SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): October 27, 2003
LAKELAND BANCORP, INC.
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(Exact name of registrant as specified in its charter)
New Jersey 33-27312 22-2953275
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
250 Oak Ridge Road, Oak Ridge, New Jersey 07438
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (973) 697-2000
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Item 5. Other Events and Regulation FD Disclosure
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On October 27, 2003, Lakeland Bancorp, Inc.'s wholly owned subsidiary,
Lakeland Bank ("Lakeland"), and American Motorists Insurance Company and its
affiliated companies (collectively, "AMICO"), finalized a Settlement Agreement
pertaining to certain pending litigation. As has been previously disclosed, the
litigation concerns various leases that Lakeland purchased from Commercial Money
Center, Inc. ("CMC"), which has filed for bankruptcy protection, and the surety
bonds issued by AMICO and two other surety companies to guarantee the income
stream of those leases.
Pursuant to the Settlement Agreement, Lakeland received $2.2 million
from AMICO in full settlement of all claims which Lakeland has against AMICO
under the bonds issued by AMICO to guarantee the income stream on certain of the
leases that Lakeland purchased from CMC. In addition, Lakeland will retain all
payments previously made by AMICO under AMICO's "reservation of rights," and
AMICO has released and waived any rights it may have to seek recoupment of such
payments from Lakeland. Lakeland and AMICO have each released the other from any
and all claims either party may have had against the other pertaining to the
surety bonds issued by AMICO in connection with those leases purchased by
Lakeland from CMC on which the income stream was guaranteed by the AMICO bonds.
One factor Lakeland considered in deciding to enter into the Settlement
Agreement is the financial condition of the members of Kemper Insurance
Companies, which includes AMICO. A.M. Best's rating of Kemper Insurance
Companies, which was A at the time Lakeland purchased the surety bonds on the
lease pools in September 2001, was downgraded to B+ in December 2002 and to D in
June 2003.
In the third quarter of 2003, Lakeland wrote down the carrying value of
the leases purchased by Lakeland from CMC on which the income stream was
guaranteed by the AMICO bonds to the anticipated amount of the settlement. Thus,
for financial statement purposes, the collection of the settlement amount will
not result in any further charge to Lakeland's allowance for loan and lease
losses. The settlement will also have the effect of reducing Lakeland's non
performing loans by $1.9 million.
The Settlement Agreement between Lakeland and AMICO does not affect the
pending litigation between Lakeland and the other two surety companies. Lakeland
continues to believe that it has substantial and meritorious positions and
claims and is continuing to pursue all rights and remedies against the remaining
two surety companies.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LAKELAND BANCORP, INC.
By: /s/ Roger Bosma
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Roger Bosma
President and Chief Executive Officer
Dated: October 28, 2003
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