EX-99.1 3 dex991.htm PRESS RELEASE Press Release
Exhibit 99.1
 
Tuesday, October 15, 2002

     
Roger Bosma
President & CEO
 
Joseph F. Hurley
EVP & CFO
973-697-2000
 
Lakeland Bancorp Reports Third Quarter Results
 
Oak Ridge, NJ – October 15, 2002 —Lakeland Bancorp, Inc. (NASDAQ: LBAI) reported a third quarter Net Loss of $711,000, or $0.05 per diluted share, including a loan loss provision of $8.25 million.
 
The total provision includes $7.5 million which relates to a $16 million pool of commercial leases that are on non-accrual status. As discussed in prior quarters, these pools are guaranteed by three surety companies, two of which had ceased making payments in the first and second quarters. The third surety company ceased making payments to Lakeland during the third quarter. The Company is presently litigating such matters. The Company continues to believe that it has substantial and meritorious positions and claims and intends to vigorously exercise all its rights and remedies to obtain the required payments. However, management’s quarterly analysis of the allowance for loan losses recognizes the uncertainty as to the ultimate collectability of such amounts.
 
Excluding this item, Lakeland reported Net Income for the quarter of $4.0 million or $0.29 per diluted share up 45% from $2.8 million or $0.20 per diluted share reported in the third quarter of 2001.
 
Net Income for the first nine months of 2002 was $6.0 million ($0.43 per diluted share). Excluding the additional provision, net income was $10.7 million ($0.77 per diluted share) up 35% from the $7.9 million ($0.57 per diluted share) reported for the same period last year.
 
Roger Bosma, Lakeland Bancorp’s President and CEO said, “While we intend to vigorously pursue our insurance claims, recognition of the additional provision refocuses attention to our underlying business. Quarterly core earnings continue at record levels. Loan and deposit growth remains strong as we continue to build market share and provide quality service to our expanding customer base.”

-Continued-
 
 
Earnings
 
Net Interest Income
 
Net interest income for the third quarter of 2002 was $12.0 million or 14% higher than the $10.5 million earned in the third quarter of 2001 reflecting growth in interest earning assets. Net interest margin decreased to 4.59% in the third quarter 2002 from 4.75% for the same period last year.
 
Year-to-date, net interest income was $35.3 million, or 19% higher than the $29.6 million reported for the first nine months of 2001. Net interest margin increased to 4.76% for the first nine months of 2002 from 4.68% for the same period last year.
 
Noninterest income
 
Noninterest income excluding $812,000 in gains on securities sold was $2.2 million in the third quarter 2002 which was $199,000 or 10% higher than the third quarter 2001. Service charges and fees on deposit accounts increased $189,000 or 15% to $1.5 million. This increase offset a $95,000 decline in the gains on sales of leases due to a decision to keep a larger amount of lease originations in the Company’s own portfolio. Other income increased from $166,000 in third quarter 2001 to $254,000 in 2002 due to income earned on bank owned life insurance policies purchased in fourth quarter of 2001.
 
Noninterest income (exclusive of gains on sales of securities) increased from $6.2 million for the first nine months of 2001 to $6.7 million for 2002. Service charges on deposit accounts increased $431,000 or 11% to $4.4 million. Commissions and fees increased $413,000 or 40% to $1.4 million as a result of increases in loan fees related to increased loan volume. These increases were partially offset by declines in gains on sales of leases of $481,000.
 
Noninterest expense
 
Noninterest expense for the third quarter of 2002 was $8.4 million as compared to $8.0 million in the third quarter of 2001, an increase of $332,000 or 4%. The bank’s efficiency ratio, however, improved from 62% in the third quarter of 2001 to 58% in the third quarter of 2002 as revenue growth outpaced expense growth.
 
For the first nine months of the year, noninterest expense was $24.8 million compared to $23.1 million in 2001, an increase of $1.7 million or 7%. Of this increase, $1.1 million relates to increased salary and benefit costs. Occupancy expenses increased by $181,000 reflecting the opening of four new branches. Stationery, supplies and postage expense decreased by $299,000, which reflects the outsourcing of statement rendering and higher 2001 costs due to the merger of our subsidiary banks.
 
Financial Condition
 
At September 30, 2002, total assets were $1.18 billion compared to $1.04 billion at year-end 2001, an increase of $140 million or 13%. Loans increased 16% from $600 million at year-end 2001 to $699 million at September 30, 2002 while deposits grew $127 million or 14% during the same time period.

Page 2 of 3

-Continued-
 
 
Loans
 
Loans have increased to $698.6 million in 2002, an increase of $98.5 million or 16% from year-end 2001. Although there has been an increase in all loan categories this year, the most substantial growth has been in consumer loans, which have increased to $232.6 million, an increase of $56.2 million or 32% from year-end. Commercial loans have increased $36.0 million or 14% to $297.1 million at September 30.
 
Asset Quality
 
At September 30, 2002, non-performing assets totaled $19.9 million (1.68% of total assets) including $16.0 million related to commercial lease pools and $3.9 million of other non-performing assets (0.32% of total assets). The Allowance for Possible Loan Losses totaled $17.8 million at September 30, 2002 and represented 2.55% of total loans. Net charge-offs dropped to .03% of average loans from .50% on September 30, 2001.
 
Deposits
 
At September 30, 2002, total deposits were $1.039 billion, an increase of $126.6 million or 14% from December 31, 2001. Core deposits, which are defined as noninterest bearing deposits and savings and interest bearing transaction accounts, increased by $98.6 million or 15%, from $677.3 million at December 31, 2001 to $775.9 million at September 30, 2002. Core deposits, as defined, represent 75% of total deposits, as compared to 71% on September 30, 2001.
 
Capital
 
As of September 30, 2002, stockholders’ equity was $89.8 million and book value per common share was $6.60. The Company’s leverage ratio was 7.11%. Tier I and total risk based capital ratios were 10.99% and 12.25%, 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 that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to credit quality (including delinquency trends and the allowance for possible loan losses), corporate objectives, and other financial and business matters. 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. The Company 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.
 
In addition to the factors disclosed by the Company elsewhere in this document, the following factors, among others, could cause the Company’s actual results to differ materially and adversely from such forward-looking statements: pricing pressures on loan and deposit products; competition; changes in economic conditions nationally, regionally and in the Company’s markets; the extent and timing of actions of the Federal Reserve Board; changes in levels of market interest rates; clients’ acceptance of the Company’s products and services; credit risks of lending activities and competitive factors; whether or not the Company ultimately receives payment of all amounts due from the lease portfolio as described in Note 15-Commitments and Contingencies in Notes to the Consolidated Financial Statements contained in Form 10-K for the period ended December 31, 2001; and the extent and timing of legislative and regulatory actions and reforms.
 
The above-listed risk factors are not necessarily exhaustive, particularly as to possible future events, and new risk factors may emerge from time to time. Certain events may occur that could cause the Company’s actual results to be materially different than those described in the Company’s periodic filings with the Securities and Exchange Commission. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

Page 3 of 3

Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)
    
Three months ended
September 30,
     
Nine months ended
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
    
(Dollars in thousands except per share amounts)
  
INCOME STATEMENT
                                    
Net Interest Income
   
$
12,008
 
   
$
10,523
 
   
$
35,291
 
   
$
29,622
 
Provision for Possible Loan Losses
   
 
(8,250
)
   
 
(400
)
   
 
(9,750
)
   
 
(1,200
)
Noninterest Income
   
 
2,228
 
   
 
2,029
 
   
 
6,687
 
   
 
6,169
 
Gain on sales of securities
   
 
812
 
   
 
1
 
   
 
875
 
   
 
35
 
Noninterest Expense
   
 
(8,396
)
   
 
(8,064
)
   
 
(24,827
)
   
 
(23,131
)
    
  
  
  
Pretax Income
   
 
(1,598
)
   
 
4,089
 
   
 
8,276
 
   
 
11,495
 
Tax Expense (Benefit)
   
 
887
 
   
 
(1,258
)
   
 
(2,235
)
   
 
(3,558
)
    
  
  
  
Net Income (Loss)
   
$
(711
)
   
$
2,831
 
   
$
6,041
 
   
$
7,937
 
    
  
  
  
Basic Earnings Per Share
   
$
(0.05
)
   
$
0.21
 
   
$
0.44
 
   
$
0.58
 
Diluted Earnings Per Share
   
$
(0.05
)
   
$
0.20
 
   
$
0.43
 
   
$
0.57
 
Dividends per share
   
$
0.10
 
   
$
0.08
 
   
$
0.28
 
   
$
0.24
 
Weighted Average Shares—Basic
   
 
13,609,154
 
   
 
13,734,467
 
   
 
13,643,277
 
   
 
13,745,053
 
Weighted Average Shares—Diluted
   
 
13,874,847
 
   
 
13,949,437
 
   
 
13,895,804
 
   
 
13,907,779
 
SELECTED OPERATING RATIOS
                                    
Return on Average Assets
   
 
-0.24
%
   
 
1.16
%
   
 
0.73
%
   
 
1.12
%
Return on Average Equity
   
 
-3.05
%
   
 
13.60
%
   
 
9.05
%
   
 
13.06
%
Yield on Interest Earning Assets
   
 
6.26
%
   
 
7.28
%
   
 
6.49
%
   
 
7.39
%
Cost of funds
   
 
2.10
%
   
 
3.25
%
   
 
2.19
%
   
 
3.50
%
Net interest spread
   
 
4.16
%
   
 
4.03
%
   
 
4.30
%
   
 
3.89
%
Net interest margin
   
 
4.59
%
   
 
4.75
%
   
 
4.76
%
   
 
4.68
%
Efficiency ratio
   
 
57.50
%
   
 
62.42
%
   
 
57.5
%
   
 
62.60
%
Stockholders’ equity to total assets
                     
 
7.59
%
   
 
8.58
%
Book value per share
                     
$
6.60
 
   
$
6.27
 
Closing stock price
                     
$
17.05
 
   
$
13.29
 
ASSET QUALITY RATIOS
                                    
Ratio of net charge-offs to average loans
                     
 
0.03
%
   
 
0.50
%
Ratio of allowance to total loans
                     
 
2.55
%
   
 
1.38
%
Non-performing loans to total loans
                     
 
2.83
%
   
 
0.40
%
Non-performing assets to total assets
                     
 
1.68
%
   
 
0.47
%
Allowance to non-performing loans
                     
 
90
%
   
 
344
%
SELECTED BALANCE SHEET DATA AT PERIOD-END
                     
 
9/30/2002
 
   
 
12/31/2001
 
                      
  
Loans
                     
$
698,591
 
   
$
600,074
 
Allowance for Loan Losses
                     
 
17,805
 
   
 
8,220
 
Investment Securities
                     
 
377,102
 
   
 
343,341
 
Total Assets
                     
 
1,183,961
 
   
 
1,044,338
 
Deposits
                     
 
1,038,733
 
   
 
912,110
 
Borrowings
                     
 
19,001
 
   
 
19,920
 
Long Term Debt
                     
 
31,006
 
   
 
21,000
 
Stockholders’ Equity
                     
 
89,817
 
   
 
85,567
 
SELECTED AVERAGE BALANCE SHEET DATA
                                    
    
For the quarter ended
     
For the nine months ended
  
    
9/30/2002
     
9/30/2001
     
9/30/2002
     
9/30/2001
  
Loans, net
   
$
689,302
 
   
$
567,898
 
   
$
653,449
 
   
$
548,377
 
Interest-Earning Assets
   
 
1,065,969
 
   
 
901,591
 
   
 
1,017,381
 
   
 
870,530
 
Deposits
   
 
1,009,914
 
   
 
856,271
 
   
 
963,407
 
   
 
824,512
 
Total Assets
   
 
1,156,278
 
   
 
977,719
 
   
 
1,106,116
 
   
 
946,142
 
Common Equity
   
 
92,427
 
   
 
83,238
 
   
 
89,233
 
   
 
81,276
 
 

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
ASSETS
   
September 30,
2002
     
December 31,
2001
  
    
(dollars in thousands)
  
Cash and due from banks
   
$
57,380
 
   
$
48,615
 
Federal funds sold
   
 
7,000
 
   
 
—  
 
    
  
Total cash and cash equivalents
   
 
64,380
 
   
 
48,615
 
Investment securities available for sale
   
 
327,790
 
   
 
273,082
 
Investment securities held to maturity; fair value of $51,509 in 2002 and $72,101 in 2001
   
 
49,312
 
   
 
70,259
 
Loans:
                  
Commercial
   
 
297,052
 
   
 
261,101
 
Residential mortgages
   
 
168,945
 
   
 
162,569
 
Consumer and home equity
   
 
232,594
 
   
 
176,404
 
    
  
Total loans
   
 
698,591
 
   
 
600,074
 
Plus: deferred costs
   
 
2,297
 
   
 
1,885
 
Less: Allowance for possible loan losses
   
 
17,805
 
   
 
8,220
 
    
  
Net loans
   
 
683,083
 
   
 
593,739
 
Premises and equipment—net
   
 
25,441
 
   
 
24,785
 
Accrued interest receivable
   
 
5,312
 
   
 
5,041
 
Other assets
   
 
28,643
 
   
 
28,817
 
    
  
TOTAL ASSETS
   
$
1,183,961
 
   
$
1,044,338
 
    
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
LIABILITIES:
                  
Deposits:
                  
Noninterest bearing
   
$
217,370
 
   
$
206,783
 
Savings and interest-bearing transaction accounts
   
 
558,578
 
   
 
470,563
 
Time deposits under $100
   
 
181,397
 
   
 
184,011
 
Time deposits $100 and over
   
 
81,388
 
   
 
50,753
 
    
  
Total deposits
   
 
1,038,733
 
   
 
912,110
 
Federal funds purchased and securities sold under agreements to repurchase
   
 
19,001
 
   
 
19,920
 
Long-term debt
   
 
31,006
 
   
 
21,000
 
Other liabilities
   
 
5,404
 
   
 
5,741
 
    
  
TOTAL LIABILITIES
   
 
1,094,144
 
   
 
958,771
 
    
  
STOCKHOLDERS’ EQUITY
                  
Common stock, no par value; authorized shares, 40,000,000; issued shares, 13,971,168 at September 30, 2002 and December 31, 2001
   
 
88,178
 
   
 
88,273
 
Retained Earnings (Accumulated Deficit)
   
 
1,353
 
   
 
(931
)
Treasury stock, at cost, 364,129 shares at September 30, 2002 and 291,823 at December 31, 2001
   
 
(4,692
)
   
 
(3,175
)
Accumulated other comprehensive income
   
 
4,978
 
   
 
1,400
 
    
  
TOTAL STOCKHOLDERS’ EQUITY
   
 
89,817
 
   
 
85,567
 
    
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
   
$
1,183,961
 
   
$
1,044,338
 
    
  

 
Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
 
    
Three months Ended
September 30,
   
Nine Months Ended
September 30,
    
2002
     
2001
   
2002
   
2001
    
(In thousands, except per share data)
INTEREST INCOME
                              
Loans and fees
   
$
11,848
 
   
$
11,442
   
$
34,434
   
$
33,168
Federal funds sold and interest bearing deposits with banks
   
 
117
 
   
 
227
   
 
261
   
 
641
Taxable investment securities
   
 
3,948
 
   
 
4,010
   
 
12,052
   
 
11,832
Tax exempt investment securities
   
 
585
 
   
 
517
   
 
1,711
   
 
1,597
    
  
  
  
TOTAL INTEREST INCOME
   
 
16,498
 
   
 
16,196
   
 
48,458
   
 
47,238
    
  
  
  
INTEREST EXPENSE
                              
Deposits
   
 
4,003
 
   
 
5,298
   
 
11,764
   
 
16,389
Securities sold under agreements to repurchase
   
 
76
 
   
 
84
   
 
221
   
 
670
Long-term debt
   
 
411
 
   
 
291
   
 
1,182
   
 
557
    
  
  
  
TOTAL INTEREST EXPENSE
   
 
4,490
 
   
 
5,673
   
 
13,167
   
 
17,616
    
  
  
  
NET INTEREST INCOME
   
 
12,008
 
   
 
10,523
   
 
35,291
   
 
29,622
Provision for possible loan losses
   
 
8,250
 
   
 
400
   
 
9,750
   
 
1,200
    
  
  
  
NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES
   
 
3,758
 
   
 
10,123
   
 
25,541
   
 
28,422
NONINTEREST INCOME
                              
Service charges on deposit accounts
   
 
1,492
 
   
 
1,303
   
 
4,376
   
 
3,945
Commissions and fees
   
 
440
 
   
 
423
   
 
1,433
   
 
1,020
Gain on the sales of securities
   
 
812
 
   
 
1
   
 
875
   
 
35
Gain on sale of leases
   
 
42
 
   
 
137
   
 
140
   
 
621
Other income
   
 
254
 
   
 
166
   
 
738
   
 
583
    
  
  
  
TOTAL NONINTEREST INCOME
   
 
3,040
 
   
 
2,030
   
 
7,562
   
 
6,204
    
  
  
  
NONINTEREST EXPENSE
                              
Salaries and employee benefits
   
 
4,625
 
   
 
4,452
   
 
13,993
   
 
12,869
Net occupancy expense
   
 
838
 
   
 
828
   
 
2,491
   
 
2,310
Furniture and equipment
   
 
841
 
   
 
761
   
 
2,326
   
 
2,177
Stationery, supplies and postage
   
 
303
 
   
 
376
   
 
948
   
 
1,247
Other expenses
   
 
1,789
 
   
 
1,647
   
 
5,069
   
 
4,528
    
  
  
  
TOTAL NONINTEREST EXPENSE
   
 
8,396
 
   
 
8,064
   
 
24,827
   
 
23,131
    
  
  
  
INCOME BEFORE PROVISION FOR INCOME TAXES
   
 
(1,598
)
   
 
4,089
   
 
8,276
   
 
11,495
Provision (benefit) for income taxes
   
 
(887
)
   
 
1,258
   
 
2,235
   
 
3,558
    
  
  
  
NET INCOME (LOSS)
   
$
(711
)
   
$
2,831
   
$
6,041
   
$
7,937
    
  
  
  
EARNINGS PER COMMON SHARE
                              
Basic
   
$
(0.05
)
   
$
0.21
   
$
0.44
   
$
0.58
    
  
  
  
Diluted
   
$
(0.05
)
   
$
0.20
   
$
0.43
   
$
0.57
    
  
  
  
DIVIDENDS PER SHARE
   
$
0.10
 
   
$
0.09
   
$
0.28
   
$
0.24
    
  
  
  

7