Lower Expenses Boost Lakeland's 3Q Earnings

Lakeland Bancorp (LBAI) in Oak Ridge, N.J., posted third-quarter profit of $5.5 million, up more than 14% from a year earlier as nonperforming assets and noninterest expenses declined.

The $2.9 billion-asset company reported earnings per share of 20 cents. For the first nine months of the year, the company earned $15.3 million, 19% higher than a year earlier, Lakeland said Tuesday.

Lakeland's third-quarter noninterest income fell almost 9%, to $4.6 million, year over year. The company recorded $785,000 from the sale of investment securities in the third quarter of 2011 compared with no gains this year. Service charges on deposit accounts rose 5%, to $2.8 million, primarily due to the implementation of a new demand deposit pricing structure in the second quarter. Commissions and fees also climbed 27%, to $1.2 million, from a year earlier.

Noninterest expense totaled $17 million, down more than 5% from a year earlier. Included in the quarter was an $800,000 prepayment fee on long-term debt while salary and benefit expenses rose 3%, to $9.6 million.

Growth in the portfolios for commercial real estate and residential mortgage loans helped fuel a slight increase in total loans, to $2.1 billion, from Dec. 31.

Net interest income fell almost 3%, to $23.7 million, from a year earlier as the annualized net interest margin fell to 3.66% from 3.85%. The decline in the net interest margin reflects a greater reduction in yields on interest-earning assets as compared with interest-bearing liabilities, Lakeland said.

Nonperforming assets totaled $29.2 million, down more than 49% year over year. The provision for loan losses fell about 17%, to $3.4 million, from the same period last year.

Lakeland also said that it had completed its $25 million common stock offering. The company announced in August that it would sell about 620,000 shares of common stock in a public offering in addition to almost 2 million shares in separate purchase agreement with institutional investors. It said it would use the funds to redeem $25 million in junior subordinated debt.

Lakeland's shares were trading at $10.62 Tuesday afternoon, down less than 1% from Monday's closing.