OAK RIDGE, N.J., Oct. 24, 2019 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $18.9 million and earnings per diluted share ("EPS") of $0.37 for the three months ended September 30, 2019 compared to net income of $16.8 million and diluted EPS of $0.35 for the third quarter of 2018. For the third quarter of 2019, annualized return on average assets was 1.17%, annualized return on average common equity was 10.61% and annualized return on average tangible common equity was 13.74%.

For the nine months ended September 30, 2019, the Company reported net income of $52.0 million, a 9% increase compared to $47.9 million for the same period in 2018. For the nine months ended 2019, the Company reported diluted EPS of $1.02, compared to diluted EPS of $0.99 for the first nine 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 nine months ended September 30, 2019 was $54.3 million, or $1.06 per diluted share. For the first nine months of 2019, annualized return on average assets was 1.11%, annualized return on average common equity was 10.07%, and annualized return on average tangible common equity was 13.11%. Excluding merger-related expenses these ratios were 1.16%, 10.53% and 13.70%, respectively.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We are pleased once again to report record quarterly earnings in spite of a volatile interest rate environment. Earlier today, the Company announced a new share repurchase program of 5% of the Company's outstanding common stock. The share repurchase program allows us the flexibility to utilize another effective capital management tool."

Net Interest Margin and Net Interest Income

Net interest margin for the third quarter of 2019 of 3.25% decreased seven basis points from the third quarter of 2018 and decreased fourteen basis points from the second quarter of 2019. The decrease in net interest margin compared to the third quarter of 2018 was due primarily to an increase in the cost of interest bearing liabilities, while the decrease compared to the second quarter of 2019 was due primarily to a decrease in the yield on earning assets. Net interest margin for the first nine months of 2019 of 3.35% compared to 3.38% for the same period in 2018.

The yield on interest-earning assets for the third quarter of 2019 was 4.32% compared to 4.14% for the third quarter of 2018 and 4.46% for the second quarter of 2019. The yield on interest-earning assets for the first nine months of 2019 was 4.41% compared to 4.09% during the same period in 2018. The current quarter and year-to-date increase in yield on interest-earning assets, when compared to the prior year periods, was a result of originating higher yielding loans, additional accretion income on loans resulting from the Highlands acquisition and higher investment securities yields. The decrease in yield on interest-earning assets compared to the second quarter of 2019 was due primarily to a reduction in yield on loans due to decreases in prime rate in the third quarter, as well as an increase in lower yielding average interest-earning cash.

The cost of interest-bearing liabilities for the third quarter of 2019 was 1.41% compared to 1.08% for the third quarter of 2018 and 1.42% for the second quarter of 2019. The cost of interest-bearing liabilities for the first nine months of 2019 was 1.39% compared to 0.94% 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 $48.7 million for the third quarter of 2019 compared to $43.6 million for the third quarter of 2018, due primarily to the growth of interest-earning assets and increases in loan yields, partially offset by an increase in average interest-bearing liabilities and higher interest rates on interest-bearing liabilities. Net interest income for the first nine months of 2019 was $146.5 million, as compared to $129.4 million for the same period in 2018.

Noninterest Income

Noninterest income increased $1.1 million to $6.7 million for the third quarter of 2019 from $5.6 million for the third quarter of 2018. Service charges on deposit accounts increased $237,000 compared to the third quarter of 2018 due primarily to deposit growth. Commissions and fees increased $131,000 compared to the third quarter of 2018 due primarily to an increase in investment services income, while gains on equity securities of $72,000 compared favorably to losses of $439,000 recorded during the third quarter of 2018. Income on bank owned life insurance decreased $436,000 due primarily to a death benefit received during the third quarter of 2018. Other income increased $616,000 compared to the third quarter of 2018 due primarily to gains resulting from payoffs of purchased credit impaired loans and an increase in swap income during the third quarter of 2019, partially offset by $315,000 in branch write-downs.

For the first nine months of 2019, noninterest income totaled $18.8 million compared to $16.7 million for the same period in 2018 as the Company recorded a $525,000 gain on equity securities in the first nine months of 2019 compared to losses of $384,000 during the same period in 2018. In addition, commissions and fees increased $586,000 compared to the first nine months of 2018 due primarily to an increase in investment services income, while service charges on deposit accounts increased $409,000 due primarily to deposit growth. Other income increased $464,000 compared to the first nine months of 2018 due primarily to the same reasons discussed above in the quarterly comparison.

Noninterest Expense

Noninterest expense totaled $29.6 million for the third quarter of 2019 and increased $1.8 million compared to the third quarter of 2018 due primarily to salary and employee benefit expense which increased $1.7 million as a result of staff additions from the Highlands merger, normal merit increases and higher benefit costs. Additionally, net occupancy expense increased $451,000 compared to the third quarter of 2018 due primarily to the acceleration of rental expense on a leased branch slated to close totaling $295,000. In the third quarter of 2019, $420,000 in previously recorded FDIC expense was reversed due to assessment credits from the FDIC and no third quarter 2019 accrual was made, resulting from the insurance fund reserve ratio exceeding the required level. The FDIC expense reversal resulted in a favorable variance of $820,000 compared to the same period in 2018.

For the first nine months of 2019, noninterest expense totaled $95.2 million compared to $82.5 million for the same period in 2018. Excluding merger-related expenses of $3.2 million, noninterest expense increased $9.6 million compared to the first nine months of 2018 primarily as a result of additional salary and benefit expenses , as well as Highlands expenses from the merger date in January 2019 through the system conversion date in April and increased data processing expenses. Net occupancy increased $693,000 during the first nine months of 2019 compared to the same period in 2018 due primarily to the addition of Highlands branches as well as the acceleration of rental expense mentioned above. FDIC insurance expense decreased $794,000 compared to the first nine months of 2018 due to the credits discussed above.

Income Tax Expense

The effective tax rate for the third quarter of 2019 was 25.3% compared to 17.9% for the third quarter of 2018, as a result of a technical bulletin issued by the New Jersey Division of Taxation during the second quarter 2019, which resulted in increasing our estimated effective tax rate for 2019 to 24.7%.

Financial Condition

At September 30, 2019, total assets were $6.49 billion, an increase of $686.4 million, including $496.5 million from the Highlands acquisition compared to December 31, 2018. For the nine months ended September 30, 2019, total loans grew $466.7 million, including $425.0 million from Highlands, to $4.92 billion and investment securities increased $83.6 million, including $24.5 million from Highlands, to $905.1 million. On the funding side, total deposits increased $589.9 million, including $409.6 million from Highlands, to $5.21 billion, while borrowings decreased $36.7 million to $483.4 million. At September 30, 2019, total loans as a percent of total deposits was 94.5%.

Asset Quality

At September 30, 2019, non-performing assets increased to $16.9 million, 0.26% 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 increased to 0.32% at September 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 September 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 0.91%. In the third quarter of 2019, the Company had net charge-offs of $543,000, or 0.04%, of average loans, annualized, compared to $357,000, or 0.03%, for the same period in 2018. Provision for loan losses for the third quarter of 2019 was $536,000 compared to provision for loan losses of $1.0 million in the third quarter of 2018.

Capital

At September 30, 2019, stockholders' equity was $713.2 million compared to $623.7 million at December 31, 2018, a 14% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 9.34% at September 30, 2019. The book value per common share and tangible book value per common share increased 10% and 11% to $14.13 and $10.94, respectively, compared to $12.79 and $9.88 at September 30, 2018. On October 22, 2019, the Company declared a quarterly cash dividend of $0.125 per share to be paid on November 15, 2019, to shareholders of record as of November 4, 2019.

Under the Share Repurchase Program announced today, the Company may repurchase up to 2,524,458 shares of its common stock, or approximately 5% of its outstanding shares of common stock at September 30, 2019. Repurchases may be made from time to time through a combination of open market and privately negotiated repurchases. The specific timing, price and quantity of repurchases will be at the discretion of the Company and will depend on a variety of factors, including general market conditions, the trading price of the common stock, legal and contractual requirements and the Company's financial performance. The repurchase program does not obligate the Company to repurchase any shares.

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 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 $6.49 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 September 30,								Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)	2019				2018				2019				2018
INCOME STATEMENT
Net interest income	$	48,682			$	43,624			$	146,486			$	129,353
Provision for loan losses	(536		)		(1,046		)		(1,044		)		(3,822		)
Gains on sales of loans	486				484				1,285				1,030
Gain on equity securities	72				(439		)		525				(384		)
Other noninterest income	6,142				5,594				17,002				16,036
Merger-related expenses	—				—				(3,178		)		—
Other noninterest expense	(29,563		)		(27,793		)		(92,055		)		(82,504		)
Pretax income	25,283				20,424				69,021				59,709
Provision for income taxes	(6,409		)		(3,666		)		(17,064		)		(11,858		)
Net income	$	18,874			$	16,758			$	51,957			$	47,851
Basic earnings per common share	$	0.37			$	0.35			$	1.02			$	1.00
Diluted earnings per common share	$	0.37			$	0.35			$	1.02			$	0.99
Dividends paid per common share	$	0.125			$	0.115			$	0.365			$	0.330
Weighted average shares - basic	50,553				47,605				50,447				47,570
Weighted average shares - diluted	50,694				47,788				50,595				47,764
SELECTED OPERATING RATIOS
Annualized return on average assets	1.17		%		1.19		%		1.11		%		1.17		%
Annualized return on average common equity	10.61		%		11.02		%		10.07		%		10.78		%
Annualized return on average tangible common equity (1)	13.74		%		14.31		%		13.11		%		14.06		%
Annualized yield on interest-earning assets	4.32		%		4.14		%		4.41		%		4.09		%
Annualized cost of interest-bearing liabilities	1.41		%		1.08		%		1.39		%		0.94		%
Annualized net interest spread	2.91		%		3.06		%		3.02		%		3.15		%
Annualized net interest margin	3.25		%		3.32		%		3.35		%		3.38		%
Efficiency ratio (1)	52.77		%		56.00		%		55.05		%		56.05		%
Stockholders' equity to total assets									10.99		%		10.80		%
Book value per common share									$	14.13			$	12.79
Tangible book value per common share (1)									$	10.94			$	9.88
Tangible common equity to tangible assets (1)									8.72		%		8.55		%
ASSET QUALITY RATIOS									September 30, 2019				September 30, 2018
Ratio of allowance for loan losses to total loans									0.78		%		0.86		%
Non-performing loans to total loans									0.32		%		0.26		%
Non-performing assets to total assets									0.26		%		0.25		%
Annualized net charge-offs (recoveries) to average loans									—		%		0.06		%
(1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands)									September 30, 2019				September 30, 2018
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans									$	4,923,414			$	4,332,238
Allowance for loan losses									38,655				37,293
Investment securities									905,078				801,315
Total assets									6,492,474				5,627,057
Total deposits									5,210,619				4,642,443
Short-term borrowings									199,326				47,398
Other borrowings									284,029				289,635
Stockholders' equity									713,204				607,555
	Three Months Ended September 30,								Nine Months Ended September 30,
	2019				2018				2019				2018
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	4,937,488			$	4,296,244			$	4,908,952			$	4,246,338
Investment securities	869,734				811,217				860,840				814,508
Interest-earning assets	5,947,645				5,221,612				5,852,919				5,126,677
Total assets	6,379,675				5,570,286				6,273,860				5,473,001
Noninterest-bearing demand deposits	1,100,413				999,217				1,080,235				978,020
Savings deposits	494,377				491,095				503,260				491,810
Interest-bearing transaction accounts	2,678,424				2,319,863				2,599,004				2,252,112
Time deposits	964,159				789,691				938,751				781,230
Total deposits	5,237,373				4,599,866				5,121,250				4,503,172
Short-term borrowings	74,042				36,702				104,450				54,981
Other borrowings	287,839				291,477				292,447				286,138
Total interest-bearing liabilities	4,498,841				3,928,828				4,437,912				3,866,271
Stockholders' equity	705,726				603,059				689,538				593,453

Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
		Three Months Ended September 30,							Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)		2019			2018				2019			2018
INTEREST INCOME
Loans and net deferred fees and costs		$	58,563		$	49,181			$	175,324		$	142,384
Federal funds sold and interest-bearing deposits with banks		695			533				1,297			844
Taxable investment securities and other		5,007			4,141				14,865			12,160
Tax exempt investment securities		361			427				1,165			1,299
	TOTAL INTEREST INCOME	64,626			54,282				192,651			156,687
INTEREST EXPENSE
Deposits		13,267			8,429				37,526			20,685
Federal funds purchased and securities sold under agreements to repurchase		231			42				1,333			409
Other borrowings		2,446			2,187				7,306			6,240
	TOTAL INTEREST EXPENSE	15,944			10,658				46,165			27,334
NET INTEREST INCOME		48,682			43,624				146,486			129,353
Provision for loan losses		536			1,046				1,044			3,822
	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	48,146			42,578				145,442			125,531
NONINTEREST INCOME
Service charges on deposit accounts		2,851			2,614				8,179			7,770
Commissions and fees		1,545			1,414				4,682			4,096
Income on bank owned life insurance		691			1,127				2,064			2,557
Gain on equity securities		72			(439		)		525			(384		)
Gains on sales of loans		486			484				1,285			1,030
Other income		1,055			439				2,077			1,613
	TOTAL NONINTEREST INCOME	6,700			5,639				18,812			16,682
NONINTEREST EXPENSE
Salaries and employee benefit expense		19,062			17,352				57,672			50,921
Net occupancy expense		2,767			2,316				8,350			7,657
Furniture and equipment expense		2,084			2,070				6,365			6,287
FDIC insurance expense		(420		)	400				431			1,225
Stationary, supplies and postage expense		366			371				1,214			1,230
Marketing expense		423			343				1,430			1,160
Data processing expense		1,248			1,083				3,800			2,525
Telecommunications expense		480			438				1,451			1,321
ATM and debit card expense		588			556				1,773			1,624
Core deposit intangible amortization		288			142				893			452
Other real estate owned and other repossessed assets expense		29			45				223			112
Merger-related expenses		—			—				3,178			—
Other expenses		2,648			2,677				8,453			7,990
	TOTAL NONINTEREST EXPENSE	29,563			27,793				95,233			82,504
INCOME BEFORE PROVISION FOR INCOME TAXES		25,283			20,424				69,021			59,709
Provision for income taxes		6,409			3,666				17,064			11,858
NET INCOME		$	18,874		$	16,758			$	51,957		$	47,851
EARNINGS PER COMMON SHARE:
	Basic	$	0.37		$	0.35			$	1.02		$	1.00
	Diluted	$	0.37		$	0.35			$	1.02		$	0.99
DIVIDENDS PAID PER COMMON SHARE		$	0.125		$	0.115			$	0.365		$	0.330

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)	September 30, 2019				December 31, 2018
	(Unaudited)
ASSETS
Cash	$	249,553			$	205,199
Interest-bearing deposits due from banks	32,405				3,400
Total cash and cash equivalents	281,958				208,599
Investment securities available for sale, at fair value	720,405				638,618
Equity securities, at fair value	15,552				15,921
Investment securities held to maturity; fair value of $152,495 at September 30, 2019 and $150,932 at December 31, 2018	151,115				153,646
Federal Home Loan Bank and other membership stocks, at cost	18,006				13,301
Loans held for sale	3,077				1,113
Loans, net of deferred fees	4,923,414				4,456,733
Allowance for loan losses	(38,655		)		(37,688		)
Net loans and leases	4,884,759				4,419,045
Premises and equipment, net	47,372				49,175
Operating lease right-of-use assets	17,953				—
Accrued interest receivable	16,573				16,114
Goodwill	156,277				136,433
Other identifiable intangible assets	4,602				1,768
Bank owned life insurance	111,717				110,052
Other assets	63,108				42,308
TOTAL ASSETS	$	6,492,474			$	5,806,093
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	1,101,083			$	950,218
Savings and interest-bearing transaction accounts	3,196,323				2,913,414
Time deposits $250 thousand and under	682,677				589,737
Time deposits over $250 thousand	230,536				167,301
Total deposits	5,210,619				4,620,670
Federal funds purchased and securities sold under agreements to repurchase	199,326				233,905
Other borrowings	165,818				181,118
Subordinated debentures	118,211				105,027
Operating lease liabilities	19,509				—
Other liabilities	65,787				41,634
TOTAL LIABILITIES	5,779,270				5,182,354
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 100,000,000 shares at September 30, 2019 and at December 31, 2018; issued shares 50,489,161 at September 30, 2019 and 47,486,250 shares at December 31, 2018	559,595				514,703
Retained earnings	150,399				116,874
Accumulated other comprehensive income (loss)	3,210				(7,838		)
TOTAL STOCKHOLDERS' EQUITY	713,204				623,739
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,492,474			$	5,806,093

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands, except per share data)	2019			2019			2019			2018			2018
INCOME STATEMENT
Net interest income	$	48,682		$	49,198		$	48,606		$	44,206		$	43,624
Provision for loan losses	(536		)	—			(508		)	(591		)	(1,046		)
Gains on sales of loans	486			428			371			299			484
Gain (loss) on equity securities	72			100			353			(199		)	(439		)
Other noninterest income	6,142			5,861			4,999			5,528			5,594
Merger-related expenses	—			(318		)	(2,860		)	(464		)	—
Other noninterest expense	(29,563		)	(31,368		)	(31,124		)	(28,199		)	(27,793		)
Pretax income	25,283			23,901			19,837			20,580			20,424
Provision for income taxes	(6,409		)	(6,444		)	(4,211		)	(5,030		)	(3,666		)
Net income	$	18,874		$	17,457		$	15,626		$	15,550		$	16,758
Basic earnings per common share	$	0.37		$	0.34		$	0.31		$	0.32		$	0.35
Diluted earnings per common share	$	0.37		$	0.34		$	0.31		$	0.32		$	0.35
Dividends paid per common share	$	0.125		$	0.125		$	0.115		$	0.115		$	0.115
Dividends paid	$	6,362		$	6,357		$	5,838		$	5,510		$	5,510
Weighted average shares - basic	50,553			50,509			50,275			47,605			47,605
Weighted average shares - diluted	50,694			50,649			50,442			47,780			47,788
SELECTED OPERATING RATIOS
Annualized return on average assets	1.17		%	1.12		%	1.02		%	1.08		%	1.19		%
Annualized return on average common equity	10.61		%	10.16		%	9.41		%	10.05		%	11.02		%
Annualized return on average tangible common equity (1)	13.74		%	13.21		%	12.32		%	12.98		%	14.31		%
Annualized net interest margin	3.25		%	3.39		%	3.42		%	3.29		%	3.32		%
Efficiency ratio (1)	52.77		%	55.78		%	56.62		%	56.18		%	56.00		%
Common stockholders' equity to total assets	10.99		%	10.90		%	10.70		%	10.74		%	10.80		%
Tangible common equity to tangible assets (1)	8.72		%	8.61		%	8.41		%	8.57		%	8.55		%
Tier 1 risk-based ratio	11.24		%	11.11		%	10.98		%	11.27		%	11.21		%
Total risk-based ratio	13.70		%	13.60		%	13.48		%	13.71		%	13.69		%
Tier 1 leverage ratio	9.34		%	9.30		%	9.23		%	9.39		%	9.42		%
Common equity tier 1 capital ratio	10.66		%	10.52		%	10.38		%	10.62		%	10.56		%
Book value per common share	$	14.13		$	13.85		$	13.51		$	13.14		$	12.79
Tangible book value per common share (1)	$	10.94		$	10.66		$	10.35		$	10.22		$	9.88
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2019			2019			2019			2018			2018
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans	$	4,925,998		$	4,925,300		$	4,924,671		$	4,460,447		$	4,332,238
Allowance for loan losses	38,655			38,662			37,979			37,688			37,293
Investment securities	905,078			863,474			850,729			821,486			801,315
Total assets	6,492,474			6,407,195			6,365,063			5,806,093			5,627,057
Total deposits	5,210,619			5,082,598			5,064,584			4,620,670			4,642,443
Short-term borrowings	199,326			258,703			261,266			233,905			47,398
Other borrowings	284,029			294,022			293,976			286,145			289,635
Stockholders' equity	713,204			698,463			681,343			623,739			607,555
LOANS
Commercial, real estate	$	3,749,413		$	3,737,447		$	3,769,545		$	3,377,324		$	3,281,946
Commercial, industrial and other	391,486			407,776			389,230			336,735			334,241
Equipment financing	104,689			99,351			90,791			87,925			82,881
Residential mortgages	337,482			336,810			335,290			329,854			315,135
Consumer and home equity	342,928			343,916			339,815			328,609			318,035
Total loans	$	4,925,998		$	4,925,300		$	4,924,671		$	4,460,447		$	4,332,238
DEPOSITS
Noninterest-bearing	$	1,101,083		$	1,089,474		$	1,071,890		$	950,218		$	996,296
Savings and interest-bearing transaction accounts	3,196,323			3,007,784			3,046,322			2,913,414			2,855,318
Time deposits	913,213			985,340			946,372			757,038			790,829
Total deposits	$	5,210,619		$	5,082,598		$	5,064,584		$	4,620,670		$	4,642,443
Total loans to total deposits ratio	94.5		%	96.9		%	97.2		%	96.5		%	93.3		%
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	4,937,488		$	4,917,109		$	4,871,534		$	4,393,382		$	4,296,244
Investment securities	869,734			854,608			858,046			823,193			811,217
Interest-earning assets	5,947,645			5,836,333			5,772,853			5,346,934			5,221,612
Total assets	6,379,675			6,256,523			6,183,224			5,694,827			5,570,286
Noninterest-bearing demand deposits	1,100,413			1,083,745			1,056,060			1,003,508			999,217
Savings deposits	494,377			502,340			513,270			483,606			491,095
Interest-bearing transaction accounts	2,678,424			2,562,365			2,554,865			2,446,325			2,319,863
Time deposits	964,159			961,212			890,070			769,129			789,691
Total deposits	5,237,373			5,109,662			5,014,265			4,702,568			4,599,866
Short-term borrowings	74,042			110,941			128,972			50,196			36,702
Other borrowings	287,839			283,177			306,529			288,126			291,477
Total interest-bearing liabilities	4,498,841			4,420,035			4,393,706			4,037,382			3,928,828
Stockholders' equity	705,726			689,324			673,205			613,583			603,059

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2019			2019			2019			2018			2018
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans	4.71		%	4.82		%	4.80		%	4.58		%	4.54		%
Taxable investment securities and other	2.50		%	2.55		%	2.49		%	2.44		%	2.26		%
Tax-exempt securities	2.70		%	2.74		%	2.74		%	2.74		%	2.71		%
Federal funds sold and interest-bearing cash accounts	1.98		%	2.15		%	2.35		%	2.19		%	1.87		%
Total interest-earning assets	4.32		%	4.46		%	4.44		%	4.20		%	4.14		%
LIABILITIES
Savings accounts	0.06		%	0.06		%	0.07		%	0.06		%	0.06		%
Interest-bearing transaction accounts	1.24		%	1.25		%	1.18		%	1.04		%	0.89		%
Time deposits	2.00		%	1.96		%	1.79		%	1.79		%	1.61		%
Borrowings	2.89		%	2.90		%	2.82		%	2.65		%	2.66		%
Total interest-bearing liabilities	1.41		%	1.42		%	1.34		%	1.21		%	1.08		%
Net interest spread (taxable equivalent basis)	2.91		%	3.04		%	3.10		%	2.99		%	3.06		%
Annualized net interest margin (taxable equivalent basis)	3.25		%	3.39		%	3.42		%	3.29		%	3.32		%
Annualized cost of deposits	1.00		%	1.00		%	0.93		%	0.84		%	0.73		%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	38,662		$	37,979		$	37,688		$	37,293		$	36,604
Provision for loan losses	536			—			508			591			1,046
Charge-offs	(809		)	(413		)	(516		)	(381		)	(753		)
Recoveries	266			1,096			299			185			396
Balance at end of period	$	38,655		$	38,662		$	37,979		$	37,688		$	37,293
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial, real estate	$	203		$	(85	)	$	67		$	132		$	(115	)
Commercial, industrial and other	393			(909		)	50			(44		)	(26		)
Equipment financing	—			293			85			28			366
Residential mortgages	(55		)	(2		)	41			(2		)	36
Consumer and home equity	2			20			(26		)	82			96
Net charge-offs (recoveries)	$	543		$	(683	)	$	217		$	196		$	357
NON-PERFORMING ASSETS
Commercial, real estate	$	9,164		$	10,205		$	9,817		$	7,192		$	5,737
Commercial, industrial and other	795			662			2,202			1,019			1,189
Equipment financing	271			136			383			501			441
Residential mortgages	3,250			1,548			1,740			1,986			2,347
Consumer and home equity	2,437			1,873			1,581			1,432			1,410
Total non-accrual loans	15,917			14,424			15,723			12,130			11,124
Property acquired through foreclosure or repossession	944			532			715			830			2,754
Total non-performing assets	$	16,861		$	14,956		$	16,438		$	12,960		$	13,878
Loans past due 90 days or more and still accruing	$	—		$	—		$	78		$	—		$	16
Loans restructured and still accruing	$	5,029		$	5,139		$	6,352		$	9,293		$	9,030
Ratio of allowance for loan losses to total loans	0.78		%	0.78		%	0.77		%	0.84		%	0.86		%
Total non-accrual loans to total loans	0.32		%	0.29		%	0.32		%	0.27		%	0.26		%
Total non-performing assets to total assets	0.26		%	0.23		%	0.26		%	0.22		%	0.25		%
Annualized net charge-offs (recoveries) to average loans	0.04		%	(0.06		)%	0.02		%	0.02		%	0.03		%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	At or for the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands, except ratios and per share amounts)	2019			2019			2019			2018			2018
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP	$	713,204		$	698,463		$	681,343		$	623,739		$	607,555
Less:  Goodwill	156,277			155,830			154,153			136,433			136,433
Less:  Other identifiable intangible assets	4,602			4,891			5,192			1,768			1,910
Total tangible common stockholders' equity at end of period - Non-GAAP	$	552,325		$	537,742		$	521,998		$	485,538		$	469,212
Shares outstanding at end of period	50,489			50,441			50,436			47,486			47,485
Book value per share - GAAP	$	14.13		$	13.85		$	13.51		$	13.14		$	12.79
Tangible book value per share - Non-GAAP	$	10.94		$	10.66		$	10.35		$	10.22		$	9.88
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP	$	552,325		$	537,742		$	521,998		$	485,538		$	469,212
Total assets at end of period - GAAP	$	6,492,474		$	6,407,195		$	6,365,063		$	5,806,093		$	5,627,057
Less:  Goodwill	156,277			155,830			154,153			136,433			136,433
Less:  Other identifiable intangible assets	4,602			4,891			5,192			1,768			1,910
Total tangible assets at end of period - Non-GAAP	$	6,331,595		$	6,246,474		$	6,205,718		$	5,667,892		$	5,488,714
Common equity to assets - GAAP	10.99		%	10.90		%	10.70		%	10.74		%	10.80		%
Tangible common equity to tangible assets - Non-GAAP	8.72		%	8.61		%	8.41		%	8.57		%	8.55		%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP	$	18,874		$	17,457		$	15,626		$	15,550		$	16,758
Total average common stockholders' equity - GAAP	$	705,726		$	689,324		$	673,205		$	613,583		$	603,059
Less:  Average goodwill	155,835			154,171			153,562			136,433			136,433
Less:  Average other identifiable intangible assets	4,761			5,058			5,254			1,844			1,982
Total average tangible common stockholders' equity - Non-GAAP	$	545,130		$	530,095		$	514,389		$	475,306		$	464,644
Return on average common stockholders' equity - GAAP	10.61		%	10.16		%	9.41		%	10.05		%	11.02		%
Return on average tangible common stockholders' equity - Non-GAAP	13.74		%	13.21		%	12.32		%	12.98		%	14.31		%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	29,563		$	31,686		$	33,984		$	28,663		$	27,793
Amortization of core deposit intangibles	(288		)	(301		)	(304		)	(142		)	(142		)
Merger-related expenses	—			(318		)	(2,860		)	(464		)	—
Noninterest expense, as adjusted	$	29,275		$	31,067		$	30,820		$	28,057		$	27,651
Net interest income	$	48,682		$	49,198		$	48,606		$	44,206		$	43,624
Total noninterest income	6,700			6,389			5,723			5,628			5,639
Total revenue	55,382			55,587			54,329			49,834			49,263
Tax-equivalent adjustment on municipal securities	97			105			108			109			113
Total revenue, as adjusted	$	55,479		$	55,692		$	54,437		$	49,943		$	49,376
Efficiency ratio - Non-GAAP	52.77		%	55.78		%	56.62		%	56.18		%	56.00		%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	For the Nine Months Ended September 30,
(Dollars in thousands)	2019			2018
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP	$	51,957		$	47,851
Total average common stockholders' equity - GAAP	$	689,538		$	593,453
Less:  Average goodwill	$	154,531		$	136,433
Less:  Average other identifiable intangible assets	$	5,022		$	2,138
Total average tangible common stockholders' equity - Non-GAAP	$	529,985		$	454,882
Return on average common stockholders' equity - GAAP	10.07		%	10.78		%
Return on average tangible common stockholders' equity - Non-GAAP	13.11		%	14.06		%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	95,233		$	82,504
Amortization of core deposit intangibles	$	(893	)	$	(452	)
Merger-related expenses	$	(3,178	)	$	—
Noninterest expense, as adjusted	$	91,162		$	82,052
Net interest income	$	146,486		$	129,353
Noninterest income	$	18,812		$	16,682
Total revenue	$	165,298		$	146,035
Tax-equivalent adjustment on municipal securities	$	310		$	345
Total revenue, as adjusted	$	165,608		$	146,380
Efficiency ratio - Non-GAAP	55.05		%	56.05		%

Lakeland Bancorp, Inc.
Supplemental Information - Reconciliation of Net Income
(Unaudited)
	For the Three Months Ended September 30,							For the Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)	2019			2018				2019			2018
Net income - GAAP	$	18,874		$	16,758			$	51,957		$	47,851
NON-ROUTINE TRANSACTIONS, NET OF TAX
Tax deductible merger-related expenses	—			—				1,878			—
Non-tax deductible merger-related expenses	—			—				491			—
Net effect of non-routine transactions	—			—				2,369			—
Net income available to common shareholders excluding non-routine transactions	$	18,874		$	16,758			$	54,326		$	47,851
Less:  Earnings allocated to participating securities	156			153				443			440
Net Income,  excluding non-routine transactions	$	18,713		$	16,605			$	53,877		$	47,411
Weighted average shares - Basic	50,553			47,605				50,447			$	47,570
Weighted average shares - Diluted	50,694			47,788				50,595			$	47,764
Basic earnings per share - GAAP	$	0.37		$	0.35			$	1.02		$	1.00
Diluted earnings per share - GAAP	$	0.37		$	0.35			$	1.02		$	0.99
Basic earnings per share, adjusted for non-routine transactions	$	0.37		$	0.35			$	1.07		$	1.00
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)	$	0.37		$	0.35			$	1.06		$	0.99
Return on average assets - GAAP	1.17		%	1.19		%		1.11		%	1.17		%
Return on average assets, adjusted for non-routine transactions	1.17		%	1.19		%		1.16		%	1.17		%
Return on average common stockholders' equity - GAAP	10.61		%	11.02		%		10.07		%	10.78		%
Return on average common stockholders' equity, adjusted for non-routine transactions	10.61		%	11.02		%		10.53		%	10.78		%
Return on average tangible common stockholders' equity - Non-GAAP	13.74		%	14.31		%		13.11		%	14.06		%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions	13.74		%	14.31		%		13.70		%	14.06		%

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