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Lakeland Bancorp Reports First Quarter Results

Oak Ridge, NJ – April 18, 2013 -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) reported the following positive developments for the first quarter of 2013:
 
·            Net Income Available to Common Shareholders in the first quarter of 2013 was $5.1 million, or $0.17 per diluted share, as compared to the $4.4 million, or $0.16 per diluted share, reported for the same period last year. Included in the 2013 first quarter earnings were $631,000 in expenses related to the proposed merger with Somerset Hills Bancorp. Exclusive of these expenses, EPS for the first quarter of 2013 was $0.19 per common share, a 19% increase over the EPS for the same period last year.
·            The Company reported strong growth in both loans and non-interest bearing demand deposits in the first quarter of 2013. Loans totaling $2.17 billion at March 31, 2013 increased by $24.2 million from December 31, 2012, including a 4% increase in commercial loans secured by real estate. Non-interest bearing demand deposits at $521.0 million increased by $23.0 million, or 5%, from year-end 2012 and represented 22% of total deposits at March 31, 2013.
·            Non-performing assets at March 31, 2013 totaling $25.8 million were 10% lower than year-end 2012 and 40% below the total for the first quarter of 2012.  
·            Net Interest Margin (“NIM”) was 3.71%, a four basis point improvement from the fourth quarter of 2012, primarily due to prepayment fees on commercial loans. The yield on interest-earning assets decreased by three basis points from the fourth quarter of 2012, while the yield on average interest-bearing liabilities decreased by eight basis points, as the Company repaid $10.0 million in long-term debt at a rate of 2.90%.
·            The Company declared a quarterly cash dividend of $0.07 per common share. The cash dividend will be paid on May 15, 2013 to holders of record as of the close of business on April 30, 2013.
Thomas J. Shara, Lakeland Bancorp’s President and CEO said, “In the first quarter of 2013, we showed continued growth in both loans and non-interest-bearing demand deposits, while maintaining a stable Net Interest Margin. As previously announced earlier this quarter, we entered into an agreement to acquire Somerset Hills Bancorp. The merger, which is expected to close in either the second or third quarter this year, will expand our footprint in the contiguous counties in which we operate.”
Earnings
 
Net Interest Income
Net interest income for the first quarter of 2013 at $23.9 million equaled net interest income for the same period in 2012. Net interest margin at 3.71% compared to 3.76% reported in the first quarter of 2012. The Company’s yield on interest-earning assets in the first quarter of 2013 was 4.11%, a decrease of 32 basis points from the same period in 2012. The cost of interest-bearing liabilities was 0.51%, a decrease of 32 basis points from the first quarter of 2012. 
 
Noninterest income
Noninterest income, exclusive of gains on investment securities, totaled $4.5 million for the first quarter of 2013, an increase of $521,000 as compared to the same period in 2012. Gains on sales of securities totaled $505,000 and $32,000 in the first quarter of 2013 and 2012, respectively. Service charges on deposits at $2.5 million were 3% higher than the total for the first quarter of 2012. Commissions and fees at $1.2 million increased by $233,000, primarily due to increased investment commission income. Other income at $498,000 was $239,000 higher than the total for the same period last year. Within other income for the first quarter of 2013, the Company recorded $181,000 in income on loan swap transactions, and $152,000 in gains on sales of residential mortgage loans. 
 
Noninterest expense
Noninterest expense for the first quarter of 2013, exclusive of the $526,000 prepayment fee on long-term debt and $631,000 in merger related expenses, was $17.1 million, compared to $16.3 million for the same period in 2012, an increase of $795,000, or 5%. Salary and benefit expense at $10.0 million increased by 5%, partially due to increased commission expenses. Net occupancy, furniture and equipment expenses at $3.4 million were $608,000 higher than last year, primarily due to expenses relating to the opening of both a new Training and Operations Center and branch office in the second half of 2012, as well as increased service contract expense.
Financial Condition
At March 31, 2013, total assets were $2.91 billion, which was equivalent to total assets at year-end 2012. Total loans at $2.17 billion were $24.2 million higher than at December 31, 2012, primarily due to a $43.1 million, or 4%, increase in commercial real estate loans. Total deposits at $2.39 billion increased by $17.7 million from year-end 2012, primarily due to an increase of $23.0 million in noninterest bearing demand deposits, which totaled $521.0 million at March 31, 2013.
 
Asset Quality
At March 31, 2013, non-performing assets totaled $25.8 million (0.89% of total assets), as compared to $28.5 million (0.98% of total assets) as of December 31, 2012. The Allowance for Loan and Lease Losses totaled $29.6 million at March 31, 2013, and represented 1.36% of total loans. During the first quarter of 2013, the Company had net charge-offs of $2.5 million (annualized 0.47% of average loans).    
 
Capital
Stockholders' equity was $283.9 million and book value per common share was $9.51 as of March 31, 2013. As of March 31, 2013, the Company’s leverage ratio was 8.77%. Tier I and total risk based capital ratios were 11.60% and 12.85%, respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.    
 
Forward-Looking Statements
 
The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipates”, “projects”, “intends”, “estimates”, “expects”, “believes”, “plans”, “may”, “will”, “should”, “could”, and other similar expressions are intended to identify such forward-looking statements. Lakeland cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company’s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company’s lending and leasing activities, customers’ acceptance of the Company’s products, services and competition, failure to obtain required shareholder and regulatory approvals for the merger of Somerset Hills Bancorp into Lakeland Bancorp and for the merger of Somerset Hills Bank into Lakeland Bank, and failure to realize anticipated efficiencies and synergies if the mergers are consummated. Any statements made by Lakeland that are not historical facts should be considered to be forward-looking statements. Lakeland is not obligated to update and does not undertake to update any of its forward-looking statements made herein.
 
 
 
 
EXPLANATION OF NON-GAAP FINANCIAL MEASURES
 
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").  The Company’s management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors.  These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
 
The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, expenses on other real estate owned and other repossessed assets, provision for unfunded lending committments and, where applicable, long-term debt prepayment fees and merger related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes securities gains and losses, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a better comparison of period to period operating performance.
 
Lakeland Bancorp, the holding company for Lakeland Bank, has a current asset base of $2.9 billion and forty-seven (47) offices spanning six northwestern New Jersey counties: Bergen, Essex, Morris, Passaic, Sussex and Warren. Lakeland Bank, headquartered at 250 Oak Ridge Road, Oak Ridge, New Jersey offers an extensive array of consumer and commercial products and services, including online banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. For more information about their full line of products and services, visit their website at www.lakelandbank.com.