Wednesday, October 15, 2003 Roger Bosma
President & CEO
Joseph F. Hurley
EVP & CFO
973-697-2000
LAKELAND BANCORP SURPASSES $1.5 BILLION IN TOTAL ASSETS AS COMPANY REPORTS $3.8
MILLION IN THIRD QUARTER EARNINGS
OAK RIDGE, NJ - October 15, 2003 --Lakeland Bancorp, Inc. (Nasdaq: LBAI)
reported Net Income for the third quarter of $3.8 million, or $0.25 per diluted
share, as compared to a Net Loss of ($711,000), or ($0.05) per diluted share for
the third quarter of 2002. The Company's Annualized Return on Average Assets was
1.08% and Annualized Return on Average Equity was 15.52% for the third quarter
of 2003.
Net Income for the first nine months of 2003 was $11.1 million, up $5.1 million
from the $6.0 million for the same period last year. Earnings per diluted share
were $0.73, up from the $0.39 per diluted share for the first nine months of
2002. Return on Average Assets was 1.14% and Return on Average Equity was 15.79%
for the first nine months of 2003.
Lakeland Bancorp also announced that it has declared a quarterly cash dividend
of $0.10 per common share. The cash dividend will be paid on November 14, 2003
to holders of record as of the close of business on October 31, 2003.
A highlight in the third quarter was the consummation of the acquisition of CSB
Financial Corp ("CSB"). With this acquisition, the Company surpassed the $1.5
billion mark in total assets and the total number of branches in northern New
Jersey increased to thirty-eight.
Roger Bosma, Lakeland Bancorp's President and CEO, said, "We are pleased to
welcome our new shareholders, formerly of CSB Financial Corp. The four new
locations Lakeland Bancorp acquired enhance our position in the Bergen County
area, and help to make Lakeland Bancorp one of the leading community banks in
New Jersey."
- -continued-
EARNINGS
NET INTEREST INCOME
Net interest income for the third quarter of 2003 was $12.2 million, compared
with $12.0 million for the same period last year. This reflects the impact of
the lower interest rate environment offset by a 22% increase in average earning
assets. Net interest margin decreased to 3.85% for the third quarter of 2003
from 4.59% for the third quarter of 2002.
Year-to-date, net interest income was $36.9 million, or 5% higher than the $35.3
million reported for the first nine months of 2002. Net interest margin
decreased to 4.20% for the nine months of 2003 from 4.76% for the same period
last year, while average earning assets increased 19%.
NONINTEREST INCOME
Noninterest income, including gains on the sales of securities, totaled $3.9
million for the third quarter of 2003, compared to $3.0 million for the third
quarter of 2002. Gains on the sales of securities were $934,000 in the third
quarter of 2003 compared to gains of $812,000 for the same period last year.
Noninterest income, excluding gains on the sales of securities, totaled $2.9
million for the third quarter of 2003, or 32% higher than the $2.2 million for
the third quarter of 2002. Service charges on deposit accounts increased 32% to
$1.9 million due to increased overdraft and return item charges. Commissions and
fees increased 63% to $793,000, primarily due to increased loan fees.
Noninterest income, including gains on the sales of securities, totaled $9.6
million for the first nine months of 2003, compared to $7.6 million for the
first nine months of 2002. Gains on the sales of securities increased from
$875,000 in the first nine months of 2002 to $1.7 million for the same period in
2003. Noninterest income, excluding gains on the sales of securities, increased
from $6.7 million for the first nine months of 2002 to $8.0 million for 2003, a
19% increase. This was primarily due to increases of $856,000 in service charges
on deposit accounts and $514,000 in commissions and fees on loans.
NONINTEREST EXPENSE
Noninterest expense for the third quarter of 2003 was $9.7 million, an increase
of 15% compared to the third quarter of 2002. Salary and benefit costs were $5.2
million for the third quarter of 2003, an increase of 13% compared to the same
period last year. Net occupancy expense was $912,000, an increase of 9% from the
third quarter of 2002. The increases in both salaries and benefits and occupancy
expense were due in part to the acquisition of CSB Financial Corp. in the third
quarter of 2003. Other expenses increased by 28% in the third quarter of 2003
reflecting increased legal and consulting expenses.
For the first nine months of 2003, noninterest expense was $28.0 million
compared to $24.8 million for the first nine months of 2002, an increase of $3.2
million or 13%. Of this increase, $1.3 million relates to increased salary and
benefit costs. This increase reflects higher salary and benefit expense due to
bank expansion as well as normal salary and benefit increases. Occupancy expense
increased by $197,000 reflecting the opening of one new branch in the fourth
quarter of 2002 as well as increased expenses incurred in the other bank
locations. Other expenses increased 30% primarily due to increased legal and
consulting fees.
-2-
- -continued-
FINANCIAL CONDITION
At September 30, 2003, total assets were $1.530 billion, an increase of $322.9
million or 27% from year-end 2002, including $141.1 million from the acquisition
of CSB.
LOANS
Total loans increased $100.1 million from December 31, 2002 to September 30,
2003 including $83.1 million from the CSB acquistion. In the first nine months
of 2003, commercial loans increased $74.6 million or 24% from year-end 2002.
Consumer and home equity loans increased $15.8 million, or 7%, while residential
mortgage loans increased $9.7 million or 6%. The growth in home equity loans and
residential mortgage loans was slowed due to loan refinancing activity.
ASSET QUALITY
At September 30, 2003, non-performing assets totaled $18.9 million (1.24% of
total assets) including $12.6 million related to commercial lease pools (0.83%
of total assets) and $6.3 million of other non-performing assets (0.41% of total
assets). The Allowance for Loans and Lease Losses totaled $16.5 million at
September 30, 2003 including an additional provision of $7.5 million which was
recorded in the third quarter 2002 relating to the commercial lease pools. The
provision totaled $750,000 in the third quarter 2003. Charge-offs totaled $3.8
million in the third quarter 2003. This included a $3.4 million charge-off to
reflect the deterioration of the credit rating of one of the three surety
companies which guaranteed the commercial lease pools. The Company continues to
believe that it has substantial and meritorious positions and claims against the
surety companies and continues to litigate such matters.
DEPOSITS
At September 30, 2003, total deposits were $1.332 billion, which included $124.7
million from CSB. This was an increase of $273.0 million or 26% from December
31, 2002. Core deposits, which are defined as noninterest bearing deposits and
savings and interest bearing transaction accounts, increased by $226.3 million
or 28% at December 31, 2002 to $1.034 billion at September 30, 2003. Core
deposits, as defined, represent 78% of total deposits at September 30, 2003.
CAPITAL
Stockholders' equity was $109.6 million and book value per common share was
$6.88 at September 30, 2003. As of September 30, 2003, the Company's leverage
ratio was 8.01%. Tier I and total risk based capital ratios were 12.20% and
13.46%, 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 LOAN AND LEASE 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
-3-
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 THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2002;
CHANGES IN THE CONDITIONS OF THE CAPITAL MARKETS IN GENERAL AND IN THE CAPITAL
MARKETS FOR FINANCIAL INSTITUTIONS IN PARTICULAR AND THE IMPACT OF THE WAR IN
IRAQ ON SUCH MARKETS; THE ABILITY OF THE COMPANY TO INTEGRATE COMMUNITY STATE
BANK PROMPTLY INTO THE COMPANY'S OVERALL BUSINESS; 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.
-4-
LAKELAND BANCORP, INC.
FINANCIAL HIGHLIGHTS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------- -----------------------------------
2003 2002 2003 2002
----- ----- ----- ----
(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income $12,170 $12,008 $36,935 $35,291
Provision for Loan Losses (750) (8,250) (2,250) (9,750)
Noninterest Income 2,934 2,228 7,958 6,687
Gain on sales of investment securities 934 812 1,686 875
Noninterest Expense (9,651) (8,396) (28,006) (24,827)
----------------------- ----------------- ------------------- -------------
Pretax Income (Loss) 5,637 (1,598) 16,323 8,276
Tax (Expense) Benefit (1,815) 887 (5,212) (2,235)
----------------------- ----------------- ------------------- -------------
Net Income (Loss) $3,822 ($711) $11,111 $6,041
======================= ================= =================== =============
Basic Earnings (loss) Per Share $0.25 ($0.05) $0.74 $0.40
Diluted Earnings (loss) Per Share $0.25 ($0.05) $0.73 $0.39
Dividends per share $0.10 $0.09 $0.28 $0.25
Weighted Average Shares - Basic 15,333,292 15,004,092 15,059,277 15,041,713
Weighted Average Shares - Diluted 15,550,330 15,297,019 15,282,882 15,320,124
SELECTED OPERATING RATIOS
Return on Average Assets 1.08% -0.24% 1.14% 0.73%
Return on Average Equity 15.52% -3.05% 15.79% 9.05%
Yield on Interest Earning Assets 5.14% 6.26% 5.47% 6.49%
Cost of funds 1.58% 2.10% 1.58% 2.19%
Net interest spread 3.56% 4.16% 3.89% 4.30%
Net interest margin 3.85% 4.59% 4.20% 4.76%
Efficiency ratio 62.10% 57.60% 60.40% 56.30%
Stockholders' equity to total assets 7.17% 7.59%
Book value per share $6.88 $5.99
Closing stock price $15.95 $15.46
ASSET QUALITY RATIOS
Ratio of net charge-offs to average loans 0.82% 0.03%
Ratio of allowance to total loans 2.01% 2.55%
Non-performing loans to total loans 2.29% 2.83%
Non-performing assets to total assets 1.24% 1.68%
Allowance to non-performing loans 88% 90%
SELECTED BALANCE SHEET DATA AT PERIOD-END 9/30/2003 12/31/2002
--------- ----------
Loans $818,727 $718,676
Allowance for Loan Losses 16,476 17,940
Investment Securities 555,838 407,843
Total Assets 1,530,005 1,207,105
Deposits 1,332,091 1,059,092
Borrowings 17,380 19,974
Long Term Debt 34,500 31,000
Guaranteed preferred beneficial interests in Company's
subordinated debentures 30,000 -
Stockholders' Equity 109,629 90,767
SELECTED AVERAGE BALANCE SHEET DATA
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
9/30/2003 9/30/2002 9/30/2003 9/30/2002
--------- --------- --------- ---------
Loans, net $766,069 $689,302 $742,284 $653,449
Interest-Earning Assets 1,296,408 1,065,969 1,212,496 1,017,381
Deposits 1,218,398 1,009,914 1,144,869 963,407
Total Assets 1,403,787 1,156,278 1,306,331 1,106,116
Common Equity 97,693 92,427 94,110 89,233
LAKELAND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
ASSETS 2003 2002
- --------------------------------------------------------------------------------------------------------------
(dollars in thousands) (unaudited)
Cash and due from banks $ 49,247 $ 32,775
Federal funds sold and interest-bearing deposits due from banks 20,402 2,690
- --------------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 69,649 35,465
Investment securities available for sale 509,642 361,760
Investment securities held to maturity; fair value of $ 47,196
in 2003 and $48,436 in 2002 46,196 46,083
Loans:
Commercial 388,959 314,378
Residential mortgages 179,730 170,039
Consumer and home equity 250,038 234,259
- --------------------------------------------------------------------------------------------------------------
Total loans 818,727 718,676
Plus: deferred (fees) costs (261) 982
Less: Allowance for loan and lease losses 16,476 17,940
- --------------------------------------------------------------------------------------------------------------
Net loans 801,990 701,718
Premises and equipment - net 28,062 25,167
Accrued interest receivable 6,343 5,495
Goodwill and Identifiable Intangible Assets 28,309 3,020
Other assets 39,814 28,397
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TOTAL ASSETS $1,530,005 $1,207,105
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Deposits:
Noninterest bearing $254,741 $214,110
Savings and interest-bearing transaction accounts 779,268 593,637
Time deposits under $100 218,769 179,423
Time deposits $100 and over 79,313 71,922
- --------------------------------------------------------------------------------------------------------------
Total deposits 1,332,091 1,059,092
Federal funds purchased and securities sold under
agreements to repurchase 17,380 19,974
Long-term debt 34,500 31,000
Other liabilities 6,405 6,272
Guaranteed preferred beneficial interests in Company's
subordinated debentures 30,000 ---
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,420,376 1,116,338
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STOCKHOLDERS' EQUITY
Common stock, no par value; authorized shares, 40,000,000; issued
shares, 16,484,561 at September 30, 2003 and 15,404,651 December 31, 2002 131,162 101,664
Accumulated Deficit (15,366) (9,436)
Treasury stock, at cost, 549,607 shares at September 30, 2003 and
466,219 at December 31, 2002 (7,443) (5,881)
Accumulated other comprehensive income 1,276 4,420
- --------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 109,629 90,767
- --------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,530,005 $1,207,105
==============================================================================================================
LAKELAND BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
2003 2002 2003 2002
- -------------------------------------------------------------------------------------------------------------------------------
(In thousands, except per share data)
INTEREST INCOME
Loans and fees $11,828 $11,848 $35,406 $34,434
Federal funds sold and interest bearing deposits with banks 67 117 193 261
Taxable investment securities 3,710 3,948 10,849 12,052
Tax exempt investment securities 774 585 2,144 1,711
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST INCOME 16,379 16,498 48,592 48,458
- -------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Deposits 3,282 4,003 9,748 11,764
Securities sold under agreements to repurchase 50 76 160 221
Long-term debt 877 411 1,749 1,182
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 4,209 4,490 11,657 13,167
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 12,170 12,008 36,935 35,291
Provision for loan losses 750 8,250 2,250 9,750
- -------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 11,420 3,758 34,685 25,541
NONINTEREST INCOME
Service charges on deposit accounts 1,913 1,444 5,232 4,376
Commissions and fees 793 488 1,947 1,433
Gain on the sales of securities 934 812 1,686 875
Other income 228 296 779 878
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST INCOME 3,868 3,040 9,644 7,562
- -------------------------------------------------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Salaries and employee benefits 5,240 4,625 15,250 13,993
Net occupancy expense 912 838 2,688 2,491
Furniture and equipment 877 841 2,452 2,326
Stationery, supplies and postage 341 303 1,007 948
Other expenses 2,281 1,789 6,609 5,069
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NONINTEREST EXPENSE 9,651 8,396 28,006 24,827
- -------------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 5,637 (1,598) 16,323 8,276
Provision for income taxes (benefit) 1,815 (887) 5,212 2,235
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $3,822 ($711) $11,111 $6,041
===============================================================================================================================
EARNINGS (LOSS) PER COMMON SHARE
Basic $0.25 $(0.05) $0.74 $0.40
- -------------------------------------------------------------------------------------------------------------------------------
Diluted $0.25 $(0.05) $0.73 $0.39
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS PER SHARE $0.10 $0.09 $0.28 $0.25
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