended December 31, 2005, the Company reported net income of $7,323,000 or $1.66 in diluted earnings per share ($1.68 in basic earnings per share) compared to $7,380,000 or $1.64 in diluted earnings per share ($1.67 in basic earnings per share) for the year ended December 31, 2004.

Income Statement

Net interest income, the Company’s core earnings, totaled $5,493,000 for the fourth quarter of 2005, up $118,000 or 2.2% from the same quarter in 2004. This is the fifth consecutive quarter that the Company has reported a year-over-year improvement in net interest income. The net interest margin in the recent quarter improved 24 basis points to 2.53% from 2.29% in the fourth quarter of 2004. This is an increase of 10.5% over the same quarter last year. The Company continues to benefit from rising short-term interest rates. The Federal Reserve Bank Board’s Federal Open Market Committee (FOMC) has raised the target rate for Federal Funds by 25 basis points eight times since the end of December 2004, increasing the rate from 2.25% to 4.25%.

Return on average assets and return on average equity for the fourth quarter 2005 were 0.84% and 7.23%, respectively, up from 0.78% and 6.86% for the comparable quarter in 2004.

Balance Sheet

The Company’s total assets decreased $77.5 million to $898.7 million at December 31, 2005 from $976.2 million at December 31, 2004. Deposits decreased approximately $64.8 million or 7.6% year-over-year from $849.5 million at December 31, 2004 to $784.7 million at December 31, 2005. Stockholders’ equity was $105.3 million at December 31, 2005, representing a book value of $24.32 per share. This compares to $110.0 million at December 31, 2004, representing a book value of $25.11 per share.

The Company’s non-accrual loans remain low totaling $257,000 at December 31, 2005, representing 0.11% of total loans. This compares to $74,000 representing 0.03% of total loans at December 31, 2004. At December 31, 2005, the Bank’s allowance for loan losses totaled $1.253 million representing 0.56% of total loans compared to $1.307 million representing 0.55% of total loans at December 31, 2004. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $517,000 at December 31, 2005 compared to $588,000 a year earlier. This is intended to protect the bank against losses on loan commitments made to customers that have not yet been drawn down.

January 23, 2006

Page Two

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 $0.27 per share. This, the Company’s seventy-eighth consecutive dividend, will be payable on February 20, 2006 to stockholders of record at the close of business on February 3, 2006.

Stock Repurchase Program

During the three months ended December 31, 2005, the Company continued the repurchase of its common stock by acquiring 10,600 shares in the open market. As of December 31, 2005 there were 122,717 shares available for repurchase in the current program.

Date Set for Annual Meeting

The Company also announced that the Annual Meeting of Stockholders will be held at the Sheraton Ferncroft Resort, 50 Ferncroft Road, Danvers, Massachusetts on Tuesday, April 18, 2006 at 10:00 a.m. Only stockholders of record at the close of business on February 27, 2006 are entitled to notice of and to vote at the Annual Meeting.

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 belief, expectations or intentions 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 the strength of the local economy and the U.S. economy in general, 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, a significant decline in residential real estate values in the Company’s market area, adverse impacts resulting from the continuing war on terrorism, an increase in employee-related costs, the impact of deflation or 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, 2004.

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

January 23, 2006

Page Three

MASSBANK CORP.

FINANCIAL HIGHLIGHTS

($ in thousands except share data)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2005			2004			2005			2004
For the Period Ended
Total interest and dividend income	$	9,621		$	8,679		$	36,801		$	33,581
Total interest expense		4,128			3,304			15,141			12,729
Net interest income		5,493			5,375			21,660			20,852
Provision (credit) for loan losses		—			(55	)		(53	)		(242	)
Net interest income after provision (credit) for loan losses		5,493			5,430			21,713			21,094
Gains on securities, net		253			287			679			1,229
Other non-interest income		275			361			1,185			1,257
Non-interest expense		3,082			3,200			12,461			12,302
Income tax expense		1,051			992			3,793			3,898
Net income	$	1,888		$	1,886		$	7,323		$	7,380
Weighted Average Common Shares Outstanding
Basic		4,331,984			4,391,567			4,365,932			4,408,293
Diluted		4,371,312			4,476,938			4,422,529			4,501,537
Per Common Share
Earnings:
Basic	$	0.44		$	0.43		$	1.68		$	1.67
Diluted		0.43			0.42			1.66			1.64
Cash dividends paid		0.27			0.25			1.05			1.00
Book value (period end)								24.32			25.11
Ratios (1)
Return on average assets		0.84	%		0.78	%		0.79	%		0.75	%
Return on average equity		7.23			6.86			6.84			6.71
Net interest margin		2.53			2.29			2.40			2.19
Total equity to assets (period end)								11.71			11.27
							At December 31,
							2005			2004
At Period End
Assets							$	898,679		$	976,168
Deposits								784,728			849,465
Total loans								225,730			236,198
Stockholders’ equity							$	105,264		$	110,015
Common shares outstanding								4,328,517			4,381,727
Asset Quality
Non-accrual loans							$	257		$	74
Real estate acquired through foreclosure								—			—
Total non-performing assets							$	257		$	74
Allowance for loan losses							$	1,253		$	1,307
Non-accrual loans to total loans								0.11	%		0.03	%

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

January 23, 2006

Page Four

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

($ in thousands except share data)

	At December 31, 2005			At December 31, 2004
Assets:
Cash and due from banks	$	9,590		$	9,829
Interest-bearing deposits in banks		900			2,938
Federal funds sold		167,785			193,728
Short-term investments		—			302
Debt securities available for sale:
Mortgage-backed securities		135,432			122,709
Other securities		310,653			313,616
Equity securities available for sale		7,387			7,428
Mortgage-backed securities held-to-maturity		6,137			4,877
Trading securities		9,282			59,013
Loans:
Mortgage loans		215,904			226,197
Other loans		9,826			10,001
Total loans		225,730			236,198
Allowance for loan losses		(1,253	)		(1,307	)
Net loans		224,477			234,891
Premises and equipment		6,525			6,464
Accrued interest receivable		3,898			3,416
Goodwill		1,090			1,090
Current income tax asset, net		—			164
Deferred income tax asset, net		3,240			588
Other assets		12,283			15,115
Total assets	$	898,679		$	976,168
Liabilities and Stockholders’ Equity:
Deposits:
Demand and NOW	$	82,250		$	87,653
Savings		441,541			561,313
Time certificates of deposit		260,937			200,499
Total deposits		784,728			849,465
Escrow deposits of borrowers		1,059			1,074
Accrued income taxes		35			—
Allowance for loan losses on off-balance sheet credit exposures		517			588
Other liabilities		7,076			15,026
Total liabilities		793,415			866,153
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, 7,811,680 and 7,736,430 shares issued, respectively		7,812			7,736
Additional paid-in capital		57,067			55,313
Retained earnings		104,743			102,003
		169,622			165,052
Treasury stock at cost 3,483,163 and 3,354,703 shares, respectively		(61,281	)		(56,794	)
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on securitiesavailable for sale, net of tax effect		(3,077	)		1,757
Shares held in rabbi trust at cost 15,644 and 25,804 shares, respectively		(351	)		(553	)
Deferred compensation obligation		351			553
Total stockholders’ equity		105,264			110,015
Total liabilities and stockholders’ equity	$	898,679		$	976,168

January 23, 2006

Page Five

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Three Months Ended
	December 31, 2005		December 31, 2004
Interest and dividend income:
Mortgage loans	$	2,963	$	3,209
Other loans		174		167
Securities available for sale:
Mortgage-backed securities		1,750		1,709
Other securities		2,705		2,354
Mortgage-backed securities held-to-maturity		75		62
Trading securities		140		250
Federal funds sold		1,806		898
Other investments		8		30
Total interest and dividend income		9,621		8,679
Interest expense:
Deposits		4,128		3,304
Total interest expense		4,128		3,304
Net interest income		5,493		5,375
Provision (credit) for loan losses		—		(55	)
Net interest income after provision (credit) for loan losses		5,493		5,430
Non-interest income:
Deposit account service fees		92		106
Gains on securities available for sale, net		208		205
Gains on trading securities, net		45		82
Deferred compensation plan income		25		84
Other		158		171
Total non-interest income		528		648
Non-interest expense:
Salaries and employee benefits		1,891		1,819
Deferred compensation plan expense		47		98
Occupancy and equipment		563		525
Data processing		136		130
Professional services		105		248
Advertising and marketing		51		31
Deposit Insurance		35		38
Other		254		311
Total non-interest expense		3,082		3,200
Income before income taxes		2,939		2,878
Income tax expense		1,051		992
Net income	$	1,888	$	1,886
Weighted average common shares outstanding:
Basic		4,331,984		4,391,567
Diluted		4,371,312		4,476,938
Earnings per share (in dollars):
Basic	$	0.44	$	0.43
Diluted		0.43		0.42

January 23, 2006

Page Six

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Twelve Months Ended
	December 31, 2005			December 31, 2004
Interest and dividend income:
Mortgage loans	$	12,111		$	13,578
Other loans		681			669
Securities available for sale:
Mortgage-backed securities		6,961			6,398
Other securities		9,863			8,941
Mortgage-backed securities held-to-maturity		256			173
Trading securities		760			1,145
Federal funds sold		6,116			2,438
Other investments		53			239
Total interest and dividend income		36,801			33,581
Interest expense:
Deposits		15,141			12,729
Total interest expense		15,141			12,729
Net interest income		21,660			20,852
Provision (credit) for loan losses		(53	)		(242	)
Net interest income after provision (credit) for loan losses		21,713			21,094
Non-interest income:
Deposit account service fees		393			448
Gains on securities available for sale, net		515			1,361
Gains (losses) on trading securities, net		164			(132	)
Deferred compensation plan income		84			108
Other		708			701
Total non-interest income		1,864			2,486
Non-interest expense:
Salaries and employee benefits		7,463			7,261
Deferred compensation plan expense		172			167
Occupancy and equipment		2,212			2,169
Data processing		540			521
Professional services		485			631
Advertising and marketing		155			110
Deposit Insurance		145			160
Other		1,289			1,283
Total non-interest expense		12,461			12,302
Income before income taxes		11,116			11,278
Income tax expense		3,793			3,898
Net income	$	7,323		$	7,380
Weighted average common shares outstanding:
Basic		4,365,932			4,408,293
Diluted		4,422,529			4,501,537
Earnings per share (in dollars):
Basic	$	1.68		$	1.67
Diluted		1.66			1.64