Lakeland Bancorp Reports Fourth Quarter 2009 Earnings

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.

SOURCE Lakeland Bancorp, Inc.