Lakeland Bancorp Reports Increased First Quarter Results
Lakeland Bancorp Reports Increased First Quarter Results
OAK RIDGE, N.J., April 28, 2014 -- Lakeland Bancorp, Inc. (Nasdaq:LBAI) reported the following positive developments for the first quarter of 2014:
- Net Income in the first quarter of 2014 was $7.2 million, or $0.20 per diluted share, as compared to the $5.1 million, or $0.17 per diluted share, reported for the same period last year. Included in the 2013 first quarter earnings was $0.6 million in pre-tax expenses related to the merger with Somerset Hills Bancorp. Exclusive of these expenses, diluted EPS for the first quarter of 2013 was $0.19 per common share.
- The Company reported strong growth in both loans and non-interest bearing demand deposits in the first quarter of 2014. Loans totaling $2.50 billion at March 31, 2014 increased by $34.3 million from December 31, 2013, including a 3% increase in commercial loans secured by real estate. Non-interest bearing demand deposits at $630.5 million increased by $29.8 million, or 5%, from year-end 2013 and represented 23% of total deposits at March 31, 2014.
- Net Interest Margin ("NIM") was 3.72%, a two basis point improvement from the fourth quarter of 2013, primarily due to the increased commercial loan demand, as well as the reduced cost of other borrowings. The yield on interest-earning assets was unchanged at 3.99% compared to the fourth quarter of 2013, while the yield on average interest-bearing liabilities decreased by two basis points to 0.36% in the first quarter of 2014 from 0.38% in the fourth quarter of 2013.
- On April 25, 2014, the Company declared a quarterly cash dividend of $0.075 per common share. The cash dividend will be paid on May 15, 2014 to holders of record as of the close of business on May 8, 2014.
Thomas J. Shara, Lakeland Bancorp's President and CEO said, "In the first quarter of 2014, we showed continued growth in both commercial real estate loans and non-interest-bearing demand deposits, primarily in the commercial sector, reflecting an improvement in the local economy in which we operate. Net Interest Margin remained stable, while total loans and total assets at $2.5 billion and $3.4 billion, respectively, are at record levels, reflecting our continued growth."
As previously noted, the Company acquired Somerset Hills Bancorp ("Somerset Hills"), which had total assets of $355.9 million at the time of acquisition, on May 31, 2013. Accordingly, the Company's financial statements reflect the impact of the merger from the date of acquisition which should be considered when comparing the results for the first quarter of 2014 and 2013, respectively.
Net Interest Income
Net interest income for the first quarter of 2014 at $27.8 million compared to $23.9 million for the same period in 2013, an increase of 16%, reflecting an increase in interest-earning assets resulting from the Somerset Hills' merger as well as organic growth. Net interest margin at 3.72% compared to 3.71% reported in the first quarter of 2013. The Company's yield on interest-earning assets in the first quarter of 2014 was 3.99%, a decrease of twelve basis points from the same period in 2013. The cost of interest-bearing liabilities was 0.36%, a decrease of 15 basis points from the first quarter of 2013.
Noninterest income, exclusive of gains on investment securities, totaled $4.1 million for the first quarter of 2014, a decrease of $0.5 million as compared to the same period in 2013. Gains on sales of securities totaled $2 thousand and $0.5 million in the first quarters of 2014 and 2013, respectively. Service charges on deposits at $2.6 million were equivalent to the total for the first quarter of 2013. Commissions and fees at $1.0 million decreased by $0.2 million, primarily due to a decrease in investment commission income. Other income was $0.4 million lower than the total for the same period last year primarily due to reductions in both loan swap income and gains on sales of residential mortgage loans.
Noninterest expense for the first quarter of 2014 was $19.7 million as compared to $17.1 million, exclusive of the $0.5 million prepayment fee on long-term debt and $0.6 million in merger related expenses, in the first quarter of 2013. Salary and benefit expense at $10.8 million increased by 9%, partially due to increased staffing due to the Somerset Hills merger. Net occupancy, furniture and equipment expenses at $4.3 million were $0.9 million higher than last year primarily due to expenses relating to the six new branches acquired in the Somerset Hills merger, as well as a $0.4 million increase in snow removal costs in the first quarter of 2014. Other expenses were $3.0 million, a $0.7 million increase from the first quarter of 2013, primarily due to a $0.3 million increase in audit fees.
At March 31, 2014, total assets were $3.39 billion, an increase of $68.9 million from year-end 2013. Total loans at $2.50 billion were $34.3 million higher than at December 31, 2013, primarily due to a $43.3 million, or 3%, increase in commercial real estate loans. Total deposits at $2.74 billion increased by $27.5 million from year-end 2013, primarily due to an increase of $29.8 million in noninterest bearing demand deposits, which totaled $630.5 million at March 31, 2014.
At March 31, 2014, non-performing assets totaled $22.7 million (0.67% of total assets), as compared to $17.5 million as of December 31, 2013, and $25.8 million as of March 31, 2013. Three non-performing loans totaling $3.5 million were resolved in April 2014 resulting in no additional specific reserve allocation or charge-offs. The Allowance for Loan and Lease Losses totaled $29.5 million at March 31, 2014, represented 1.18% of total loans, and was 134% of non-accruing loans. During the first quarter of 2014, the Company had net charge-offs of $1.8 million (annualized 0.29 % of average loans) compared to $2.5 million (annualized 0.47% of average loans) in the first quarter of 2013. The provision for loan and lease losses in the first quarter of 2014 was $1.5 million, compared to $3.2 million in the first quarter of 2013.
Stockholders' equity was $359.5 million, while book value and tangible book value per common share were $9.96 and $6.85, respectively, as of March 31, 2014. As of March 31, 2014, the Company's leverage ratio was 9.01%. Tier I and total risk based capital ratios were 11.76% and 13.01% respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.
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 and services, competition and the failure to realize anticipated efficiencies and synergies of the merger between Lakeland Bancorp, Inc. and Somerset Hills Bancorp. 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 commitments 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 and gain on debt extinguishment, 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.
About Lakeland Bank
Lakeland Bancorp, the holding company for Lakeland Bank, has $3.4 billion in total assets with 52 offices spanning eight northern New Jersey counties: Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren. Lakeland Bank is the second largest commercial bank headquartered in the state and offers an extensive array of consumer and commercial products and services, including online and mobile banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. For more information about the full line of products and services, visit LakelandBank.com.