LSB Bancshares Inc.

LSB Bancshares Inc. is listed on NASDAQ (LXBK). REGISTRANT. Bancshares is a bank holding company incorporated on December 8, 1982 under the laws of the State of North Carolina, headquartered in Lexington, North Carolina and registered under the Federal Bank Holding Company Act of 1956, as amended (the FBHCA). Bancshares’ principal executive offices are located at One LSB Plaza, Lexington, North Carolina 27292. Its telephone number is (336) 248-6500. Bancshares’ principal business is providing banking and other financial services through its banking subsidiary, Lexington State Bank. Bancshares is the parent holding company of the Bank, a North Carolina chartered commercial bank. The principal assets of Bancshares are all outstanding shares of the Bank’s common stock. As part of its operations, Bancshares is not dependent upon a single customer or a few customers whose loss would have a material adverse effect on Bancshares.

LSB Corporation

LSB Corporation is listed on NASDAQ (LSBX). The response is incorporated herein by reference from the discussion respectively under the captions entitled FINANCIAL HIGHLIGHTS on page 4, BUSINESS on pages 5 through 7, MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS on pages 8 through 21 and Consolidated Financial Statements and Notes to Consolidated Financial Statements on pages 24 through 46 of the 2004 Annual Report.

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