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Lakeland Bancorp Announces Quarterly and Year-End 2020 Earnings; Updates Loan Deferrals and Share Repurchase Plan

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Lakeland Bancorp, Inc.
·36 min read
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OAK RIDGE, N.J. , Jan. 28, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $18.8 million and earnings per diluted share ("EPS") of $0.37 for the three months ended December 31, 2020, compared to net income of $14.4 million and diluted earnings per share of $0.28 for the third quarter of 2020 and net income of $18.7 million and diluted EPS of $0.37 for the fourth quarter of 2019. For the fourth quarter of 2020, annualized return on average assets was 0.98%, annualized return on average common equity was 9.96% and annualized return on average tangible common equity was 12.64%.

For the year ended December 31, 2020, the Company reported net income of $57.5 million, a 19% decrease compared to $70.7 million for the same period in 2019 resulting in annualized return on average assets of 0.80%, annualized return on average common equity of 7.74%, and annualized return on average tangible common equity of 9.86%. For 2020, the Company reported diluted EPS of $1.13, compared to diluted EPS of $1.38 for 2019.

The 2020 financial results were adversely impacted by an elevated provision for credit losses of $27.2 million, compared to a provision for loan losses of $2.1 million for 2019. The increased provision for 2020 was primarily due to COVID-19's negative impact on forecasted economic conditions and credit loss projections with the remainder of the provision attributable to loan growth. As of December 31, 2020, the ratio of the allowance for credit loss for loans to total loans was 1.18% compared to 0.78% as of December 31, 2019. The allowance for credit losses on loans to total loans excluding Paycheck Protection Program ("PPP") loans of $284.6 million was 1.24% as of December 31, 2020.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "2020 turned out to be a year that no one could have anticipated. We have all been directly or indirectly impacted by the events of the past year and, while it has presented many challenges, I could not be prouder of our Lakeland team for going above and beyond to support our customers and communities. Our team worked tirelessly to ensure the needs of our customers were addressed by increasing our lending, extending PPP loans, granting loan payment deferrals to borrowers, keeping our branches open and increasing donations to the communities we serve. The ongoing pandemic has impacted every sector of our society and dramatically changed the financial services industry. Yet, Lakeland maintained its position as one of New Jersey’s leading banks and developed even closer relationships with our customers in the last year. We will continue to prudently navigate the current environment with the safety of our customers and associates at the forefront.”

Mr. Shara continued, “Our financial performance in this environment was strong and directly related to our focus on addressing our customers' needs. In 2020, we experienced substantial balance sheet growth in both our loan and deposit portfolios. Our provision for projected credit losses increased significantly due to the pandemic; however, our loan charge-offs remained very low for the year. Due to our strong capital position, we will be recommencing our share repurchase plan in the first quarter of 2021.”

Q4 2020 Highlights

  • Loans on payment deferral at December 31, 2020 totaled $9.7 million, or 0.2% of total loans.

  • Balance sheet restructure in October involving the payoff of $99.9 million in FHLB borrowings, resulted in a prepayment fee of $3.8 million, partially offset by gain on securities sales of $871,000.

  • Net interest margin increased 12 basis points to 3.08% compared to the linked quarter.

  • The Company adopted CECL at December 31, 2020, and recorded a Q4 provision for credit losses of $789,000 compared to $8 million in Q3 2020.

  • Loan and deposit portfolios continued their steady growth, each increasing 3% compared to the linked quarter.

Full Year 2020 Highlights

  • Total asset growth of 14% to $7.66 billion at December 31, 2020.

  • Strong organic loan growth of 12% or $605.6 million, which excludes PPP loans.

  • Deposit generation of 22% or $1.16 billion, including 34% growth in noninterest-bearing deposits.

  • Net loan charge-offs for the year totaled $1.5 million, or 0.03% of average loans.

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 December 31, 2020, loans on payment deferral totaled $9.7 million, or 0.2% of total loans compared to $154 million, or 2.6% of total loans at September 30, 2020. The reduction in payment deferrals since September 30, 2020, was due primarily to borrowers resuming their regular payment schedule. In addition, during the fourth quarter of 2020, we modified $39.0 million in loans on payment deferment in accordance with the provisions of the CARES Act. We are also a participant in the Small Business Administration PPP to help strengthen local businesses and preserve jobs in our communities and had originally funded $326.6 million with $11.1 million in related fees, as well as $1.1 million in deferred costs. The Company is currently accepting online applications for PPP First Draw Loans to first-time borrowers as well as PPP Second Draw Loans for previous PPP borrowers under the Economic Aid Act.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2020 of 3.08% increased 12 basis points from the linked quarter and decreased 19 basis points compared to the fourth quarter of 2019. The increase in net interest margin compared to the third quarter was due in part to the impact of the reduction of FHLB borrowings as a result of the balance sheet restructure in the fourth quarter of 2020 as well as an increase in prepayment fees, a decrease in cash balances and a decrease in the cost of interest-bearing liabilities. The decrease compared to the fourth quarter of 2019 was primarily a result of the current low interest rate environment resulting in lower yields on interest-earning assets as well as higher cash levels. Net interest margin for 2020 was 3.09% compared to 3.33% for the same period in 2019.

The yield on interest-earning assets for the fourth quarter of 2020 was 3.51% compared to 3.49% for the linked quarter and 4.21% for the fourth quarter of 2019. The yield on interest-earning assets for 2020 was 3.70% compared to 4.36% for 2019. The decrease in yield on interest-earning assets, when compared to 2019 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, increased balance of lower-yielding federal funds sold, as well as the origination of lower-yielding PPP loans during 2020.

The cost of interest-bearing liabilities decreased in the fourth quarter of 2020 to 0.59% compared to 0.72% for the linked quarter and 1.26% for the fourth quarter of 2019. The cost of interest-bearing liabilities for 2020 was 0.83% compared to 1.35% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings continue to decrease since 2019 largely driven by reductions in market interest rates.

Net interest income increased to $55.1 million for the fourth quarter of 2020 compared to $49.5 million for the fourth quarter of 2019, due primarily to the growth of interest-earning assets as well as lower interest rates on interest-bearing liabilities partially offset by an increase in interest-bearing liabilities and lower yields on interest-earning assets. Net interest income for 2020 was $207.7 million, as compared to $196.0 million for the same period in 2019 due to the same reason as the quarterly comparison.

Noninterest Income

Noninterest income decreased $1.1 million to $6.8 million for the fourth quarter of 2020 from $8.0 million for the fourth quarter of 2019 due primarily to a reduction of $1.2 million in loan swap income. Service charges on deposit accounts decreased $541,000 due to changes in customer behavior resulting from the pandemic. Gain on sales of loans in the fourth quarter of 2020 increased $385,000 due primarily to the low interest rate environment. Fourth quarter 2020 results also included an $871,000 gain on sales of securities compared to no gain on sales of securities during the same period in 2019. Other income decreased $593,000 compared to the fourth quarter of 2019 due primarily to gains resulting from payoffs of purchased credit impaired loans during the fourth quarter of 2019.

For 2020, noninterest income totaled $27.1 million compared to $26.8 million for the same period in 2019. Gains on sales of loans and swap income increased $1.7 million and $1.5 million, respectively, compared to 2019, both due primarily to the low interest rate environment. Gain on sales of securities totaled $1.2 million in 2020 compared to no such gains in 2019. These variances were partially offset by a decrease in service charges on deposit accounts of $2.1 million, a reduction in equity securities valuation by $1.0 million and a decrease in other income of $499,000 compared to 2019.

Noninterest Expense

Noninterest expense totaled $36.9 million for the fourth quarter of 2020 and increased $5.4 million compared to the fourth quarter of 2019 due primarily to prepayment fees of $3.8 million resulting from the prepayment of $99.9 million in FHLB debt at a weighted average rate of 2.34%. Salary and employee benefit expense increased $586,000, or 3%, due primarily to normal merit increases. Furniture and equipment in the fourth quarter of 2020 increased $726,000 due primarily to an increase in IT service agreement expense compared to the fourth quarter of 2019. FDIC expense was $750,000 in the fourth quarter of 2020 compared to zero in the fourth quarter of 2019 as the FDIC insurance fund reserve ratio exceeded the required level and the Company received credits to offset its fourth quarter 2019 assessment.

For 2020, noninterest expense totaled $132.8 million compared to $126.8 million for the same period in 2019. The primary increase was $4.1 million in FHLB loan prepayment fees on balance sheet restructurings during 2020. Salary and employee benefit expense increased $3.1 million, or 4%, due primarily to an increase in staffing levels as well as normal merit increases. Furniture and equipment in 2020 increased $2.6 million due to the same reason mentioned in the quarterly comparison. FDIC insurance expense increased $1.7 million in 2020 primarily due to an increase in deposit balances and the application of FDIC assessment credits in 2019 as mentioned in the previous paragraph. Noninterest expense in 2019 included merger-related expenses of $3.2 million resulting from the merger with Highlands Bancorp.

Income Tax Expense

The effective tax rate for the fourth quarter of 2020 was 22.3% compared to 24.9% for the fourth quarter of 2019. The effective tax rate for 2020 was 23.1% compared to 24.8% for 2019.

Financial Condition

At December 31, 2020, total assets were $7.66 billion, an increase of $953.1 million, including $284.6 million in PPP loans, compared to December 31, 2019. For the twelve months ended December 31, 2020, total loans grew $883.4 million, or 17% to $6.02 billion and investment securities increased $54.3 million or 6% to $973.2 million. On the funding side, total deposits increased $1.16 billion or 22% to $6.46 billion, while borrowings decreased $299.9 million or 49% to $312.8 million. At December 31, 2020, total loans as a percent of total deposits was 93.4%.

Asset Quality

At December 31, 2020, non-performing assets increased to $36.1 million, 0.47% 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 0.60% at December 31, 2020 compared to 0.41% at December 31, 2019. The allowance for credit losses increased to $71.1 million, 1.18% of total loans, at December 31, 2020, compared to $40.0 million, 0.78% of total loans, at December 31, 2019. Excluding PPP loans, the ratio of allowance for loan losses to total loans was 1.24%. The increase from December 31, 2019, was primarily due to the adoption of CECL and the impact of COVID-19. The Company adopted CECL at December 31, 2020, and recorded an increase in the allowance for credit losses on loans of $6.7 million effective January 1, 2020. In the fourth quarter of 2020, the Company had net charge-offs of $528,000, or 0.04% of average loans, annualized, compared to net recoveries of $262,000, or 0.02% of average loans, annualized, for the same period in 2019. Provision for credit losses for the fourth quarter of 2020 was $789,000 compared to $1.1 million in the fourth quarter of 2019.

Capital

At December 31, 2020, stockholders' equity was $763.8 million compared to $725.3 million at December 31, 2019, a 5% increase. Lakeland Bancorp remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.37% at December 31, 2020. At December 31, 2020, the book value per common share increased 5% to $15.13 and tangible book value per common share increased 7% to $11.97. On January 26, 2021, the Company declared a quarterly cash dividend of $0.125 per share to be paid on February 17, 2021, to shareholders of record as of February 8, 2021. The Company will recommence its existing share repurchase plan, which has 2.4 million shares remaining under the current plan, in the first quarter of 2021.

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, and competition. Further, given its ongoing and dynamic nature, it is difficult to predict what the continuing effects of the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, continue to result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely. 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, 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, 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 had $7.66 billion in total assets at December 31, 2020. 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 or 973-697-2000 for more information.

Thomas J. Shara

Thomas F. Splaine

President & CEO

EVP & CFO



Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
December 31,

Twelve Months Ended
December 31,

(Dollars in thousands, except per share amounts)

2020

2019

2020

2019

INCOME STATEMENT

Net interest income

$

55,135

$

49,548

$

207,687

$

196,034

Provision for credit losses

(789

)

(1,086

)

(27,222

)

(2,130

)

Gain on sales of investment securities

871

1,213

Gain on sales of loans

760

375

3,322

1,660

Gain (loss) on equity securities

73

(29

)

(552

)

496

Other noninterest income

5,141

7,638

23,127

24,640

Long-term debt prepayment fee

(3,777

)

(4,133

)

Merger-related expenses

(3,178

)

Other noninterest expense

(33,168

)

(31,523

)

(128,665

)

(123,578

)

Pretax income

24,246

24,923

74,777

93,944

Provision for income taxes

(5,398

)

(6,208

)

(17,259

)

(23,272

)

Net income

$

18,848

$

18,715

$

57,518

$

70,672

Basic earnings per common share

$

0.37

$

0.37

$

1.13

$

1.39

Diluted earnings per common share

$

0.37

$

0.37

$

1.13

$

1.38

Dividends paid per common share

$

0.125

$

0.125

$

0.500

$

0.490

Weighted average shares - basic

50,527

50,566

50,540

50,477

Weighted average shares - diluted

50,672

50,748

50,650

50,642

SELECTED OPERATING RATIOS

Annualized return on average assets

0.98

%

1.15

%

0.80

%

1.12

%

Annualized return on average common equity

9.96

%

10.32

%

7.74

%

10.14

%

Annualized return on average tangible common equity (1)

12.64

%

13.29

%

9.86

%

13.16

%

Annualized yield on interest-earning assets

3.51

%

4.21

%

3.70

%

4.36

%

Annualized cost of interest-bearing liabilities

0.59

%

1.26

%

0.83

%

1.35

%

Annualized net interest spread

2.92

%

2.96

%

2.87

%

3.00

%

Annualized net interest margin

3.08

%

3.27

%

3.09

%

3.33

%

Efficiency ratio (1)

53.74

%

54.20

%

54.54

%

54.83

%

Stockholders' equity to total assets

9.97

%

10.81

%

Book value per common share

$

15.13

$

14.36

Tangible book value per common share (1)

$

11.97

$

11.18

Tangible common equity to tangible assets (1)

8.05

%

8.62

%

ASSET QUALITY RATIOS

December 31,
2020

December 31,
2019

Ratio of allowance for credit losses on loans to total loans

1.18

%

0.78

%

Non-performing loans to total loans

0.60

%

0.41

%

Non-performing assets to total assets

0.47

%

0.32

%

Annualized net charge-offs (recoveries) to average loans

0.03

%

%

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



Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

(Dollars in thousands)

December 31,
2020

December 31,
2019

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans

$

6,021,232

$

5,137,823

Allowance for credit losses on loans

71,124

40,003

Investment securities

973,185

918,853

Total assets

7,664,297

6,711,236

Total deposits

6,455,783

5,293,779

Short-term borrowings

169,560

328,658

Other borrowings

143,257

284,036

Stockholders' equity

763,784

725,263

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2020

2019

2020

2019

SELECTED AVERAGE BALANCE SHEET DATA

Loans

$

5,939,904

$

5,025,377

$

5,626,273

$

4,938,298

Investment securities

912,723

894,698

889,223

869,374

Interest-earning assets

7,137,884

6,022,525

6,735,825

5,895,669

Total assets

7,625,458

6,470,082

7,208,366

6,322,654

Noninterest-bearing demand deposits

1,499,093

1,130,192

1,362,918

1,092,827

Savings deposits

571,794

492,903

535,754

500,650

Interest-bearing transaction accounts

3,313,556

2,814,831

3,035,626

2,653,404

Time deposits

1,112,053

873,924

1,064,187

922,412

Total deposits

6,496,496

5,311,850

5,998,485

5,169,293

Short-term borrowings

68,962

67,097

92,425

95,035

Other borrowings

155,943

284,049

244,000

290,330

Total interest-bearing liabilities

5,222,308

4,532,804

4,971,992

4,461,831

Stockholders' equity

753,059

719,292

743,225

697,037



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)

2020

2019

2020

2019

INTEREST INCOME

Loans and fees

$

58,553

$

58,211

$

229,036

$

233,535

Federal funds sold and interest-bearing deposits with banks

61

423

348

1,720

Taxable investment securities and other

3,680

4,857

17,811

19,722

Tax exempt investment securities

565

345

1,647

1,510

TOTAL INTEREST INCOME

62,859

63,836

248,842

256,487

INTEREST EXPENSE

Deposits

6,090

11,722

32,059

49,248

Federal funds purchased and securities sold under agreements to repurchase

25

138

556

1,471

Other borrowings

1,609

2,428

8,540

9,734

TOTAL INTEREST EXPENSE

7,724

14,288

41,155

60,453

NET INTEREST INCOME

55,135

49,548

207,687

196,034

Provision for credit losses

789

1,086

27,222

2,130

NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES

54,346

48,462

180,465

193,904

NONINTEREST INCOME

Service charges on deposit accounts

2,485

3,026

9,148

11,205

Commissions and fees

1,365

1,548

5,868

6,230

Income on bank owned life insurance

657

676

2,657

2,740

Gain (loss) on equity securities

73

(29

)

(552

)

496

Gain on sales of loans

760

375

3,322

1,660

Gain on sales and calls of investment securities,net

871

1,213

Swap income

485

1,646

4,719

3,231

Other income

149

742

735

1,234

TOTAL NONINTEREST INCOME

6,845

7,984

27,110

26,796

NONINTEREST EXPENSE

Salaries and employee benefit expense

20,201

19,615

80,399

77,287

Net occupancy expense

2,580

2,679

10,596

11,029

Furniture and equipment expense

3,042

2,316

11,275

8,681

FDIC insurance expense

750

2,123

431

Stationary, supplies and postage expense

409

385

1,677

1,599

Marketing expense

413

515

1,253

1,945

Data processing expense

1,064

1,113

4,964

4,913

Telecommunications expense

476

492

1,875

1,943

ATM and debit card expense

593

604

2,331

2,377

Core deposit intangible amortization

249

289

1,025

1,182

Other real estate owned and other repossessed assets expense

33

53

256

Long-term debt prepayment fee

3,777

4,133

Merger-related expenses

3,178

Other expenses

3,391

3,482

11,094

11,935

TOTAL NONINTEREST EXPENSE

36,945

31,523

132,798

126,756

INCOME BEFORE PROVISION FOR INCOME TAXES

24,246

24,923

74,777

93,944

Provision for income taxes

5,398

6,208

17,259

23,272

NET INCOME

$

18,848

$

18,715

$

57,518

$

70,672

EARNINGS PER COMMON SHARE:

Basic

$

0.37

$

0.37

$

1.13

$

1.39

Diluted

$

0.37

$

0.37

$

1.13

$

1.38

DIVIDENDS PAID PER COMMON SHARE

$

0.125

$

0.125

$

0.500

$

0.490



Lakeland Bancorp, Inc.

Consolidated Balance Sheets

(Dollars in thousands)

December 31, 2020

December 31, 2019

(Unaudited)

ASSETS

Cash

$

262,327

$

275,794

Interest-bearing deposits due from banks

7,763

6,577

Total cash and cash equivalents

270,090

282,371

Investment securities available for sale, at estimated fair value (allowance for credit losses of $2
at December 31, 2020)

855,746

755,900

Investment securities, held to maturity (estimated fair value of $93,868 at December 31, 2020 and $124,904 at December 31, 2019 and no allowance for credit losses at December 31, 2020)

90,766

123,975

Equity securities, at fair value

14,694

16,473

Federal Home Loan Bank and other membership stocks, at cost

11,979

22,505

Loans held for sale

1,335

1,743

Loans, net of deferred fees

6,021,232

5,137,823

Less: Allowance for credit losses

71,124

40,003

Net loans

5,950,108

5,097,820

Premises and equipment, net

48,495

47,608

Operating lease right-of-use assets

16,772

18,282

Accrued interest receivable

19,339

16,832

Goodwill

156,277

156,277

Other identifiable intangible assets

3,288

4,314

Bank owned life insurance

115,115

112,392

Other assets

110,293

54,744

TOTAL ASSETS

$

7,664,297

$

6,711,236

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Deposits:

Noninterest-bearing

$

1,510,224

$

1,124,121

Savings and interest-bearing transaction accounts

3,867,303

3,298,854

Time deposits $250 thousand and under

895,056

652,144

Time deposits over $250 thousand

183,200

218,660

Total deposits

6,455,783

5,293,779

Federal funds purchased and securities sold under agreements to repurchase

169,560

328,658

Other borrowings

25,000

165,816

Subordinated debentures

118,257

118,220

Operating lease liabilities

18,183

19,814

Other liabilities

113,730

59,686

TOTAL LIABILITIES

6,900,513

5,985,973

STOCKHOLDERS' EQUITY

Common stock, no par value; authorized 100,000,000 shares; issued 50,610,681 shares and outstanding 50,479,646 shares at December 31, 2020 and issued and outstanding 50,489,410 shares at December 31, 2019

562,421

560,263

Treasury shares, at cost, 131,035 shares at December 31, 2020 and no shares at December 31, 2019

(1,452

)

Retained earnings

191,418

162,752

Accumulated other comprehensive income (loss)

11,397

2,248

TOTAL STOCKHOLDERS' EQUITY

763,784

725,263

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

7,664,297

$

6,711,236



Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands, except per share data)

2020

2020

2020

2020

2019

INCOME STATEMENT

Net interest income

$

55,135

$

52,134

$

50,519

$

49,899

$

49,548

Provision for credit losses (1)

(789

)

(8,000

)

(9,000

)

(9,223

)

(1,086

)

Gain on sales of investment securities

871

342

Gain on sales of loans

760

1,437

710

415

375

Gain (loss) on equity securities

73

(170

)

198

(653

)

(29

)

Other noninterest income

5,141

5,506

4,573

7,907

7,638

Long-term debt prepayment fee

(3,777

)

(356

)

Other noninterest expense

(33,168

)

(32,097

)

(31,462

)

(32,148

)

(31,523

)

Pretax income

24,246

18,810

15,538

16,183

24,923

Provision for income taxes

(5,398

)

(4,383

)

(3,687

)

(3,791

)

(6,208

)

Net income

$

18,848

$

14,427

$

11,851

$

12,392

$

18,715

Basic earnings per common share

$

0.37

$

0.28

$

0.23

$

0.24

$

0.37

Diluted earnings per common share

$

0.37

$

0.28

$

0.23

$

0.24

$

0.37

Dividends paid per common share

$

0.125

$

0.125

$

0.125

$

0.125

$

0.125

Dividends paid

$

6,364

$

6,365

$

6,365

$

6,364

$

6,363

Weighted average shares - basic

50,527

50,526

50,522

50,586

50,566

Weighted average shares - diluted

50,672

50,620

50,593

50,728

50,748

SELECTED OPERATING RATIOS

Annualized return on average assets

0.98

%

0.76

%

0.67

%

0.76

%

1.15

%

Annualized return on average common equity

9.96

%

7.64

%

6.42

%

6.77

%

10.32

%

Annualized return on average tangible common equity (2)

12.64

%

9.71

%

8.19

%

8.65

%

13.29

%

Annualized net interest margin

3.08

%

2.96

%

3.06

%

3.28

%

3.27

%

Efficiency ratio (2)

53.40

%

53.96

%

55.62

%

55.30

%

54.20

%

Common stockholders' equity to total assets

9.97

%

10.02

%

9.96

%

10.51

%

10.81

%

Tangible common equity to tangible assets (2)

8.05

%

8.06

%

7.99

%

8.41

%

8.62

%

Tier 1 risk-based ratio

10.22

%

10.34

%

10.45

%

10.61

%

11.02

%

Total risk-based ratio

12.85

%

12.93

%

12.98

%

13.04

%

13.40

%

Tier 1 leverage ratio

8.37

%

8.36

%

8.69

%

9.38

%

9.41

%

Common equity tier 1 capital ratio

9.73

%

9.83

%

9.93

%

10.08

%

10.46

%

Book value per common share

$

15.13

$

14.93

$

14.77

$

14.60

$

14.36

Tangible book value per common share (2)

$

11.97

$

11.77

$

11.60

$

11.43

$

11.18

(1) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on December 31, 2020, with a transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.
(2) See Supplemental Information - Non-GAAP Financial Measures



Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands)

2020

2020

2020

2020

2019

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans

$

6,031,220

$

5,855,024

$

5,769,127

$

5,331,863

$

5,140,940

Allowance for credit losses on loans (3)

71,124

65,242

57,839

48,884

40,003

Investment securities

973,185

909,535

957,985

974,319

918,853

Total assets

7,664,297

7,522,184

7,488,516

7,013,908

6,711,236

Total deposits

6,455,783

6,266,516

6,125,502

5,455,138

5,293,779

Short-term borrowings

169,560

97,874

183,116

419,085

328,658

Other borrowings

143,257

253,359

273,954

258,944

284,036

Stockholders' equity

763,784

753,572

745,489

736,922

725,263

LOANS

Commercial, secured by real estate

$

4,514,649

$

4,326,074

$

4,260,917

$

4,073,911

$

3,924,762

Commercial, industrial and other

439,503

426,821

402,239

467,346

431,934

Paycheck Protection Program

284,636

325,115

325,999

Equipment financing

114,737

116,410

115,651

116,421

111,076

Residential mortgages

376,416

342,583

334,455

334,114

335,191

Consumer and home equity

301,279

318,021

329,866

340,071

337,977

Total loans

$

6,031,220

$

5,855,024

$

5,769,127

$

5,331,863

$

5,140,940

DEPOSITS

Noninterest-bearing

$

1,510,224

$

1,474,847

$

1,486,273

$

1,129,695

$

1,124,121

Savings and interest-bearing transaction accounts

3,867,303

3,647,328

3,510,723

3,241,397

3,298,854

Time deposits

1,078,256

1,144,341

1,128,506

1,084,046

870,804

Total deposits

$

6,455,783

$

6,266,516

$

6,125,502

$

5,455,138

$

5,293,779

Total loans to total deposits ratio

93.4

%

93.4

%

94.2

%

97.7

%

97.1

%

SELECTED AVERAGE BALANCE SHEET DATA

Loans

$

5,939,904

$

5,775,093

$

5,572,865

$

5,208,097

$

5,025,377

Investment securities

912,723

873,066

891,037

879,987

894,698

Interest-earning assets

7,137,884

7,009,939

6,650,993

6,133,003

6,022,525

Total assets

7,625,458

7,516,069

7,137,529

6,565,302

6,470,082

Noninterest-bearing demand deposits

1,499,093

1,475,422

1,364,785

1,109,638

1,130,192

Savings deposits

571,794

548,662

525,224

496,798

492,903

Interest-bearing transaction accounts

3,313,556

3,086,260

2,908,299

2,830,778

2,814,831

Time deposits

1,112,053

1,176,181

1,093,760

872,998

873,924

Total deposits

6,496,496

6,286,525

5,892,068

5,310,212

5,311,850

Short-term borrowings

68,962

58,845

82,694

159,825

67,097

Other borrowings

155,943

269,093

273,904

277,753

284,049

Total interest-bearing liabilities

5,222,308

5,139,042

4,883,881

4,638,152

4,532,804

Stockholders' equity

753,059

751,099

742,050

736,719

719,292

(3) The Company adopted CECL on December 31, 2020, with a transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.



Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

December 31,

September 30,

June 30,

March 31,

December 31,

(Dollars in thousands)

2020

2020

2020

2020

2019

AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)

ASSETS

Loans

3.92

%

3.91

%

4.03

%

4.47

%

4.60

%

Taxable investment securities and other

1.84

%

2.09

%

2.31

%

2.56

%

2.34

%

Tax-exempt securities

2.51

%

2.55

%

2.70

%

2.67

%

2.69

%

Federal funds sold and interest-bearing cash accounts

0.09

%

0.10

%

0.08

%

1.42

%

1.65

%

Total interest-earning assets

3.51

%

3.49

%

3.69

%

4.17

%

4.21

%

LIABILITIES

Savings accounts

0.05

%

0.06

%

0.07

%

0.07

%

0.07

%

Interest-bearing transaction accounts

0.38

%

0.44

%

0.55

%

0.97

%

1.05

%

Time deposits

1.01

%

1.19

%

1.48

%

1.81

%

1.93

%

Borrowings

2.84

%

2.73

%

2.62

%

2.54

%

2.86

%

Total interest-bearing liabilities

0.59

%

0.72

%

0.86

%

1.18

%

1.26

%

Net interest spread (taxable equivalent basis)

2.92

%

2.77

%

2.83

%

2.99

%

2.96

%

Annualized net interest margin (taxable equivalent basis)

3.08

%

2.96

%

3.06

%

3.28

%

3.27

%

Annualized cost of deposits

0.37

%

0.44

%

0.55

%

0.82

%

0.88

%

ASSET QUALITY DATA

ALLOWANCE FOR CREDIT LOSSES ON LOANS

Balance at beginning of period

$

65,242

$

57,839

$

48,884

$

40,003

$

38,655

Provision for credit losses on loans

(246

)

8,000

9,000

9,223

1,086

Charge-offs

(746

)

(682

)

(142

)

(483

)

(198

)

Recoveries

218

85

97

141

460

Balance at end of period

$

64,468

$

65,242

$

57,839

$

48,884

$

40,003

Impact of adopting CECL (4)

6,656

$

71,124

NET LOAN CHARGE-OFFS (RECOVERIES)

Commercial, secured by real estate

$

(47

)

$

298

$

(36

)

$

111

$

(18

)

Commercial, industrial and other

478

173

(13

)

(31

)

13

Equipment financing

64

95

(11

)

71

(297

)

Residential mortgages

(1

)

96

Consumer and home equity

33

32

105

95

40

Net charge-offs (recoveries)

$

528

$

597

$

45

$

342

$

(262

)

NON-PERFORMING ASSETS

Commercial, secured by real estate

$

30,085

$

26,145

$

25,615

$

24,770

$

13,281

Commercial, industrial and other

1,286

1,484

1,546

1,909

1,539

Equipment financing

320

444

400

199

284

Residential mortgages

2,190

2,695

2,860

2,837

3,428

Consumer and home equity

2,241

2,322

2,432

2,689

2,606

Total non-accrual loans

36,122

33,090

32,853

32,404

21,138

Property acquired through foreclosure or repossession

354

393

563

Total non-performing assets

$

36,122

$

33,090

$

33,207

$

32,797

$

21,701

Loans past due 90 days or more and still accruing

$

1

$

165

$

58

$

99

$

Loans restructured and still accruing

$

3,856

$

4,299

$

4,667

$

4,719

$

5,650

Ratio of allowance for credit losses to total loans (2)

1.18

%

1.11

%

1.00

%

0.92

%

0.78

%

Total non-accrual loans to total loans

0.60

%

0.57

%

0.57

%

0.61

%

0.41

%

Total non-performing assets to total assets

0.47

%

0.44

%

0.44

%

0.47

%

0.32

%

Annualized net charge-offs (recoveries) to average loans

0.04

%

0.04

%

%

0.03

%

(0.02

)%

(4) The Company adopted CECL on December 31, 2020 with a $6.7 million transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.



Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

At or for the Quarter Ended

(Dollars in thousands, except ratios and per share amounts)

December 31,
2020

September 30,
2020

June 30,
2020

March 31,
2020

December 31,
2019

CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE

Total common stockholders' equity at end of period - GAAP

$

763,784

$

753,572

$

745,489

$

736,922

$

725,263

Less: Goodwill

156,277

156,277

156,277

156,277

156,277

Less: Other identifiable intangible assets

3,288

3,538

3,788

4,049

4,314

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

$

604,219

$

593,757

$

585,424

$

576,596

$

564,672

Shares outstanding at end of period

50,480

50,468

50,463

50,462

50,498

Book value per share - GAAP

$

15.13

$

14.93

$

14.77

$

14.60

$

14.36

Tangible book value per share - Non-GAAP

$

11.97

$

11.77

$

11.60

$

11.43

$

11.18

CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

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

$

604,219

$

593,757

$

585,424

$

576,596

$

564,672

Total assets at end of period - GAAP

$

7,664,297

$

7,522,184

$

7,488,516

$

7,013,908

$

6,711,236

Less: Goodwill

156,277

156,277

156,277

156,277

156,277

Less: Other identifiable intangible assets

3,288

3,538

3,788

4,049

4,314

Total tangible assets at end of period - Non-GAAP

$

7,504,732

$

7,362,369

$

7,328,451

$

6,853,582

$

6,550,645

Common equity to assets - GAAP

9.97

%

10.02

%

9.96

%

10.51

%

10.81

%

Tangible common equity to tangible assets - Non-GAAP

8.05

%

8.06

%

7.99

%

8.41

%

8.62

%

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

18,848

$

14,427

$

11,851

$

12,392

$

18,715

Total average common stockholders' equity - GAAP

$

753,059

$

751,099

$

742,050

$

736,719

$

719,292

Less: Average goodwill

156,277

156,277

156,277

156,277

156,277

Less: Average other identifiable intangible assets

3,433

3,689

3,942

4,205

4,468

Total average tangible common stockholders' equity - Non-GAAP

$

593,349

$

591,133

$

581,831

$

576,237

$

558,547

Return on average common stockholders' equity - GAAP

9.96

%

7.64

%

6.42

%

6.77

%

10.32

%

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

12.64

%

9.71

%

8.19

%

8.65

%

13.29

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

36,945

$

32,097

$

31,462

$

32,504

$

31,523

Amortization of core deposit intangibles

(249

)

(250

)

(261

)

(265

)

(289

)

Merger-related expenses

Long-term debt prepayment fee

(3,777

)

(356

)

Noninterest expense, as adjusted

$

32,919

$

31,847

$

31,201

$

31,883

$

31,234

Net interest income

$

55,135

$

52,134

$

50,519

$

49,899

$

49,548

Total noninterest income

6,845

6,773

5,481

8,011

7,984

Total revenue

61,980

58,907

56,000

57,910

57,532

Tax-equivalent adjustment on municipal securities

149

108

93

88

91

Gain on sales of investment securities

(871

)

(342

)

Total revenue, as adjusted

$

61,258

$

59,015

$

56,093

$

57,656

$

57,623

Efficiency ratio - Non-GAAP

53.74

%

53.96

%

55.62

%

55.30

%

54.20

%



Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

For the Twelve Months Ended December 31,

(Dollars in thousands)

2020

2019

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

57,518

$

70,672

Total average common stockholders' equity - GAAP

$

743,225

$

697,037

Less: Average goodwill

156,277

154,971

Less: Average other identifiable intangible assets

3,816

4,883

Total average tangible common stockholders' equity - Non-GAAP

$

583,132

$

537,183

Return on average common stockholders' equity - GAAP

7.74

%

10.14

%

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

9.86

%

13.16

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

132,798

$

126,756

Amortization of core deposit intangibles

(1,025

)

(1,182

)

Long-term debt prepayment fee

(4,133

)

Merger-related expenses

(3,178

)

Noninterest expense, as adjusted

$

127,640

$

122,396

Net interest income

$

207,687

$

196,034

Noninterest income

$

27,110

$

26,796

Total revenue

$

234,797

$

222,830

Tax-equivalent adjustment on municipal securities

$

438

$

401

Gain on sales of investment securities

(1,213

)

Total revenue, as adjusted

$

234,022

$

223,231

Efficiency ratio - Non-GAAP

54.54

%

54.83

%