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Lakeland Bancorp Announces Fourth Quarter and Record Annual Results

OAK RIDGE, N.J., Jan. 28, 2019 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $15.6 million for the three months ended December 31, 2018, an 18% increase compared to $13.2 million for the three months ended December 31, 2017. For the three months ended December 31, 2018, the Company reported diluted EPS of $0.32, an increase of 19% compared to $0.27 for the same period in 2017. For the fourth quarter of 2018, return on average assets was 1.08%, return on average common equity was 10.05% and return on average tangible common equity was 12.98%.

For the year ended December 31, 2018, the Company reported net income of $63.4 million, a 21% increase compared to $52.6 million for the same period in 2017. For the year ended December 31, 2018, the Company reported diluted EPS of $1.32, an increase of 21% compared to $1.09 for the year ended December 31, 2017. For the twelve months of 2018, return on average assets was 1.15%, return on average common equity was 10.59%, and return on average tangible common equity was 13.78%.

During the fourth quarter of 2018, Highlands Bancorp shareholders approved the merger of Highlands Bancorp with and into the Company. The merger was consummated on January 4, 2019, adding approximately $480 million in total assets and four branches to the Company.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We are pleased to report strong fourth quarter results as we delivered our seventh consecutive year of record earnings in 2018. Our fourth quarter financial results include non-routine, pre-tax expenses for branch dispositions, merger-related expenses and severance accrual totaling $1.2 million and an additional $320,000 in New Jersey state tax expense for a change in the estimated timing of the realization of deferred tax assets. Excluding the impact of these items, our fourth quarter 2018 results for diluted EPS, return on average assets, return on average equity and return on tangible average equity would have been $0.35, 1.17%, 10.85% and 14.01%, respectively. We are excited that 2019 is off to a strong start as we consummated the Highlands Bancorp merger in early January 2019. The merger will further strengthen Lakeland’s position for future growth."

The following represents performance highlights and significant events related to the fourth quarter of 2018:

  • Total loans grew $128.2 million, or 3.0%, in the fourth quarter of 2018 and resulted in total loan growth of 7.3% for 2018.

  • Total deposits grew $251.9 million, or 5.8%, during 2018 and resulted in a loan to deposit ratio of 96.5%.

  • Non-recurring items in the fourth quarter of 2018 included the loss on disposition of four former branches of $561,000; merger-related expenses of $464,000; and severance expense of $139,000 totaling a pre-tax expense of $1.2 million.

  • The efficiency ratio for the year of 2018 was 56%.

  • Tangible book value per share increased 9.1% to $10.22 at December 31, 2018 from $9.38 at December 31, 2017.

  • Asset quality remains strong with total non-performing assets decreasing to 0.22% of total assets at December 31, 2018 from 0.27% of total assets at December 31, 2017.

Net Interest Margin and Income

Net interest margin for the fourth quarter of 2018 of 3.29% decreased eight basis points from the fourth quarter of 2017. The decrease in net interest margin was due primarily to an increase in the cost of interest-bearing liabilities, partially offset by an increase in the yield on interest-earning assets. Net interest margin for 2018 was 3.36% as compared to 3.38% for 2017.

The yield on interest-earning assets for the fourth quarter of 2018 was 4.20% compared to 3.95% for the fourth quarter of 2017. The increase in yield was due primarily to a 25 basis point increase in the yield on loans and leases as interest rates continue to rise. The yield on interest-earning assets for 2018 was 4.12% compared to 3.88% for 2017.

The cost of interest-bearing liabilities for the fourth quarter of 2018 was 1.21% compared to 0.75% for the fourth quarter of 2017 as the cost of interest-bearing transaction accounts, time deposits and borrowings have increased 53, 62, and 29 basis points, respectively, since the fourth quarter of 2017 largely driven by competitive pressures influencing higher market interest rates. The cost of interest-bearing liabilities for 2018 was 1.01% compared to 0.67% for 2017.

Net interest income increased to $44.2 million for the fourth quarter of 2018 compared to $42.4 million for the fourth quarter of 2017, due primarily to the growth of interest-earning assets and increases in loan and lease yields, offset by an increase in the cost of interest-bearing liabilities. Net interest income for 2018 was $173.6 million, as compared to $165.2 million for 2017.

Noninterest Income

Noninterest income decreased $148,000 to $5.6 million for the fourth quarter of 2018 from $5.8 million for the fourth quarter of 2017. The Company recorded a $199,000 loss on equity securities in the fourth quarter of 2018. In addition, commissions and fees increased $137,000 compared to the fourth quarter of 2017 due primarily to an increase in investment services income, while income on bank owned life insurance and gains on sales of loans decreased $105,000 and $190,000, respectively. Other income increased $209,000 due primarily to an increase in loan swap income.

For 2018, noninterest income totaled $22.3 million compared to $25.4 million for 2017. Noninterest income in 2017 included $2.5 million in gains on sales of investment securities, $881,000 gain on the sales of three former branches and a $342,000 gain on the payoff of an acquired loan. Noninterest income for 2018 had increases in commissions and fees of $684,000, an increase in income on bank owned life insurance of $902,000, including death benefit income, partially offset by a $583,000 loss on equity securities and a $507,000 decrease in gains on sales of loans.

Noninterest Expense

Noninterest expense totaled $28.7 million for the fourth quarter of 2018 compared to $25.8 million for the fourth quarter of 2017, primarily due to salary and employee benefit expense increasing $2.1 million as a result of additions to our staff to support continued growth, normal merit increases and higher benefit costs. In the fourth quarter of 2018, data processing expense increased $587,000 compared to the fourth quarter of 2017 due primarily to the Company’s expansion and improvement of its digital infrastructure. Expenses related to the Highlands merger related expenses totaled $464,000 for the fourth quarter of 2018.

For 2018, noninterest expense totaled $111.2 million compared to $104.5 million for 2017. Included in the results for 2017 was $2.8 million in long-term debt prepayment fees, while 2018 included $464,000 in merger related expenses. Excluding the 2017 long-term debt prepayment fees and 2018 merger expenses, the resulting $9.0 million net increase was primarily due to a $7.4 million increase in salary and employee benefit costs resulting from additions to our staff to support continued growth, as well as normal merit increases and higher benefit costs. Data processing increased $1.6 million compared to 2017 due primarily to the Company’s expansion and improvement of its digital infrastructure.

Income Tax Expense

The effective tax rate in the fourth quarter of 2018 was 24.4% compared to 37.5% during the same period last year primarily due to the change in tax rates resulting from the Tax Cuts and Jobs Act of 2017 (the "Tax Act") and the changes in New Jersey tax law during 2018.

Financial Condition

In 2018, total assets increased $400.5 million to $5.81 billion as total loans and leases grew $303.8 million to $4.46 billion and investment securities increased $23.1 million to $821.5 million. On the funding side, total deposits increased $251.9 million to $4.62 billion, while borrowings increased $98.2 million to $520.1 million. As of December 31, 2018, total loans and leases as a percent of total deposits was 96.5%.

Asset Quality

At December 31, 2018, non-performing assets totaled $13.0 million, 0.22% of total assets, compared to $14.5 million, 0.27% of total assets, at December 31, 2017. Non-accrual loans and leases as a percent of total loans and leases equaled 0.27% at December 31, 2018 compared to 0.33% at December 31, 2017. The allowance for loan and lease losses increased to $37.7 million at December 31, 2018, 0.84% of total loans and leases, compared to $35.5 million at December 31, 2017, 0.85% of total loans and leases. In the fourth quarter of 2018, the Company had net charge-offs of $196,000, 0.02% of average loans and leases, annualized, compared to net recoveries of $312,000, (0.03)% of average loans and leases, annualized, for the same period in 2017. The fourth quarter of 2018 provision for loan and lease losses was $591,000 compared to $1.2 million in the fourth quarter of 2017.

Capital

At December 31, 2018, stockholders' equity was $623.7 million compared to $583.1 million at December 31, 2017, a 7% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 Leverage Ratio of 9.39% at December 31, 2018. At December 31, 2018, the book value per common share and tangible book value per common share were $13.14 and $10.22 compared to $12.31 and $9.38 at December 31, 2017. On January 24, 2018, the Company declared a quarterly cash dividend of $0.115 per share to be paid on February 15, 2018 to stockholders of record as of February 8, 2018.

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

Upon the completion of the Highlands Bancorp, Inc. acquisition on January 4, 2019, Lakeland Bancorp, Inc. (LBAI) has approximately $6.3 billion in total assets. Lakeland Bank, a wholly-owned subsidiary of Lakeland Bancorp, Inc., operates 54 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey including one branch in Highland Mills, New York; six New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Newton, 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
December 31,

Twelve months ended
December 31,

(Dollars in thousands, except per share amounts)

2018

2017

2018

2017

INCOME STATEMENT

Net interest income

$

44,206

$

42,379

$

173,559

$

165,238

Provision for loan and lease losses

(591

)

(1,218

)

(4,413

)

(6,090

)

Gains on sales of investment securities

2,524

Gains on sales of loans

299

489

1,329

1,836

Loss on equity securities

(199

)

(583

)

Other noninterest income

5,528

5,287

21,564

21,075

Long-term debt prepayment fee

(2,828

)

Merger related expenses

(464

)

(464

)

Other noninterest expense

(28,199

)

(25,849

)

(110,703

)

(101,706

)

Pretax income

20,580

21,088

80,289

80,049

Provision for income taxes

(5,030

)

(7,913

)

(16,888

)

(27,469

)

Net income

$

15,550

$

13,175

$

63,401

$

52,580

Basic earnings per common share

$

0.32

$

0.28

$

1.32

$

1.10

Diluted earnings per common share

$

0.32

$

0.27

$

1.32

$

1.09

Dividends paid per common share

$

0.115

$

0.100

$

0.445

$

0.395

Weighted average shares - basic

47,605

47,466

47,570

47,438

Weighted average shares - diluted

47,780

47,719

47,764

47,674

SELECTED OPERATING RATIOS

Annualized return on average assets

1.08

%

0.97

%

1.15

%

1.00

%

Annualized return on average common equity

10.05

%

8.99

%

10.59

%

9.25

%

Annualized return on average tangible common equity (1)

12.98

%

11.82

%

13.78

%

12.24

%

Annualized yield on interest-earning assets

4.20

%

3.95

%

4.12

%

3.88

%

Annualized cost of interest-bearing liabilities

1.21

%

0.75

%

1.01

%

0.67

%

Annualized net interest spread

2.99

%

3.20

%

3.11

%

3.21

%

Annualized net interest margin

3.29

%

3.37

%

3.36

%

3.38

%

Efficiency ratio (1)

56.18

%

53.06

%

56.09

%

53.40

%

Stockholders' equity to total assets

10.74

%

10.79

%

Book value per common share

$

13.14

$

12.31

Tangible book value per common share (1)

$

10.22

$

9.38

Tangible common equity to tangible assets (1)

8.57

%

8.44

%

ASSET QUALITY RATIOS

12/31/2018

12/31/2017

Ratio of allowance for loan and lease losses to total loans and leases

0.84

%

0.85

%

Non-performing loans and leases to total loans and leases

0.27

%

0.33

%

Non-performing assets to total assets

0.22

%

0.27

%

Annualized net charge-offs to average loans and leases

0.05

%

0.05

%

(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

SELECTED BALANCE SHEET DATA AT PERIOD-END

12/31/2018

12/31/2017

Loans and leases

$

4,460,447

$

4,156,680

Allowance for loan and lease losses

37,688

35,455

Investment securities

821,486

798,396

Total assets

5,806,093

5,405,639

Total deposits

4,620,670

4,368,748

Short-term borrowings

233,905

124,936

Other borrowings

286,145

296,913

Stockholders' equity

623,739

583,122

SELECTED AVERAGE BALANCE SHEET DATA

For the Three Months Ended December 31,

For the Twelve Months Ended December 31,

2018

2017

2018

2017

Loans and leases

$

4,393,382

$

4,116,920

$

4,283,401

$

4,024,257

Investment securities

823,193

798,687

816,697

810,434

Interest-earning assets

5,346,934

5,014,333

5,182,194

4,926,986

Total assets

5,694,827

5,372,248

5,528,914

5,267,561

Noninterest-bearing demand deposits

1,003,508

988,451

984,445

959,298

Savings deposits

483,606

478,685

489,742

486,821

Interest-bearing transaction accounts

2,446,325

2,222,221

2,301,065

2,241,259

Time deposits

769,129

730,590

778,180

623,257

Total deposits

4,702,568

4,419,947

4,553,432

4,310,635

Short-term borrowings

50,196

43,130

53,775

41,695

Other borrowings

288,126

295,818

286,639

316,283

Total interest-bearing liabilities

4,037,382

3,770,444

3,909,401

3,709,315

Stockholders' equity

613,583

581,254

598,527

568,680


Lakeland Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(Dollars in thousands, except per share amounts)

2018

2017

2018

2017

INTEREST INCOME

Loans, leases and fees

$

50,759

$

44,889

$

193,143

$

172,342

Federal funds sold and interest-bearing deposits with banks

715

262

1,559

880

Taxable investment securities and other

4,550

3,850

16,710

14,987

Tax exempt investment securities

410

460

1,709

1,995

TOTAL INTEREST INCOME

56,434

49,461

213,121

190,204

INTEREST EXPENSE

Deposits

9,935

5,039

30,620

16,600

Federal funds purchased and securities sold under agreements to repurchase

62

38

471

198

Other borrowings

2,231

2,005

8,471

8,168

TOTAL INTEREST EXPENSE

12,228

7,082

39,562

24,966

NET INTEREST INCOME

44,206

42,379

173,559

165,238

Provision for loan and lease losses

591

1,218

4,413

6,090

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES

43,615

41,161

169,146

159,148

NONINTEREST INCOME

Service charges on deposit accounts

2,814

2,814

10,584

10,740

Commissions and fees

1,446

1,309

5,542

4,858

Income on bank owned life insurance

699

804

3,256

2,354

Loss on equity securities

(199

)

(583

)

Gains on sales of loans

299

489

1,329

1,836

Gains on sales of investment securities

2,524

Other income

569

360

2,182

3,123

TOTAL NONINTEREST INCOME

5,628

5,776

22,310

25,435

NONINTEREST EXPENSE

Salaries and employee benefit expense

17,674

15,553

68,595

61,166

Net occupancy expense

2,498

2,573

10,155

10,243

Furniture and equipment expense

2,010

2,103

8,297

8,269

FDIC insurance expense

383

404

1,608

1,577

Stationary, supplies and postage expense

395

378

1,625

1,797

Marketing expense

277

324

1,437

1,675

Data processing expense

1,084

497

3,609

1,993

Telecommunications expense

448

451

1,769

1,607

ATM and debit card expense

571

547

2,195

2,051

Core deposit intangible amortization

142

165

594

654

Other real estate owned and other repossessed assets expense

46

73

158

181

Long-term debt prepayment fee

2,828

Merger related expenses

464

464

Other expenses

2,671

2,781

10,661

10,493

TOTAL NONINTEREST EXPENSE

28,663

25,849

111,167

104,534

INCOME BEFORE PROVISION FOR INCOME TAXES

20,580

21,088

80,289

80,049

Provision for income taxes

5,030

7,913

16,888

27,469

NET INCOME

$

15,550

$

13,175

$

63,401

$

52,580

EARNINGS PER COMMON SHARE:

Basic

$

0.32

$

0.28

$

1.32

$

1.10

Diluted

$

0.32

$

0.27

$

1.32

$

1.09

DIVIDENDS PAID PER COMMON SHARE

$

0.115

$

0.100

$

0.445

$

0.395


Lakeland Bancorp, Inc.

Consolidated Balance Sheets

(Dollars in thousands)

December 31, 2018

December 31, 2017

(Unaudited)

ASSETS

Cash

$

205,199

$

114,138

Interest-bearing deposits due from banks

3,400

28,795

Total cash and cash equivalents

208,599

142,933

Investment securities available for sale, at fair value

638,618

628,046

Equity securities, at fair value

15,921

18,089

Investment securities held to maturity; fair value of $150,933 at December 31, 2018

and $138,688 at December 31, 2017

153,646

139,685

Federal Home Loan Bank and other membership stocks, at cost

13,301

12,576

Loans held for sale

1,113

456

Loans and leases:

Commercial, real estate

3,377,324

3,096,092

Commercial, industrial and other

336,735

340,400

Leases

87,925

75,039

Residential mortgages

329,854

322,880

Consumer and home equity

328,609

322,269

Total loans and leases

4,460,447

4,156,680

Net deferred costs (fees)

(3,714

)

(3,960

)

Allowance for loan and lease losses

(37,688

)

(35,455

)

Net loans and leases

4,419,045

4,117,265

Premises and equipment, net

49,175

50,313

Accrued interest receivable

16,114

14,416

Goodwill

136,433

136,433

Other identifiable intangible assets

1,768

2,362

Bank owned life insurance

110,052

107,489

Other assets

42,308

35,576

TOTAL ASSETS

$

5,806,093

$

5,405,639

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Deposits:

Noninterest-bearing

$

950,218

$

967,335

Savings and interest-bearing transaction accounts

2,913,414

2,663,985

Time deposits $250 thousand and under

589,737

556,863

Time deposits over $250 thousand

167,301

180,565

Total deposits

4,620,670

4,368,748

Federal funds purchased and securities sold under agreements to repurchase

233,905

124,936

Other borrowings

181,118

192,011

Subordinated debentures

105,027

104,902

Other liabilities

41,634

31,920

TOTAL LIABILITIES

5,182,354

4,822,517

STOCKHOLDERS' EQUITY

Common stock, no par value; authorized 100,000,000 shares at December 31, 2018

and 70,000,000 shares at December 31, 2017; issued shares 47,486,250 at

December 31, 2018 and 47,353,864 shares at December 31, 2017

514,703

512,734

Retained earnings

116,874

72,737

Accumulated other comprehensive gain (loss)

(7,838

)

(2,349

)

TOTAL STOCKHOLDERS' EQUITY

623,739

583,122

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

5,806,093

$

5,405,639


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Dec 31,

Sept 30,

June 30,

March 31,

Dec 31,

(Dollars in thousands, except per share data)

2018

2018

2018

2018

2017

INCOME STATEMENT

Net interest income

$

44,206

$

43,624

$

43,493

$

42,236

$

42,379

Provision for loan and lease losses

(591

)

(1,046

)

(1,492

)

(1,284

)

(1,218

)

Gains on sales of loans

299

484

300

246

489

Gain (loss) on equity securities

(199

)

(439

)

73

(18

)

Other noninterest income

5,528

5,594

5,336

5,106

5,287

Merger related expenses

(464

)

Other noninterest expense

(28,199

)

(27,793

)

(27,574

)

(27,137

)

(25,849

)

Pretax income

20,580

20,424

20,136

19,149

21,088

Provision for income taxes

(5,030

)

(3,666

)

(4,298

)

(3,894

)

(7,913

)

Net income

$

15,550

$

16,758

$

15,838

$

15,255

$

13,175

Basic earnings per common share

$

0.32

$

0.35

$

0.33

$

0.32

$

0.28

Diluted earnings per common share

$

0.32

$

0.35

$

0.33

$

0.32

$

0.27

Dividends paid per common share

$

0.115

$

0.115

$

0.115

$

0.100

$

0.100

Dividends paid

$

5,510

$

5,510

$

5,509

$

4,778

$

4,776

Weighted average shares - basic

47,605

47,605

47,600

47,503

47,466

Weighted average shares - diluted

47,780

47,788

47,770

47,736

47,719

SELECTED OPERATING RATIOS

Annualized return on average assets

1.08

%

1.19

%

1.17

%

1.14

%

0.97

%

Annualized return on average common equity

10.05

%

11.02

%

10.71

%

10.60

%

8.99

%

Annualized return on average tangible common equity (1)

12.98

%

14.31

%

13.97

%

13.90

%

11.82

%

Annualized net interest margin

3.29

%

3.32

%

3.43

%

3.39

%

3.37

%

Efficiency ratio (1)

56.18

%

56.00

%

55.60

%

56.58

%

53.06

%

Common stockholders' equity to total assets

10.74

%

10.80

%

10.80

%

10.75

%

10.79

%

Tangible common equity to tangible assets (1)

8.57

%

8.55

%

8.51

%

8.43

%

8.44

%

Tier 1 risk-based ratio

11.26

%

11.21

%

11.16

%

11.08

%

10.87

%

Total risk-based ratio

13.71

%

13.69

%

13.67

%

13.61

%

13.40

%

Tier 1 leverage ratio

9.39

%

9.42

%

9.43

%

9.28

%

9.12

%

Common equity tier 1 capital ratio

10.62

%

10.56

%

10.49

%

10.40

%

10.18

%

Book value per common share

$

13.14

$

12.79

$

12.59

$

12.40

$

12.31

Tangible book value per common share (1)

$

10.22

$

9.88

$

9.67

$

9.48

$

9.38

(1) See Supplemental Information - Non-GAAP Financial Measures


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Dec 31,

Sept 30,

June 30,

March 31,

Dec 31,

(Dollars in thousands)

2018

2018

2018

2018

2017

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans and leases

$

4,460,447

$

4,332,238

$

4,281,302

$

4,228,052

$

4,156,680

Allowance for loan and lease losses

37,688

37,293

36,604

35,644

35,455

Investment securities

821,486

801,315

798,096

805,654

798,396

Total assets

5,806,093

5,627,057

5,534,488

5,477,829

5,405,639

Total deposits

4,620,670

4,642,443

4,400,019

4,447,965

4,368,748

Short-term borrowings

233,905

47,398

197,870

126,485

124,936

Other borrowings

286,145

289,635

301,339

281,906

296,913

Stockholders' equity

623,739

607,555

597,864

588,648

583,122

LOANS AND LEASES

Commercial, real estate

$

3,377,324

$

3,281,946

$

3,222,461

$

3,169,375

$

3,096,092

Commercial, industrial and other

336,735

334,241

339,974

339,665

340,400

Leases

87,925

82,881

82,006

78,238

75,039

Residential mortgages

329,854

315,135

321,717

323,054

322,880

Consumer and home equity

328,609

318,035

315,144

317,720

322,269

Total loans and leases

$

4,460,447

$

4,332,238

$

4,281,302

$

4,228,052

$

4,156,680

DEPOSITS

Noninterest-bearing

$

950,218

$

996,296

$

967,911

$

974,641

$

967,335

Savings and interest-bearing transaction accounts

2,913,414

2,855,318

2,625,325

2,682,726

2,663,985

Time deposits

757,038

790,829

806,783

790,598

737,428

Total deposits

$

4,620,670

$

4,642,443

$

4,400,019

$

4,447,965

$

4,368,748

Total loans and leases to total deposits ratio

96.5

%

93.3

%

97.3

%

95.1

%

95.1

%

SELECTED AVERAGE BALANCE SHEET DATA

Loans and leases

$

4,393,382

$

4,296,244

$

4,247,443

$

4,194,207

$

4,116,920

Investment securities

823,193

811,217

811,361

821,055

798,687

Interest-earning assets

5,346,934

5,221,612

5,094,048

5,062,628

5,014,333

Total assets

5,694,827

5,570,286

5,437,540

5,409,409

5,372,248

Noninterest-bearing demand deposits

1,003,508

999,217

969,965

964,498

988,451

Savings deposits

483,606

491,095

496,630

487,666

478,685

Interest-bearing transaction accounts

2,446,325

2,319,863

2,195,553

2,240,044

2,222,221

Time deposits

769,129

789,691

792,270

761,418

730,590

Total deposits

4,702,568

4,599,866

4,454,418

4,453,626

4,419,947

Short-term borrowings

50,196

36,702

73,305

55,137

43,130

Other borrowings

288,126

291,477

283,206

283,645

295,818

Total interest-bearing liabilities

4,037,382

3,928,828

3,840,964

3,827,910

3,770,444

Stockholders' equity

613,583

603,059

593,388

583,700

581,254


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

Dec 31,

Sept 30,

June 30,

March 31,

Dec 31,

(Dollars in thousands)

2018

2018

2018

2018

2017

AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)

ASSETS

Loans and leases

4.58

%

4.54

%

4.50

%

4.40

%

4.33

%

Taxable investment securities and other

2.44

%

2.26

%

2.21

%

2.17

%

2.17

%

Tax-exempt securities

2.74

%

2.71

%

2.66

%

2.65

%

3.21

%

Federal funds sold and interest-bearing cash accounts

2.19

%

1.87

%

1.65

%

1.40

%

1.06

%

Total interest-earning assets

4.20

%

4.14

%

4.12

%

4.02

%

3.95

%

LIABILITIES

Savings accounts

0.06

%

0.06

%

0.06

%

0.06

%

0.06

%

Interest-bearing transaction accounts

1.04

%

0.89

%

0.69

%

0.61

%

0.51

%

Time deposits

1.79

%

1.61

%

1.34

%

1.23

%

1.17

%

Borrowings

2.65

%

2.66

%

2.51

%

2.54

%

2.36

%

Total interest-bearing liabilities

1.21

%

1.08

%

0.91

%

0.83

%

0.75

%

Net interest spread (taxable equivalent basis)

2.99

%

3.06

%

3.21

%

3.19

%

3.20

%

Annualized net interest margin (taxable equivalent basis)

3.29

%

3.32

%

3.43

%

3.39

%

3.37

%

Annualized cost of deposits

0.84

%

0.73

%

0.59

%

0.52

%

0.45

%

ASSET QUALITY DATA

ALLOWANCE FOR LOAN AND LEASE LOSSES

Balance at beginning of period

$

37,293

$

36,604

$

35,644

$

35,455

$

33,925

Provision for loan and lease losses

591

1,046

1,492

1,284

1,218

Charge-offs

(381

)

(753

)

(963

)

(1,250

)

(347

)

Recoveries

185

396

431

155

659

Balance at end of period

$

37,688

$

37,293

$

36,604

$

35,644

$

35,455

NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)

Commercial, real estate

$

132

$

(115

)

$

181

$

(13

)

$

132

Commercial, industrial and other

(44

)

(26

)

213

992

25

Leases

28

366

69

21

34

Residential mortgages

(2

)

36

(3

)

79

31

Consumer and home equity

82

96

72

16

(534

)

Net charge-offs (recoveries)

$

196

$

357

$

532

$

1,095

$

(312

)

NON-PERFORMING ASSETS

Commercial, real estate

$

7,192

$

5,737

$

7,353

$

6,204

$

7,362

Commercial, industrial and other

1,019

1,189

1,171

1,505

184

Leases

501

441

834

250

144

Residential mortgages

1,986

2,347

2,992

3,045

3,860

Consumer and home equity

1,432

1,410

1,917

2,341

2,105

Total non-accrual loans and leases

12,130

11,124

14,267

13,345

13,655

Property acquired through foreclosure or repossession

830

2,754

2,184

1,392

843

Total non-performing assets

$

12,960

$

13,878

$

16,451

$

14,737

$

14,498

Loans past due 90 days or more and still accruing

$

$

16

$

$

1

$

200

Loans restructured and still accruing

$

9,293

$

9,030

$

7,926

$

9,526

$

11,462

Ratio of allowance for loan and lease losses to total loans and leases

0.84

%

0.86

%

0.85

%

0.84

%

0.85

%

Total non-accrual loans and leases to total loans and leases

0.27

%

0.26

%

0.33

%

0.32

%

0.33

%

Total non-performing assets to total assets

0.22

%

0.25

%

0.30

%

0.27

%

0.27

%

Annualized net charge-offs (recoveries) to average loans and leases

0.02

%

0.03

%

0.05

%

0.10

%

(0.03

)%


Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

At or for the Quarter Ended

Dec 31,

Sept 30,

June 30,

March 31,

Dec 31,

(Dollars in thousands, except per share amounts)

2018

2018

2018

2018

2017

CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE

Total common stockholders' equity at end of period - GAAP

$

623,739

$

607,555

$

597,864

$

588,648

$

583,122

Less: Goodwill

136,433

136,433

136,433

136,433

136,433

Less: Other identifiable intangible assets

1,768

1,910

2,052

2,205

2,362

Total tangible common stockholders' equity at end of period - Non-GAAP

$

485,538

$

469,212

$

459,379

$

450,010

$

444,327

Shares outstanding at end of period

47,486

47,485

47,484

47,476

47,354

Book value per share - GAAP

$

13.14

$

12.79

$

12.59

$

12.40

$

12.31

Tangible book value per share - Non-GAAP

$

10.22

$

9.88

$

9.67

$

9.48

$

9.38

CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

Total tangible common stockholders' equity at end of period - Non-GAAP

$

485,538

$

469,212

$

459,379

$

450,010

$

444,327

Total assets at end of period - GAAP

$

5,806,093

$

5,627,057

$

5,534,488

$

5,477,829

$

5,405,639

Less: Goodwill

136,433

136,433

136,433

136,433

136,433

Less: Other identifiable intangible assets

1,768

1,910

2,052

2,205

2,362

Total tangible assets at end of period - Non-GAAP

$

5,667,892

$

5,488,714

$

5,396,003

$

5,339,191

$

5,266,844

Common equity to assets - GAAP

10.74

%

10.80

%

10.80

%

10.75

%

10.79

%

Tangible common equity to tangible assets - Non-GAAP

8.57

%

8.55

%

8.51

%

8.43

%

8.44

%

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

15,550

$

16,758

$

15,838

$

15,255

$

13,175

Total average common stockholders' equity - GAAP

$

613,583

$

603,059

$

593,388

$

583,700

$

581,254

Less: Average goodwill

136,433

136,433

136,433

136,433

136,433

Less: Average other identifiable intangible assets

1,844

1,982

2,134

2,300

2,450

Total average tangible common stockholders' equity - Non-GAAP

$

475,306

$

464,644

$

454,821

$

444,967

$

442,371

Return on average common stockholders' equity - GAAP

10.05

%

11.02

%

10.71

%

10.60

%

8.99

%

Return on average tangible common stockholders' equity - Non-GAAP

12.98

%

14.31

%

13.97

%

13.90

%

11.82

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

28,663

$

27,793

$

27,574

$

27,137

$

25,849

Amortization of core deposit intangibles

(142

)

(142

)

(153

)

(157

)

(165

)

Merger related expenses

(464

)

Noninterest expense, as adjusted

$

28,057

$

27,651

$

27,421

$

26,980

$

25,684

Net interest income

$

44,206

$

43,624

$

43,493

$

42,236

$

42,379

Total noninterest income

5,628

5,639

5,709

5,334

5,776

Total revenue

49,834

49,263

49,202

47,570

48,155

Tax-equivalent adjustment on municipal securities

109

113

114

118

247

Total revenue, as adjusted

$

49,943

$

49,376

$

49,316

$

47,688

$

48,402

Efficiency ratio - Non-GAAP

56.18

%

56.00

%

55.60

%

56.58

%

53.06

%


Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

For the Twelve Months Ended December 31,

(Dollars in thousands)

2018

2017

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

63,401

$

52,580

Total average common stockholders' equity - GAAP

$

598,527

$

568,680

Less: Average goodwill

136,433

136,095

Less: Average other identifiable intangible assets

2,064

2,847

Total average tangible common stockholders' equity - Non-GAAP

$

460,030

$

429,738

Return on average common stockholders' equity - GAAP

10.59

%

9.25

%

Return on average tangible common stockholders' equity - Non-GAAP

13.78

%

12.24

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

111,167

$

104,534

Amortization of core deposit intangibles

(594

)

(654

)

Long-term debt prepayment fee

(2,828

)

Merger related expenses

(464

)

Noninterest expense, as adjusted

$

110,109

$

101,052

Net interest income

$

173,559

$

165,238

Noninterest income

22,310

25,435

Total revenue

195,869

190,673

Tax-equivalent adjustment on municipal securities

454

1,074

Gains on sales of investment securities

(2,524

)

Total revenue, as adjusted

$

196,323

$

189,223

Efficiency ratio - Non-GAAP

56.09

%

53.40

%


Lakeland Bancorp, Inc.

Supplemental Information - Reconciliation of Net Income

(Unaudited)

For the Quarter Ended

Dec 31,

Dec 31,

(Dollars in thousands, except per share amounts)

2018

2017

Net income - GAAP

$

15,550

$

13,175

NON-ROUTINE TRANSACTIONS, NET OF TAX

Branch dispositions

392

Severance accrual

97

Tax deductible merger related expenses

84

Non-tax deductible merger related expenses

345

New Jersey state tax - change in timing of realization of deferred tax assets

320

One-time impact of Tax Cuts and Jobs Act of 2017

602

Net effect of non-routine transactions

1,238

602

Net income available to common shareholders excluding non-routine transactions

$

16,788

$

13,777

Less: Earnings allocated to participating securities

(143

)

(118

)

Net Income, excluding non-routine transactions

$

16,645

$

13,659

Weighted average shares - Basic

47,605

$

47,466

Weighted average shares - Diluted

47,780

$

47,719

Basic earnings per share - GAAP

$

0.32

$

0.28

Diluted earnings per share - GAAP

$

0.32

$

0.27

Basic earnings per share, adjusted for non-routine transactions

$

0.35

$

0.29

Diluted earnings per share, adjusted for non-routine transactions (Core EPS)

$

0.35

$

0.29

Return on average assets - GAAP

1.08

%

0.97

%

Return on average assets, adjusted for non-routine transactions

1.17

%

1.02

%

Return on average common stockholders' equity - GAAP

10.05

%

8.99

%

Return on average common stockholders' equity, adjusted for non-routine transactions

10.85

%

9.40

%

Return on average tangible common stockholders' equity - Non-GAAP

12.98

%

11.82

%

Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions

14.01

%

12.36

%