Item 8.01. Other Events.
As previously disclosed, onJuly 11, 2021 ,1st Constitution Bancorp , aNew Jersey corporation ("1stConstitution "), and Lakeland Bancorp, Inc., aNew Jersey corporation ("Lakeland"), entered into an Agreement and Plan of Merger (the "merger agreement"). Pursuant to the terms and subject to the conditions set forth in the merger agreement, 1stConstitution will merge with and into Lakeland, with Lakeland as the surviving entity (the "merger"). In connection with the proposed merger, Lakeland filed with theSecurities and Exchange Commission (the "SEC") a registration statement on Form S-4 containing a joint proxy statement/prospectus, as amended, and 1stConstitution filed a definitive proxy statement, and Lakeland filed a definitive proxy statement/prospectus, with theSEC datedOctober 15, 2021 (collectively, the "joint proxy statement/prospectus"), which 1stConstitution and Lakeland first mailed to their respective shareholders on or aboutOctober 20, 2021 . As disclosed in the joint proxy statement/prospectus, onSeptember 29, 2021 , a putative class action captioned Vigliotti v.1st Constitution Bancorp et al. was filed in theSuperior Court of New Jersey ,Middlesex County , Chancery Division, naming as defendants 1stConstitution and the members of the 1stConstitution board of directors, challenging the disclosures made in connection with the merger (the "Complaint"). The Complaint alleges, among other things, that the preliminary joint proxy statement/prospectus filed by Lakeland with theSEC onAugust 27, 2021 contains materially incomplete and misleading information regarding the process that culminated in the merger agreement and the proposed transaction, the valuation analyses performed by 1stConstitution's financial advisor, and potential conflicts of interest in connection with the proposed transaction. The relief sought includes enjoining the consummation of the merger unless and until certain additional and allegedly material information is disclosed to 1stConstitution's shareholders, rescinding the merger, to the extent already implemented, or granting rescissory damages, directing the individual defendants to account to the plaintiff for all alleged damages suffered as a result of their alleged wrongdoing, and awarding the plaintiff the cost and disbursements of the action, including reasonable attorneys' and experts' fees. OnOctober 12, 2021 , the plaintiff filed a motion for expedited discovery. As disclosed in the joint proxy statement/prospectus, Lakeland and 1stConstitution have also received a demand letter from another 1stConstitution shareholder challenging the disclosures made in connection with the merger. 1stConstitution subsequently received two demand letters from shareholders, one of which was also directed to Lakeland, that challenge disclosures made in connection with the merger. 1stConstitution , Lakeland and the other defendants believe that all allegations in the Complaint and the demand letters are without merit, and further believe that no supplemental disclosure is required under applicable laws. However, to diminish the risk that lawsuits may delay or otherwise adversely affect the consummation of the merger and to minimize the expense of defending such actions, and without admitting any liability or wrongdoing, 1stConstitution and Lakeland have agreed to supplement the joint proxy statement/prospectus as described in this Current Report on Form 8-K (this "report"). In consideration of the supplemental disclosures, the plaintiff named in the Complaint has agreed that he will consider his claims mooted and will withdraw the motion for expedited discovery, and dismiss the Complaint. Nothing in this report shall be deemed an admission of the legal necessity or materiality under applicable law of any of the supplemental disclosures set forth herein. 3
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SUPPLEMENTAL INFORMATION TO THE JOINT PROXY STATEMENT/PROSPECTUS
The following information supplements the joint proxy statement/prospectus and should be read in conjunction with the disclosures contained in the joint proxy statement/prospectus, which should be read in its entirety. To the extent that information set forth herein differs from or updates information contained in the joint proxy statement/prospectus, the information contained herein supersedes the information contained in the joint proxy statement/prospectus. All page references are to pages in the joint proxy statement/prospectus datedOctober 15, 2021 , and any defined terms used but not defined herein shall have the meanings set forth in the joint proxy statement/prospectus. Without admitting in any way that the disclosures below are material or otherwise required by law, rule or regulation, 1stConstitution and Lakeland make the following amended and supplemental disclosures to the joint proxy statement/prospectus: Background of the Merger
The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby supplemented by deleting the penultimate sentence of the second paragraph on page 55 of the joint proxy statement/prospectus and replacing it with the following:
The 1stConstitution board then discussed, considered, recommended and ultimately directed that 1stConstitution engage in a targeted approach to a pre-determined list of four prospective buyers, which would involve a two-stage bidding process.
The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by deleting the third paragraph on page 55 of the joint proxy statement/prospectus and replacing it with the following:
In earlyMarch 2021 , 1stConstitution entered into non-disclosure agreements with Lakeland and three other institutions (Party A, Party B and Party C) that were seen as the best of the likely transaction partners. Each of the non-disclosure agreements contained "don't ask, don't waive" standstill provisions prohibiting the potential bidder from effecting or seeking to effect certain transactions with respect to 1stConstitution or 1stConstitution securities for a period of three years following the date of the agreement, and from publicly requesting a waiver of such provisions. FromMarch 17 through March 26, 2021 ,Mr. Mangano and a representative ofRaymond James met with executives of each of the potential bidders to discuss 1stConstitution and a potential transaction. InMarch 2021 , each of these institutions was granted access to a virtual data room to conduct preliminary due diligence on 1stConstitution . Each of these potential counterparties was asked to provide a preliminary indication of interest byApril 23, 2021 , to address, among other things, pricing, form of consideration, contingencies, board and shareholder approvals, integration (including with respect to board members, management and employees), and timing. 4
-------------------------------------------------------------------------------- OnMarch 18, 2021 , the 1stConstitution board designated a special committee consisting of Messrs.Charles S. Crow , III,William M. Rue ,Edwin J. Pisani and Mangano to assist with evaluations concerning Project Sierra. As discussed further below, the special committee met with 1stConstitution's advisers and reviewed proposed transaction terms and made recommendations to the 1stConstitution board, which retained the ultimate decision-making responsibility with respect to the proposed transaction. No conflict of interest prompted the formation of the special committee. The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby supplemented by adding the following to the end of the fifth paragraph on page 55 of the joint proxy statement/prospectus: Lakeland's proposal sought to includeMr. Mangano on the post-closing Lakeland board, and Party A's proposal sought to include two existing 1stConstitution directors on the post-closing Party A board, one of whom would beMr. Mangano . Party B's and Party C's proposals did not address directorships. The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby supplemented by adding the following to the end of the second full paragraph on page 56 of the joint proxy statement/prospectus: Lakeland's updated proposal continued to seek to includeMr. Mangano on the board of directors of the combined company, Party A's updated proposal continued to seek to include two existing 1stConstitution directors on the board of directors of the combined company, one of whom would beMr. Mangano , and Party B's updated proposal sought to includeMr. Mangano on the board of directors of the combined company. The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby supplemented by adding the following to the end of the first full paragraph on page 57 of the joint proxy statement/prospectus: Following the commencement of this exclusivity arrangement, 1stConstitution did not engage in any further transaction discussions with Party A, Party B or Party C. The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby revised by deleting the third sentence of the fifth full paragraph on page 57 of the joint proxy statement/prospectus and replacing it with the following: The summary byRaymond James also included a review of pro forma financial impacts of the merger, a Lakeland equivalent dividend comparison, a comparison of value per share with that of theJune 4 proposal from Party A, a contribution analysis, a market overview, including price performance, and current market trading levels. When comparing the annual cash dividend per share received by a 1stConstitution shareholder to the annual cash dividend per share such shareholder would receive as a Lakeland shareholder following a merger in accordance with the Lakeland proposal, the Raymond James summary indicated that it was anticipated that the 1stConstitution shareholder would see an increase of approximately 83%. 5
-------------------------------------------------------------------------------- The disclosure under the heading "Description of the Merger-Background of the Merger" is hereby supplemented by adding the following as a new paragraph after the fourth full paragraph on page 58 of the joint proxy statement/prospectus:
Other than as set forth above,
Opinion of 1stConstitution's Financial Advisor The disclosure under the heading "Description of the Merger-Opinion of 1stConstitution's Financial Advisor-Material Financial Analyses" is hereby revised by deleting the first two paragraphs under the subheading "Discounted Cash Flow Analysis" on page 76 of the joint proxy statement/prospectus and replacing them with the following:
The following table sets forth the unaudited projected free cash flows of 1stConstitution used in the discounted cash flow analysis, which were determined byRaymond James using the 1stConstitution projections provided toRaymond James by 1stConstitution : (in thousands) 1st Constitution For the Three For the Nine Months Months Ended Ending March 31, December 31, For the Years Ending December 31, 2021 2021E
2022E 2023E 2024E 2025E(1)
Free Cash Flows (undiscounted)
(1) Does not include the implied terminal value.
6
-------------------------------------------------------------------------------- The following table sets forth the unaudited projected free cash flows of Lakeland used in the discounted cash flow analysis, which were determined byRaymond James using the Lakeland projections that were prepared by Lakeland, the use of which byRaymond James was approved by 1stConstitution : (in thousands) Lakeland For the Three For the Months Nine Months Ended Ending March 31, December 31, For the Years Ending December 31, 2021 2021E
2022E 2023E 2024E 2025E(1)
Free Cash Flows (undiscounted)
(1) Does not include the implied terminal value.
Raymond James calculated the above unaudited undiscounted projections of free cash flows of 1stConstitution and Lakeland used in the discounted cash flow analysis (the "unaudited cash flow projections") based upon 1stConstitution's and Lakeland's financial projections provided toRaymond James and upon certain other estimates and assumptions made byRaymond James . The unaudited cash flow projections are also based on assumptions set forth in the Raymond James opinion attached as Annex B to this joint proxy statement/prospectus. Neither Lakeland nor 1stConstitution as a matter of course makes public projections as to future performance, revenues, earnings, cash flows or other financial results due to, among other reasons, the inherent uncertainty of the underlying assumptions and estimates. The inclusion of the unaudited cash flow projections should not be regarded as an indication that any of 1stConstitution , Lakeland orRaymond James , their respective representatives or any other recipient of this information considered, or now considers, the unaudited cash flow projections to be necessarily predictive of actual future results, or that they should be construed as financial guidance, and they should not be relied on as such. The unaudited cash flow projections were prepared solely for internal use and are subjective in many respects. While presented with numeric specificity, this information reflects numerous estimates and assumptions made with respect to business, economic, market, competition, regulatory and financial conditions and matters specific to Lakeland's and 1stConstitution's business, all of which are difficult to predict and many of which are beyond each party's control. The unaudited cash flow projections reflect both assumptions as to certain business decisions that are subject to change and, in many respects, subjective judgment, and thus are susceptible to multiple interpretations and periodic revisions based on actual experience and business developments. No assurance can be given that the unaudited cash flow projections and the underlying estimates and assumptions will be realized. In addition, since the unaudited cash flow projections cover multiple years, such projections by their nature become subject to greater uncertainty with each successive year. Actual cash flows may differ materially from the unaudited cash flow projections, and important factors that may affect actual results and cause the unaudited cash flow projections to be inaccurate 7 -------------------------------------------------------------------------------- include, but are not limited to, risks and uncertainties relating to Lakeland's and 1stConstitution's business, industry performance, general business and economic conditions, customer requirements, competition and adverse changes in applicable laws, regulations or rules. For other factors that could cause actual results to differ, please see the sections entitled "Risk Factors" and "Cautionary Statement About Forward-Looking Statements" beginning on pages 23 and 33, respectively, of this joint proxy statement/prospectus. The unaudited cash flow projections were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with accounting principles generally accepted inthe United States ("GAAP"), published guidelines of theSEC or the guidelines established by theAmerican Institute of Certified Public Accountants for preparation and presentation of prospective financial information. In addition, the unaudited cash flow projections require significant estimates and assumptions that make them inherently less comparable to the similarly titled GAAP measures in each party's historical financial statements prepared in accordance with GAAP. Neither Lakeland's nor 1stConstitution's independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the unaudited cash flow projections contained in this document, nor have they expressed any opinion or any other form of assurance on such information or its achievability. Furthermore, the unaudited cash flow projections do not consider any circumstances or events occurring after the date they were prepared. No assurance can be given that, had the unaudited cash flow projections been prepared as of the date of this document, similar estimates and assumptions would be used. Neither Lakeland nor 1stConstitution intends to, and each party disclaims any obligation to, make publicly available any update or other revision to the unaudited cash flow projections to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even if any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions. The unaudited cash flow projections do not consider the possible financial and other effects on either 1stConstitution or Lakeland, as applicable, of the merger and do not attempt to predict or suggest future cash flows or other results of the combined company after giving effect to the merger. The unaudited cash flow projections do not give effect to the merger, including the impact of negotiating or executing the merger agreement, the expenses that may be incurred in connection with completing the merger, the potential synergies that may be achieved by the resulting company as a result of the merger, the effect on either 1stConstitution or Lakeland, as applicable, of any business or strategic decision or action that has been or will be taken as a result of the merger agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the merger agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the merger. The unaudited cash flow projections do not consider the effect on either 1stConstitution or Lakeland, as applicable, of any possible failure of the merger to occur. By inclusion of the unaudited cash flow projections in this document, none of 1stConstitution , Lakeland orRaymond James or their respective affiliates, associates, officers, directors, advisors, agents or other representatives makes any representation to any shareholder of 1stConstitution , 8 -------------------------------------------------------------------------------- shareholder of Lakeland or any other person regarding 1stConstitution's or Lakeland's ultimate performance or cash flows compared to the information contained in the unaudited cash flow projections or that the unaudited cash flow projections will be achieved. The inclusion of the unaudited cash flow projections in this document should not be deemed an admission or representation by 1stConstitution or Lakeland that such projections are viewed as material information, particularly in light of the inherent risks and uncertainties associated with such projections. The unaudited cash flow projections are not being included to influence a shareholder's decision whether to vote to approve the merger, but are being provided solely because they were used byRaymond James in the preparation of its opinion regarding the fairness, from a financial point of view, of the merger to the holders of 1stConstitution common stock. In light of the foregoing, and considering that the special meetings of Lakeland's and 1stConstitution's shareholders will be held many months after the unaudited cash flow projections were prepared, as well as the uncertainties inherent in any projected information, shareholders are cautioned not to place unwarranted reliance on such information, and Lakeland and 1stConstitution urge all shareholders to review Lakeland's and 1stConstitution's financial statements and other information contained or incorporated by reference in this joint proxy statement/prospectus for a description of Lakeland's and 1stConstitution's respective businesses and reported financial results as filed with theSEC . Consistent with the periods included in the projections,Raymond James used estimated calendar year 2025 as the final year for the analysis and applied multiples, ranging from 10.4x to 12.4x for 1stConstitution and 12.8x to 14.8x for Lakeland, to estimated calendar year 2025 earnings in order to derive a range of estimated terminal values for each of 1stConstitution and Lakeland in 2025.Raymond James arrived at this multiple range for Lakeland by using the median of the historical 5-year price to next twelve month EPS multiple for the NASDAQ Bank Index of approximately 13.8x and added 1.0x to get the high of that range and subtracted 1.0x to get the low of that range.Raymond James arrived at this multiple range for 1stConstitution by using the median of the historical 5-year price to next twelve month EPS multiple for theSNL US Bank $1B -$5B (total assets) index of approximately 11.4x and added 1.0x to get the high of that range and subtracted 1.0x to get the low of that range.Raymond James arrived at its discount rate range by using the Modified CAPM (Capital Asset Pricing Model) methodology as presented in the 2020 Duff & Phelps Valuation Handbook to estimate 1stConstitution's discount rate at approximately 12.25% and Lakeland's discount rate at approximately 11.42% and then added 1.0% to get the high of that range and subtracted 1.0% to get the low of that range of estimated discount rates. The disclosure under the heading "Description of the Merger-Opinion of 1stConstitution's Financial Advisor-Material Financial Analyses-Selected Companies Analysis" is hereby revised by deleting the first sentence of the second full paragraph on page 77 of the joint proxy statement/prospectus and replacing it with the following:
9 -------------------------------------------------------------------------------- tangible book value per share atMarch 31, 2021 as shown byS&P Global Market Intelligence ; (ii) core earnings per share for the twelve months endedMarch 31, 2021 , with core being defined as net income before extraordinary items, less net income attributable to non-controlling interest, gain on sale of securities, amortization of intangibles, goodwill, and nonrecurring items, as defined byS&P Global Market Intelligence ; and (iii) consensus forward operating earnings per share for the 2021 fiscal year based onS&P Global Market Intelligence data. The disclosure under the heading "Description of the Merger-Opinion of 1stConstitution's Financial Advisor-Material Financial Analyses-Selected Companies Analysis" is hereby supplemented by adding the following table after the second sentence of the second full paragraph on page 77 of the joint proxy statement/prospectus: Price / Price / Price / TBV LTM Core EPS 2021E EPS Selected Companies for Lakeland First Commonwealth Financial Corporation (FCF) 173 11.5 10.3 Flushing Financial Corporation (FFIC) 104 10.5 8.8 Tompkins Financial Corporation (TMP) 188 12.0 12.8 The Bancorp, Inc. (TBBK) 223 14.4 13.1 Univest Financial Corporation (UVSP) 139 9.4 9.1 Peapack-Gladstone Financial Corporation (PGC) 121 13.1 11.2 Financial Institutions, Inc. (FISI) 124 8.2 8.0 Selected Companies for 1stConstitution BCB Bancorp, Inc. (BCBP) 103 12.6 8.4 Howard Bancorp, Inc. (HBMD) 115 18.6 13.0 Citizens & Northern Corporation (CZNC) 163 16.1 12.3 The Community Financial Corporation (TCFC) 109 10.3 8.8 Evans Bancorp, Inc. (EVBN) 130 10.1 10.0 Shore Bancshares, Inc. (SHBI) 110 12.1 13.9 Unity Bancorp, Inc. (UNTY) 129 9.0 7.4 Penns Woods Bancorp, Inc. (PWOD) 113 11.4 - First United Corporation (FUNC) 100 6.8 6.3 The Bank of Princeton (BPRN) 97 12.2 9.6 Franklin Financial Services Corporation (FRAF) 107 8.9 - FNCB Bancorp, Inc. (FNCB) 94 8.8 - 10
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The disclosure under the heading "Description of the Merger-Opinion of 1st
Raymond James examined valuation multiples, as set forth below, of transaction value compared to the target companies' (i) basic tangible book value per share atMarch 31, 2021 ; (ii) LTM core earnings per share; and (iii) premium to tangible book value divided by core deposits (calculated as total deposits less time deposits greater than$100,000 ), in each case as shown byS&P Global Market Intelligence . TV / LTM Premium Transaction TV / Core to Core Closing Date Value ($M) TBV EPS Deposits Selected National Transactions Columbia Banking System, Inc. (WA) / Bank of Commerce Holdings (CA) 10/1/2021 268.8 166 14.7 7.1 First Foundation Inc. (TX) / TGR Financial, Inc. (FL) Pending 295.1 180 17.2 7.4 United Bankshares, Inc. (WV) / Community Bankers Trust Corporation (VA) Pending 305.3 177 14.2 11.7First Bancorp (NC) /Select Bancorp, Inc. (NC) 10/15/2021 314.3 187 23.8 11.0 Enterprise Financial Services Corp (MO) / First Choice Bancorp (CA) 7/21/2021 403.9 200 13.5 13.1 Nicolet Bankshares, Inc. (WI) / Mackinac Financial Corporation (MI) 9/3/2021 248.3 173 18.3 NAVyStar Credit Union (FL) / Heritage Southeast Bancorporation Inc. (GA) Pending 194.4 183 43.6 7.4 Peoples Bancorp Inc. (OH) /Premier Financial Bancorp, Inc. (WV) 9/17/2021 292.4 141 12.9 NA
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