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Lakeland Bancorp Announces Third Quarter Results

OAK RIDGE, N.J., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $14.4 million and earnings per diluted share ("EPS") of $0.28 for the three months ended September 30, 2020 compared to net income of $18.9 million and diluted EPS of $0.37 for the third quarter of 2019. For the third quarter of 2020, annualized return on average assets was 0.76%, annualized return on average common equity was 7.64% and annualized return on average tangible common equity was 9.71%.

For the nine months ended September 30, 2020, the Company reported net income of $38.7 million and earnings per diluted share ("EPS") of $0.76 compared to net income of $52.0 million and diluted EPS of $1.02 for the first nine months of 2019. For the first nine months of 2020, annualized return on average assets was 0.73%, annualized return on average common equity was 6.95% and annualized return on average tangible common equity was 8.86%.

The third quarter and year-to-date results were adversely impacted by provisions for loan losses of $8.0 million and $26.2 million, respectively, compared to $536,000 and $1.0 million for the same periods last year. The increased provision for the first nine months of 2020 was primarily due to the impact of COVID-19 on certain qualitative factors and loans on payment deferment resulting in approximately 75% of the provision. The remainder of the provision is attributable to loan growth, a change in the loan portfolio composition and a change in loss rates. As of September 30, 2020, the ratio of the allowance for loan loss to total loans was 1.11% compared to 0.78% as of December 31, 2019. The allowance for loan losses to total loans less Paycheck Protection Program ("PPP") loans of $325.1 million, was 1.18% as of September 30, 2020.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We continue to be a trusted partner for our customers during these uncertain times with our loans growing this quarter by $86 million or 1.5% and year-to-date growth of 7.4% excluding Payment Protection Plan loans, while deposits grew this quarter by $141 million or 2.3% and year-to-date growth of 18%. In addition, we recorded a lower provision for loan loss this quarter as our asset quality remains strong. Loans on deferred payment status decreased to 2.7% of total loans at September 30, 2020 from 19% at June 30, 2020 and loan charge-offs remain negligible. In light of the customer preference to utilize digital banking channels along with a decrease in branch transactions, we will be closing three branches representing 6% of our branch network."

COVID-19
As part of Lakeland’s response to COVID-19, we initiated remote working plans and encouraged the use of our mobile and online banking alternatives. To assist COVID-19 impacted borrowers, we offered temporary payment deferrals on commercial, mortgage and consumer loans. At September 30, 2020, we have on deferral, approximately $149 million in commercial loans (includes commercial loans secured by real estate, commercial and industrial and other loans), $3 million in equipment finance loans and $3 million in residential mortgage and consumer loans, compared to $927 million, $40 million and $53 million, respectively, at June 30, 2020. The reduction in deferrals from June 30, 2020 to September 30, 2020 was due primarily to borrowers resuming their regular payment schedule. We also participated in the Small Business Administration Paycheck Protection Program ("PPP") to help strengthen local businesses and preserve jobs in our communities and have funded 2,066 loans totaling $326.6 million with $11.1 million in related fees, as well as $1.1 million in deferred costs.

Net Interest Margin and Net Interest Income

Net interest margin for the third quarter of 2020 of 2.96% decreased 29 and 10 basis points, respectively, compared to the third quarter of 2019 and the second quarter of 2020. Net interest margin for the first nine months of 2020 of 3.09% compared to 3.35% for the same period in 2019. The decrease in net interest margin was due primarily to a decrease in the yield on interest-earning assets partially offset by a decrease in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the third quarter of 2020 was 3.49% compared to 4.32% for the third quarter of 2019 and 3.69% for the second quarter of 2020. The yield on interest-earning assets for the first nine months of 2020 was 3.77% compared to 4.41% during the same period in 2019. The current quarter and year-to-date decrease in yield on interest-earning assets, when compared to the prior periods, was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2019 and 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during the second quarter of 2020, which earn an effective yield of 2.50% including amortization of fees and costs.

The cost of interest-bearing liabilities for the third quarter of 2020 was 0.72% compared to 1.41% for the third quarter of 2019 and 0.86% for the second quarter of 2020. The cost of interest-bearing liabilities for the first nine months of 2020 was 0.91% compared to 1.39% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings has decreased since 2019 largely driven by reductions in market interest rates.

Net interest income for the third quarter of 2020 of $52.1 million increased $3.5 million and $1.6 million, respectively, compared to the third quarter of 2019 and the second quarter of 2020. Net interest income for the first nine months of 2020 of $152.6 million compared to $146.5 million for the first nine months of 2019. The increase in net interest income compared to prior periods was due primarily to the growth in the volume of interest-earning assets which was somewhat offset by a decrease in yield on interest-earning assets.

Noninterest Income

Noninterest income increased $73,000 to $6.8 million for the third quarter of 2020 from $6.7 million for the third quarter of 2019. Gains on sales of loans for the third quarter of 2020 increased $951,000 compared to the third quarter of 2019 due primarily to increased volume driven by lower interest rates, while commissions and fees for the third quarter of 2020 increased $122,000 due primarily to increases in mortgage application fees and commercial loan fees. Service charges on deposit accounts for the third quarter of 2020 decreased $563,000 compared to the third quarter of 2019 due primarily to changes in customer behavior resulting from the pandemic. Third quarter 2020 results also included losses on equity securities of $170,000 compared to a gain of $72,000 during the same period in 2019.

For the first nine months of 2020, noninterest income increased $1.5 million to $20.3 million compared to the first nine months of 2019 primarily due to increases in swap income and gains on sales of loans which increased $2.6 million and $1.3 million, respectively, resulting from increased volume driven by lower interest rates. The first nine months of 2020 included gains on sales of investment securities of $342,000 compared to none for the same period last year. Partially offsetting these favorable variances was service charges on deposits which decreased $1.5 million compared to the first nine months of 2019 due to the same reason mentioned in the quarterly comparison. The first nine months of 2020 also included a $625,000 loss on equity securities compared to a gain of $525,000 for the first nine months of 2019.

Noninterest Expense

Noninterest expense totaled $32.1 million for the third quarter of 2020 and increased $2.5 million compared to the third quarter of 2019. Salary and employee benefit expense for the third quarter of 2020 increased $632,000, or 3%, when compared to the same quarter of 2019 as a result of staff additions and normal merit increases. Furniture and equipment expense increased $806,000 compared to the third quarter of 2019 due primarily to an increase in costs associated with the Company's digital strategy initiative. FDIC insurance expense totaled $625,000 for the third quarter of 2020 and increased $1.0 million compared to the same period in 2019. In the third quarter of 2019, $420,000 in previously recorded FDIC expense was reversed due to FDIC assessment credits and no third quarter 2019 accrual was made, resulting from the insurance fund reserve ratio exceeding the required level.

Noninterest expense for the first nine months of 2020 of $96.1 million increased $830,000 compared to the first nine months of 2019. Salary and employee benefit expense increased $2.5 million compared to the first nine months of 2019 due to the same reasons discussed in the quarterly comparison. Furniture and equipment expense and FDIC insurance expense increased $1.9 million and $942,000, respectively, due to the same reasons mentioned in the quarterly comparison. Marketing expenses for the first nine months of 2020 decreased $590,000 due partially to the delay of marketing campaigns resulting from the pandemic. Year-to-date 2019 results included merger related expenses of $3.2 million due to the acquisition of Highlands Bank, while year-to-date 2020 results include a long-term debt prepayment fee of $356,000 resulting from the payoff of $10.0 million in Federal Home Loan Bank debt yielding 2.89%.

Income Tax Expense

The effective tax rate for the third quarter of 2020 was 23.3% compared to 25.3% for the third quarter of 2019. The decreased effective tax rate for the third quarter of 2020 was primarily a result of an increase in tax advantaged items as a percent of pretax income.

Financial Condition

At September 30, 2020, total assets were $7.52 billion, an increase of $810.9 million compared to December 31, 2019. For the nine months ended September 30, 2020, total loans grew $705.8 million, including $325.1 million attributed to PPP loans, to $5.84 billion and investment securities decreased $9.3 million to $909.5 million. On the funding side, total deposits increased $972.7 million to $6.27 billion, while borrowings decreased $261.5 million to $351.2 million. At September 30, 2020, total loans as a percent of total deposits was 93.4%.

Asset Quality

At September 30, 2020, non-performing assets increased to $33.1 million, 0.44% of total assets, compared to $21.7 million, 0.32% of total assets, at December 31, 2019. Non-accrual loans as a percent of total loans increased to 0.57% at September 30, 2020 compared to 0.41% at December 31, 2019. The increase in non-accrual loans from December 31, 2019, related primarily to one loan relationship totaling $9.5 million that was not COVID-19 related. The allowance for loan losses increased to $65.2 million, 1.11% of total loans, at September 30, 2020, compared to $40.0 million, 0.78% of total loans, at December 31, 2019. In the third quarter of 2020, the Company had net charge-offs of $597,000, or 0.04% of average loans, annualized, compared to $543,000, or 0.04%, for the same period in 2019. The provision for loan losses for the third quarter of 2020 was $8.0 million compared to a $536,000 provision for loan losses in the third quarter of 2019.

Capital

At September 30, 2020, stockholders' equity was $753.6 million compared to $725.3 million at December 31, 2019, a 4% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.36% at September 30, 2020. The book value per common share and tangible book value per common share increased 6% and 8% to $14.93 and $11.77, respectively, compared to $14.13 and $10.94 at September 30, 2019. At September 30, 2020, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio was 10.02% and 8.06%, respectively, compared to 10.81% and 8.62% at December 31, 2019. Excluding the impact of the PPP loans of $325.1 million, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio was 10.47% and 8.44%, respectively, at September 30, 2020. On October 21, 2020, the Company declared a quarterly cash dividend of $0.125 per share to be paid on November 13, 2020, to shareholders of record as of November 3, 2020.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements – including the statement regarding the prospective impact of COVID-19 and our plans to close three branches – 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 the Company’s 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; public health crises (such as the governmental, social and economic effects of the novel coronavirus); 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 Lakeland’s lending and equipment financing activities; successful implementation, deployment and upgrades of new and existing technology, systems, services and products; and customers’ acceptance of Lakeland’s products and services.

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 Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which has over $7 billion in total assets. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, N.Y., the Bank offers business and retail banking products and services. Business services include commercial loans and lines of credit, commercial real estate loans, loans for healthcare services, asset based lending, equipment financing, small business loans and lines, and cash management services. Consumer services include online and mobile banking, home equity loans and lines, mortgage options and wealth management solutions. Lakeland is proud to be recognized as one of New Jersey’s Best-In-State Banks by Forbes and Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jersey’s 50 Fastest Growing Companies by NJBIZ. 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) 2020   2019   2020   2019
INCOME STATEMENT              
Net interest income $ 52,134       $ 48,682       $ 152,552       $ 146,486    
Provision for loan losses (8,000 )     (536 )     (26,223 )     (1,044 )  
Gains on sales of investment securities             342          
Gains on sales of loans 1,437       486       2,562       1,285    
Gain (loss) on equity securities (170 )     72       (625 )     525    
Other noninterest income 5,506       6,142       17,986       17,002    
Long-term debt prepayment fee             (356 )        
Merger-related expenses                   (3,178 )  
Other noninterest expense (32,097 )     (29,563 )     (95,707 )     (92,055 )  
Pretax income 18,810       25,283       50,531       69,021    
Provision for income taxes (4,383 )     (6,409 )     (11,861 )     (17,064 )  
Net income $ 14,427       $ 18,874       $ 38,670       $ 51,957    
               
Basic earnings per common share $ 0.28       $ 0.37       $ 0.76       $ 1.02    
Diluted earnings per common share $ 0.28       $ 0.37       $ 0.76       $ 1.02    
Dividends paid per common share $ 0.125       $ 0.125       $ 0.375       $ 0.365    
Weighted average shares - basic 50,526       50,553       50,544       50,447    
Weighted average shares - diluted 50,620       50,694       50,645       50,595    
               
SELECTED OPERATING RATIOS              
Annualized return on average assets 0.76   %   1.17   %   0.73   %   1.11   %
Annualized return on average common equity 7.64   %   10.61   %   6.95   %   10.07   %
Annualized return on average tangible common equity (1) 9.71   %   13.74   %   8.86   %   13.11   %
Annualized yield on interest-earning assets 3.49   %   4.32   %   3.77   %   4.41   %
Annualized cost of interest-bearing liabilities 0.72   %   1.41   %   0.91   %   1.39   %
Annualized net interest spread 2.77   %   2.91   %   2.86   %   3.02   %
Annualized net interest margin 2.96   %   3.25   %   3.09   %   3.35   %
Efficiency ratio (1) 53.96   %   52.77   %   54.95   %   55.05   %
Stockholders' equity to total assets         10.02   %   10.99   %
Book value per common share         $ 14.93       $ 14.13    
Tangible book value per common share (1)         $ 11.77       $ 10.94    
Tangible common equity to tangible assets (1)         8.06   %   8.72   %
               
ASSET QUALITY RATIOS         September 30, 2020   September 30, 2019
Ratio of allowance for loan losses to total loans         1.11   %   0.78   %
Non-performing loans to total loans         0.57   %   0.32   %
Non-performing assets to total assets         0.44   %   0.26   %
Annualized net charge-offs to average loans         0.02   %     %
               
(1) See Supplemental Information - Non-GAAP Financial Measures            
               
               
               
               
               
               
               
               
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
               
(Dollars in thousands)         September 30, 2020   September 30, 2019
SELECTED BALANCE SHEET DATA AT PERIOD-END            
Loans         $ 5,843,591       $ 4,923,414    
Allowance for loan losses         65,242       38,655    
Investment securities         909,535       905,078    
Total assets         7,522,184       6,492,474    
Total deposits         6,266,516       5,210,619    
Short-term borrowings         97,874       199,326    
Other borrowings         253,359       284,029    
Stockholders' equity         753,572       713,204    
               
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
  2020   2019   2020   2019
SELECTED AVERAGE BALANCE SHEET DATA              
Loans $ 5,775,093       $ 4,937,488       $ 5,519,621       $ 4,908,952    
Investment securities 873,066       869,734       881,332       860,840    
Interest-earning assets 7,009,939       5,947,645       6,599,481       5,852,919    
Total assets 7,516,069       6,379,675       7,073,438       6,273,860    
Noninterest-bearing demand deposits 1,475,422       1,100,413       1,317,195       1,080,235    
Savings deposits 548,662       494,377       523,653       503,260    
Interest-bearing transaction accounts 3,086,260       2,678,424       2,942,307       2,599,004    
Time deposits 1,176,181       964,159       1,048,115       938,751    
Total deposits 6,286,525       5,237,373       5,831,270       5,121,250    
Short-term borrowings 58,845       74,042       100,303       104,450    
Other borrowings 269,093       287,839       273,567       292,447    
Total interest-bearing liabilities 5,139,042       4,498,841       4,887,945       4,437,912    
Stockholders' equity 751,099       705,726       743,318       689,538    
               



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) 2020   2019   2020   2019
INTEREST INCOME              
Loans and net deferred fees and costs $ 56,801       $ 58,563       $ 170,483       $ 175,324  
Federal funds sold and interest-bearing deposits with banks 92       695       287       1,297  
Taxable investment securities and other 4,139       5,007       14,131       14,865  
Tax exempt investment securities 401       361       1,082       1,165  
  TOTAL INTEREST INCOME 61,433       64,626       185,983       192,651  
INTEREST EXPENSE              
Deposits 7,012       13,267       25,969       37,526  
Federal funds purchased and securities sold under agreements to repurchase 27       231       531       1,333  
Other borrowings 2,260       2,446       6,931       7,306  
  TOTAL INTEREST EXPENSE 9,299       15,944       33,431       46,165  
NET INTEREST INCOME 52,134       48,682       152,552       146,486  
Provision for loan losses 8,000       536       26,223       1,044  
  NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 44,134       48,146       126,329       145,442  
NONINTEREST INCOME              
Service charges on deposit accounts 2,288       2,851       6,663       8,179  
Commissions and fees 1,667       1,545       4,503       4,682  
Income on bank owned life insurance 670       691       2,000       2,064  
(Loss) gain on equity securities (170 )     72       (625 )     525  
Gains on sales of loans 1,437       486       2,562       1,285  
Gains on sales of investment securities             342        
Swap income 624       730       4,234       1,585  
Other income 257       325       586       492  
  TOTAL NONINTEREST INCOME 6,773       6,700       20,265       18,812  
NONINTEREST EXPENSE              
Salaries and employee benefit expense 19,694       19,062       60,198       57,672  
Net occupancy expense 2,692       2,767       8,016       8,350  
Furniture and equipment expense 2,890       2,084       8,233       6,365  
FDIC insurance expense 625       (420 )     1,373       431  
Stationary, supplies and postage expense 488       366       1,268       1,214  
Marketing expense 381       423       840       1,430  
Data processing expense 1,211       1,248       3,900       3,800  
Telecommunications expense 501       480       1,399       1,451  
ATM and debit card expense 615       588       1,738       1,773  
Core deposit intangible amortization 250       288       776       893  
Other real estate owned and other repossessed assets expense (income) (2 )     29       53       223  
Long-term debt prepayment fee             356        
Merger-related expenses                   3,178  
Other expenses 2,752       2,648       7,913       8,453  
  TOTAL NONINTEREST EXPENSE 32,097       29,563       96,063       95,233  
INCOME BEFORE PROVISION FOR INCOME TAXES 18,810       25,283       50,531       69,021  
Provision for income taxes 4,383       6,409       11,861       17,064  
NET INCOME $ 14,427       $ 18,874       $ 38,670       $ 51,957  
EARNINGS PER COMMON SHARE:              
  Basic $ 0.28       $ 0.37       $ 0.76       $ 1.02  
  Diluted $ 0.28       $ 0.37       $ 0.76       $ 1.02  
DIVIDENDS PAID PER COMMON SHARE $ 0.125       $ 0.125       $ 0.375       $ 0.365  



Lakeland Bancorp, Inc.
Consolidated Balance Sheets
       
(Dollars in thousands) September 30, 2020   December 31, 2019
  (Unaudited)    
ASSETS      
Cash $ 314,591       $ 275,794  
Interest-bearing deposits due from banks 31,337       6,577  
Total cash and cash equivalents 345,928       282,371  
Investment securities available for sale, at fair value 783,331       755,900  
Equity securities, at fair value 14,076       16,473  
Investment securities held to maturity; fair value of $101,205 at September 30, 2020 and $124,904 at December 31, 2019 97,893       123,975  
Federal Home Loan Bank and other membership stocks, at cost 14,235       22,505  
Loans held for sale 4,197       1,743  
Loans, net of deferred fees 5,843,591       5,137,823  
Less: Allowance for loan losses 65,242       40,003  
Net loans and leases 5,778,349       5,097,820  
Premises and equipment, net 47,810       47,608  
Operating lease right-of-use assets 17,028       18,282  
Accrued interest receivable 21,480       16,832  
Goodwill 156,277       156,277  
Other identifiable intangible assets 3,538       4,314  
Bank owned life insurance 114,418       112,392  
Other assets 123,624       54,744  
TOTAL ASSETS $ 7,522,184       $ 6,711,236  
LIABILITIES AND STOCKHOLDERS' EQUITY      
LIABILITIES      
Deposits:      
Noninterest-bearing $ 1,474,847       $ 1,124,121  
Savings and interest-bearing transaction accounts 3,647,328       3,298,854  
Time deposits $250 thousand and under 961,402       652,144  
Time deposits over $250 thousand 182,939       218,660  
Total deposits 6,266,516       5,293,779  
Federal funds purchased and securities sold under agreements to repurchase 97,874       328,658  
Other borrowings 135,111       165,816  
Subordinated debentures 118,248       118,220  
Operating lease liabilities 18,471       19,814  
Other liabilities 132,392       59,686  
TOTAL LIABILITIES 6,768,612       5,985,973  
STOCKHOLDERS' EQUITY      
Common stock, no par value; authorized shares, 100,000,000; issued shares
  50,598,670 and outstanding shares 50,467,635 at September 30, 2020
  and issued and outstanding shares 50,498,410 at December 31, 2019
561,817       560,263  
Retained earnings 182,329       162,752  
Treasury shares, at cost, 131,035 shares at September 30, 2020 and no shares at December 31, 2019 (1,452 )      
Accumulated other comprehensive income 10,878       2,248  
TOTAL STOCKHOLDERS' EQUITY 753,572       725,263  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,522,184       $ 6,711,236  



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) 2020 2020 2020 2019 2019
INCOME STATEMENT          
Net interest income $ 52,134     $ 50,519     $ 49,899     $ 49,548     $ 48,682    
Provision for loan losses (8,000 )   (9,000 )   (9,223 )   (1,086 )   (536 )  
Gains on sales of investment securities         342            
Gains on sales of loans 1,437     710     415     375     486    
(Loss) gain on equity securities (170 )   198     (653 )   (29 )   72    
Other noninterest income 5,506     4,573     7,907     7,638     6,142    
Long-term debt prepayment fee         (356 )          
Merger-related expenses                    
Other noninterest expense (32,097 )   (31,462 )   (32,148 )   (31,523 )   (29,563 )  
Pretax income 18,810     15,538     16,183     24,923     25,283    
Provision for income taxes (4,383 )   (3,687 )   (3,791 )   (6,208 )   (6,409 )  
Net income $ 14,427     $ 11,851     $ 12,392     $ 18,715     $ 18,874    
           
Basic earnings per common share $ 0.28     $ 0.23     $ 0.24     $ 0.37     $ 0.37    
Diluted earnings per common share $ 0.28     $ 0.23     $ 0.24     $ 0.37     $ 0.37    
Dividends paid per common share $ 0.125     $ 0.125     $ 0.125     $ 0.125     $ 0.125    
Dividends paid $ 6,365     $ 6,365     $ 6,364     $ 6,363     $ 6,362    
Weighted average shares - basic 50,526     50,522     50,586     50,566     50,553    
Weighted average shares - diluted 50,620     50,593     50,728     50,748     50,694    
           
SELECTED OPERATING RATIOS          
Annualized return on average assets 0.76   % 0.67   % 0.76   % 1.15   % 1.17   %
Annualized return on average common equity 7.64   % 6.42   % 6.77   % 10.32   % 10.61   %
Annualized return on average tangible common equity (1) 9.71   % 8.19   % 8.65   % 13.29   % 13.74   %
Annualized net interest margin 2.96   % 3.06   % 3.28   % 3.27   % 3.25   %
Efficiency ratio (1) 53.96   % 55.62   % 55.30   % 54.20   % 52.77   %
Common stockholders' equity to total assets 10.02   % 9.96   % 10.51   % 10.81   % 10.99   %
Tangible common equity to tangible assets (1) 8.06   % 7.99   % 8.41   % 8.62   % 8.72   %
Tier 1 risk-based ratio 10.34   % 10.45   % 10.61   % 11.02   % 11.24   %
Total risk-based ratio 12.93   % 12.98   % 13.04   % 13.40   % 13.70   %
Tier 1 leverage ratio 8.36   % 8.69   % 9.38   % 9.41   % 9.34   %
Common equity tier 1 capital ratio 9.83   % 9.93   % 10.08   % 10.46   % 10.66   %
Book value per common share $ 14.93     $ 14.77     $ 14.60     $ 14.36     $ 14.13    
Tangible book value per common share (1) $ 11.77     $ 11.60     $ 11.43     $ 11.18     $ 10.94    
           
(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) 2020 2020 2020 2019 2019
SELECTED BALANCE SHEET DATA AT PERIOD-END        
Loans $ 5,855,024   $ 5,769,127   $ 5,331,863   $ 5,140,940   $ 4,925,998  
Allowance for loan losses 65,242   57,839   48,884   40,003   38,655  
Investment securities 909,535   957,985   974,319   918,853   905,078  
Total assets 7,522,184   7,488,516   7,013,908   6,711,236   6,492,474  
Total deposits 6,266,516   6,125,502   5,455,138   5,293,779   5,210,619  
Short-term borrowings 97,874   183,116   419,085   328,658   199,326  
Other borrowings 253,359   273,954   258,944   284,036   284,029  
Stockholders' equity 753,572   745,489   736,922   725,263   713,204  
           
LOANS          
Commercial, real estate $ 4,326,074   $ 4,260,917   $ 4,073,911   $ 3,924,762   $ 3,749,413  
Commercial, industrial and other 426,821   402,239   467,346   431,934   391,486  
Paycheck Protection Program 325,115   325,999        
Equipment financing 116,410   115,651   116,421   111,076   104,689  
Residential mortgages 342,583   334,455   334,114   335,191   337,482  
Consumer and home equity 318,021   329,866   340,071   337,977   342,928  
Total loans $ 5,855,024   $ 5,769,127   $ 5,331,863   $ 5,140,940   $ 4,925,998  
           
DEPOSITS          
Noninterest-bearing $ 1,474,847   $ 1,486,273   $ 1,129,695   $ 1,124,121   $ 1,101,083  
Savings and interest-bearing transaction accounts 3,647,328   3,510,723   3,241,397   3,298,854   3,196,323  
Time deposits 1,144,341   1,128,506   1,084,046   870,804   913,213  
Total deposits $ 6,266,516   $ 6,125,502   $ 5,455,138   $ 5,293,779   $ 5,210,619  
           
Total loans to total deposits ratio 93.4 % 94.2 % 97.7 % 97.1 % 94.5 %
           
SELECTED AVERAGE BALANCE SHEET DATA          
Loans $ 5,775,093   $ 5,572,865   $ 5,208,097   $ 5,025,377   $ 4,937,488  
Investment securities 873,066   891,037   879,987   894,698   869,734  
Interest-earning assets 7,009,939   6,650,993   6,133,003   6,022,525   5,947,645  
Total assets 7,516,069   7,137,529   6,565,302   6,470,082   6,379,675  
Noninterest-bearing demand deposits 1,475,422   1,364,785   1,109,638   1,130,192   1,100,413  
Savings deposits 548,662   525,224   496,798   492,903   494,377  
Interest-bearing transaction accounts 3,086,260   2,908,299   2,830,778   2,814,831   2,678,424  
Time deposits 1,176,181   1,093,760   872,998   873,924   964,159  
Total deposits 6,286,525   5,892,068   5,310,212   5,311,850   5,237,373  
Short-term borrowings 58,845   82,694   159,825   67,097   74,042  
Other borrowings 269,093   273,904   277,753   284,049   287,839  
Total interest-bearing liabilities 5,139,042   4,883,881   4,638,152   4,532,804   4,498,841  
Stockholders' equity 751,099   742,050   736,719   719,292   705,726  



Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
           
  For the Quarter Ended
  September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2020 2020 2020 2019 2019
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS) AND COSTS      
ASSETS          
Loans 3.91   % 4.03   % 4.47   % 4.60   % 4.71   %
Taxable investment securities and other 2.09   % 2.31   % 2.56   % 2.34   % 2.50   %
Tax-exempt securities 2.55   % 2.70   % 2.67   % 2.69   % 2.70   %
Federal funds sold and interest-bearing cash accounts 0.10   % 0.08   % 1.42   % 1.65   % 1.98   %
Total interest-earning assets 3.49   % 3.69   % 4.17   % 4.21   % 4.32   %
LIABILITIES          
Savings accounts 0.06   % 0.07   % 0.07   % 0.07   % 0.06   %
Interest-bearing transaction accounts 0.44   % 0.55   % 0.97   % 1.05   % 1.24   %
Time deposits 1.19   % 1.48   % 1.81   % 1.93   % 2.00   %
Borrowings 2.73   % 2.62   % 2.54   % 2.86   % 2.89   %
Total interest-bearing liabilities 0.72   % 0.86   % 1.18   % 1.26   % 1.41   %
Net interest spread (taxable equivalent basis) 2.77   % 2.83   % 2.99   % 2.96   % 2.91   %
Annualized net interest margin (taxable equivalent basis) 2.96   % 3.06   % 3.28   % 3.27   % 3.25   %
Annualized cost of deposits 0.44   % 0.55   % 0.82   % 0.88   % 1.00   %
ASSET QUALITY DATA          
ALLOWANCE FOR LOAN LOSSES          
Balance at beginning of period $ 57,839     $ 48,884     $ 40,003     $ 38,655     $ 38,662    
Provision for loan losses 8,000     9,000     9,223     1,086     536    
Charge-offs (682 )   (142 )   (483 )   (198 )   (809 )  
Recoveries 85     97     141     460     266    
Balance at end of period $ 65,242     $ 57,839     $ 48,884     $ 40,003     $ 38,655    
           
NET LOAN CHARGE-OFFS (RECOVERIES)          
Commercial, real estate $ 298     $ (36 )   $ 111     $ (18 )   $ 203    
Commercial, industrial and other 173     (13 )   (31 )   13     393    
Equipment financing 95     (11 )   71     (297 )      
Residential mortgages (1 )       96         (55 )  
Consumer and home equity 32     105     95     40     2    
Net charge-offs (recoveries) $ 597     $ 45     $ 342     $ (262 )   $ 543    
           
NON-PERFORMING ASSETS          
Commercial, real estate $ 26,145     $ 25,615     $ 24,770     $ 13,281     $ 9,164    
Commercial, industrial and other 1,484     1,546     1,909     1,539     795    
Equipment financing 444     400     199     284     271    
Residential mortgages 2,695     2,860     2,837     3,428     3,250    
Consumer and home equity 2,322     2,432     2,689     2,606     2,437    
Total non-accrual loans 33,090     32,853     32,404     21,138     15,917    
Property acquired through foreclosure or repossession     354     393     563     944    
Total non-performing assets $ 33,090     $ 33,207     $ 32,797     $ 21,701     $ 16,861    
           
Loans past due 90 days or more and still accruing $ 165     $ 58     $ 99     $     $    
Loans restructured and still accruing $ 4,299     $ 4,667     $ 4,719     $ 5,650     $ 5,029    
           
Ratio of allowance for loan losses to total loans 1.11   % 1.00   % 0.92   % 0.78   % 0.78   %
Total non-accrual loans to total loans 0.57   % 0.57   % 0.61   % 0.41   % 0.32   %
Total non-performing assets to total assets 0.44   % 0.44   % 0.47   % 0.32   % 0.26   %
Annualized net charge-offs (recoveries) to average loans 0.04   %   % 0.03   % (0.02 ) % 0.04   %



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) 2020 2020 2020 2019 2019
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE        
Total common stockholders' equity at end of period - GAAP $ 753,572     $ 745,489     $ 736,922     $ 725,263     $ 713,204    
Less: Goodwill 156,277     156,277     156,277     156,277     156,277    
Less: Other identifiable intangible assets 3,538     3,788     4,049     4,314     4,602    
Total tangible common stockholders' equity at end of period - Non-GAAP $ 593,757     $ 585,424     $ 576,596     $ 564,672     $ 552,325    
           
Shares outstanding at end of period 50,468     50,463     50,462     50,498     50,489    
           
Book value per share - GAAP $ 14.93     $ 14.77     $ 14.60     $ 14.36     $ 14.13    
           
Tangible book value per share - Non-GAAP $ 11.77     $ 11.60     $ 11.43     $ 11.18     $ 10.94    
           
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS      
Total tangible common stockholders' equity at end of period - Non-GAAP $ 593,757     $ 585,424     $ 576,596     $ 564,672     $ 552,325    
           
Total assets at end of period - GAAP $ 7,522,184     $ 7,488,516     $ 7,013,908     $ 6,711,236     $ 6,492,474    
Less: Goodwill 156,277     156,277     156,277     156,277     156,277    
Less: Other identifiable intangible assets 3,538     3,788     4,049     4,314     4,602    
Total tangible assets at end of period - Non-GAAP $ 7,362,369     $ 7,328,451     $ 6,853,582     $ 6,550,645     $ 6,331,595    
           
Common equity to assets - GAAP 10.02   % 9.96   % 10.51   % 10.81   % 10.99   %
           
Tangible common equity to tangible assets - Non-GAAP 8.06   % 7.99   % 8.41   % 8.62   % 8.72   %
           
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY      
Net income - GAAP $ 14,427     $ 11,851     $ 12,392     $ 18,715     $ 18,874    
           
Total average common stockholders' equity - GAAP $ 751,099     $ 742,050     $ 736,719     $ 719,292     $ 705,726    
Less: Average goodwill 156,277     156,277     156,277     156,277     155,835    
Less: Average other identifiable intangible assets 3,689     3,942     4,205     4,468     4,761    
Total average tangible common stockholders' equity - Non-GAAP $ 591,133     $ 581,831     $ 576,237     $ 558,547     $ 545,130    
           
Return on average common stockholders' equity - GAAP 7.64   % 6.42   % 6.77   % 10.32   % 10.61   %
           
Return on average tangible common stockholders' equity - Non-GAAP 9.71   % 8.19   % 8.65   % 13.29   % 13.74   %
           
CALCULATION OF EFFICIENCY RATIO          
Total noninterest expense $ 32,097     $ 31,462     $ 32,504     $ 31,523     $ 29,563    
Amortization of core deposit intangibles (250 )   (261 )   (265 )   (289 )   (288 )  
Long term debt prepayment fees $     $     $ (356 )      
Noninterest expense, as adjusted $ 31,847     $ 31,201     $ 31,883     $ 31,234     $ 29,275    
           
Net interest income $ 52,134     $ 50,519     $ 49,899     $ 49,548     $ 48,682    
Total noninterest income 6,773     5,481     8,011     7,984     6,700    
Total revenue 58,907     56,000     57,910     57,532     55,382    
Tax-equivalent adjustment on municipal securities 108     93     88     91     97    
(Gains) on sales of investment securities         (342 )          
Total revenue, as adjusted $ 59,015     $ 56,093     $ 57,656     $ 57,623     $ 55,479    
Efficiency ratio - Non-GAAP 53.96   % 55.62   % 55.30   % 54.20   % 52.77   %



Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
  For the Nine Months Ended September 30,
(Dollars in thousands) 2020   2019
       
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY      
Net income - GAAP $ 38,670        $ 51,957     
       
Total average common stockholders' equity - GAAP $ 743,318        $ 689,538     
Less: Average goodwill $ 156,277        $ 154,531     
Less: Average other identifiable intangible assets $ 3,944        $ 5,022     
Total average tangible common stockholders' equity - Non-GAAP $ 583,097        $ 529,985     
       
Return on average common stockholders' equity - GAAP 6.95    %   10.07    %
       
Return on average tangible common stockholders' equity - Non-GAAP 8.86    %   13.11    %
       
CALCULATION OF EFFICIENCY RATIO      
Total noninterest expense $ 96,063        $ 95,233     
Amortization of core deposit intangibles $ (776 )     $ (893 )  
Long-term debt prepayment fee $ (356 )     $ —     
Merger-related expenses $ —        $ (3,178 )  
Noninterest expense, as adjusted $ 94,931        $ 91,162     
       
Net interest income $ 152,552        $ 146,486     
Noninterest income $ 20,265        $ 18,812     
Total revenue $ 172,817        $ 165,298     
Tax-equivalent adjustment on municipal securities $ 289        $ 310     
Gains on sales of investment securities $ (342 )     $ —     
Total revenue, as adjusted $ 172,764        $ 165,608     
Efficiency ratio - Non-GAAP 54.95    %   55.05    %