Lakeland Bancorp Reports 11% Increase in Fourth Quarter EPS and Record Full Year Results
Oak Ridge, NJ – January 24, 2013 -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) reported the following results:
- Net Income Available to Common Shareholders in the fourth quarter of 2012 was $5.8 million, up 21% from $4.8 million for the fourth quarter of 2011. Earnings per diluted share in the fourth quarter of 2012, was $0.20 per share, an 11% increase from $0.18 per diluted share for the same period in 2011. Net Income Available to Common Shareholders for the year ended December 31, 2012 was $21.1 million, a 19% increase from the $17.7 million for 2011, while earnings per diluted share was $0.76 per share, a 15% increase from $0.66 per diluted share for 2011.
- The Company reported strong growth in both loans and non-interest bearing demand deposits in the fourth quarter of 2012. Loans totaling $2.15 billion at year-end 2012 increased by $82.3 million, or 4%, from September 30, 2012, while non-interest bearing demand deposits at $498.1 million increased by $12.8 million in the fourth quarter of 2012, and by $48.5 million, or 11%, in 2012.
- Asset quality improved in 2012, as non-performing assets, which totaled $28.5 million at December 31, 2012, were 43% lower than the $50.2 million reported at year-end 2011. The Allowance for Loan and Lease Losses at year end 2012 was 103% of non-performing loans, compared to 58% at year-end 2011.
- The Net Interest Margin for the fourth quarter of 2012 was 3.67%, as compared to 3.66% in the third quarter of 2012. The yield on interest-earning assets at 4.14% in the fourth quarter of 2012 was eleven basis points lower than 4.25% in the previous quarter, while the cost of interest-bearing liabilities at 0.59% decreased by 15 basis points from 0.74% in the third quarter, primarily as a result of reduced borrowing costs. In the fourth quarter, the Company sold securities resulting in a gain of $776,000, and repaid $10.0 million in long-term debt at a rate of 3.93%, incurring a prepayment fee of $782,000. Additionally, a $25 million Trust Preferred issuance, with a coupon rate of 7.535%, was repaid in the fourth quarter of 2012, using the proceeds from the Company’s earlier capital raise in the third quarter of 2012.
- The Company declared a quarterly cash dividend of $0.07 per common share, payable on February 15, 2013 to holders of record as of the close of business on January 31, 2013.
Thomas J. Shara, Lakeland Bancorp’s President and CEO said, “We are pleased to report record earnings for the full year 2012 despite a continuing weak economy, and a low interest rate environment. Asset quality improved as non-performing assets decreased by 43% from year-end 2011. In addition, tangible book value per common share increased 13%.”
Net Interest Income
Net interest income for the fourth quarter of 2012 was $24.2 million, which was equivalent to the same period in 2011. Net Interest Margin for the fourth quarter of 2012 was 3.67%, compared to 3.66% in the third quarter of 2012, and 3.73% reported in the fourth quarter of 2011. The yield on interest-earning assets declined 32 basis points to 4.14% in the fourth quarter of 2012 compared to 4.46% for the same period of 2011, while the cost of interest-bearing liabilities decreased 31 basis points from 0.90% in the fourth quarter of 2011 to 0.59% in the fourth quarter of 2012.
For 2012, net interest income totaled $95.5 million compared to $97.4 million reported for 2011. Net Interest Margin for 2012 at 3.70% compared to 3.85% for 2011. The Company’s yield on earning assets decreased 34 basis points from 4.63% for the year ended December 31, 2011, to 4.29% for 2012. The Company’s cost of interest bearing liabilities decreased 22 basis points from 0.96% for 2011 to 0.74% in 2012.
Noninterest income, exclusive of gains on sales of investment securities, totaled $4.7 million for the fourth quarter of 2012, as compared to $4.1 million for the fourth quarter of 2011. Gains on investment securities totaled $776,000 for the fourth quarter of 2012 as compared to no gains for the same period of 2011. Service charges on deposit accounts totaling $2.6 million were equivalent to the total for the fourth quarter of 2011, while commissions and fees at $1.1 million increased by $174,000 from the fourth quarter of 2011, primarily due to increased loan fees as well as a 24% increase in investment services income. Other income at $600,000 increased by $541,000, including $275,000 in net gains on the sales of properties in the fourth quarter of 2012.
Noninterest income, exclusive of gains on sales of investment securities, totaled $17.9 million for the year ended December 31, 2012 compared to $16.9 million for 2011. Gains on investment securities totaled $1.0 million for 2012 as compared to $1.2 million in 2011. Service charges on deposit accounts at$10.5 million increased by 2%, while commissions and fees at $4.5 million increased by $788,000 or 21% primarily due to increased loan fees. Gains on leasing related assets at $475,000 decreased by $499,000 in 2012 primarily due to the reduction in the size of the leasing portfolio, while other income at $1.0 million was $516,000 higher in 2012, partially due to the aforementioned net gains on sales of properties.
Noninterest expense for the fourth quarter of 2012, excluding a $782,000 prepayment fee on the repayment of long-term debt, was $17.2 million, as compared to $16.4 million for the fourth quarter of 2011, an increase of $825,000. Salaries and benefit expenses at $10.0 million increased by 11% in the fourth quarter of 2012, resulting from adjustments made to the discount rate on benefit plans to reflect the current interest rate environment, as well as normal salary and benefit increases. Net occupancy and furniture and equipment expense at $3.3 million, increased by $437,000, or 15%, as the Company opened a new training and operations center, as well as a new branch office.
Noninterest expense for the full year ended December 31, 2012 was $67.7 million, compared to $68.2 million for 2011. Prepayment fees on the repayment of long-term debt were $782,000 and $800,000, respectively, in 2012 and 2011. Excluding the prepayment fees in both years, noninterest expense in 2012 was $66.9 million, compared to $67.4 million in 2011, a decrease of $460,000. Marketing expense at $2.0 million decreased 16%, primarily due to the elimination of several marketing programs in 2012, while FDIC insurance expense at $2.2 million decreased by $627,000, or 22%, resulting from a change in FDIC assessment rate methodology. Core deposit intangibles were fully amortized in 2011, which resulted in a $577,000 reduction in expenses in 2012, while expenses on other real estate owned and other repossessed assets declined $681,000 as compared to 2011.
At December 31, 2012, total assets were $2.92 billion, an increase of $92.8 million from December 31, 2011. Total loans were $2.15 billion at year-end 2012, an increase of $105.9 million, primarily due to an increase in commercial loans of $85.5 million in 2012. Total deposits were $2.37 billion, an increase of $121.3 million from year-end 2011. Non-interest bearing demand deposits totaling $498.1 million increased by $48.5 million, or 11%. Core deposits at $2.07 billion at year-end 2012 increased by $177.1 million, and represented 87% of total deposits at December 31, 2012.
At December 31, 2012, non-performing assets totaled $28.5 million (0.98% of total assets) compared to $50.2 million (1.78% of total assets) at December 31, 2011. The Allowance for Loan and Lease Losses totaled $28.9 million at December 31, 2012 and represented 1.35% of total loans and 103% of non-performing loans. In the fourth quarter of 2012, the Company had net charge-offs totaling $2.9 million and for the full year ended December 31, 2012, had net charge-offs of $14.4 million (0.69% of average loans), as compared to $17.7 million (0.89% of average loans) for the same period last year.
At December 31, 2012, stockholders' equity was $280.9 million and book value per common share was $9.45. As of December 31, 2012, the Company’s leverage ratio was 8.62%. Tier I and total risk based capital ratios were 11.52% and 12.77%, 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 (with respect to corporate objectives, trends, 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, 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.
EXPLANATION OF NON-GAAP FINANCIAL MEASURES
Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company’s management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.
The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, expenses on other real estate owned and other repossessed assets and, where applicable, long-term debt prepayment fees. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes securities gains and losses, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a better comparison of period to period operating performance.
Lakeland Bancorp, the holding company for Lakeland Bank, has a current asset base of $2.9 billion and forty-six (46) 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.