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Lakeland Bancorp Announces Second Quarter Results

·35 min read

OAK RIDGE, N.J., July 22, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $27.4 million and earnings per diluted share ("EPS") of $0.53 for the three months ended June 30, 2021 compared to net income of $11.9 million and diluted EPS of $0.23 for the three months ended June 30, 2020. For the second quarter of 2021, annualized return on average assets was 1.41%, annualized return on average common equity was 14.07% and annualized return on average tangible common equity was 17.67%.

For the six months ended June 30, 2021, the Company reported net income of $50.6 million and earnings per diluted share ("EPS") of $0.98 compared to net income of $24.2 million and diluted EPS of $0.47 for the first six months of 2020. Annualized return on average assets was 1.32%, annualized return on average common equity was 13.15% and annualized return on average tangible common equity was 16.55% for the first six months of 2021.

The second quarter and year-to-date 2021 results were favorably impacted by negative provisions for credit losses of $6.0 million and $8.6 million, respectively, compared to provisions of $9.0 million and $18.2 million for the same periods last year as forecasted macroeconomic conditions have improved and Lakeland's asset quality continues to be strong.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, “We are pleased with the Company’s record earnings for the quarter and our continued improvement in asset quality with non-performing assets to total assets dropping to 29 basis points. Notwithstanding the negative provision for credit losses for the quarter, Lakeland continues to effectively navigate the current economic environment with increased net interest margin, prudent expense management and excellent credit metrics.”

Regarding last week’s announced merger agreement to acquire 1st Constitution Bancorp, Mr. Shara continued, “We are extremely excited to bring together two high performing banks who each were recently recognized by national news media outlets as the best banks in New Jersey. Lakeland was named Best In-State Bank in New Jersey by Forbes and 1st Constitution was awarded Best Small Bank in New Jersey by Newsweek.” This transaction is expected to close in the fourth quarter of 2021 or early first quarter 2022.

Second Quarter 2021 Highlights

  • Net interest margin increased to 3.27% compared to 3.19% in the first quarter of 2021 and 3.06% in the second quarter of 2020.

  • Nonperforming assets decreased $8.5 million or 27% to $22.6 million at June 30, 2021 compared to $31.1 million at March 31, 2021.

  • Deposit growth was strong as saving and interest-bearing transaction accounts increased $148.8 million during the second quarter, while higher priced time deposits were allowed to run off. Noninterest-bearing deposits increased $51.9 million to $1.68 billion at June 30, 2021.

  • Paycheck Protection Program ("PPP") loans totaled $207.0 million at June 30, 2021 compared to $346.2 million at March 31, 2021. New PPP loans booked during the second quarter totaled $14.2 million while $153.3 million in previously booked PPP loans were forgiven resulting in a net decrease of $139.1 million. Unamortized net deferred fees on PPP loans totaled $6.1 million at June 30, 2021 compared to $8.1 million at March 31, 2021.

Net Interest Margin and Net Interest Income

Net interest margin for the second quarter of 2021 of 3.27% increased 21 basis points compared to the second quarter of 2020 and increased 8 basis points compared to the first quarter of 2021. Net interest margin for the first six months of 2021 was 3.23% as compared to 3.16% for the same period in 2020. The increase in net interest margin compared to the second quarter 2020 and year-to-date 2020 was due primarily to a decrease in the cost of interest-bearing liabilities, while the increase in net interest margin compared to the linked quarter was due primarily to an increase in the yield on interest-earning assets as well as a reduction in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the second quarter of 2021 was 3.57% as compared to 3.69% for the second quarter of 2020 and 3.56% for the first quarter of 2021. The yield on interest-earning assets for the first six months of 2021 was 3.57% as compared to 3.92% during the same period in 2020. The current quarter decrease in yield on interest-earning assets, when compared to the second quarter of 2020 was due primarily to a reduction in the yield on securities as well as an increase in average securities balances. The current quarter increase in yield on interest-earning assets compared to the first quarter of 2021 was due primarily to an increase in yield on loans resulting from an increase in prepayment fees and interest recoveries on non-performing assets. The 35 basis point reduction in yield on interest-earning assets for the first six months of 2021 compared to the same period in 2020 was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during 2020, which earn an effective yield of 2.50% including amortization of fees and costs.

The cost of interest-bearing liabilities for the second quarter of 2021 was 0.42% compared to 0.86% for the second quarter of 2020 and 0.51% for the first quarter of 2021. The cost of interest-bearing liabilities for the first six months of 2021 was 0.47% compared to 1.02% during the same period in 2020. The reduction in the cost of interest-bearing liabilities compared to prior periods was largely driven by reductions in market interest rates as well as a change in the mix of interest-bearing liabilities. Higher cost time deposit and borrowings balances have decreased while lower cost interest-bearing transaction account balances have increased.

Net interest income for the second quarter of 2021 of $59.7 million increased $9.2 million and $3.0 million, respectively, compared to the second quarter of 2020 and the first quarter of 2021. Net interest income for the first six months of 2021 was $116.5 million as compared to $100.4 million for the first six months of 2020. The increase in net interest income compared to prior periods was due primarily to a reduction in the cost of interest-bearing deposits as well as growth in the volume of interest-earning assets.

Noninterest Income

Noninterest income decreased $212,000 to $5.3 million for the second quarter of 2021 from $5.5 million for the second quarter of 2020. Service charges on deposit accounts for the second quarter of 2021 increased $570,000 compared to the second quarter of 2020 due primarily to changes in customer behavior relating to the pandemic. Commissions and fees for the second quarter of 2021 increased $559,000 compared to the second quarter of 2020 due primarily to increases in commercial loan fees and investment commission income. Swap income decreased $695,000 compared to the second quarter of 2020 due primarily to the steepness of the yield curve which makes new swap agreements less attractive. Other income decreased $343,000 due primarily to a $400,000 write-down on a branch location held for sale.

For the first six months of 2021, noninterest income decreased $2.5 million to $11.0 million compared to the first six months of 2020 primarily due to a $3.0 million decrease in swap income resulting from the changes to the yield curve discussed above. Service charges on deposit accounts and commissions and fees increased $366,000 and $517,000, respectively, compared to the first half of 2020 due to the same reasons discussed in the quarterly comparison. Losses on equity securities totaled $133,000 in the first six months of 2021 compared to losses of $455,000 in the first six months of 2020. Other income decreased $497,000 due primarily to the same reason discussed in the quarterly comparison. Additionally, the first half of 2020 included gains on sales of investment securities of $342,000 compared to $9,000 for the same period in 2021.

Noninterest Expense

Noninterest expense totaled $34.1 million for the second quarter of 2021 and increased $2.6 million compared to the second quarter of 2020. Compensation and employee benefit expense for the second quarter of 2021 increased $1.9 million or 10% compared to the same quarter of 2020 as a result of staff additions and normal merit increases. Premises and equipment increased $807,000 compared to the second quarter of 2020 predominately driven by an increase in costs associated with the Company's digital strategy initiative. Other operating expenses in the second quarter of 2021 were $123,000 less than the second quarter of 2020 due primarily to decreased consulting and professional fees.

Noninterest expense for the first half of 2021 of $68.0 million increased $4.0 million compared to the first half of 2020. Compensation and employee benefit expense and premises and equipment expense increased $2.7 million and $1.7 million, respectively, compared to the first half of 2020 due to the same reasons discussed in the quarterly comparison. FDIC insurance expense in the first six months of 2021 increased $584,000 due primarily to deposit growth and assessment credits recorded in the first half of 2020. Other operating expenses decreased $852,000 in the first half of 2021 compared to the same period in 2020 due primarily to a decrease in consulting and professional fees. Additionally, other operating expenses in the first half of 2020 included 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 second quarter of 2021 was 25.7% compared to 23.7% for the second quarter of 2020. The increased effective tax rate for the second quarter of 2021 was primarily a result of tax advantaged items declining as a percentage of pretax income due to the increase in pretax income.

Financial Condition

At June 30, 2021, total assets were $7.85 billion, an increase of $189.9 million compared to December 31, 2020. For the six months ended June 30, 2021, total loans decreased $32.4 million to $5.99 billion and investment securities increased $134.4 million to $1.11 billion. On the funding side, total deposits increased $259.3 million to $6.72 billion, while borrowings decreased $74.6 million to $238.2 million. At June 30, 2021, total loans as a percent of total deposits was 89.2%.

Asset Quality

At June 30, 2021, non-performing assets decreased 47% to $22.6 million or 0.29% of total assets compared to $42.8 million or 0.56% of total assets at December 31, 2020. Non-accrual loans as a percent of total loans decreased to 0.38% at June 30, 2021 compared to 0.71% at December 31, 2020. The allowance for credit losses decreased to $60.4 million, 1.01% of total loans, at June 30, 2021, compared to $71.1 million, 1.18% of total loans, at December 31, 2020. In the second quarter of 2021, the Company had net charge-offs of $1.5 million or 0.10% of average loans, on an annualized basis, compared to $45,000 or 0% for the same period in 2020. The provision for credit losses for the second quarter of 2021 was a benefit of $6.0 million compared to a provision of $9.0 million in the second quarter of 2020. In addition, the second quarter of 2021 included a sale of nonperforming residential mortgages and consumer loans totaling $5.0 million and resulted in an improvement of asset quality ratios.

Capital

At June 30, 2021, stockholders' equity was $796.7 million compared to $763.8 million at December 31, 2020, a 4% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.70% at June 30, 2021. The book value per common share and tangible book value per common share increased 7% and 9% to $15.74 and $12.60, respectively, compared to $14.77 and $11.60 at June 30, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At June 30, 2021, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio was 10.14% and 8.29%, respectively, compared to 9.97% and 8.05% at December 31, 2020. On July 21, 2021, the Company declared a quarterly cash dividend of $0.135 per share to be paid on August 13, 2021, to shareholders of record as of August 2, 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. Accordingly, you should not place undue reliance on forward-looking statements. In addition to the specific risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, 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 1st Constitution Bancorp into Lakeland Bancorp and the merger of 1st Constitution Bank into Lakeland Bank. Further, given its ongoing and dynamic nature, it is difficult to predict the continuing effects that 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, 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 U.S. generally accepted accounting principles ("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.

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.

Specifically, 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 "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures.

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $7.85 billion in total assets at June 30, 2021. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, New York, 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
June 30,

Six Months Ended
June 30,

(dollars in thousands, except per share amounts)

2021

2020

2021

2020

Income Statement

Net interest income

$

59,740

$

50,519

$

116,468

$

100,418

Provision for credit losses (2)

5,959

(9,000

)

8,601

(18,223

)

Gains on sales of investment securities

9

9

342

Gains on sales of loans

607

710

1,315

1,125

Gain (loss) on equity securities

11

198

(133

)

(455

)

Other noninterest income

4,642

4,573

9,837

12,480

Long-term debt prepayment fee

(356

)

Other noninterest expense

(34,097

)

(31,462

)

(68,000

)

(63,610

)

Pretax income

36,871

15,538

68,097

31,721

Provision for income taxes

(9,464

)

(3,687

)

(17,515

)

(7,478

)

Net income

$

27,407

$

11,851

$

50,582

$

24,243

Basic earnings per common share

$

0.53

$

0.23

$

0.99

$

0.48

Diluted earnings per common share

$

0.53

$

0.23

$

0.98

$

0.47

Dividends paid per common share

$

0.135

$

0.125

$

0.260

$

0.250

Weighted average shares - basic

50,636

50,522

50,606

50,554

Weighted average shares - diluted

50,858

50,593

50,821

50,660

Selected Operating Ratios

Annualized return on average assets

1.41

%

0.67

%

1.32

%

0.71

%

Annualized return on average common equity

14.07

%

6.42

%

13.15

%

6.59

%

Annualized return on average tangible common equity (1)

17.67

%

8.19

%

16.55

%

8.42

%

Annualized yield on interest-earning assets

3.57

%

3.69

%

3.57

%

3.92

%

Annualized cost of interest-bearing liabilities

0.42

%

0.86

%

0.47

%

1.02

%

Annualized net interest spread

3.15

%

2.83

%

3.10

%

2.91

%

Annualized net interest margin

3.27

%

3.06

%

3.23

%

3.16

%

Efficiency ratio (1)

51.98

%

55.62

%

52.85

%

55.46

%

Stockholders' equity to total assets

10.14

%

9.96

%

Book value per common share

$

15.74

$

14.77

Tangible book value per common share (1)

$

12.60

$

11.60

Tangible common equity to tangible assets (1)

8.29

%

7.99

%

Asset Quality Ratios

June 30, 2021

June 30, 2020

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

1.01

%

1.00

%

Non-performing loans to total loans

0.38

%

0.57

%

Non-performing assets to total assets

0.29

%

0.44

%

Annualized net charge-offs to average loans

0.09

%

0.01

%

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

(2) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") on December 31, 2020, with a $6.7 million transition adjustment retroactive to January 1, 2020. Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

(dollars in thousands)

June 30, 2021

June 30, 2020

Selected Balance Sheet Data at Period End

Loans

$

5,988,832

$

5,756,155

Allowance for credit losses (1)

60,389

57,839

Investment securities

1,107,601

957,985

Total assets

7,854,238

7,488,516

Total deposits

6,715,035

6,125,502

Short-term borrowings

100,190

183,116

Other borrowings

138,045

273,954

Stockholders' equity

796,676

745,489

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Selected Average Balance Sheet Data

Loans

$

6,080,408

$

5,572,865

$

6,085,057

$

5,390,481

Investment securities

1,066,086

891,037

1,034,956

885,512

Interest-earning assets

7,342,952

6,650,993

7,286,856

6,391,998

Total assets

7,784,385

7,137,529

7,744,714

6,851,415

Noninterest-bearing demand deposits

1,660,825

1,364,785

1,603,714

1,237,212

Savings deposits

639,540

525,224

622,331

511,011

Interest-bearing transaction accounts

3,495,610

2,908,299

3,442,116

2,869,539

Time deposits

880,079

1,093,760

962,042

983,379

Total deposits

6,676,054

5,892,068

6,630,203

5,601,141

Short-term borrowings

85,325

82,694

79,441

121,260

Other borrowings

140,162

273,904

141,703

275,828

Total interest-bearing liabilities

5,240,716

4,883,881

5,247,633

4,761,017

Stockholders' equity

781,299

742,050

775,808

739,385

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

(in thousands, except per share data)

2021

2020

2021

2020

Interest Income

Loans and fees

$

60,529

$

55,825

$

119,307

$

113,682

Federal funds sold and interest-bearing deposits with banks

52

36

89

195

Taxable investment securities and other

4,029

4,763

8,010

9,992

Tax-exempt investment securities

631

349

1,243

681

Total Interest Income

65,241

60,973

128,649

124,550

Interest Expense

Deposits

4,238

8,094

9,362

18,957

Federal funds purchased and securities sold under agreements to repurchase

16

75

39

504

Other borrowings

1,247

2,285

2,780

4,671

Total Interest Expense

5,501

10,454

12,181

24,132

Net Interest Income

59,740

50,519

116,468

100,418

Provision for credit losses (1)

(5,959

)

9,000

(8,601

)

18,223

Net Interest Income after Provision for Credit Losses

65,699

41,519

125,069

82,195

Noninterest Income

Service charges on deposit accounts

2,445

1,875

4,741

4,375

Commissions and fees

1,755

1,196

3,353

2,836

Income on bank owned life insurance

643

665

1,277

1,330

Gain (loss) on equity securities

11

198

(133

)

(455

)

Gains on sales of loans

607

710

1,315

1,125

Gains on sales of investment securities, net

9

9

342

Swap income

72

767

634

3,610

Other income

(273

)

70

(168

)

329

Total Noninterest Income

5,269

5,481

11,028

13,492

Noninterest Expense

Compensation and employee benefits

20,407

18,490

40,925

38,217

Premises and equipment

6,078

5,271

12,396

10,667

FDIC insurance

621

450

1,332

748

Data processing

1,299

1,436

2,554

2,689

Other operating expenses

5,692

5,815

10,793

11,645

Total Noninterest Expense

34,097

31,462

68,000

63,966

Income before provision for income taxes

36,871

15,538

68,097

31,721

Provision for income taxes

9,464

3,687

17,515

7,478

Net Income

$

27,407

$

11,851

$

50,582

$

24,243

Per Share of Common Stock

Basic earnings

$

0.53

$

0.23

$

0.99

$

0.47

Diluted earnings

$

0.53

$

0.23

$

0.98

$

0.47

Dividends

$

0.135

$

0.125

$

0.260

$

0.250

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.

Consolidated Balance Sheets

(dollars in thousands)

June 30, 2021

December 31, 2020

(Unaudited)

Assets

Cash

$

358,052

$

262,327

Interest-bearing deposits due from banks

17,348

7,763

Total cash and cash equivalents

375,400

270,090

Investment securities available for sale, at estimated fair value (allowance for credit losses of $21 at June 30, 2021 and $2 at December 31, 2020 )

988,673

855,746

Investment securities held to maturity (estimated fair value of $96,311 at June 30, 2021 and $93,868 at December 31, 2020, allowance for credit losses of $137 at June 30, 2021 and none at December 31, 2020)

94,278

90,766

Equity securities, at fair value

15,440

14,694

Federal Home Loan Bank and other membership stocks, at cost

9,210

11,979

Loans held for sale

816

1,335

Loans, net of deferred fees

5,988,832

6,021,232

Less: Allowance for credit losses

60,389

71,124

Net loans

5,928,443

5,950,108

Premises and equipment, net

47,641

48,495

Operating lease right-of-use assets

15,513

16,772

Accrued interest receivable

18,309

19,339

Goodwill

156,277

156,277

Other identifiable intangible assets

2,841

3,288

Bank owned life insurance

116,398

115,115

Other assets

84,999

110,293

Total Assets

$

7,854,238

$

7,664,297

Liabilities and Stockholders' Equity

Liabilities

Deposits:

Noninterest-bearing

$

1,683,887

$

1,510,224

Savings and interest-bearing transaction accounts

4,198,709

3,867,303

Time deposits $250 thousand and under

685,583

895,056

Time deposits over $250 thousand

146,856

183,200

Total deposits

6,715,035

6,455,783

Federal funds purchased and securities sold under agreements to repurchase

100,190

169,560

Other borrowings

25,000

25,000

Subordinated debentures

113,045

118,257

Operating lease liabilities

16,847

18,183

Other liabilities

87,445

113,730

Total Liabilities

7,057,562

6,900,513

Stockholders' Equity

Common stock, no par value; authorized 100,000,000 shares; issued 50,732,384 shares and outstanding 50,601,349 shares at June 30, 2021 and issued 50,610,681 shares and outstanding 50,479,646 shares at December 31, 2020

563,980

562,421

Retained earnings

228,803

191,418

Treasury shares, at cost, 131,035 shares at June 30, 2021 and December 31, 2020

(1,452

)

(1,452

)

Accumulated other comprehensive income

5,345

11,397

Total Stockholders' Equity

796,676

763,784

Total Liabilities and Stockholders' Equity

$

7,854,238

$

7,664,297


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share data)

2021

2021

2020

2020

2020

Income Statement

Net interest income

$

59,740

$

56,728

$

55,135

$

52,134

$

50,519

Provision for credit losses (1)

5,959

2,642

(789

)

(8,000

)

(9,000

)

Gains on sales of investment securities

9

871

Gains on sales of loans

607

708

760

1,437

710

Gain (loss) on equity securities

11

(144

)

73

(170

)

198

Other noninterest income

4,642

5,195

5,141

5,506

4,573

Long-term debt prepayment fee

(3,777

)

Other noninterest expense

(34,097

)

(33,903

)

(33,168

)

(32,097

)

(31,462

)

Pretax income

36,871

31,226

24,246

18,810

15,538

Provision for income taxes

(9,464

)

(8,051

)

(5,398

)

(4,383

)

(3,687

)

Net income

$

27,407

$

23,175

$

18,848

$

14,427

$

11,851

Basic earnings per common share

$

0.53

$

0.45

$

0.37

$

0.28

$

0.23

Diluted earnings per common share

$

0.53

$

0.45

$

0.37

$

0.28

$

0.23

Dividends paid per common share

$

0.135

$

0.125

$

0.125

$

0.125

$

0.125

Dividends paid

$

6,828

$

6,369

$

6,364

$

6,365

$

6,365

Weighted average shares - basic

50,636

50,576

50,527

50,526

50,522

Weighted average shares - diluted

50,858

50,780

50,672

50,620

50,593

Selected Operating Ratios

Annualized return on average assets

1.41

%

1.22

%

0.98

%

0.76

%

0.67

%

Annualized return on average common equity

14.07

%

12.20

%

9.96

%

7.64

%

6.42

%

Annualized return on average tangible common equity (2)

17.67

%

15.39

%

12.64

%

9.71

%

8.19

%

Annualized net interest margin

3.27

%

3.19

%

3.08

%

2.96

%

3.06

%

Efficiency ratio (2)

51.98

%

53.75

%

53.74

%

53.96

%

55.62

%

Common stockholders' equity to total assets

10.14

%

9.88

%

9.97

%

10.02

%

9.96

%

Tangible common equity to tangible assets (2)

8.29

%

8.00

%

8.05

%

8.06

%

7.99

%

Tier 1 risk-based ratio

10.78

%

10.47

%

10.22

%

10.34

%

10.45

%

Total risk-based ratio

13.11

%

13.02

%

12.85

%

12.93

%

12.98

%

Tier 1 leverage ratio

8.70

%

8.51

%

8.37

%

8.36

%

8.69

%

Common equity tier 1 capital ratio

10.29

%

9.98

%

9.73

%

9.83

%

9.93

%

Book value per common share

$

15.74

$

15.18

$

15.13

$

14.93

$

14.77

Tangible book value per common share (2)

$

12.60

$

12.03

$

11.97

$

11.77

$

11.60

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.
(2) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Selected Balance Sheet Data at Period End

Loans

$

5,988,832

$

6,108,946

$

6,021,232

$

5,843,591

$

5,756,155

Allowance for credit losses on loans (1)

60,389

67,252

71,124

65,242

57,839

Investment securities

1,107,601

1,078,750

973,185

909,535

957,985

Total assets

7,854,238

7,771,761

7,664,297

7,522,184

7,488,516

Total deposits

6,715,035

6,635,226

6,455,783

6,266,516

6,125,502

Short-term borrowings

100,190

111,999

169,560

97,874

183,116

Other borrowings

138,045

143,267

143,257

253,359

273,954

Stockholders' equity

796,676

768,065

763,784

753,572

745,489

Loans

Non-owner occupied commercial

$

2,330,376

$

2,375,024

$

2,398,946

Owner occupied commercial

870,535

857,506

827,092

Multifamily

902,394

858,168

813,225

Non-owner occupied residential

189,765

195,534

200,229

Total commercial, secured by real estate (1)

$

4,293,070

$

4,286,232

$

4,239,492

$

4,042,946

$

3,955,045

Commercial, industrial and other

358,659

394,416

433,553

418,813

393,017

Construction

335,167

291,252

266,883

275,716

298,180

Paycheck Protection Program

207,045

346,150

284,636

325,115

325,999

Equipment financing

121,096

119,428

116,690

118,320

117,569

Residential mortgages

391,589

385,778

377,380

343,317

335,135

Consumer and home equity

282,206

285,690

302,598

319,364

331,210

Total loans

$

5,988,832

$

6,108,946

$

6,021,232

$

5,843,591

$

5,756,155

Deposits

Noninterest-bearing

$

1,683,887

$

1,631,942

$

1,510,224

$

1,474,847

$

1,486,273

Savings and interest-bearing transaction accounts

4,198,709

4,049,914

3,867,303

3,647,328

3,510,723

Time deposits

832,439

953,370

1,078,256

1,144,341

1,128,506

Total deposits

$

6,715,035

$

6,635,226

$

6,455,783

$

6,266,516

$

6,125,502

Total loans to total deposits ratio

89.2

%

92.1

%

93.3

%

93.3

%

94

%

Selected Average Balance Sheet Data

Loans

$

6,080,408

$

6,089,757

$

5,939,904

$

5,775,093

$

5,572,865

Investment securities

1,066,086

1,003,479

912,723

873,066

891,037

Interest-earning assets

7,342,952

7,230,136

7,137,884

7,009,939

6,650,993

Total assets

7,784,385

7,704,603

7,625,458

7,516,069

7,137,529

Noninterest-bearing demand deposits

1,660,825

1,545,968

1,499,093

1,475,422

1,364,785

Savings deposits

639,540

604,931

571,794

548,662

525,224

Interest-bearing transaction accounts

3,495,610

3,388,027

3,313,556

3,086,260

2,908,299

Time deposits

880,079

1,044,915

1,112,053

1,176,181

1,093,760

Total deposits

6,676,054

6,583,841

6,496,496

6,286,525

5,892,068

Short-term borrowings

85,325

73,492

68,962

58,845

82,694

Other borrowings

140,162

143,261

155,943

269,093

273,904

Total interest-bearing liabilities

5,240,716

5,254,626

5,222,308

5,139,042

4,883,881

Stockholders' equity

781,299

770,255

753,059

751,099

742,050

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands)

2021

2021

2020

2020

2020

Average Annualized Yields (Taxable Equivalent Basis) and Costs

Assets

Loans

3.99

%

3.91

%

3.92

%

3.91

%

4.03

%

Taxable investment securities and other

1.72

%

1.81

%

1.84

%

2.09

%

2.31

%

Tax-exempt securities

2.50

%

2.54

%

2.51

%

2.55

%

2.70

%

Federal funds sold and interest-bearing cash accounts

0.11

%

0.11

%

0.09

%

0.10

%

0.08

%

Total interest-earning assets

3.57

%

3.56

%

3.51

%

3.49

%

3.69

%

Liabilities

Savings accounts

0.05

%

0.05

%

0.05

%

0.06

%

0.07

%

Interest-bearing transaction accounts

0.32

%

0.34

%

0.38

%

0.44

%

0.55

%

Time deposits

0.61

%

0.83

%

1.01

%

1.19

%

1.48

%

Borrowings

2.22

%

2.87

%

2.84

%

2.73

%

2.62

%

Total interest-bearing liabilities

0.42

%

0.51

%

0.59

%

0.72

%

0.86

%

Net interest spread (taxable equivalent basis)

3.15

%

3.05

%

2.92

%

2.77

%

2.83

%

Annualized net interest margin (taxable equivalent basis)

3.27

%

3.19

%

3.08

%

2.96

%

3.06

%

Annualized cost of deposits

0.25

%

0.32

%

0.37

%

0.44

%

0.55

%

Asset Quality Data

Allowance for Credit Losses on Loans

Balance at beginning of period

$

67,252

$

71,124

$

65,242

$

57,839

$

48,884

Impact of adopting ASU 2016-13 (1)

6,656

Provision for credit losses on loans

(5,314

)

(2,808

)

(246

)

8,000

9,000

Charge-offs

(1,862

)

(1,270

)

(746

)

(682

)

(142

)

Recoveries

313

206

218

85

97

Balance at end of period

$

60,389

$

67,252

$

71,124

$

65,242

$

57,839

Net Loan Charge-Offs (Recoveries)

Commercial, real estate

$

1,590

$

843

$

(47

)

$

298

$

(36

)

Commercial, industrial and other

5

221

478

173

(13

)

Equipment financing

4

83

64

95

(11

)

Residential mortgages

(82

)

(58

)

(1

)

Consumer and home equity

32

(25

)

33

32

105

Net charge-offs (recoveries)

$

1,549

$

1,064

$

528

$

597

$

45

Non-Performing Assets (2)

Commercial, real estate

$

20,594

$

23,984

$

35,091

$

26,145

$

25,615

Commercial, industrial and other

1,449

2,252

2,633

1,484

1,546

Equipment financing

264

293

327

444

400

Residential mortgages

2,323

2,469

2,695

2,860

Consumer and home equity

308

2,274

2,243

2,322

2,432

Total non-accrual loans

22,615

31,126

42,763

33,090

32,853

Property acquired through foreclosure or repossession

354

Total non-performing assets

$

22,615

$

31,126

$

42,763

$

33,090

$

33,207

Loans past due 90 days or more and still accruing

$

$

$

1

$

165

$

58

Loans restructured and still accruing

$

3,595

$

3,799

$

3,856

$

4,299

$

4,667

Ratio of allowance for loan losses to total loans

1.01

%

1.10

%

1.18

%

1.11

%

1.00

%

Total non-accrual loans to total loans

0.38

%

0.51

%

0.71

%

0.57

%

0.57

%

Total non-performing assets to total assets

0.29

%

0.40

%

0.56

%

0.44

%

0.44

%

Annualized net charge-offs to average loans

0.10

%

0.07

%

0.04

%

0.04

%

%

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13
(2) Includes non-accrual purchased credit deteriorated loans from December 31, 2020 forward

Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

At or for the Quarter Ended

June 30,

March 31,

December 31,

September 30,

June 30,

(dollars in thousands, except per share amounts)

2021

2021

2020

2020

2020

Calculation of Tangible Book Value Per Common Share

Total common stockholders' equity at end of period - GAAP

$

796,676

$

768,065

$

763,784

$

753,572

$

745,489

Less: Goodwill

156,277

156,277

156,277

156,277

156,277

Less: Other identifiable intangible assets

2,841

3,063

3,288

3,538

3,788

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

$

637,558

$

608,725

$

604,219

$

593,757

$

585,424

Shares outstanding at end of period

50,601

50,598

50,480

50,468

50,463

Book value per share - GAAP

$

15.74

$

15.18

$

15.13

$

14.93

$

14.77

Tangible book value per share - Non-GAAP

$

12.60

$

12.03

$

11.97

$

11.77

$

11.60

Calculation of Tangible Common Equity to Tangible Assets

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

$

637,558

$

608,725

$

604,219

$

593,757

$

585,424

Total assets at end of period - GAAP

$

7,854,238

$

7,771,761

$

7,664,297

$

7,522,184

$

7,488,516

Less: Goodwill

156,277

156,277

156,277

156,277

156,277

Less: Other identifiable intangible assets

2,841

3,063

3,288

3,538

3,788

Total tangible assets at end of period - Non-GAAP

$

7,695,120

$

7,612,421

$

7,504,732

$

7,362,369

$

7,328,451

Common equity to assets - GAAP

10.14

%

9.88

%

9.97

%

10.02

%

9.96

%

Tangible common equity to tangible assets - Non-GAAP

8.29

%

8.00

%

8.05

%

8.06

%

7.99

%

Calculation of Return on Average Tangible Common Equity

Net income - GAAP

$

27,407

$

23,175

$

18,848

$

14,427

$

11,851

Total average common stockholders' equity - GAAP

$

781,299

$

770,255

$

753,059

$

751,099

$

742,050

Less: Average goodwill

156,277

156,277

156,277

156,277

156,277

Less: Average other identifiable intangible assets

2,979

3,192

3,433

3,689

3,942

Total average tangible common stockholders' equity - Non-GAAP

$

622,043

$

610,786

$

593,349

$

591,133

$

581,831

Return on average common stockholders' equity - GAAP

14.07

%

12.20

%

9.96

%

7.64

%

6.42

%

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

17.67

%

15.39

%

12.64

%

9.71

%

8.19

%

Calculation of Efficiency Ratio

Total noninterest expense

$

34,097

$

33,903

$

36,945

$

32,097

$

31,462

Amortization of core deposit intangibles

(221

)

(226

)

(249

)

(250

)

(261

)

Long term debt prepayment fees

(3,777

)

Noninterest expense, as adjusted

$

33,876

$

33,677

$

32,919

$

31,847

$

31,201

Net interest income

$

59,740

$

56,728

$

55,135

$

52,134

$

50,519

Total noninterest income

5,269

5,759

6,845

6,773

5,481

Total revenue

65,009

62,487

61,980

58,907

56,000

Tax-equivalent adjustment on municipal securities

167

163

149

108

93

Gains on sales of investment securities

(9

)

(871

)

Total revenue, as adjusted

$

65,167

$

62,650

$

61,258

$

59,015

$

56,093

Efficiency ratio - Non-GAAP

51.98

%

53.75

%

53.74

%

53.96

%

55.62

%


Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

For the Six Months Ended June 30,

(dollars in thousands)

2021

2020

Calculation of Return on Average Tangible Common Equity

Net income - GAAP

$

50,582

$

24,243

Total average common stockholders' equity - GAAP

$

775,808

$

739,385

Less: Average goodwill

156,277

156,277

Less: Average other identifiable intangible assets

3,085

4,073

Total average tangible common stockholders' equity - Non-GAAP

$

616,446

$

579,035

Return on average common stockholders' equity - GAAP

13.15

%

6.59

%

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

16.55

%

8.42

%

Calculation of Efficiency Ratio

Total noninterest expense

$

68,000

$

63,966

Amortization of core deposit intangibles

(447

)

(526

)

Long-term debt prepayment fee

(356

)

Noninterest expense, as adjusted

$

67,553

$

63,084

Net interest income

$

116,468

$

100,418

Noninterest income

11,028

13,492

Total revenue

$

127,496

$

113,910

Tax-equivalent adjustment on municipal securities

330

181

Gains on sales of investment securities

(9

)

(342

)

Total revenue, as adjusted

$

127,817

$

113,749

Efficiency ratio - Non-GAAP

52.85

%

55.46

%