425 Filing

Filer: Lakeland Bancorp, Inc.

Pursuant to Rule 425 under the

Securities Act of 1933 and deemed

filed pursuant to Rule 14a-12 of the

Securities Exchange Act of 1934

Subject Company: Lakeland Bancorp, Inc.

Commission File No.: 000-17820

 

 

 

 

 

 

       

Thursday, April 15, 2004

       Roger Bosma
                    President & CEO
                    Joseph F. Hurley
                    EVP & CFO
                    973-697-2000

 

Lakeland Bancorp Reports $3.6 Million in First Quarter Earnings

 

Oak Ridge, NJ – April 15, 2004 – Lakeland Bancorp, Inc. (Nasdaq: LBAI) reported first quarter Net Income of $3.6 million, which was slightly higher than Net Income of $3.5 million for the same period in 2003. Diluted earnings per share was $0.22 per share, compared to $0.23 per share for the first quarter 2003, reflecting an increase in outstanding shares following the acquisition of CSB Financial Corp. (“CSB”) in August 2003. Annualized Return on Average Assets was 0.91% and Annualized Return on Average Equity was 12.73% for the first quarter 2004.

 

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 May 14, 2004 to holders of record as of the close of business on April 30, 2004.

 

Roger Bosma, Lakeland Bancorp’s President and CEO said, “While our core business and expansion into the Bergen County market continues to prosper, our pending acquisition of Newton Financial Corp. (“Newton”) is moving forward. Shareholders of both Newton and Lakeland have now formally approved the merger. In addition, Newton has agreed on a course of action necessary to obtain a declaratory judgment confirming that their currently outstanding shares are validly issued and outstanding. Past and present Newton shareholders have been notified and Newton has requested a court hearing in May 2004 on the merits of its declaratory judgment.”

-continued-

 

Earnings

 

Net Interest Income

Net interest income for the first quarter of 2004 was $13.6 million or 10% higher than the $12.3 million earned in the first quarter of 2003. Net interest margin was 3.86% compared to 4.49% in the first quarter of 2003, primarily reflecting a 67 basis point decline in the yield on interest earning assets due to the declining interest rate environment, and to a higher proportion of investment securities to total earning assets as deposit growth outpaced loan growth during 2003. The Company’s average cost of interest bearing liabilities decreased 9 basis points from the first quarter of 2003 to the first quarter of 2004. This decline was due to a reduction in the yields on deposits partially offset by the cost of $56.7 million in trust-preferred securities funded in the latter part of 2003.

 

Noninterest income

Noninterest income, including gains on the sale of securities, totaled $2.9 million or 12% higher than the first quarter of 2003. Gains on sales of securities were $3,000 in the first quarter of 2004 compared to gains of $265,000 for the same period last year. Excluding the gains on sale of securities, noninterest income was 24% higher than the first quarter of 2003. Service charges on deposit accounts increased 23% to $1.9 million, primarily due to increased overdraft and return item charges; commissions and fees increased 17% primarily due to increased loan fees collected; and other income increased 44% to $380,000, primarily due to increased income on bank owned life insurance.

 

Noninterest expense

Noninterest expense for the first quarter of 2004 was $10.3 million, an increase of 15% compared to the first quarter of 2003. Salary and employee benefit expenses increased by 12% due to branch expansion following the acquisition of CSB, as well as normal salary and benefit increases. Other noninterest expense categories increased by 19% in the first quarter of 2004 primarily due to additional costs incurred by the four new branches from CSB, and increased legal and marketing expenses. The bank’s efficiency ratio was 60.6% in the first quarter of 2004.

 

Financial Condition

 

At March 31, 2004, total assets were $1.59 billion, unchanged from year-end.

 

Loans

In the first quarter of 2004, total loans increased $9.7 million from year-end. Commercial loans increased by $9.1 million, or 2% in the first quarter, while residential mortgage and consumer and home equity loans showed minor net changes in the quarter.

 

Asset Quality

At March 31, 2004, non-performing assets totaled $16.2 million (1.02% of total assets). This compares to $16.7 million (1.05% of total assets) at year-end 2003. Included in non-performing assets are $10.5 million related to commercial lease pools (0.66% of total assets) and $5.7 million of other non-performing assets (0.36% of total assets). The Allowance for Loan and Lease Losses totaled $17.2 million at March 31, 2004 and represented 2.00% of total loans. During the first quarter of 2004, the Company had net charge-offs of $576,000 compared to $61,000 for the first quarter last year.

 

Page 2 of 3

-continued-

 

Deposits

At March 31, 2004, total deposits were $1.34 billion, an increase of $18.0 million from December 31, 2003. Core deposits, which are defined as noninterest bearing deposits and savings and interest bearing transaction accounts, increased by $22.6 million or 2% to $1.06 billion. Core deposits, as defined, represent 79% of total deposits.

 

Capital

Stockholders’ equity was $117.7 million and book value per common share was $7.37 as of March 31, 2004. As of March 31, 2004, the Company’s leverage ratio was 7.88%. Tier I and total risk based capital ratios were 12.88% and 15.97%, respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines. The Company repurchased 11,000 shares during the first quarter of 2004 at an average price of $16.41 per share.

 

 

 

 

Non-historical information disclosed in this press release constitutes forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Lakeland cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements as a result of numerous factors, including pricing pressures on loan and deposit products; competition; changes in economic conditions nationally, regionally and in Lakeland’s markets; changes in levels of market interest rates; credit risks of lending activities and competitive factors; whether or not the Company ultimately receives payment of all amounts due from a lease portfolio as described in its Form 10-K for the year ended December 31, 2003; changes in the conditions of the capital markets in general and in the capital markets for financial institutions in particular; the ability of Lakeland Bank to integrate Newton into the Company’s overall business and plans after the acquisition closes; and the extent and timing of legislative and regulatory actions and reforms. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

 

Lakeland Bancorp has filed a Registration Statement on SEC Form S-4 in connection with its pending merger with Newton Financial Corporation and has mailed a Proxy Statement/Prospectus to its shareholders containing information about the merger. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CAREFULLY. THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS CONTAIN IMPORTANT INFORMATION ABOUT LAKELAND, NEWTON, THE MERGER AND RELATED MATTERS. Investors and security holders can obtain free copies of these documents through the web site maintained by the U.S. Securities and Exchange Commission at http//www.sec.gov. In addition to the Registration Statement and the Proxy Statement/ Prospectus, Lakeland files annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, statements and other information filed by Lakeland at the SEC public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the Commission’s other public reference rooms in New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information on public reference rooms. Lakeland’s filings with the Commission also are available to the public from commercial document- retrieval services and at the web site maintained by the Commission at http//www.sec.gov. This press release does not constitute an offer of any securities for sale.

 

Page 3 of 3

Lakeland Bancorp, Inc.

Financial Highlights

(unaudited)

 

     Three months ended March
31,
  
     2004
     2003
  
     (Dollars in thousands except
per share amounts)		  

INCOME STATEMENT

                 

Net Interest Income

    $ 13,558     $ 12,310  

Provision for Loan and Lease Losses

      875       750  

Noninterest Income (excluding investment

                 

security gains)

      2,873       2,314  

Gain on sales of investment securities

      3       265  

Noninterest Expense

      10,311       8,967  
    
 

Pretax Income

      5,248       5,172  

Tax Expense

      1,679       1,629  
    
 

Net Income

    $ 3,569     $ 3,543  
    
 

Basic Earnings Per Share

    $ 0.22     $ 0.24  

Diluted Earnings Per Share

    $ 0.22     $ 0.23  

Dividends per share

    $ 0.10     $ 0.09  

Weighted Average Shares—Basic

      15,956       14,921  

Weighted Average Shares—Diluted

      16,183       15,154  

SELECTED OPERATING RATIOS

                 

Return on Average Assets

      0.91 %     1.17 %

Return on Average Equity

      12.73 %     15.84 %

Yield on Interest Earning Assets

      5.20 %     5.87 %

Cost of funds

      1.62 %     1.71 %

Net interest spread

      3.58 %     4.16 %

Net interest margin

      3.86 %     4.49 %

Efficiency ratio

      60.60 %     59.63 %

Stockholders' equity to total assets

      7.39 %     7.33 %

Book value per share

    $ 7.37     $ 6.20  

ASSET QUALITY RATIOS

                 

Ratio of net charge-offs to average loans

      0.27 %     0.03 %

Ratio of allowance to total loans

      2.00 %     2.57 %

Non-performing loans to total loans

      1.88 %     2.81 %

Non-performing assets to total assets

      1.02 %     1.62 %

Allowance to non-performing loans

      105.85 %     91.32 %

SELECTED BALANCE SHEET DATA AT PERIOD-END

                 
     03/31/2004
     12/31/2003
  

Loans

    $ 862,050     $ 852,387  

Allowance for Loan and Lease Losses

      17,198       16,899  

Investment Securities

      590,938       600,411  

Total Assets

      1,593,549       1,585,290  

Deposits

      1,343,645       1,325,682  

Short-Term Borrowings

      32,286       51,423  

Long-Term Debt

      91,203       89,500  

Stockholders' Equity

      117,692       110,951  

SELECTED AVERAGE BALANCE SHEET DATA

                 
     For the quarter ended  
     03/31/2004
     03/31/2003
  

Loans

    $ 850,378     $ 720,210  

Interest-Earning Assets

      1,453,787       1,144,826  

Core Deposits

      1,044,112       832,420  

Time Deposits

      285,318       251,566  

Total Deposits

      1,329,430       1,083,986  

Total Assets

      1,581,665       1,231,037  

Short-Term Borrowings

      39,992       18,329  

Long-Term Debt

      34,530       31,035  

Subordinated Debentures

      56,703       —    

Common Equity

      112,757       90,688  

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

 

     March, 31,     December 31,  
ASSETS    2004     2003  
  

(dollars in thousands)

      (unaudited )        

Cash and due from banks

    $ 45,499     $ 42,760  

Federal funds sold and interest-bearing deposits due from banks

      9,618       3,324  
  

Total cash and cash equivalents

      55,117       46,084  

Investment securities available for sale

      551,195       557,402  

Investment securities held to maturity; fair value of $ 40,643 in 2004 and $43,650 in 2003

      39,743       43,009  

Loans:

                 

Commercial

      422,327       413,198  

Residential mortgages

      182,932       185,153  

Consumer and home equity

      256,791       254,036  
  

Total loans

      862,050       852,387  

Plus: deferred costs (fees)

      (1,375 )     (851 )

Less: Allowance for loan and lease losses

      17,198       16,899  
  

Net loans

      843,477       834,637  

Premises and equipment—net

      27,304       27,510  

Accrued interest receivable

      6,528       6,391  

Goodwill and other identifiable intangible assets

      28,383       27,609  

Bank owned life insurance

      27,854       27,575  

Other assets

      13,948       15,073  
  

TOTAL ASSETS

    $ 1,593,549     $ 1,585,290  
  

LIABILITIES AND STOCKHOLDERS' EQUITY

                 
  

LIABILITIES:

                 

Deposits:

                 

Noninterest bearing

    $ 253,081     $ 242,710  

Savings and interest-bearing transaction accounts

      807,683       795,485  

Time deposits under $100

      206,752       209,216  

Time deposits $100 and over

      76,129       78,271  
  

Total deposits

      1,343,645       1,325,682  

Federal funds purchased and securities sold under agreements to repurchase

      32,286       51,423  

Long-term debt

      34,500       34,500  

Subordinated debentures

      56,703       —    

Other liabilities

      8,723       7,734  

Guaranteed preferred beneficial interests in Company's subordinated debentures

      —         55,000  
  

TOTAL LIABILITIES

      1,475,857       1,474,339  
  

STOCKHOLDERS' EQUITY

                 

Common stock, no par value; authorized shares, 40,000,000; issued shares, 16,483,551 at March 31, 2004 and December 31, 2003

      131,093       131,116  

Accumulated Deficit

      (11,007 )     (12,980 )

Treasury stock, at cost, 507,403 shares at March 31, 2004 and 535,025 at December 31, 2003

      (7,142 )     (7,283 )

Accumulated other comprehensive income

      4,748       98  
  

TOTAL STOCKHOLDERS' EQUITY

      117,692       110,951  
  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

    $ 1,593,549     $ 1,585,290  
  

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

 

     Three months Ended March 31,
     2004    2003
     (In thousands, except per share data)

INTEREST INCOME

              

Loans and fees

    $ 12,669    $ 11,853

Federal funds sold and interest bearing deposits with banks

      10      68

Taxable investment securities

      5,013      3,632

Tax exempt investment securities

      764      658

TOTAL INTEREST INCOME

      18,456      16,211

INTEREST EXPENSE

              

Deposits

      3,387      3,436

Securities sold under agreements to repurchase

      111      63

Long-term debt

      1,400      402

TOTAL INTEREST EXPENSE

      4,898      3,901

NET INTEREST INCOME

      13,558      12,310

Provision for loan and lease losses

      875      750

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES

      12,683      11,560

NONINTEREST INCOME

              

Service charges on deposit accounts

      1,864      1,511

Commissions and fees

      629      539

Gain on the sales of investment securities

      3      265

Other income

      380      264

TOTAL NONINTEREST INCOME

      2,876      2,579

NONINTEREST EXPENSE

              

Salaries and employee benefits

      5,547      4,959

Net occupancy expense

      1,021      925

Furniture and equipment

      845      814

Stationery, supplies and postage

      348      330

Legal fees

      482      253

Marketing expense

      315      196

Other expenses

      1,753      1,490

TOTAL NONINTEREST EXPENSE

      10,311      8,967

INCOME BEFORE PROVISION FOR INCOME TAXES

      5,248      5,172

Provision for income taxes

      1,679      1,629

NET INCOME

    $ 3,569    $ 3,543

EARNINGS PER COMMON SHARE

              

Basic

    $ 0.22    $ 0.24

Diluted

    $ 0.22    $ 0.23

DIVIDENDS PER SHARE

    $ 0.10    $ 0.09