OAK RIDGE, N.J., July 26, 2019 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $17.5 million and earnings per diluted share ("EPS") of $0.34 for the three months ended June 30, 2019 versus net income of $15.8 million and diluted EPS of $0.33 for the prior year quarter. For the second quarter of 2019, annualized return on average assets was 1.12%, annualized return on average common equity was 10.16% and annualized return on average tangible common equity was 13.21%.

For the six months ended June 30, 2019, the Company reported net income of $33.1 million, a 6% increase compared to $31.1 million for the same period in 2018. For the six months ended June 30, 2019, the Company reported diluted EPS of $0.65, which equaled diluted EPS for the first six months of 2018. Excluding merger-related expenses pertaining to the Company’s January 2019 acquisition of Highlands Bancorp, Inc. ("Highlands") of $2.4 million, tax-effected, net income for the six months ended June 30, 2019 was $35.5 million, or $0.70 per diluted share. For the first six months of 2019, return on average assets was 1.07%, return on average common equity was 9.79%, and return on average tangible common equity was 12.77%. Excluding merger-related expenses these ratios were 1.15%, 10.49% and 13.69%, respectively.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We are pleased to report record quarterly net income of $17.5 million for the second quarter of 2019. Our quarterly results reflect a 10% growth in quarterly net income compared to the same prior year period, partially attributable to the Highlands Bancorp acquisition completed earlier in the year. Our record results were achieved in spite of an increase in our effective tax rate this quarter, due to the recent changes in the New Jersey tax rules. While commercial loan production this year has been very healthy, loan prepayments continue at an accelerated pace keeping loan growth muted. However, we are pleased with the 5% growth of our C&I area this quarter along with 9% growth in our Equipment Finance area."

Net Interest Margin and Income

Net interest margin for the second quarter of 2019 of 3.39% decreased four basis points from the second quarter of 2018 and decreased three basis points from the first quarter of 2019. The decrease in net interest margin was due primarily to an increase in the cost of interest-bearing liabilities. Net interest margin for the first six months of 2019 of 3.41% equaled net interest margin for the same period in 2018.

The yield on interest-earning assets for the second quarter of 2019 was 4.46% compared to 4.12% for the second quarter of 2018 and 4.44% for the first quarter of 2019. The yield on interest-earning assets for the first six months of 2019 was 4.45% compared to 4.07% during the same period in 2018. The increase in yield on interest-earning assets was a result of originating higher yielding loans, additional accretion income on loans resulting from the Highlands acquisition and higher investment securities yields.

The cost of interest-bearing liabilities for the second quarter of 2019 was 1.42% compared to 0.91% for the second quarter of 2018 and 1.34% for the first quarter of 2019. The cost of interest-bearing liabilities for the first six months of 2019 was 1.38% compared to 0.87% during the same period in 2018. The cost of interest-bearing transaction accounts, time deposits and borrowings have increased since 2018 largely driven by competitive pressures and higher market interest rates.

Net interest income increased to $49.2 million for the second quarter of 2019 compared to $43.5 million for the second quarter of 2018, due primarily to the growth of interest-earning assets and increases in loan yields, partially offset by an increase in interest-bearing liabilities and higher interest rates on deposits and borrowings. Net interest income for the first six months of 2019 was $97.8 million, as compared to $85.7 million for the same period in 2018.

Noninterest Income

Noninterest income increased $680,000 to $6.4 million for the second quarter of 2019 from $5.7 million for the second quarter of 2018. Service charges on deposit accounts increased $210,000 compared to the second quarter of 2018 due primarily to deposit growth. Commissions and fees increased $315,000 compared to the second quarter of 2018 due primarily to an increase in commercial loan fees and investment services income, while gains on sales of loans increased $128,000.

For the first six months of 2019, noninterest income totaled $12.1 million compared to $11.0 million for the same period in 2018 as the Company recorded a $453,000 gain on equity securities in the first half of 2019 compared to $55,000 during the same period in 2018. In addition, commissions and fees increased $455,000 compared to the first half of 2018 due primarily to an increase in investment services income, while gains on sales of loans increased $253,000.

Noninterest Expense

Noninterest expense totaled $31.7 million for the second quarter of 2019 compared to $27.6 million for the second quarter of 2018. Noninterest expense in the second quarter of 2019 included $318,000 in merger related expenses. Salary and employee benefit expense increased $2.7 million as a result of additions to our staff from the Highlands merger, normal merit increases and higher benefit costs. In the second quarter of 2019, data processing expense increased $249,000 compared to the second quarter of 2018 due primarily to the Company’s continued expansion and improvement of its digital infrastructure. Other expenses increased $377,000 due primarily to an increase in consulting expense.

For the first six months of 2019, noninterest expense totaled $65.7 million compared to $54.7 million for the same period in 2018. Excluding merger related expenses of $3.2 million, noninterest expense increased $7.8 million compared to the first half of 2018 primarily as a result of additional Highlands expenses from merger date in January 2019 through system conversion date in April, as well as increased salary and benefit expenses and increased data processing expenses.

Income Tax Expense

The effective tax rate for the second quarter of 2019 was 27.0% compared to 21.3% for the first quarter of 2019, as a result of a technical bulletin issued by the New Jersey Division of Taxation during second quarter 2019, which will result in increasing our effective tax rate for 2019 to 24.5%.

Financial Condition

At June 30, 2019, total assets were $6.41 billion, an increase of $601.1 million, including $496.5 million from the Highlands acquisition compared to December 31, 2018. For the six months ended June 30, 2019, total loans grew $465.6 million, including $425.0 million from Highlands, to $4.92 billion and investment securities increased $42.0 million, including $24.5 million from Highlands, to $863.5 million. On the funding side, total deposits increased $461.9 million, including $409.6 million from Highlands, to $5.08 billion, while borrowings increased $32.7 million to $552.7 million. At June 30, 2019, total loans as a percent of total deposits was 96.9%.

Asset Quality

At June 30, 2019, non-performing assets increased to $15.0 million, 0.23% of total assets, compared to $13.0 million, 0.22% of total assets, at December 31, 2018. Non-accrual loans as a percent of total loans equaled 0.29% at June 30, 2019 compared to 0.27% at December 31, 2018. The allowance for loan losses increased to $38.7 million, 0.78% of total loans, at June 30, 2019, compared to $37.7 million, 0.84% of total loans, at December 31, 2018. The Company's allowance for loan losses excluding acquired loans would be 0.92%. In the second quarter of 2019, the Company had net loan recoveries of $683,000, or 0.06% of average loans, annualized, compared to net charge-offs of $532,000, or 0.05% of average loans, annualized, for the same period in 2018. There was no provision for loan losses for second quarter of 2019 compared to provision for loan losses of $1.5 million in the second quarter of 2018.

Capital

At June 30, 2019, stockholders' equity was $698.5 million compared to $623.7 million at December 31, 2018, a 12% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 Leverage Ratio of 9.30% at June 30, 2019. The book value per common share and tangible book value per common share increased 10.0% and 10.2% to $13.85 and $10.66, respectively, compared to $12.59 and $9.67 at June 30, 2018. On July 24, 2019, the Company declared the quarterly cash dividend of $0.125 per share to be paid on August 15, 2019, to shareholders of record as of August 5, 2019.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipates”, “projects”, “intends”, “estimates”, “expects”, “believes”, “plans”, “may”, “will”, “should”, “could”, and other similar expressions are intended to identify such forward-looking statements. The Company cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company’s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company’s lending and leasing activities, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, customers’ acceptance of the Company’s products and services, competition and failure to realize anticipated efficiencies and synergies from the merger of Highlands Bancorp, Inc. into Lakeland Bancorp and the merger of Highlands State Bank into Lakeland Bank. Any statements made by the Company that are not historical facts (including statements regarding anticipated synergies from the Highlands Bancorp and Highlands State Bank mergers and regarding positioning for 2019) should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company’s management uses in its analysis of the Company’s financial results. Specifically, the Company provides measures based on what it believes are its operating earnings on a consistent basis, and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods in question.

The Company also provides measurements and ratios based on tangible equity and tangible assets. These measures are utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, the Company’s management believes that such information is useful to investors.

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, provision for unfunded lending commitments and, where applicable, long-term debt prepayment fees and merger related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes gains and losses from the sale of investment securities and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period.

These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying non-GAAP tables.

About Lakeland

Lakeland Bancorp, Inc. (NASDAQ:LBAI) has approximately $6.41 billion in total assets. Lakeland Bank, a wholly-owned subsidiary of Lakeland Bancorp, Inc., 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; five New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, 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. Visit LakelandBank.com for more information.

Thomas J. Shara
President & CEO

Thomas F. Splaine
EVP & CFO
973-697-2000

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended June 30,								Six months ended June 30,
(Dollars in thousands, except per share amounts)	2019				2018				2019				2018
INCOME STATEMENT
Net interest income	$	49,198			$	43,493			$	97,804			$	85,729
Provision for loan losses	—				(1,492		)		(508		)		(2,776		)
Gains on sales of loans	428				300				799				546
Gain on equity securities	100				73				453				55
Other noninterest income	5,861				5,336				10,860				10,442
Merger related expenses	(318		)		—				(3,178		)		—
Other noninterest expense	(31,368		)		(27,574		)		(62,492		)		(54,711		)
Pretax income	23,901				20,136				43,738				39,285
Provision for income taxes	(6,444		)		(4,298		)		(10,655		)		(8,192		)
Net income	$	17,457			$	15,838			$	33,083			$	31,093
Basic earnings per common share	$	0.34			$	0.33			$	0.65			$	0.65
Diluted earnings per common share	$	0.34			$	0.33			$	0.65			$	0.65
Dividends paid per common share	$	0.125			$	0.115			$	0.240			$	0.215
Weighted average shares - basic	50,509				47,600				50,393				47,552
Weighted average shares - diluted	50,649				47,770				50,544				47,753
SELECTED OPERATING RATIOS
Annualized return on average assets	1.12		%		1.17		%		1.07		%		1.16		%
Annualized return on average common equity	10.16		%		10.71		%		9.79		%		10.65		%
Annualized return on average tangible common equity (1)	13.21		%		13.97		%		12.77		%		13.94		%
Annualized yield on interest-earning assets	4.46		%		4.12		%		4.45		%		4.07		%
Annualized cost of interest-bearing liabilities	1.42		%		0.91		%		1.38		%		0.87		%
Annualized net interest spread	3.04		%		3.21		%		3.07		%		3.20		%
Annualized net interest margin	3.39		%		3.43		%		3.41		%		3.41		%
Efficiency ratio (1)	55.78		%		55.60		%		56.20		%		56.08		%
Stockholders' equity to total assets									10.90		%		10.80		%
Book value per common share									$	13.85			$	12.59
Tangible book value per common share (1)									$	10.66			$	9.67
Tangible common equity to tangible assets (1)									8.61		%		8.51		%
ASSET QUALITY RATIOS									6/30/2019				6/30/2018
Ratio of allowance for loan losses to total loans									0.78		%		0.85		%
Non-performing loans to total loans									0.29		%		0.33		%
Non-performing assets to total assets									0.23		%		0.30		%
Annualized net charge-offs (recoveries) to average loans									(0.02		)%		0.08		%
(1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
SELECTED BALANCE SHEET DATA AT PERIOD-END									6/30/2019				6/30/2018
Loans									$	4,922,373			$	4,281,302
Allowance for loan losses									38,662				36,604
Investment securities									863,474				798,096
Total assets									6,407,195				5,534,488
Total deposits									5,082,598				4,400,019
Short-term borrowings									258,703				197,870
Other borrowings									294,022				301,339
Stockholders' equity									698,463				597,864
SELECTED AVERAGE BALANCE SHEET DATA	For the Three Months Ended								For the Six Months Ended
	6/30/2019				6/30/2018				6/30/2019				6/30/2018
Loans	$	4,917,109			$	4,247,443			$	4,894,447			$	4,220,972
Investment securities	854,608				811,361				856,318				816,182
Interest-earning assets	5,836,333				5,094,048				5,804,769				5,078,425
Total assets	6,256,523				5,437,540				6,220,076				5,423,552
Noninterest-bearing demand deposits	1,083,745				969,965				1,069,979				967,246
Savings deposits	502,340				496,630				507,775				492,173
Interest-bearing transaction accounts	2,562,365				2,195,553				2,558,636				2,217,676
Time deposits	961,212				792,270				925,837				776,929
Total deposits	5,109,662				4,454,418				5,062,227				4,454,024
Short-term borrowings	110,941				73,305				119,907				64,271
Other borrowings	283,177				283,206				294,788				283,425
Total interest-bearing liabilities	4,420,035				3,840,964				4,406,943				3,834,474
Stockholders' equity	689,324				593,388				681,309				588,571

Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
		Three Months Ended June 30,							Six Months Ended June 30,
(Dollars in thousands, except per share amounts)		2019			2018				2019			2018
INTEREST INCOME
Loans and net deferred fees and costs		$	59,119		$	47,659			$	116,761		$	93,203
Federal funds sold and interest-bearing deposits with banks		348			145				602			311
Taxable investment securities and other		4,985			4,027				9,858			8,019
Tax exempt investment securities		396			429				804			872
	TOTAL INTEREST INCOME	64,848			52,260				128,025			102,405
INTEREST EXPENSE
Deposits		12,762			6,501				24,259			12,256
Federal funds purchased and securities sold under agreements to repurchase		494			233				1,102			367
Other borrowings		2,394			2,033				4,860			4,053
	TOTAL INTEREST EXPENSE	15,650			8,767				30,221			16,676
NET INTEREST INCOME		49,198			43,493				97,804			85,729
Provision for loan losses		—			1,492				508			2,776
	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	49,198			42,001				97,296			82,953
NONINTEREST INCOME
Service charges on deposit accounts		2,755			2,545				5,328			5,156
Commissions and fees		1,725			1,410				3,137			2,682
Income on bank owned life insurance		690			711				1,373			1,430
Gain on equity securities		100			73				453			55
Gains on sales of loans		428			300				799			546
Other income		691			670				1,022			1,174
	TOTAL NONINTEREST INCOME	6,389			5,709				12,112			11,043
NONINTEREST EXPENSE
Salaries and employee benefit expense		19,379			16,708				38,610			33,569
Net occupancy expense		2,629			2,603				5,583			5,341
Furniture and equipment expense		2,165			2,011				4,281			4,217
FDIC insurance expense		401			400				851			825
Stationary, supplies and postage expense		401			443				848			859
Marketing expense		538			456				1,007			817
Data processing expense		1,225			976				2,552			1,442
Telecommunications expense		478			462				971			883
ATM and debit card expense		583			558				1,185			1,068
Core deposit intangible amortization		301			153				605			310
Other real estate owned and other repossessed assets expense		108			21				194			67
Merger related expenses		318			—				3,178			—
Other expenses		3,160			2,783				5,805			5,313
	TOTAL NONINTEREST EXPENSE	31,686			27,574				65,670			54,711
INCOME BEFORE PROVISION FOR INCOME TAXES		23,901			20,136				43,738			39,285
Provision for income taxes		6,444			4,298				10,655			8,192
NET INCOME		$	17,457		$	15,838			$	33,083		$	31,093
EARNINGS PER COMMON SHARE:
	Basic	$	0.34		$	0.33			$	0.65		$	0.65
	Diluted	$	0.34		$	0.33			$	0.65		$	0.65
DIVIDENDS PAID PER COMMON SHARE		$	0.125		$	0.115			$	0.240		$	0.215

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)	June 30, 2019				December 31, 2018
	(Unaudited)
ASSETS
Cash	$	223,684			$	205,199
Interest-bearing deposits due from banks	23,215				3,400
Total cash and cash equivalents	246,899				208,599
Investment securities available for sale, at fair value	664,122				638,618
Equity securities, at fair value	15,382				15,921
Investment securities held to maturity; fair value of $161,028 at June 30, 2019 and $150,932 at December 31, 2018	160,328				153,646
Federal Home Loan Bank and other membership stocks, at cost	23,642				13,301
Loans held for sale	1,391				1,113
Loans, net of deferred fees	4,922,373				4,456,733
Allowance for loan losses	(38,662		)		(37,688		)
Net loans and leases	4,883,711				4,419,045
Premises and equipment, net	50,106				49,175
Operating lease right-of-use assets	18,598				—
Accrued interest receivable	17,365				16,114
Goodwill	155,830				136,433
Other identifiable intangible assets	4,891				1,768
Bank owned life insurance	111,133				110,052
Other assets	53,797				42,308
TOTAL ASSETS	$	6,407,195			$	5,806,093
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	1,089,474			$	950,218
Savings and interest-bearing transaction accounts	3,007,784				2,913,414
Time deposits $250 thousand and under	781,126				589,737
Time deposits over $250 thousand	204,214				167,301
Total deposits	5,082,598				4,620,670
Federal funds purchased and securities sold under agreements to repurchase	258,703				233,905
Other borrowings	175,820				181,118
Subordinated debentures	118,202				105,027
Operating lease liabilities	20,175				—
Other liabilities	53,234				41,634
TOTAL LIABILITIES	5,708,732				5,182,354
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 100,000,000 shares at June 30, 2019 and at December 31, 2018; issued shares 50,441,279 at June 30, 2019 and 47,486,250 shares at December 31, 2018	558,768				514,703
Retained earnings	137,887				116,874
Accumulated other comprehensive income (loss)	1,808				(7,838		)
TOTAL STOCKHOLDERS' EQUITY	698,463				623,739
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,407,195			$	5,806,093

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,			March 31,			Dec 31,			Sept 30,			June 30,
(Dollars in thousands, except per share data)	2019			2019			2018			2018			2018
INCOME STATEMENT
Net interest income	$	49,198		$	48,606		$	44,206		$	43,624		$	43,493
Provision for loan losses	—			(508		)	(591		)	(1,046		)	(1,492		)
Gains on sales of loans	428			371			299			484			300
Gain (loss) on equity securities	100			353			(199		)	(439		)	73
Other noninterest income	5,861			4,999			5,528			5,594			5,336
Merger related expenses	(318		)	(2,860		)	(464		)	—			—
Other noninterest expense	(31,368		)	(31,124		)	(28,199		)	(27,793		)	(27,574		)
Pretax income	23,901			19,837			20,580			20,424			20,136
Provision for income taxes	(6,444		)	(4,211		)	(5,030		)	(3,666		)	(4,298		)
Net income	$	17,457		$	15,626		$	15,550		$	16,758		$	15,838
Basic earnings per common share	$	0.34		$	0.31		$	0.32		$	0.35		$	0.33
Diluted earnings per common share	$	0.34		$	0.31		$	0.32		$	0.35		$	0.33
Dividends paid per common share	$	0.125		$	0.115		$	0.115		$	0.115		$	0.115
Dividends paid	$	6,357		$	5,838		$	5,510		$	5,510		$	5,509
Weighted average shares - basic	50,509			50,275			47,605			47,605			47,600
Weighted average shares - diluted	50,649			50,442			47,780			47,788			47,770
SELECTED OPERATING RATIOS
Annualized return on average assets	1.12		%	1.02		%	1.08		%	1.19		%	1.17		%
Annualized return on average common equity	10.16		%	9.41		%	10.05		%	11.02		%	10.71		%
Annualized return on average tangible common equity (1)	13.21		%	12.32		%	12.98		%	14.31		%	13.97		%
Annualized net interest margin	3.39		%	3.42		%	3.29		%	3.32		%	3.43		%
Efficiency ratio (1)	55.78		%	56.62		%	56.18		%	56.00		%	55.60		%
Common stockholders' equity to total assets	10.90		%	10.70		%	10.74		%	10.80		%	10.80		%
Tangible common equity to tangible assets (1)	8.61		%	8.41		%	8.57		%	8.55		%	8.51		%
Tier 1 risk-based ratio	11.10		%	10.98		%	11.26		%	11.21		%	11.16		%
Total risk-based ratio	13.59		%	13.48		%	13.71		%	13.69		%	13.67		%
Tier 1 leverage ratio	9.30		%	9.23		%	9.39		%	9.42		%	9.43		%
Common equity tier 1 capital ratio	10.52		%	10.38		%	10.62		%	10.56		%	10.49		%
Book value per common share	$	13.85		$	13.51		$	13.14		$	12.79		$	12.59
Tangible book value per common share (1)	$	10.66		$	10.35		$	10.22		$	9.88		$	9.67
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,			March 31,			Dec 31,			Sept 30,			June 30,
(Dollars in thousands)	2019			2019			2018			2018			2018
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans	$	4,925,300		$	4,924,671		$	4,460,447		$	4,332,238		$	4,281,302
Allowance for loan losses	38,662			37,979			37,688			37,293			36,604
Investment securities	863,474			850,729			821,486			801,315			798,096
Total assets	6,407,195			6,365,063			5,806,093			5,627,057			5,534,488
Total deposits	5,082,598			5,064,584			4,620,670			4,642,443			4,400,019
Short-term borrowings	258,703			261,266			233,905			47,398			197,870
Other borrowings	294,022			293,976			286,145			289,635			301,339
Stockholders' equity	698,463			681,343			623,739			607,555			597,864
LOANS
Commercial, real estate	$	3,737,447		$	3,769,545		$	3,377,324		$	3,281,946		$	3,222,461
Commercial, industrial and other	407,776			389,230			336,735			334,241			339,974
Equipment financing	99,351			90,791			87,925			82,881			82,006
Residential mortgages	336,810			335,290			329,854			315,135			321,717
Consumer and home equity	343,916			339,815			328,609			318,035			315,144
Total loans	$	4,925,300		$	4,924,671		$	4,460,447		$	4,332,238		$	4,281,302
DEPOSITS
Noninterest-bearing	$	1,089,474		$	1,071,890		$	950,218		$	996,296		$	967,911
Savings and interest-bearing transaction accounts	3,007,784			3,046,322			2,913,414			2,855,318			2,625,325
Time deposits	985,340			946,372			757,038			790,829			806,783
Total deposits	$	5,082,598		$	5,064,584		$	4,620,670		$	4,642,443		$	4,400,019
Total loans to total deposits ratio	96.9		%	97.2		%	96.5		%	93.3		%	97.3		%
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	4,917,109		$	4,871,534		$	4,393,382		$	4,296,244		$	4,247,443
Investment securities	854,608			858,046			823,193			811,217			811,361
Interest-earning assets	5,836,333			5,772,853			5,346,934			5,221,612			5,094,048
Total assets	6,256,523			6,183,224			5,694,827			5,570,286			5,437,540
Noninterest-bearing demand deposits	1,083,745			1,056,060			1,003,508			999,217			969,965
Savings deposits	502,340			513,270			483,606			491,095			496,630
Interest-bearing transaction accounts	2,562,365			2,554,865			2,446,325			2,319,863			2,195,553
Time deposits	961,212			890,070			769,129			789,691			792,270
Total deposits	5,109,662			5,014,265			4,702,568			4,599,866			4,454,418
Short-term borrowings	110,941			128,972			50,196			36,702			73,305
Other borrowings	283,177			306,529			288,126			291,477			283,206
Total interest-bearing liabilities	4,420,035			4,393,706			4,037,382			3,928,828			3,840,964
Stockholders' equity	689,324			673,205			613,583			603,059			593,388

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,			March 31,			Dec 31,			Sept 30,			June 30,
(Dollars in thousands)	2019			2019			2018			2018			2018
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans	4.82		%	4.80		%	4.58		%	4.54		%	4.50		%
Taxable investment securities and other	2.55		%	2.49		%	2.44		%	2.26		%	2.21		%
Tax-exempt securities	2.74		%	2.74		%	2.74		%	2.71		%	2.66		%
Federal funds sold and interest-bearing cash accounts	2.15		%	2.35		%	2.19		%	1.87		%	1.65		%
Total interest-earning assets	4.46		%	4.44		%	4.20		%	4.14		%	4.12		%
LIABILITIES
Savings accounts	0.06		%	0.07		%	0.06		%	0.06		%	0.06		%
Interest-bearing transaction accounts	1.25		%	1.18		%	1.04		%	0.89		%	0.69		%
Time deposits	1.96		%	1.79		%	1.79		%	1.61		%	1.34		%
Borrowings	2.90		%	2.82		%	2.65		%	2.66		%	2.51		%
Total interest-bearing liabilities	1.42		%	1.34		%	1.21		%	1.08		%	0.91		%
Net interest spread (taxable equivalent basis)	3.04		%	3.10		%	2.99		%	3.06		%	3.21		%
Annualized net interest margin (taxable equivalent basis)	3.39		%	3.42		%	3.29		%	3.32		%	3.43		%
Annualized cost of deposits	1.00		%	0.93		%	0.84		%	0.73		%	0.59		%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	37,979		$	37,688		$	37,293		$	36,604		$	35,644
Provision for loan losses	—			508			591			1,046			1,492
Charge-offs	(413		)	(516		)	(381		)	(753		)	(963		)
Recoveries	1,096			299			185			396			431
Balance at end of period	$	38,662		$	37,979		$	37,688		$	37,293		$	36,604
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial, real estate	$	(85	)	$	67		$	132		$	(115	)	$	181
Commercial, industrial and other	(909		)	50			(44		)	(26		)	213
Equipment financing	293			85			28			366			69
Residential mortgages	(2		)	41			(2		)	36			(3		)
Consumer and home equity	20			(26		)	82			96			72
Net (recoveries) charge-offs	$	(683	)	$	217		$	196		$	357		$	532
NON-PERFORMING ASSETS
Commercial, real estate	$	10,205		$	9,817		$	7,192		$	5,737		$	7,353
Commercial, industrial and other	662			2,202			1,019			1,189			1,171
Equipment financing	136			383			501			441			834
Residential mortgages	1,548			1,740			1,986			2,347			2,992
Consumer and home equity	1,873			1,581			1,432			1,410			1,917
Total non-accrual loans	14,424			15,723			12,130			11,124			14,267
Property acquired through foreclosure or repossession	532			715			830			2,754			2,184
Total non-performing assets	$	14,956		$	16,438		$	12,960		$	13,878		$	16,451
Loans past due 90 days or more and still accruing	$	—		$	78		$	—		$	16		$	—
Loans restructured and still accruing	$	5,139		$	6,352		$	9,293		$	9,030		$	7,926
Ratio of allowance for loan losses to total loans	0.78		%	0.77		%	0.84		%	0.86		%	0.85		%
Total non-accrual loans to total loans	0.29		%	0.32		%	0.27		%	0.26		%	0.33		%
Total non-performing assets to total assets	0.23		%	0.26		%	0.22		%	0.25		%	0.30		%
Annualized net charge-offs (recoveries) to average loans	(0.06		)%	0.02		%	0.02		%	0.03		%	0.05		%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	At or for the Quarter Ended
	June 30,			March 31,			Dec 31,			Sept 30,			June 30,
(Dollars in thousands, except per share amounts)	2019			2019			2018			2018			2018
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP	$	698,463		$	681,343		$	623,739		$	607,555		$	597,864
Less:  Goodwill	155,830			154,153			136,433			136,433			136,433
Less:  Other identifiable intangible assets	4,891			5,192			1,768			1,910			2,052
Total tangible common stockholders' equity at end of period - Non-GAAP	$	537,742		$	521,998		$	485,538		$	469,212		$	459,379
Shares outstanding at end of period	50,441			50,436			47,486			47,485			47,484
Book value per share - GAAP	$	13.85		$	13.51		$	13.14		$	12.79		$	12.59
Tangible book value per share - Non-GAAP	$	10.66		$	10.35		$	10.22		$	9.88		$	9.67
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP	$	537,742		$	521,998		$	485,538		$	469,212		$	459,379
Total assets at end of period - GAAP	$	6,407,195		$	6,365,063		$	5,806,093		$	5,627,057		$	5,534,488
Less:  Goodwill	155,830			154,153			136,433			136,433			136,433
Less:  Other identifiable intangible assets	4,891			5,192			1,768			1,910			2,052
Total tangible assets at end of period - Non-GAAP	$	6,246,474		$	6,205,718		$	5,667,892		$	5,488,714		$	5,396,003
Common equity to assets - GAAP	10.90		%	10.70		%	10.74		%	10.80		%	10.80		%
Tangible common equity to tangible assets - Non-GAAP	8.61		%	8.41		%	8.57		%	8.55		%	8.51		%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP	$	17,457		$	15,626		$	15,550		$	16,758		$	15,838
Total average common stockholders' equity - GAAP	$	689,324		$	673,205		$	613,583		$	603,059		$	593,388
Less:  Average goodwill	154,171			153,562			136,433			136,433			136,433
Less:  Average other identifiable intangible assets	5,058			5,254			1,844			1,982			2,134
Total average tangible common stockholders' equity - Non-GAAP	$	530,095		$	514,389		$	475,306		$	464,644		$	454,821
Return on average common stockholders' equity - GAAP	10.16		%	9.41		%	10.05		%	11.02		%	10.71		%
Return on average tangible common stockholders' equity - Non-GAAP	13.21		%	12.32		%	12.98		%	14.31		%	13.97		%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	31,686		$	33,984		$	28,663		$	27,793		$	27,574
Amortization of core deposit intangibles	(301		)	(304		)	(142		)	(142		)	(153		)
Merger related expenses	(318		)	(2,860		)	(464		)	—			—
Noninterest expense, as adjusted	$	31,067		$	30,820		$	28,057		$	27,651		$	27,421
Net interest income	$	49,198		$	48,606		$	44,206		$	43,624		$	43,493
Total noninterest income	6,389			5,723			5,628			5,639			5,709
Total revenue	55,587			54,329			49,834			49,263			49,202
Tax-equivalent adjustment on municipal securities	105			108			109			113			114
Total revenue, as adjusted	$	55,692		$	54,437		$	49,943		$	49,376		$	49,316
Efficiency ratio - Non-GAAP	55.78		%	56.62		%	56.18		%	56.00		%	55.60		%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	For the Six Months Ended June 30,
(Dollars in thousands)	2019			2018
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP	$	33,083		$	31,093
Total average common stockholders' equity - GAAP	$	681,309		$	588,571
Less:  Average goodwill	$	153,868		$	136,433
Less:  Average other identifiable intangible assets	$	5,155		$	2,217
Total average tangible common stockholders' equity - Non-GAAP	$	522,286		$	449,921
Return on average common stockholders' equity - GAAP	9.79		%	10.65		%
Return on average tangible common stockholders' equity - Non-GAAP	12.77		%	13.94		%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	65,670		$	54,711
Amortization of core deposit intangibles	$	(605	)	$	(310	)
Merger related expenses	$	(3,178	)	$	—
Noninterest expense, as adjusted	$	61,887		$	54,401
Net interest income	$	97,804		$	85,729
Noninterest income	$	12,112		$	11,043
Total revenue	$	109,916		$	96,772
Tax-equivalent adjustment on municipal securities	$	213		$	232
Total revenue, as adjusted	$	110,129		$	97,004
Efficiency ratio - Non-GAAP	56.20		%	56.08		%

Lakeland Bancorp, Inc.
Supplemental Information - Reconciliation of Net Income
(Unaudited)
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2019			2018			2019			2018
Net income - GAAP	$	17,457		$	15,838		$	33,083		$	31,093
NON-ROUTINE TRANSACTIONS, NET OF TAX
Tax deductible merger related expenses	222			—			1,878			—
Non-tax deductible merger related expenses	—			—			491			—
Net effect of non-routine transactions	222			—			2,369			—
Net income available to common shareholders excluding non-routine transactions	$	17,679		$	15,838		$	35,452		$	31,093
Less:  Earnings allocated to participating securities	(147		)	(146		)	(287		)	(287		)
Net Income,  excluding non-routine transactions	$	17,532		$	15,692		$	35,165		$	30,806
Weighted average shares - Basic	50,509			47,600			50,393			$	47,552
Weighted average shares - Diluted	50,649			47,770			50,544			$	47,753
Basic earnings per share - GAAP	$	0.34		$	0.33		$	0.65		$	0.65
Diluted earnings per share - GAAP	$	0.34		$	0.33		$	0.65		$	0.65
Basic earnings per share, adjusted for non-routine transactions	$	0.35		$	0.33		$	0.70		$	0.65
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)	$	0.35		$	0.33		$	0.70		$	0.65
Return on average assets - GAAP	1.12		%	1.17		%	1.07		%	1.16		%
Return on average assets, adjusted for non-routine transactions	1.13		%	1.17		%	1.15		%	1.16		%
Return on average common stockholders' equity - GAAP	10.16		%	10.71		%	9.79		%	10.65		%
Return on average common stockholders' equity, adjusted for non-routine transactions	10.29		%	10.71		%	10.49		%	10.65		%
Return on average tangible common stockholders' equity - Non-GAAP	13.21		%	13.97		%	12.77		%	13.94		%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions	13.38		%	13.97		%	13.69		%	13.94		%

 

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