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): October 23, 2007

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 October 23, 2007 MASSBANK Corp. (the “Company”) issued a press release discussing the Company’s third quarter 2007 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.

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

99.1 Press Release dated October 23, 2007, 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: October 24, 2007	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 October 23, 2007, of MASSBANK Corp..

EX-99.1

Exhibit 99.1

MASSBANK CORP.	October 23, 2007
Reading, MA

FOR IMMEDIATE RELEASE

MASSBANK CORP. ANNOUNCES 22.8% INCREASE IN THIRD QUARTER EARNINGS,

INCREASE IN DIVIDENDS AND

NEW STOCK REPURCHASE PROGRAM

MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $2,126,000 for the quarter ended September 30, 2007 compared to $1,731,000 for the quarter ended September 30, 2006, an increase of $395,000 or 22.8%. Diluted and basic earnings per share were $0.49 for the third quarter of 2007 compared to $0.40 for the same period in 2006, an increase of 22.5%.

For the nine months ended September 30, 2007, the Company reported net income of $5,629,000 compared to $5,296,000 for the same period in 2006, an increase of $333,000 or 6.3%. Diluted earnings per share for the first nine months of 2007 increased 6.6% to $1.29 from $1.21 for the same period last year. Basic earnings per share for the nine months ended September 30, 2007 were $1.30 compared to $1.22 for the same period in 2006.

The growth in net income during the recent quarter compared to the same quarter last year resulted primarily from an increase in non-interest income and a decrease in provision for loan losses, partially offset by a decrease in net interest income and an increase in non-interest expense.

Non-interest income for the three months ended September 30, 2007 was $2,436,000 compared to $447,000 for the same period in 2006, an increase of $1,989,000 or 445.0% over the same period last year. The growth in non-interest income was mainly due to an increase in net securities gains of $1,937,000 resulting primarily from net gains on trading securities. The strong performance of the Company’s trading securities portfolio in the recent quarter reflects an increase in the fair value of the trading securities portfolio of $2,036,000 over the same quarter last year. In addition, all other non-interest income in the recent quarter increased $52,000 over the same period last year.

There was no loan loss provision recorded by the Company in the third quarter of 2007 compared with a provision of $82,000 in the prior year. The reduced provision reflects a decrease in the size of the loan portfolio and a relatively low level of loan delinquencies and charge-offs. The Company’s non-accrual loans remain near historical lows totaling $206,000 at September 30, 2007, representing 0.11% of total loans. This compares to $5,000 representing 0.002% of total loans at September 30, 2006. Net charge-offs were $2,000 in the first nine months of 2007 compared to net recoveries of $10,000 during the first nine months of 2006.

Net interest income for the three months ended September 30, 2007 was $4,645,000 compared to $5,180,000 for the same period in 2006. The decrease in net interest income was due in part to a flat yield curve, increased funding costs due to intense competition for short-term deposits and a decrease in the Company’s average earning assets. Average earning assets for the third quarter of 2007 declined to $786.1 million, from $822.2 million in the third quarter of the prior year due to a decrease in deposits. Deposits declined due in part to management’s decision to seek to protect the Company’s net interest margin.

October 23, 2007

Page Two

Non-interest expense was $3,760,000 for the three months ended September 30, 2007 compared to $2,929,000 for the same period in 2006, an increase of $831,000 or 28.4%. The increases were predominately in compensation related costs, professional services and other expenses.

Salaries and employee benefits increased $484,000 due principally to an accrual of $390,000 for a profit sharing and incentive compensation bonus plan distribution to Company employees at year-end based on the Company’s earnings performance, the increased costs of employee benefits and an increase in stock-based compensation costs.

Deferred compensation plan expense increased $79,000 in the recent quarter due principally to a higher expense provision for the Company’s executive supplemental retirement plan.

Professional services expense increased $117,000 due to higher legal fees incurred related to various shareholder and other business matters.

Other expenses increased $104,000 for the three months ended September 30, 2007 compared to the same period in 2006. The increase was due primarily to a benefit of $107,000 recorded in the third quarter of 2006 resulting from a decrease in the Bank’s allowance for loan losses on off-balance sheet credit exposures.

Balance Sheet

The Company’s total assets decreased $28.9 million to $817.0 million at September 30, 2007, from $845.9 million at September 30, 2006. Deposits decreased $36.0 million year-over-year from $729.4 million at September 30, 2006 to $693.4 million at September 30, 2007. Stockholders’ equity increased $1.5 million to $107.4 million at September 30, 2007, from $105.9 million at September 30, 2006. Book value per share increased $0.63 to $25.18 per share at September 30, 2007, from $24.55 per share at September 30, 2006.

At September 30, 2007, the Company’s allowance for loan losses totaled $1.370 million representing 0.71% of total loans compared to $1.395 million representing 0.65% of total loans at September 30, 2006. In addition, the Company’s allowance for loan losses on off-balance sheet credit exposures totaled $345,000 at September 30, 2007 compared to $336,000 a year earlier. This is intended to protect the Company against possible losses on loan commitments made to customers that have not yet been drawn down.

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.

October 23, 2007

Page Three

ADDITIONAL INFORMATION

Dividend Increase

MASSBANK Corp. today announced an increase in its quarterly cash dividend to stockholders, from $0.28 to $0.29 per common share. The increase will raise the annualized dividend from $1.12 to $1.16 per share. This, the Company’s eighty-fifth consecutive dividend, will be payable on November 15, 2007 to stockholders of record at the close of business on October 31, 2007.

New Stock Repurchase Program

The Company also announced today that its Board of Directors has extended for another year, the stock repurchase program which it authorized in October of last year. Additionally, the Board approved an increase of 100,000 in the number of shares of the Company’s common stock authorized for repurchase in the current program, bringing the total shares available for repurchase to 150,517 during the next twelve months.

During the three months ended September 30, 2007, the Company continued the repurchase of its common stock by acquiring 53,900 shares in the open market.

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, 2006.

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

October 23, 2007

Page Four

MASSBANK CORP.

FINANCIAL HIGHLIGHTS

($ in thousands except share date)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2007			2006			2007			2006
For the Period Ended
Total interest and dividend income	$	10,013		$	10,052		$	30,048		$	29,854
Total interest expense		5,368			4,872			15,848			13,845
Net interest income		4,645			5,180			14,200			16,009
Provision (credit) for loan losses		—			82			(10	)		132
Net interest income after provision (credit) for loan losses		4,645			5,098			14,210			15,877
Gains on securities, net		2,105			168			3,233			538
Other non-interest income		331			279			1,148			892
Non-interest expense		3,760			2,929			9,951			9,268
Income tax expense		1,195			885			3,011			2,743
Net income	$	2,126		$	1,731		$	5,629		$	5,296
Weighted Average Common Shares Outstanding
Basic		4,299,907			4,315,211			4,322,309			4,327,930
Diluted		4,328,422			4,349,187			4,348,828			4,363,386
Per Common Share
Earnings:
Basic	$	0.49		$	0.40		$	1.30		$	1.22
Diluted		0.49			0.40			1.29			1.21
Cash dividends paid		0.28			0.27			0.84			0.81
Book value (period end)								25.18			24.55
Ratios (1)
Return on average assets		1.05	%		0.82	%		0.92	%		0.81	%
Return on average equity		8.00			6.72			7.02			6.81
Net interest margin		2.37			2.53			2.39			2.54
Total equity to assets (period end)								13.15			12.52
							At September 30,
							2007			2006
At Period End
Assets							$	817,047		$	845,927
Deposits								693,362			729,411
Total loans								193,412			213,876
Stockholders’ equity							$	107,423		$	105,902
Common shares outstanding								4,266,654			4,314,504
Asset Quality
Non-accrual loans							$	206		$	5
Real estate acquired through foreclosure								—			—
Total non-performing assets							$	206		$	5
Allowance for loan losses							$	1,370		$	1,395
Percent of non-accrual loans to total loans								0.11	%		0.002	%

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

October 23, 2007

Page Five

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

($ in thousands except share data)

	At September 30, 2007			At September 30, 2006
Assets:
Cash and due from banks	$	6,882		$	8,489
Short-term investments		162,452			138,854
Total cash and cash equivalents		169,334			147,343
Term federal funds sold		63,000			15,000
Securities available for sale, at fair value (amortized cost of $130,019 in 2007 and $434,564 in 2006)		129,863			429,013
Securities held to maturity, at amortized cost (market value of $8,004 in 2007 and $5,277 in 2006)		8,127			5,416
Trading securities, at fair value:
Debt securities		231,160			—
Equity securities and mutual funds		2,817			369
Loans:
Mortgage loans		183,841			204,036
Other loans		9,571			9,840
Total loans		193,412			213,876
Allowance for loan losses		(1,370	)		(1,395	)
Net loans		192,042			212,481
Premises and equipment		8,176			7,051
Real estate held for resale		425			425
Accrued interest and income receivable		5,322			5,573
Goodwill		1,090			1,090
Income tax receivable, net		380			246
Deferred income tax asset, net		1,968			3,587
Other assets		3,343			18,333
Total assets	$	817,047		$	845,927
Liabilities and Stockholders’ Equity:
Deposits:
Demand and NOW	$	72,606		$	77,577
Savings		311,725			363,610
Time certificates of deposit		309,031			288,224
Total deposits		693,362			729,411
Escrow deposits of borrowers		963			992
Borrowed funds		10,000			—
Allowance for loan losses on off-balance sheet credit exposures		345			336
Other liabilities		4,954			9,286
Total liabilities		709,624			740,025
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, 7,872,017 and 7,840,167 shares issued in 2007 and 2006, respectively		7,872			7,840
Additional paid-in capital		58,482			57,695
Retained earnings		106,810			106,532
		173,164			172,067
Treasury stock at cost 3,605,363 and 3,525,663 shares in 2007 and 2006, respectively		(65,385	)		(62,672	)
Accumulated other comprehensive loss		(356	)		(3,493	)
Shares held in rabbi trust at cost, 19,444 and 16,744 shares in 2007 and 2006, respectively		(475	)		(386	)
Deferred compensation obligation		475			386
Total stockholders’ equity		107,423			105,902
Total liabilities and stockholders’ equity	$	817,047		$	845,927

October 23, 2007

Page Six

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

($ in thousands except share data)

	Three Months Ended
	September 30, 2007			September 30, 2006
Interest and dividend income:
Mortgage loans	$	2,541		$	2,799
Other loans		193			200
Securities available for sale:
Mortgage-backed securities		1,702			1,799
Other securities		34			3,146
Mortgage-backed securities held to maturity		104			73
Trading securities		2,646			38
Federal funds sold		2,058			1,923
Other investments		735			74
Total interest and dividend income		10,013			10,052
Interest expense:
Deposits		5,364			4,872
Borrowed funds		4			—
Total interest expense		5,368			4,872
Net interest income		4,645			5,180
Provision (credit) for loan losses		—			82
Net interest income after provision (credit) for loan losses		4,645			5,098
Non-interest income:
Deposit account service fees		81			84
Gains (losses) on securities available for sale, net		(104	)		80
Gains on trading securities, net		2,209			88
Option fees		75			—
Deferred compensation plan income (loss)		9			48
Other		166			147
Total non-interest income		2,436			447
Non-interest expense:
Salaries and employee benefits		2,292			1,808
Deferred compensation plan expense		148			69
Occupancy and equipment		528			490
Data processing		149			146
Professional services		230			113
Advertising and marketing		56			46
Deposit insurance		27			31
Other		330			226
Total non-interest expense		3,760			2,929
Income before income taxes		3,321			2,616
Income tax expense		1,195			885
Net income	$	2,126		$	1,731
Weighted average common shares outstanding:
Basic		4,299,907			4,315,211
Diluted		4,328,422			4,349,187
Earnings per share (in dollars):
Basic	$	0.49		$	0.40
Diluted		0.49			0.40

October 23, 2007

Page Seven

MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

(Unaudited)

($ in thousands except share data)

	Nine Months Ended
	September 30, 2007			September 30, 2006
Interest and dividend income:
Mortgage loans	$	7,820		$	8,554
Other loans		585			570
Securities available for sale:
Mortgage-backed securities		5,236			5,469
Other securities		97			9,025
Mortgage-backed securities held to maturity		240			229
Trading securities		7,922			194
Federal funds sold		6,438			5,727
Other investments		1,710			86
Total interest and dividend income		30,048			29,854
Interest expense:
Deposits		15,844			13,845
Borrowed funds		4			—
Total interest expense		15,848			13,845
Net interest income		14,200			16,009
Provision (credit) for loan losses		(10	)		132
Net interest income after provision (credit) for loan losses		14,210			15,877
Non-interest income:
Deposit account service fees		245			258
Gains on securities available for sale, net		184			429
Gains on trading securities, net		3,049			109
Option fees		225			—
Deferred compensation plan income		118			109
Other		560			525
Total non-interest income		4,381			1,430
Non-interest expense:
Salaries and employee benefits		6,032			5,544
Deferred compensation plan expense		304			172
Occupancy and equipment		1,553			1,702
Data processing		436			417
Professional services		472			414
Advertising and marketing		125			102
Deposit insurance		82			96
Other		947			821
Total non-interest expense		9,951			9,268
Income before income taxes		8,640			8,039
Income tax expense		3,011			2,743
Net income	$	5,629		$	5,296
Weighted average common shares outstanding:
Basic		4,322,309			4,327,930
Diluted		4,348,828			4,363,386
Earnings per share (in dollars):
Basic	$	1.30		$	1.22
Diluted		1.29			1.21