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.
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-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 | ) |
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| Pretax Income | | | (1,598 | ) | | | 4,089 | | | | 8,276 | | | | 11,495 | |
| Tax Expense (Benefit) | | | 887 | | | | (1,258 | ) | | | (2,235 | ) | | | (3,558 | ) |
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| Net Income (Loss) | | $ | (711 | ) | | $ | 2,831 | | | $ | 6,041 | | | $ | 7,937 | |
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| 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 | |
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| 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 | | | | — | |
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| Total cash and cash equivalents | | | 64,380 | | | | 48,615 | |
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| 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 | |
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| Total loans | | | 698,591 | | | | 600,074 | |
| Plus: deferred costs | | | 2,297 | | | | 1,885 | |
| Less: Allowance for possible loan losses | | | 17,805 | | | | 8,220 | |
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| 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 | |
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TOTAL ASSETS | | $ | 1,183,961 | | | $ | 1,044,338 | |
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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 | |
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| 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 | |
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| TOTAL LIABILITIES | | | 1,094,144 | | | | 958,771 | |
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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 | |
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| TOTAL STOCKHOLDERS’ EQUITY | | | 89,817 | | | | 85,567 | |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,183,961 | | | $ | 1,044,338 | |
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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 |
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| TOTAL INTEREST INCOME | | | 16,498 | | | | 16,196 | | | 48,458 | | | 47,238 |
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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 |
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| TOTAL INTEREST EXPENSE | | | 4,490 | | | | 5,673 | | | 13,167 | | | 17,616 |
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NET INTEREST INCOME | | | 12,008 | | | | 10,523 | | | 35,291 | | | 29,622 |
| Provision for possible loan losses | | | 8,250 | | | | 400 | | | 9,750 | | | 1,200 |
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| NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES | | | 3,758 | | | | 10,123 | | | 25,541 | | | 28,422 |
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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 |
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| TOTAL NONINTEREST INCOME | | | 3,040 | | | | 2,030 | | | 7,562 | | | 6,204 |
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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 |
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| TOTAL NONINTEREST EXPENSE | | | 8,396 | | | | 8,064 | | | 24,827 | | | 23,131 |
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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 |
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NET INCOME (LOSS) | | $ | (711 | ) | | $ | 2,831 | | $ | 6,041 | | $ | 7,937 |
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| EARNINGS PER COMMON SHARE | | | | | | | | | | | | | |
| Basic | | $ | (0.05 | ) | | $ | 0.21 | | $ | 0.44 | | $ | 0.58 |
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| Diluted | | $ | (0.05 | ) | | $ | 0.20 | | $ | 0.43 | | $ | 0.57 |
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| DIVIDENDS PER SHARE | | $ | 0.10 | | | $ | 0.09 | | $ | 0.28 | | $ | 0.24 |
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7
