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Lakeland Bancorp Announces Third Quarter Results and Share Repurchase Program

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

For the nine months ended September 30, 2019, the Company reported net income of $52.0 million, a 9% increase compared to $47.9 million for the same period in 2018. For the nine months ended 2019, the Company reported diluted EPS of $1.02, compared to diluted EPS of $0.99 for the first nine months of 2018. Excluding merger-related expenses pertaining to the Company’s January 2019 acquisition of Highlands Bancorp, Inc. ("Highlands") of $2.4 million, tax-effected, net income for the nine months ended September 30, 2019 was $54.3 million, or $1.06 per diluted share. For the first nine months of 2019, annualized return on average assets was 1.11%, annualized return on average common equity was 10.07%, and annualized return on average tangible common equity was 13.11%. Excluding merger-related expenses these ratios were 1.16%, 10.53% and 13.70%, respectively.

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

Net Interest Margin and Net Interest Income

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

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

The cost of interest-bearing liabilities for the third quarter of 2019 was 1.41% compared to 1.08% for the third quarter of 2018 and 1.42% for the second quarter of 2019. The cost of interest-bearing liabilities for the first nine months of 2019 was 1.39% compared to 0.94% during the same period in 2018. The cost of interest-bearing transaction accounts, time deposits and borrowings have increased since 2018 largely driven by competitive pressures and higher market interest rates.

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

Noninterest Income

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

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

Noninterest Expense

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

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

Income Tax Expense

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

Financial Condition

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

Asset Quality

At September 30, 2019, non-performing assets increased to $16.9 million, 0.26% of total assets, compared to $13.0 million, 0.22% of total assets, at December 31, 2018. Non-accrual loans as a percent of total loans increased to 0.32% at September 30, 2019 compared to 0.27% at December 31, 2018. The allowance for loan losses increased to $38.7 million, 0.78% of total loans, at September 30, 2019, compared to $37.7 million, 0.84% of total loans, at December 31, 2018. The Company's allowance for loan losses excluding acquired loans would be 0.91%. In the third quarter of 2019, the Company had net charge-offs of $543,000, or 0.04%, of average loans, annualized, compared to $357,000, or 0.03%, for the same period in 2018. Provision for loan losses for the third quarter of 2019 was $536,000 compared to provision for loan losses of $1.0 million in the third quarter of 2018.

Capital

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

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

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipates”, “projects”, “intends”, “estimates”, “expects”, “believes”, “plans”, “may”, “will”, “should”, “could”, and other similar expressions are intended to identify such forward-looking statements. The Company cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company’s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company’s lending and leasing activities, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, customers’ acceptance of the Company’s products and services, competition and failure to realize anticipated efficiencies and synergies from the merger of Highlands Bancorp, Inc. into Lakeland Bancorp and the merger of Highlands State Bank into Lakeland Bank. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company’s management uses in its analysis of the Company’s financial results. Specifically, the Company provides measures based on what it believes are its operating earnings on a consistent basis, and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods in question.

The Company also provides measurements and ratios based on tangible equity and tangible assets. These measures are utilized by regulators and market analysts to evaluate a company’s financial condition and, therefore, the Company’s management believes that such information is useful to investors.

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, provision for unfunded lending commitments and, where applicable, long-term debt prepayment fees and merger-related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes gains and losses from the sale of investment securities and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period.

These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying non-GAAP tables.

About Lakeland

Lakeland Bancorp, Inc. (LBAI) has approximately $6.49 billion in total assets. Lakeland Bank, a wholly-owned subsidiary of Lakeland Bancorp, Inc., operates 53 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey including one branch in Highland Mills, New York; five New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Teaneck and Waldwick; and one New York commercial lending center to serve the Hudson Valley region. Lakeland also has a commercial loan production office serving Middlesex and Monmouth counties in New Jersey. Lakeland Bank offers an extensive suite of financial products and services for businesses and consumers. Visit LakelandBank.com for more information.

Thomas J. Shara
President & CEO

Thomas F. Splaine
EVP & CFO
973-697-2000

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(Dollars in thousands, except per share amounts)

2019

2018

2019

2018

INCOME STATEMENT

Net interest income

$

48,682

$

43,624

$

146,486

$

129,353

Provision for loan losses

(536

)

(1,046

)

(1,044

)

(3,822

)

Gains on sales of loans

486

484

1,285

1,030

Gain on equity securities

72

(439

)

525

(384

)

Other noninterest income

6,142

5,594

17,002

16,036

Merger-related expenses

(3,178

)

Other noninterest expense

(29,563

)

(27,793

)

(92,055

)

(82,504

)

Pretax income

25,283

20,424

69,021

59,709

Provision for income taxes

(6,409

)

(3,666

)

(17,064

)

(11,858

)

Net income

$

18,874

$

16,758

$

51,957

$

47,851

Basic earnings per common share

$

0.37

$

0.35

$

1.02

$

1.00

Diluted earnings per common share

$

0.37

$

0.35

$

1.02

$

0.99

Dividends paid per common share

$

0.125

$

0.115

$

0.365

$

0.330

Weighted average shares - basic

50,553

47,605

50,447

47,570

Weighted average shares - diluted

50,694

47,788

50,595

47,764

SELECTED OPERATING RATIOS

Annualized return on average assets

1.17

%

1.19

%

1.11

%

1.17

%

Annualized return on average common equity

10.61

%

11.02

%

10.07

%

10.78

%

Annualized return on average tangible common equity (1)

13.74

%

14.31

%

13.11

%

14.06

%

Annualized yield on interest-earning assets

4.32

%

4.14

%

4.41

%

4.09

%

Annualized cost of interest-bearing liabilities

1.41

%

1.08

%

1.39

%

0.94

%

Annualized net interest spread

2.91

%

3.06

%

3.02

%

3.15

%

Annualized net interest margin

3.25

%

3.32

%

3.35

%

3.38

%

Efficiency ratio (1)

52.77

%

56.00

%

55.05

%

56.05

%

Stockholders' equity to total assets

10.99

%

10.80

%

Book value per common share

$

14.13

$

12.79

Tangible book value per common share (1)

$

10.94

$

9.88

Tangible common equity to tangible assets (1)

8.72

%

8.55

%

ASSET QUALITY RATIOS

September 30,
2019

September 30,
2018

Ratio of allowance for loan losses to total loans

0.78

%

0.86

%

Non-performing loans to total loans

0.32

%

0.26

%

Non-performing assets to total assets

0.26

%

0.25

%

Annualized net charge-offs (recoveries) to average loans

%

0.06

%

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

Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

(Dollars in thousands)

September 30,
2019

September 30,
2018

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans

$

4,923,414

$

4,332,238

Allowance for loan losses

38,655

37,293

Investment securities

905,078

801,315

Total assets

6,492,474

5,627,057

Total deposits

5,210,619

4,642,443

Short-term borrowings

199,326

47,398

Other borrowings

284,029

289,635

Stockholders' equity

713,204

607,555

Three Months Ended
September 30,

Nine Months Ended
September 30,

2019

2018

2019

2018

SELECTED AVERAGE BALANCE SHEET DATA

Loans

$

4,937,488

$

4,296,244

$

4,908,952

$

4,246,338

Investment securities

869,734

811,217

860,840

814,508

Interest-earning assets

5,947,645

5,221,612

5,852,919

5,126,677

Total assets

6,379,675

5,570,286

6,273,860

5,473,001

Noninterest-bearing demand deposits

1,100,413

999,217

1,080,235

978,020

Savings deposits

494,377

491,095

503,260

491,810

Interest-bearing transaction accounts

2,678,424

2,319,863

2,599,004

2,252,112

Time deposits

964,159

789,691

938,751

781,230

Total deposits

5,237,373

4,599,866

5,121,250

4,503,172

Short-term borrowings

74,042

36,702

104,450

54,981

Other borrowings

287,839

291,477

292,447

286,138

Total interest-bearing liabilities

4,498,841

3,928,828

4,437,912

3,866,271

Stockholders' equity

705,726

603,059

689,538

593,453


Lakeland Bancorp, Inc.

Consolidated Statements of Income

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

(Dollars in thousands, except per share amounts)

2019

2018

2019

2018

INTEREST INCOME

Loans and net deferred fees and costs

$

58,563

$

49,181

$

175,324

$

142,384

Federal funds sold and interest-bearing deposits with banks

695

533

1,297

844

Taxable investment securities and other

5,007

4,141

14,865

12,160

Tax exempt investment securities

361

427

1,165

1,299

TOTAL INTEREST INCOME

64,626

54,282

192,651

156,687

INTEREST EXPENSE

Deposits

13,267

8,429

37,526

20,685

Federal funds purchased and securities sold under agreements to repurchase

231

42

1,333

409

Other borrowings

2,446

2,187

7,306

6,240

TOTAL INTEREST EXPENSE

15,944

10,658

46,165

27,334

NET INTEREST INCOME

48,682

43,624

146,486

129,353

Provision for loan losses

536

1,046

1,044

3,822

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

48,146

42,578

145,442

125,531

NONINTEREST INCOME

Service charges on deposit accounts

2,851

2,614

8,179

7,770

Commissions and fees

1,545

1,414

4,682

4,096

Income on bank owned life insurance

691

1,127

2,064

2,557

Gain on equity securities

72

(439

)

525

(384

)

Gains on sales of loans

486

484

1,285

1,030

Other income

1,055

439

2,077

1,613

TOTAL NONINTEREST INCOME

6,700

5,639

18,812

16,682

NONINTEREST EXPENSE

Salaries and employee benefit expense

19,062

17,352

57,672

50,921

Net occupancy expense

2,767

2,316

8,350

7,657

Furniture and equipment expense

2,084

2,070

6,365

6,287

FDIC insurance expense

(420

)

400

431

1,225

Stationary, supplies and postage expense

366

371

1,214

1,230

Marketing expense

423

343

1,430

1,160

Data processing expense

1,248

1,083

3,800

2,525

Telecommunications expense

480

438

1,451

1,321

ATM and debit card expense

588

556

1,773

1,624

Core deposit intangible amortization

288

142

893

452

Other real estate owned and other repossessed assets expense

29

45

223

112

Merger-related expenses

3,178

Other expenses

2,648

2,677

8,453

7,990

TOTAL NONINTEREST EXPENSE

29,563

27,793

95,233

82,504

INCOME BEFORE PROVISION FOR INCOME TAXES

25,283

20,424

69,021

59,709

Provision for income taxes

6,409

3,666

17,064

11,858

NET INCOME

$

18,874

$

16,758

$

51,957

$

47,851

EARNINGS PER COMMON SHARE:

Basic

$

0.37

$

0.35

$

1.02

$

1.00

Diluted

$

0.37

$

0.35

$

1.02

$

0.99

DIVIDENDS PAID PER COMMON SHARE

$

0.125

$

0.115

$

0.365

$

0.330


Lakeland Bancorp, Inc.

Consolidated Balance Sheets

(Dollars in thousands)

September 30, 2019

December 31, 2018

(Unaudited)

ASSETS

Cash

$

249,553

$

205,199

Interest-bearing deposits due from banks

32,405

3,400

Total cash and cash equivalents

281,958

208,599

Investment securities available for sale, at fair value

720,405

638,618

Equity securities, at fair value

15,552

15,921

Investment securities held to maturity; fair value of $152,495 at September 30, 2019 and $150,932 at December 31, 2018

151,115

153,646

Federal Home Loan Bank and other membership stocks, at cost

18,006

13,301

Loans held for sale

3,077

1,113

Loans, net of deferred fees

4,923,414

4,456,733

Allowance for loan losses

(38,655

)

(37,688

)

Net loans and leases

4,884,759

4,419,045

Premises and equipment, net

47,372

49,175

Operating lease right-of-use assets

17,953

Accrued interest receivable

16,573

16,114

Goodwill

156,277

136,433

Other identifiable intangible assets

4,602

1,768

Bank owned life insurance

111,717

110,052

Other assets

63,108

42,308

TOTAL ASSETS

$

6,492,474

$

5,806,093

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Deposits:

Noninterest-bearing

$

1,101,083

$

950,218

Savings and interest-bearing transaction accounts

3,196,323

2,913,414

Time deposits $250 thousand and under

682,677

589,737

Time deposits over $250 thousand

230,536

167,301

Total deposits

5,210,619

4,620,670

Federal funds purchased and securities sold under agreements to repurchase

199,326

233,905

Other borrowings

165,818

181,118

Subordinated debentures

118,211

105,027

Operating lease liabilities

19,509

Other liabilities

65,787

41,634

TOTAL LIABILITIES

5,779,270

5,182,354

STOCKHOLDERS' EQUITY

Common stock, no par value; authorized 100,000,000 shares at September 30, 2019 and at December 31, 2018; issued shares 50,489,161 at
September 30, 2019 and 47,486,250 shares at December 31, 2018

559,595

514,703

Retained earnings

150,399

116,874

Accumulated other comprehensive income (loss)

3,210

(7,838

)

TOTAL STOCKHOLDERS' EQUITY

713,204

623,739

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

6,492,474

$

5,806,093


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands, except per share data)

2019

2019

2019

2018

2018

INCOME STATEMENT

Net interest income

$

48,682

$

49,198

$

48,606

$

44,206

$

43,624

Provision for loan losses

(536

)

(508

)

(591

)

(1,046

)

Gains on sales of loans

486

428

371

299

484

Gain (loss) on equity securities

72

100

353

(199

)

(439

)

Other noninterest income

6,142

5,861

4,999

5,528

5,594

Merger-related expenses

(318

)

(2,860

)

(464

)

Other noninterest expense

(29,563

)

(31,368

)

(31,124

)

(28,199

)

(27,793

)

Pretax income

25,283

23,901

19,837

20,580

20,424

Provision for income taxes

(6,409

)

(6,444

)

(4,211

)

(5,030

)

(3,666

)

Net income

$

18,874

$

17,457

$

15,626

$

15,550

$

16,758

Basic earnings per common share

$

0.37

$

0.34

$

0.31

$

0.32

$

0.35

Diluted earnings per common share

$

0.37

$

0.34

$

0.31

$

0.32

$

0.35

Dividends paid per common share

$

0.125

$

0.125

$

0.115

$

0.115

$

0.115

Dividends paid

$

6,362

$

6,357

$

5,838

$

5,510

$

5,510

Weighted average shares - basic

50,553

50,509

50,275

47,605

47,605

Weighted average shares - diluted

50,694

50,649

50,442

47,780

47,788

SELECTED OPERATING RATIOS

Annualized return on average assets

1.17

%

1.12

%

1.02

%

1.08

%

1.19

%

Annualized return on average common equity

10.61

%

10.16

%

9.41

%

10.05

%

11.02

%

Annualized return on average tangible common equity (1)

13.74

%

13.21

%

12.32

%

12.98

%

14.31

%

Annualized net interest margin

3.25

%

3.39

%

3.42

%

3.29

%

3.32

%

Efficiency ratio (1)

52.77

%

55.78

%

56.62

%

56.18

%

56.00

%

Common stockholders' equity to total assets

10.99

%

10.90

%

10.70

%

10.74

%

10.80

%

Tangible common equity to tangible assets (1)

8.72

%

8.61

%

8.41

%

8.57

%

8.55

%

Tier 1 risk-based ratio

11.24

%

11.11

%

10.98

%

11.27

%

11.21

%

Total risk-based ratio

13.70

%

13.60

%

13.48

%

13.71

%

13.69

%

Tier 1 leverage ratio

9.34

%

9.30

%

9.23

%

9.39

%

9.42

%

Common equity tier 1 capital ratio

10.66

%

10.52

%

10.38

%

10.62

%

10.56

%

Book value per common share

$

14.13

$

13.85

$

13.51

$

13.14

$

12.79

Tangible book value per common share (1)

$

10.94

$

10.66

$

10.35

$

10.22

$

9.88

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


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands)

2019

2019

2019

2018

2018

SELECTED BALANCE SHEET DATA AT PERIOD-END

Loans

$

4,925,998

$

4,925,300

$

4,924,671

$

4,460,447

$

4,332,238

Allowance for loan losses

38,655

38,662

37,979

37,688

37,293

Investment securities

905,078

863,474

850,729

821,486

801,315

Total assets

6,492,474

6,407,195

6,365,063

5,806,093

5,627,057

Total deposits

5,210,619

5,082,598

5,064,584

4,620,670

4,642,443

Short-term borrowings

199,326

258,703

261,266

233,905

47,398

Other borrowings

284,029

294,022

293,976

286,145

289,635

Stockholders' equity

713,204

698,463

681,343

623,739

607,555

LOANS

Commercial, real estate

$

3,749,413

$

3,737,447

$

3,769,545

$

3,377,324

$

3,281,946

Commercial, industrial and other

391,486

407,776

389,230

336,735

334,241

Equipment financing

104,689

99,351

90,791

87,925

82,881

Residential mortgages

337,482

336,810

335,290

329,854

315,135

Consumer and home equity

342,928

343,916

339,815

328,609

318,035

Total loans

$

4,925,998

$

4,925,300

$

4,924,671

$

4,460,447

$

4,332,238

DEPOSITS

Noninterest-bearing

$

1,101,083

$

1,089,474

$

1,071,890

$

950,218

$

996,296

Savings and interest-bearing transaction accounts

3,196,323

3,007,784

3,046,322

2,913,414

2,855,318

Time deposits

913,213

985,340

946,372

757,038

790,829

Total deposits

$

5,210,619

$

5,082,598

$

5,064,584

$

4,620,670

$

4,642,443

Total loans to total deposits ratio

94.5

%

96.9

%

97.2

%

96.5

%

93.3

%

SELECTED AVERAGE BALANCE SHEET DATA

Loans

$

4,937,488

$

4,917,109

$

4,871,534

$

4,393,382

$

4,296,244

Investment securities

869,734

854,608

858,046

823,193

811,217

Interest-earning assets

5,947,645

5,836,333

5,772,853

5,346,934

5,221,612

Total assets

6,379,675

6,256,523

6,183,224

5,694,827

5,570,286

Noninterest-bearing demand deposits

1,100,413

1,083,745

1,056,060

1,003,508

999,217

Savings deposits

494,377

502,340

513,270

483,606

491,095

Interest-bearing transaction accounts

2,678,424

2,562,365

2,554,865

2,446,325

2,319,863

Time deposits

964,159

961,212

890,070

769,129

789,691

Total deposits

5,237,373

5,109,662

5,014,265

4,702,568

4,599,866

Short-term borrowings

74,042

110,941

128,972

50,196

36,702

Other borrowings

287,839

283,177

306,529

288,126

291,477

Total interest-bearing liabilities

4,498,841

4,420,035

4,393,706

4,037,382

3,928,828

Stockholders' equity

705,726

689,324

673,205

613,583

603,059


Lakeland Bancorp, Inc.

Financial Highlights

(Unaudited)

For the Quarter Ended

September 30,

June 30,

March 31,

December 31,

September 30,

(Dollars in thousands)

2019

2019

2019

2018

2018

AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)

ASSETS

Loans

4.71

%

4.82

%

4.80

%

4.58

%

4.54

%

Taxable investment securities and other

2.50

%

2.55

%

2.49

%

2.44

%

2.26

%

Tax-exempt securities

2.70

%

2.74

%

2.74

%

2.74

%

2.71

%

Federal funds sold and interest-bearing cash accounts

1.98

%

2.15

%

2.35

%

2.19

%

1.87

%

Total interest-earning assets

4.32

%

4.46

%

4.44

%

4.20

%

4.14

%

LIABILITIES

Savings accounts

0.06

%

0.06

%

0.07

%

0.06

%

0.06

%

Interest-bearing transaction accounts

1.24

%

1.25

%

1.18

%

1.04

%

0.89

%

Time deposits

2.00

%

1.96

%

1.79

%

1.79

%

1.61

%

Borrowings

2.89

%

2.90

%

2.82

%

2.65

%

2.66

%

Total interest-bearing liabilities

1.41

%

1.42

%

1.34

%

1.21

%

1.08

%

Net interest spread (taxable equivalent basis)

2.91

%

3.04

%

3.10

%

2.99

%

3.06

%

Annualized net interest margin (taxable equivalent basis)

3.25

%

3.39

%

3.42

%

3.29

%

3.32

%

Annualized cost of deposits

1.00

%

1.00

%

0.93

%

0.84

%

0.73

%

ASSET QUALITY DATA

ALLOWANCE FOR LOAN LOSSES

Balance at beginning of period

$

38,662

$

37,979

$

37,688

$

37,293

$

36,604

Provision for loan losses

536

508

591

1,046

Charge-offs

(809

)

(413

)

(516

)

(381

)

(753

)

Recoveries

266

1,096

299

185

396

Balance at end of period

$

38,655

$

38,662

$

37,979

$

37,688

$

37,293

NET LOAN CHARGE-OFFS (RECOVERIES)

Commercial, real estate

$

203

$

(85

)

$

67

$

132

$

(115

)

Commercial, industrial and other

393

(909

)

50

(44

)

(26

)

Equipment financing

293

85

28

366

Residential mortgages

(55

)

(2

)

41

(2

)

36

Consumer and home equity

2

20

(26

)

82

96

Net charge-offs (recoveries)

$

543

$

(683

)

$

217

$

196

$

357

NON-PERFORMING ASSETS

Commercial, real estate

$

9,164

$

10,205

$

9,817

$

7,192

$

5,737

Commercial, industrial and other

795

662

2,202

1,019

1,189

Equipment financing

271

136

383

501

441

Residential mortgages

3,250

1,548

1,740

1,986

2,347

Consumer and home equity

2,437

1,873

1,581

1,432

1,410

Total non-accrual loans

15,917

14,424

15,723

12,130

11,124

Property acquired through foreclosure or repossession

944

532

715

830

2,754

Total non-performing assets

$

16,861

$

14,956

$

16,438

$

12,960

$

13,878

Loans past due 90 days or more and still accruing

$

$

$

78

$

$

16

Loans restructured and still accruing

$

5,029

$

5,139

$

6,352

$

9,293

$

9,030

Ratio of allowance for loan losses to total loans

0.78

%

0.78

%

0.77

%

0.84

%

0.86

%

Total non-accrual loans to total loans

0.32

%

0.29

%

0.32

%

0.27

%

0.26

%

Total non-performing assets to total assets

0.26

%

0.23

%

0.26

%

0.22

%

0.25

%

Annualized net charge-offs (recoveries) to average loans

0.04

%

(0.06

)%

0.02

%

0.02

%

0.03

%


Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

At or for the Quarter Ended

September 30,

June 30,

March 31,

December 31,

September 30,

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

2019

2019

2019

2018

2018

CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE

Total common stockholders' equity at end of period - GAAP

$

713,204

$

698,463

$

681,343

$

623,739

$

607,555

Less: Goodwill

156,277

155,830

154,153

136,433

136,433

Less: Other identifiable intangible assets

4,602

4,891

5,192

1,768

1,910

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

$

552,325

$

537,742

$

521,998

$

485,538

$

469,212

Shares outstanding at end of period

50,489

50,441

50,436

47,486

47,485

Book value per share - GAAP

$

14.13

$

13.85

$

13.51

$

13.14

$

12.79

Tangible book value per share - Non-GAAP

$

10.94

$

10.66

$

10.35

$

10.22

$

9.88

CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS

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

$

552,325

$

537,742

$

521,998

$

485,538

$

469,212

Total assets at end of period - GAAP

$

6,492,474

$

6,407,195

$

6,365,063

$

5,806,093

$

5,627,057

Less: Goodwill

156,277

155,830

154,153

136,433

136,433

Less: Other identifiable intangible assets

4,602

4,891

5,192

1,768

1,910

Total tangible assets at end of period - Non-GAAP

$

6,331,595

$

6,246,474

$

6,205,718

$

5,667,892

$

5,488,714

Common equity to assets - GAAP

10.99

%

10.90

%

10.70

%

10.74

%

10.80

%

Tangible common equity to tangible assets - Non-GAAP

8.72

%

8.61

%

8.41

%

8.57

%

8.55

%

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

18,874

$

17,457

$

15,626

$

15,550

$

16,758

Total average common stockholders' equity - GAAP

$

705,726

$

689,324

$

673,205

$

613,583

$

603,059

Less: Average goodwill

155,835

154,171

153,562

136,433

136,433

Less: Average other identifiable intangible assets

4,761

5,058

5,254

1,844

1,982

Total average tangible common stockholders' equity - Non-GAAP

$

545,130

$

530,095

$

514,389

$

475,306

$

464,644

Return on average common stockholders' equity - GAAP

10.61

%

10.16

%

9.41

%

10.05

%

11.02

%

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

13.74

%

13.21

%

12.32

%

12.98

%

14.31

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

29,563

$

31,686

$

33,984

$

28,663

$

27,793

Amortization of core deposit intangibles

(288

)

(301

)

(304

)

(142

)

(142

)

Merger-related expenses

(318

)

(2,860

)

(464

)

Noninterest expense, as adjusted

$

29,275

$

31,067

$

30,820

$

28,057

$

27,651

Net interest income

$

48,682

$

49,198

$

48,606

$

44,206

$

43,624

Total noninterest income

6,700

6,389

5,723

5,628

5,639

Total revenue

55,382

55,587

54,329

49,834

49,263

Tax-equivalent adjustment on municipal securities

97

105

108

109

113

Total revenue, as adjusted

$

55,479

$

55,692

$

54,437

$

49,943

$

49,376

Efficiency ratio - Non-GAAP

52.77

%

55.78

%

56.62

%

56.18

%

56.00

%


Lakeland Bancorp, Inc.

Supplemental Information - Non-GAAP Financial Measures

(Unaudited)

For the Nine Months Ended September 30,

(Dollars in thousands)

2019

2018

CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY

Net income - GAAP

$

51,957

$

47,851

Total average common stockholders' equity - GAAP

$

689,538

$

593,453

Less: Average goodwill

$

154,531

$

136,433

Less: Average other identifiable intangible assets

$

5,022

$

2,138

Total average tangible common stockholders' equity - Non-GAAP

$

529,985

$

454,882

Return on average common stockholders' equity - GAAP

10.07

%

10.78

%

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

13.11

%

14.06

%

CALCULATION OF EFFICIENCY RATIO

Total noninterest expense

$

95,233

$

82,504

Amortization of core deposit intangibles

$

(893

)

$

(452

)

Merger-related expenses

$

(3,178

)

$

Noninterest expense, as adjusted

$

91,162

$

82,052

Net interest income

$

146,486

$

129,353

Noninterest income

$

18,812

$

16,682

Total revenue

$

165,298

$

146,035

Tax-equivalent adjustment on municipal securities

$

310

$

345

Total revenue, as adjusted

$

165,608

$

146,380

Efficiency ratio - Non-GAAP

55.05

%

56.05

%


Lakeland Bancorp, Inc.

Supplemental Information - Reconciliation of Net Income

(Unaudited)

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

(Dollars in thousands, except per share amounts)

2019

2018

2019

2018

Net income - GAAP

$

18,874

$

16,758

$

51,957

$

47,851

NON-ROUTINE TRANSACTIONS, NET OF TAX

Tax deductible merger-related expenses

1,878

Non-tax deductible merger-related expenses

491

Net effect of non-routine transactions

2,369

Net income available to common shareholders excluding non-routine transactions

$

18,874

$

16,758

$

54,326

$

47,851

Less: Earnings allocated to participating securities

156

153

443

440

Net Income, excluding non-routine transactions

$

18,713

$

16,605

$

53,877

$

47,411

Weighted average shares - Basic

50,553

47,605

50,447

$

47,570

Weighted average shares - Diluted

50,694

47,788

50,595

$

47,764

Basic earnings per share - GAAP

$

0.37

$

0.35

$

1.02

$

1.00

Diluted earnings per share - GAAP

$

0.37

$

0.35

$

1.02

$

0.99

Basic earnings per share, adjusted for non-routine transactions

$

0.37

$

0.35

$

1.07

$

1.00

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

$

0.37

$

0.35

$

1.06

$

0.99

Return on average assets - GAAP

1.17

%

1.19

%

1.11

%

1.17

%

Return on average assets, adjusted for non-routine transactions

1.17

%

1.19

%

1.16

%

1.17

%

Return on average common stockholders' equity - GAAP

10.61

%

11.02

%

10.07

%

10.78

%

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

10.61

%

11.02

%

10.53

%

10.78

%

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

13.74

%

14.31

%

13.11

%

14.06

%

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

13.74

%

14.31

%

13.70

%

14.06

%