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Member News — Lakeland Bancorp, Inc. to Acquire Highlands Bancorp, Inc.
August 27th, 2018

The Boards of Directors of Lakeland Bancorp, Inc. (NASDAQ:  LBAI) (“Lakeland Bancorp”), the parent company of Lakeland Bank, and Highlands Bancorp, Inc. (OTC Pink:  HSBK) (“Highlands Bancorp”), the parent company of Highlands State Bank, announced today that the companies have entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which Highlands Bancorp will be merged with and into Lakeland Bancorp, with Lakeland Bancorp as the surviving bank holding company, and Highlands State Bank will merge with and into Lakeland Bank, with Lakeland Bank as the surviving bank.  The Merger Agreement provides that shareholders of Highlands Bancorp will receive, for each outstanding share of Highlands Bancorp common stock that they own at the effective time of the merger, 1.015 shares of Lakeland Bancorp common stock.

Lakeland Bancorp expects to issue an aggregate of approximately 2.8 million shares of its common stock in the merger, and will cash out outstanding Highlands Bancorp options. The transaction is valued at approximately $56.7 million on a fully diluted basis, or $19.79 per share, which represents a 20% premium over the closing sale price per share of Highlands Bancorp common stock on August 22, 2018.   The transaction is expected to be approximately 4% accretive to Lakeland Bancorp’s earnings per share in 2019 and approximately 1.5% dilutive to tangible book value with an estimated earnback in under 2.0 years using the crossover method.

Thomas J. Shara, Lakeland Bancorp’s President and Chief Executive Officer, remarked:  “We are delighted to be combining with Highlands, and expanding Lakeland’s presence in Sussex, Passaic and Morris counties.  Both banks share a focus on community banking and providing the highest level of service to our customers.  We look forward to working with the Highlands team in delivering to all of our customers and shareholders the benefits that we expect from this transaction.”

Mary Ann Deacon, Lakeland Bancorp’s Chairman, added:  “We firmly believe that Lakeland’s combination with Highlands will present opportunities that we can leverage for future growth, to the advantage of our customers and shareholders.”

Steven C. Ackmann, Highlands Bancorp’s President and CEO, stated: “We are very excited to be partnering with such a strong, well managed organization as Lakeland. Together, our franchises create a great presence in one of the most attractive banking markets in the country.”

George E. Irwin, Highlands Bancorp’s Chairman of the Board, added:  “In addition to sharing a commitment to providing first class customer service, we each bring complementary products and services to the combined company that we believe will be well received by our customers, and ultimately benefit our shareholders.”

Lakeland Bank operates 53 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey including one branch in Highland Mills, New York; six New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Newton, Teaneck and Waldwick; and one New York commercial lending center to serve the Hudson Valley region. Lakeland also has a commercial loan production office serving Middlesex and Monmouth counties in New Jersey.  Lakeland Bank offers an extensive suite of financial products and services for businesses and consumers. As of June 30, 2018, Lakeland Bancorp had consolidated total assets, total loans, total deposits and total stockholders’ equity of $5.53 billion, $4.28 billion, $4.40 billion and $597.9 million, respectively.

Highlands State Bank is a full service community bank headquartered and maintaining its main office in Vernon, New Jersey with additional branch offices in Sparta, Totowa and Denville, New Jersey.  Highlands State Bank provides deposit and loan banking services to consumers and businesses in northern New Jersey.  As of June 30, 2018, Highlands Bancorp had consolidated total assets, total loans, total deposits and total stockholders’ equity of $487.9 million, $427.3 million, $404.2 million and $30.3 million, respectively.

The Boards of Directors of both companies have approved the mergers.  Closing is subject to receipt of approvals from regulators, approval of the holding company merger by Highlands Bancorp’s shareholders and other customary conditions.  No approval is required from Lakeland Bancorp’s shareholders. The closing is expected to occur early in 2019.

Highlands Bancorp’s directors and certain of its executive officers, owning in the aggregate approximately 12.65% of Highlands Bancorp’s outstanding shares, have signed voting agreements pursuant to which they have agreed to vote their shares in favor of the holding company merger.

Sandler O’Neill + Partners, L.P. is acting as financial advisor to Lakeland Bancorp.  FIG Partners, L.P. is acting as financial advisor to Highlands Bancorp.  Lowenstein Sandler LLP is acting as Lakeland Bancorp’s legal advisor.  Windels Marx Lane & Mittendorf, LLP is acting as Highlands Bancorp’s legal advisor.

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