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Lakeland Bancorp Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2010 01:17PM
Lakeland Bancorp Inc. (LBAI) filed Quarterly Report for the period ended 2010-03-31.
Highlight of Business Operations:
Net income for the first quarter of 2010 was $4.6 million, compared to net income of $3.2 million for the same period in 2009, an increase of $1.4 million, or 44%. Net income available to common shareholders was $3.7 million compared to $2.6 million for the same period last year. Diluted earnings per share was $0.15 for the first quarter of 2010, compared to diluted earnings of $0.11 per share for the same period last year.
Total interest expense decreased from $11.3 million in the first quarter of 2009 to $7.2 million in the first quarter of 2010, a decrease of $4.1 million, or 36%. Average interest-bearing liabilities increased $32.8 million, but the cost of those liabilities decreased from 2.15% in 2009 to 1.36% in 2010. The decrease in yield was due to the declining rate environment along with a change in the mix of interest-bearing liabilities. Average rates paid on interest-bearing liabilities declined in all categories. Savings and interest-bearing transaction accounts as a percent of interest-bearing liabilities increased from 54% in the first quarter of 2009 to 65% in the first quarter of 2010. Time deposits as a percent of interest-bearing liabilities declined from 29% in the first quarter of 2009 to 22% in the first quarter of 2010 as customers preferred to keep their deposits in short-term transaction accounts in the current low rate environment. Average borrowings decreased from $341.7 million in 2009 to $279.1 million in 2010, as deposit growth outpaced loan and lease growth.
During the first quarter of 2010, the Company charged off loans of $4.1 million and recovered $535,000 in previously charged off loans and leases compared to $6.5 million and $680,000, respectively, during the same period in 2009. For more information regarding the determination of the provision, see Risk Elements under Financial Condition.
Noninterest income decreased $864,000 or 17% to $4.1 million in the first quarter of 2010 compared to the first quarter of 2009. This decrease was primarily due to a decrease of $884,000 in gains on the sale of investment securities and a reduction in service charges on deposit accounts of $219,000. The reduction in service charges can be attributed to reduced overdraft fees collected. These decreases were partially offset by gains on leasing related assets which totaled $304,000 in the first quarter of 2010 compared to $185,000 for the first quarter of 2009, an increase of $119,000, or 64%. Income on bank owned life insurance at $386,000 increased $55,000, or 17%, due to an increase in the number of policies, while commissions and fees increased by $62,000, or 8%, to $885,000, due primarily to an increase in loan fees.
Noninterest expense totaling $16.8 million increased $29,000 in the first quarter of 2010 from the first quarter of 2009. Salaries and employee benefits expense increased $320,000, or 4%, to $8.9 million. Within this category, health insurance benefits have increased by $100,000, or 14%, in the first quarter of 2010, compared to the first quarter of 2009. Furniture and equipment decreased by $94,000, or 7%, due primarily to lower equipment purchases, repairs and depreciation expenses. Collection expense at $148,000 and other real estate and repossessed asset expense at $37,000 decreased $357,000, or 71%, and $83,000, or 69%, respectively, due to decreased leasing related expenses, while legal expense at $341,000 increased $232,000 in the first quarter of 2010 compared to the same period in 2009. Legal fees increased as a result of increased workout expenses related to nonperforming loans and leases. The Companys efficiency ratio, a non-GAAP financial measure, was 56.9% in the first quarter of 2010, compared to 60.0% for the same period last year. The Company uses this ratio because it believes that the ratio provides a good comparison of period-to-period performance and because the ratio is widely accepted in the banking industry. The following table shows the calculation of the efficiency ratio:
The Companys total assets increased $44.0 million, or 2%, from $2.72 billion at December 31, 2009, to $2.77 billion at March 31, 2010. Total deposits increased from $2.16 billion on December 31, 2009 to $2.20 billion on March 31, 2010, an increase of $45.6 million, or 2%. Included in the deposit increase was a $23.5 million, or 7%, increase in noninterest bearing demand deposits.
Stocks Discussed: LBAI,