Lakeland Bancorp Reports Fourth Quarter 2009 Earnings

Jan 20, 2010, 12:02 ET from Lakeland Bancorp, Inc.

OAK RIDGE, N.J., Jan. 20 /PRNewswire-FirstCall/ -- Lakeland Bancorp, Inc. (Nasdaq: LBAI) reported the following positive developments in the fourth quarter of 2009:

  • Net Income in the fourth quarter of 2009 totaled $2.1 million, as compared to $889,000 for the same period in 2008. Net Income Available to Common Shareholders was $1.3 million or $0.05 per diluted share compared to $889,000 or $0.04 per diluted share for the same period last year.

  • Net Interest Margin ("NIM") for the fourth quarter of 2009 was 3.90%, an increase of 21 basis points as compared to the NIM of 3.69% for the same period last year. The improvement in NIM was primarily a result of an 11% increase in Net Interest Income driven by a reduction in the cost of interest-bearing deposits.

  • Non-performing assets decreased by $2.8 million from September 30, 2009, to $40.6 million at December 31, 2009, and represented 1.49% of total assets at December 31, 2009, down from 1.56% at September 30, 2009. The Allowance for Loan and Lease Losses at $25.6 million at year-end was 1.27% of total loans, as compared to 1.23% at year end 2008.

  • The previously announced plan to reduce the leasing portfolio continued with an $18.5 million decrease in leasing loans outstanding in the fourth quarter of 2009, and a $191.0 million decrease (61%) for the full year. Leasing loans at year-end were 6% of total loans compared to 15% at year-end 2008.

  • Core deposits at year-end totaled $1.69 billion and represented 78% of total deposits, as compared to 70% at December 31, 2008.

Net Loss for the year ended December 31, 2009 was $5.4 million, compared to Net Income of $15.2 million reported for 2008. Net Loss Available to Common Shareholders in 2009 was $8.6 million or $0.36 per diluted share, as compared to Net Income in 2008 of $15.2 million, or $0.64 per diluted share.

Thomas J. Shara, Lakeland Bancorp's President and CEO, said: "We are very pleased to report several positive trends in our fourth quarter results. Total loans, exclusive of leasing loans, increased by $68 million, or 4%, while core deposits increased by $105 million, or 7%, in the fourth quarter of 2009. Non-performing loans decreased by $3.5 million in the fourth quarter, while the ratio of allowance for loan and lease losses to total loans was 1.27% at year end, as compared to 1.23% at September 30, 2009. Capital ratios remained well in excess of regulatory requirements."

Lakeland Bancorp declared a quarterly cash dividend of $0.05 per common share. The cash dividend will be paid on February 15, 2010 to holders of record as of the close of business on January 29, 2010. The Company also declared a dividend of 5% for the quarterly dividend payment due February 15, 2010 for the preferred stock issued to the U.S. Treasury under the Capital Purchase Program.

Net Interest Income

Net interest income for the fourth quarter of 2009 was $25.0 million, as compared to the $22.5 million earned in the fourth quarter of 2008, an increase of 11%. Net Interest Margin increased by 21 basis points to 3.90%, as compared to the 3.69% reported in the fourth quarter of 2008, while average interest-earning assets increased by 5%. The Company received full principal and interest on a $7.2 million commercial loan which was previously on a non-accrual status. This resulted in an improvement in Net Interest Margin in the quarter of ten basis points. The annualized yield on interest-earning assets decreased by 62 basis points to 5.22% in the fourth quarter of 2009 from 5.84% for the same period last year. The annualized cost of interest bearing liabilities decreased 93 basis points from 2.50% in the fourth quarter of 2008 to 1.57% in the fourth quarter of 2009. The decrease in the cost of interest-bearing liabilities primarily reflects the repricing of maturing certificates of deposits at lower rates.  

For the year 2009, net interest income was $93.4 million, or 5% higher than the $88.6 million reported for 2008, while average earning assets increased 7%.  Net Interest Margin was 3.74% for 2009 compared to 3.79% for 2008. The Company's yield on earning assets decreased from 6.12% in 2008 to 5.34% in 2009, while the cost of interest bearing liabilities decreased from 2.70% in 2008 to 1.89% in 2009.

Noninterest Income

Noninterest income, excluding net gains on investment securities, totaled $4.4 million for the fourth quarter of 2009, which equaled the total for the same period last year. In the fourth quarter of 2009, there were $2.6 million in net gains on investment securities as compared to no gains or losses in the fourth quarter of 2008. Commissions and fees totaling $968,000 increased by $218,000, or 29%, primarily due to an increase in investment commission income. This increase was offset by a $269,000 decrease in income on bank owned life insurance as the Company received a $392,000 insurance benefit on a Bank Owned Life Insurance policy in the fourth quarter of 2008.

Noninterest income, excluding the gains on investment securities, totaled $16.0 million for 2009, as compared to the $17.6 million reported for 2008. Net gains on investment securities were $2.9 million for 2009, as compared to $53,000 in 2008. The decrease in noninterest income in 2009 as compared to 2008 was due to gains (losses) on leasing related assets. In 2009, the Company recorded losses related to the sale of leasing assets totaling $1.1 million, while in 2008, gains totaled $995,000.

Noninterest Expense

Noninterest expense for the fourth quarter of 2009 was $20.3 million compared to $15.4 million reported for the fourth quarter in 2008. Included in noninterest expense in the fourth quarter of 2009 was a $3.1 million fee on the prepayment of $55.0 million in long-term debt, at an average rate of 3.81%. Salary and benefit expenses increased by $754,000, or 10%, to $8.6 million, reflecting increased staffing levels and normal salary increases. Occupancy, furniture and equipment expenses increased by $214,000, or 8%, to $2.9 million, primarily due to two new branch offices that were opened in 2009. FDIC insurance expense increased by $724,000 to $1.3 million. All other noninterest expenses totaling $4.4 million increased by $150,000 or 3%, in the fourth quarter of 2009, as compared to the same period last year. The Company's efficiency ratio for the fourth quarter of 2009 was 57% as compared to 55% for the same period last year.    

For the year 2009, noninterest expense was $73.8 million as compared to the $60.1 million reported for 2008.  Included in this category was the aforementioned $3.1 million fee on prepayment of long-term debt. Salary and benefit costs increased by $2.2 million, or 7%, to $34.5 million. Occupancy, furniture and equipment expenses increased by $729,000, or 7%, to $11.7 million, while FDIC insurance expense at $5.8 million increased by $4.3 million, which included a $1.2 million industry-wide special assessment in the second quarter of 2009. Other repossessed asset expense at $1.0 million, and collection expenses at $1.6 million, increased respectively by $847,000 and $1.0 million, primarily due to leasing related activity.  

Financial Condition

At December 31, 2009, total assets were $2.72 billion, an increase of $81.3 million, or 3%, from year-end 2008. Total loans and leases were $2.01 billion, down $16.5 million from $2.03 billion at year-end 2008. Increases in commercial loans and residential mortgage loans, which increased by $134.1 million, or 13%, and $40.1 million, or 12%, respectively, were offset by a $191.0 million, or 61%, decrease in the lease portfolio, which was consistent with the planned reduction in this business. Total deposits were $2.16 billion at December 31, 2009, an increase of $101.1 million, or 5% from $2.06 billion at December 31, 2008. Core deposits, which are defined as non-interest bearing deposits and savings and interest bearing transaction accounts, amounted to $1.69 billion at year-end 2009, an increase of $246.3 million or 17% from year-end 2008, and represented 78% of total deposits at December 31, 2009, as compared to 70% at year-end 2008. During 2009, time deposits decreased by $145.3 million, while money market accounts increased by $103.9 million for the year.  

Asset Quality

At December 31, 2009, non-performing assets totaled $40.6 million (1.49% of total assets) compared to $43.3 million (1.56% of total assets) at September 30, 2009. The Allowance for Loan and Lease Losses, which totaled $25.6 million at December 31, 2009, represented 1.27% of total loans, as compared to 1.23% as of December 31, 2008. In the fourth quarter of 2009, the Company had net charge-offs totaling $5.0 million. For the year 2009, net charge-offs totaled $51.1 million, including $43.3 million related to leasing.                    

Capital

Stockholders' equity was $268.0 million and book value per common share was $8.88 as of December 31, 2009. The Company's leverage ratio was 9.44%. Tier I and total risk based capital ratios were 12.65% and 13.90%, 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, 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, passage by the U.S. Congress of legislation which unilaterally amends the terms of the U.S. Department of the Treasury's preferred stock investment in the Company, 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 and competition.  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.

Lakeland Bancorp, the holding company for Lakeland Bank, has a current asset base of $2.7 billion and forty-eight (48) 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.



Lakeland Bancorp, Inc.

Financial Highlights

(unaudited)










Three months ended
December 31,


Year Ended
December 31,










2009


2008


2009


2008


(Dollars in thousands except per share amounts)

INCOME STATEMENT








Net Interest Income

$    24,982  


$    22,453  


$      93,379  


$      88,579  

Provision for Loan and Lease Losses

(6,438)  


(11,032)  


(51,615)  


(23,730)  

Noninterest Income (excluding investment securities gains)

4,368  


4,360  


15,952  


17,558  

Gains on investment securities

2,552  


-  


2,905  


53  

Noninterest Expense

(20,313)  


(15,396)  


(73,794)  


(60,071)  

Pretax Income (Loss)

5,151  


385  


(13,173)  


22,389  

Tax (Expense) Benefit

(3,011)  


504  


7,777  


(7,224)  

Net Income (Loss)

$      2,140  


$         889  


$      (5,396)  


$      15,165  

Dividends on Preferred Stock and Discount Accretion

(885)  


-  


(3,194)  


-  

Net Income (Loss) Available to Common Stockholders

$      1,255  


$         889  


$      (8,590)  


$      15,165  

















Basic Earnings (Loss) Per Common Share

$        0.05  


$        0.04  


$        (0.36)  


$          0.65  

Diluted Earnings (Loss) Per Common Share

$        0.05  


$        0.04  


$        (0.36)  


$          0.64  

Dividends per Common Share

$        0.05  


$        0.10  


$          0.30  


$          0.40  

Weighted Average Shares - Basic

23,736  


23,600  


23,673  


23,465  

Weighted Average Shares - Diluted

23,739  


23,665  


23,673  


23,549  









SELECTED OPERATING RATIOS








Annualized Return on Average Assets (1)

0.30%


0.13%


     NM


0.59%

Annualized Return on Average Common Equity (1)

3.98%


1.61%


NM


6.99%

Annualized Return on Interest Earning Assets

5.22%


5.84%


5.34%


6.12%

Annualized Cost of funds

1.57%


2.50%


1.89%


2.70%

Annualized Net interest spread

3.65%


3.34%


3.45%


3.43%

Annualized Net interest margin

3.90%


3.69%


3.74%


3.79%

Efficiency ratio (2)

56.99%


55.45%


62.11%


54.80%

Stockholders' equity to total assets





9.84%


8.36%

Book value per common share (3)





$8.88  


$9.33  









ASSET QUALITY RATIOS





12/31/2009


12/31/2008

Ratio of allowance for loan and lease losses
to total loans (4)





1.27%


1.23%

Non-performing loans to total loans (4)





1.92%


0.81%

Non-performing assets to total assets (4)





1.49%


0.78%









SELECTED BALANCE SHEET DATA AT PERIOD-END





12/31/2009


12/31/2008

Loans and Leases





$ 2,014,127  


$ 2,030,666  

Allowance for Loan and Lease Losses                





(25,563)  


(25,053)  

Investment Securities





457,351  


392,288  

Total Assets





2,723,968  


2,642,625  

Total Deposits                              





2,157,187  


2,056,133  

Short-Term Borrowings





63,672  


62,363  

Long-Term Debt





223,222  


288,222  

Stockholders' Equity                    





267,986  


220,941  





SELECTED AVERAGE BALANCE SHEET DATA









For the
three months ended


For the year ended


12/31/2009


12/31/2008


12/31/2009


12/31/2008

Loans and Leases, net

1,999,830


2,019,915


2,007,881


1,969,581

Investment Securities

538,830


370,674


479,118


376,917

Interest-Earning Assets              

2,572,501


2,449,119


2,530,007


2,372,329

Total Assets                          

2,790,501


2,647,030


2,737,175


2,578,619

Core Deposits

1,689,148


1,446,777


1,533,972


1,417,030

Time Deposits

498,987


604,450


589,499


561,069

Total Deposits                              

2,188,135


2,051,227


2,123,471


1,978,099

Short-Term Borrowings

56,507


53,439


49,887


77,246

Long-Term Debt

184,241


230,160


202,653


213,665

Subordinated Debentures

77,322


77,322


77,322


77,322

Total Interest-Bearing Liabilities

2,172,272


2,106,012


2,138,139


2,045,382

Stockholders' Equity

269,358


219,528


267,327


216,931

Common Stockholders' Equity

213,422


219,528


217,062


216,931









(1) Ratios for the year ended December 31, 2009 are not meaningful and therefore not reported.

(2) Represents non-interest expense, excluding other real estate expense, other repossessed asset expense,  long term debt prepayment fee, and core deposit amortization, as a percentage of total revenue (calculated on a tax equivalent basis), excluding gains (losses) on sales of securities. Total revenue represents net interest income (calculated on a tax equivalent basis) plus non-interest income.

(3) Excludes preferred stock

(4) Includes leases held for sale





Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS






December 31,


December 31,

ASSETS

2009


2008

(dollars in thousands)

(unaudited)



Cash and due from banks

$31,869 


$35,238 

Federal funds sold and interest-bearing deposits due from banks

26,794 


14,538 

      Total cash and cash equivalents

58,663 


49,776 





Investment securities available for sale

375,530 


282,174 

Investment securities held to maturity; fair value of $84,389




   in 2009 and $111,881 in 2008

81,821 


110,114 

Loans:




 Commercial

1,194,944 


1,060,839 

 Leases

113,161 


311,463 

 Residential mortgages

382,778 


342,660 

 Consumer and home equity

315,930 


315,704 

 Leases held for sale, at fair value

7,314 


       Total loans

2,014,127 


2,030,666 

  Deferred cost

2,908 


4,165 

  Allowance for loan and lease losses

(25,563)


(25,053)

       Net loans

1,991,472 


2,009,778 

Premises and equipment - net

29,196 


29,479 

Accrued interest receivable

8,943 


8,598 

Goodwill

87,111 


87,111 

Other identifiable intangible assets

1,640 


2,701 

Bank owned life insurance

41,720 


39,217 

Other assets

47,872 


23,677 

     TOTAL ASSETS

$2,723,968 


$2,642,625 





LIABILITIES AND STOCKHOLDERS' EQUITY




LIABILITIES:




Deposits:




    Noninterest bearing

$323,175 


$302,492 

    Savings and interest-bearing transaction accounts

1,368,272 


1,142,609 

    Time deposits under $100,000

283,512 


393,549 

    Time deposits $100,000 and over

182,228 


217,483 

       Total deposits

2,157,187 


2,056,133 

Federal funds purchased and securities sold under




  agreements to repurchase

63,672 


62,363 

Long-term debt

145,900 


210,900 

Subordinated debentures

77,322 


77,322 

Other liabilities

11,901 


14,966 

       TOTAL LIABILITIES

2,455,982 


2,421,684 





STOCKHOLDERS' EQUITY




 Preferred stock, Series A, no par value, $1,000 liquidation value, authorized




  1,000,000 shares; issued  59,000 shares at December 31, 2009

56,023 


 Common stock, no par value; authorized shares, 40,000,000; issued




   shares, 24,740,564 at December 31, 2009 and December 31, 2008

259,521 


257,051 

 Accumulated Deficit

(34,961)


(19,246)

 Treasury shares, at cost, 868,428 shares at December 31, 2009 and




  1,053,561 at December 31, 2008

(11,940)


(14,496)

 Accumulated other comprehensive (loss)

(657)


(2,368)

        TOTAL STOCKHOLDERS' EQUITY

267,986 


220,941 

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$2,723,968 


$2,642,625 




Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)










Three months Ended

December 31,


Year Ended

December 31,



2009

2008


2009

2008



(In thousands, except per share data)

INTEREST INCOME






 Loans and fees

$29,192 

$31,689 


$117,123 

$127,414 

 Federal funds sold and interest bearing deposits with banks

20 

127 


109 

420 

 Taxable investment securities

3,785 

3,344 


14,351 

13,713 

 Tax exempt investment securities

526 

526 


2,239 

2,390 


TOTAL INTEREST INCOME

33,523 

35,686 


133,822 

143,937 

INTEREST EXPENSE






 Deposits


5,324 

9,379 


26,793 

39,303 

 Federal funds purchased and securities sold under agreements to repurchase

43 

131 


139 

1,487 

 Long-term debt

3,174 

3,723 


13,511 

14,568 


TOTAL INTEREST EXPENSE

8,541 

13,233 


40,443 

55,358 

NET INTEREST INCOME

24,982 

22,453 


93,379 

88,579 

Provision for loan and lease losses

6,438 

11,032 


51,615 

23,730 








NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES

18,544 

11,421 


41,764 

64,849 








NONINTEREST INCOME






 Service charges on deposit accounts

2,784 

2,845 


10,918 

11,106 

 Commissions and fees

968 

750 


3,709 

3,422 

 Gain on investment securities

2,552 


2,905 

53 

 Income on bank owned life insurance

457 

726 


1,930 

1,741 

 Gain (loss) on leasing related assets

(87)

74 


(1,142)

995 

 Other income

246 

(35)


537 

294 


TOTAL NONINTEREST INCOME

6,920 

4,360 


18,857 

17,611 

NONINTEREST EXPENSE






 Salaries and employee benefits

8,638 

7,884 


34,505 

32,263 

 Net occupancy expense

1,570 

1,524 


6,637 

6,098 

 Furniture and equipment

1,319 

1,151 


5,038 

4,848 

 Stationery, supplies and postage

390 

521 


1,605 

1,764 

 Marketing expense

625 

698 


2,633 

2,348 

 Amortization of core deposit intangibles

266 

266 


1,062 

1,062 

 FDIC insurance expense

1,272 

548 


5,819 

1,478 

 Long-term debt prepayment fee

3,075 


3,075 

 Collection expense

265 

283 


1,552 

572 

 Other repossessed asset expense

85 

103 


1,002 

155 

 Other expenses

2,808 

2,418 


10,866 

9,483 


TOTAL NONINTEREST EXPENSE

20,313 

15,396 


73,794 

60,071 

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES

5,151 

385 


(13,173)

22,389 

Provision for income taxes (benefit)

3,011 

(504)


(7,777)

7,224 

NET INCOME (LOSS)

$2,140 

$889 


($5,396)

$15,165 

Dividends on Preferred Stock and Discount Accretion

885 


3,194 

Net Income (Loss) Available to Common Stockholders

$1,255 

$889 


($8,590)

$15,165 

EARNINGS (LOSS) PER COMMON SHARE






 Basic


$0.05 

$0.04 


$(0.36)

$0.65 

 Diluted


$0.05 

$0.04 


$(0.36)

$0.64 








DIVIDENDS PER COMMON SHARE


$0.05 

$0.10 


$0.30 

$0.40 


SOURCE Lakeland Bancorp, Inc.



RELATED LINKS

http://www.lakelandbank.com