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Lakeland Bancorp Third Quarter Results Driven by Strong Loan Growth; Receives Regulatory Approvals for Merger with Pascack Bancorp

OAK RIDGE, N.J., Oct. 27, 2015 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the "Company") reported the following results in the third quarter of 2015:

  • Net Income in the third quarter of 2015 was $7.8 million, or $0.20 per diluted share, compared to $8.2 million, or $0.22 per diluted share, for the same period in 2014. Excluding the impact of $734 thousand in non-routine transactions, net income for the third quarter of 2015 would have been $8.3 million, or $0.22 per diluted share.
  • For the third quarter of 2015, Annualized Return on Average Assets was 0.84%, Annualized Return on Average Common Equity was 7.86%, and Annualized Return on Average Tangible Common Equity was 10.96%. As of September 30, 2015, tangible book value per common share was $7.55, an increase of 6.9% compared to December 31, 2014.
  • Net Income for the first nine months of 2015 was $24.0 million, or $0.63 per diluted share, which was $0.8 million, or $0.02 per diluted share, higher than the same period in 2014. Excluding the impact of $734 thousand in non-routine transactions, net income for the first nine months of 2015 would have been $24.5 million, or $0.64 per diluted share. Annualized Return on Average Assets was 0.89%, the Annualized Return on Average Common Equity was 8.24%, and the Annualized Return on Average Tangible Common Equity was 11.56%.
  • The $734 thousand in non-routine transactions included $330 thousand of expenses related to the proposed merger with Pascack Bancorp, Inc., $1.8 million of realized gain when the Company redeemed and extinguished Lakeland Bancorp Capital Trust IV trust preferred securities having a notional value of $10.0 million, $2.4 million of prepayment fees from the repayment of $20.0 million in 4.44% long-term debt, and $173 thousand in net realized gains on the sale of securities relating to the two aforementioned transactions.
  • At September 30, 2015, loans totaled $2.85 billion, an increase of $198.2 million, or 7.5%, compared to December 31, 2014. The overall year-to-date increase was primarily in total commercial loans, which increased by $235.8 million, or 12.9%, aided in part by the new Hudson Valley, N.Y. and Middlesex/Monmouth County, N.J. Loan Production Offices ("LPOs").
  • Noninterest bearing demand deposits totaled $694.3 million at September 30, 2015, an increase of $48.2 million, or 7.5%, since December 31, 2014. As of September 30, 2015, noninterest bearing demand deposits represent 23.8% of total deposits, up from 23.1% at December 31, 2014.
  • On October 23, 2015, the Company declared a quarterly cash dividend of $0.085 per common share, payable on November 16, 2015 to holders of record as of the close of business on November 6, 2015.

Thomas J. Shara, Lakeland Bancorp's President and CEO said, "Total loans and total assets at $2.9 billion and $3.7 billion, respectively, are now at record levels. Our loan growth continues to be driven by our commercial lending teams, which now include meaningful contributions from our recently formed LPOs. For the third quarter, our growth in commercial real estate was 4.8%, and for the last twelve months totaled 14.1%. Our commercial, industrial and other growth for the third quarter was 10.8% and for the last twelve months totaled 25.4%. Our organic loan growth, along with the fully operational LPOs, recent debt prepayments and the anticipated merger with Pascack, have us well positioned for the future."

Earnings

Net Interest Income

Net interest income for the third quarter of 2015 was $29.3 million, an increase of 3.1% as compared to $28.5 million for the same period in 2014. Annualized Net Interest Margin ("NIM") was 3.42%, as compared to 3.46% for the second quarter of 2015 and 3.58% reported in the third quarter of 2014. The 16 basis point decrease in NIM from the third quarter of 2014 to the third quarter of 2015 was primarily driven by a 14 basis point decline in the yield on loans and leases as new and repriced loans were added at lower rates. Average loan and lease balances increased by $202.9 million over this time period. The annualized cost of interest bearing liabilities also increased during this period by five basis points.

Year-to-date 2015 net interest income of $86.5 million increased 2.1% as compared to the $84.7 million reported for the same period in 2014. Annualized NIM for the first nine months of 2015 was 3.48%, as compared to 3.66% for the same period in 2014. The Company's annualized yield on interest earning assets decreased from 3.94% for the first nine months of 2014 to 3.79% for the same period in 2015. The Company's cost of interest bearing liabilities increased from 0.37% for the first nine months of 2014 to 0.42% for the same period in 2015.

Noninterest Income

Noninterest income totaled $6.7 million for the third quarter of 2015, as compared to $4.8 million for the same period in 2014. Excluding the $1.8 million gain on debt extinguishment and $173 thousand net gain on sale of securities related to debt prepayments, total noninterest income totaling $4.7 million was $0.1 million less than the same period in 2014. The gain on sale of mortgage loans at $0.5 million rose by $0.4 million due to an increase in the number of mortgages sold, partially offset by a $0.2 million decline in investment services fee income and a $0.1 million decline in the gain on sale of other real estate property.

For the first nine months of 2015, noninterest income totaled $16.4 million, as compared to $13.3 million for the same period in 2014. Excluding the $1.8 million gain on debt extinguishment and $173 thousand net gain on sale of securities related to debt prepayments, total noninterest income totaling $14.4 million was $1.1 million greater than the same period in 2014. Service charges on deposits totaled $7.4 million and decreased $0.5 million as compared to the same period in 2014, due to reduced demand deposit account fees and overdraft charges. Swap fees yielded $0.4 million during the first nine months of 2015, but none in 2014. Finally, gains on the sale of mortgage loans at $1.2 million exceeded the $0.4 million earned in the same period in 2014 due to an increase in the number of mortgages sold.

Noninterest Expense

Noninterest expense for the third quarter of 2015 was $23.8 million, as compared to $19.7 million for the same period in 2014. Excluding the $330 thousand in merger related expenses and $2.4 million of debt prepayment fees, noninterest expense totaling $21.1 million was $1.4 million greater than the same period in 2014. Salary and benefit expense at $12.4 million comprised most of this increase as $0.4 million in salary and benefit expenses were incurred related to the two new LPOs, coupled with year-over-year incremental salary and benefit increases.

For the first nine months of 2015, noninterest expense totaled $65.1 million, as compared to $59.0 million for the same period in 2014. Excluding the $330 thousand in merger related expenses and $2.4 million of debt prepayment fees, noninterest expense totaling $62.3 million was $3.4 million greater than the same period in 2014. Salary and benefit expense at $36.3 million increased by $2.9 million and was the primary driver of the year-over-year increase in noninterest expense. This increase was primarily due to $0.7 million in salary and benefits expenses related to the two new LPOs, coupled with year-over-year incremental salary and benefit increases.

Financial Condition

At September 30, 2015, total assets were $3.74 billion, an increase of $204.8 million, or 5.8%, from December 31, 2014. As previously mentioned, at September 30, 2015, loans totaled $2.85 billion, an increase of $198.2 million, or 7.5%, compared to December 31, 2014. Total deposits were $2.92 billion, an increase of $128.9 million, or 4.6%, from December 31, 2014. Noninterest bearing demand deposits at $694.3 million have increased by $48.2 million, or 7.5%, in 2015, while interest bearing deposits at $2.2 billion have increased $80.6 million, or 3.8%, in 2015.

Asset Quality

At September 30, 2015, non-performing assets totaled $22.3 million (0.60% of total assets). The Allowance for Loan and Lease Losses totaled $31.0 million at September 30, 2015 and represented 1.09% of total loans. In the third quarter of 2015, the Company had net recoveries of $0.5 million, as compared to net charge offs totaling $1.0 million in the third quarter of 2014. For the first nine months of 2015, the Company had net charge-offs of $1.6 million (0.08% of average loans), as compared to $4.1 million (0.21% of average loans) for the same period in 2014. The provision for loan and lease losses in the third quarter of 2015 was $0.3 million, compared to $1.2 million in the same quarter of 2014. The provision for loan and lease losses for the first nine months of 2015 was $1.9 million, as compared to $4.3 million for the same period in 2014.

Capital

At September 30, 2015, stockholders' equity was $397.7 million, while book value per common share was $10.49. Tangible book value per common share was $7.55 at September 30, 2015, an increase of 6.9% since December 31, 2014. As of September 30, 2015, the Company's leverage ratio was 8.77%. Tier I and total risk based capital ratios were 10.81% and 11.93%, respectively. The common equity tier 1 capital ratio was 9.78%. The tangible common equity ratio was 7.88%. The regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.

Regulatory Approvals

The Company and Pascack Bancorp have received approvals from the Federal Deposit Insurance Corporation and the New Jersey Department of Banking and Insurance to complete the merger of the bank subsidiaries, Pascack Community Bank with and into Lakeland Bank. The Federal Reserve Board has advised that the merger of the bank holding companies, Pascack Bancorp with and into the Company, does not require its approval. The merger remains subject to the approval of Pascack Bancorp's shareholders and other customary closing conditions.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. In connection with the proposed mergers, Lakeland Bancorp has filed with the Securities and Exchange Commission a registration statement on Form S-4 that includes a preliminary proxy statement of Pascack Bancorp and a preliminary prospectus of Lakeland Bancorp. The registration statement has not yet become effective. This material is not a substitute for the final proxy statement and prospectus or any other document Lakeland Bancorp may file with the SEC. After the registration statement has been declared effective by the SEC, the definitive proxy statement and prospectus will be delivered to the shareholders of Pascack Bancorp. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE TRANSACTIONS THAT HAVE BEEN OR WILL BE FILED BY LAKELAND CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN AND WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a free copy of the registration statement and the definitive proxy statement and prospectus (when available) and other documents filed by Lakeland Bancorp with the SEC at the SEC's web site at www.sec.gov. These documents may be accessed and downloaded for free at Lakeland Bancorp's website at www.lakelandbank.com or by directing a request to Investor Relations, Lakeland Bancorp, Inc., 250 Oak Ridge Road, Oak Ridge, NJ 07438 (973-697-2000). Requests for the definitive proxy statement and prospectus (when available) may also be made to Investor Relations, Pascack Bancorp, Inc., 64 Crescent Avenue, Waldwick, New Jersey 07463 (201-345-9348).

Participants in the Solicitation

This communication is not a solicitation of a proxy from any security holder of Lakeland Bancorp or Pascack Bancorp. However, Lakeland Bancorp, Pascack Bancorp and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Pascack Bancorp's shareholders in respect of the proposed transaction. Information regarding the directors and executive officers of Lakeland Bancorp may be found in its definitive proxy statement relating to its 2015 Annual Meeting of Shareholders, which was filed with the Commission on April 10, 2015, and can be obtained free of charge from Lakeland Bancorp's website. Information regarding the directors and executive officers of Pascack Bancorp may be found in its definitive proxy statement relating to its 2015 Annual Meeting of Shareholders, and can be obtained free of charge from Pascack Bancorp's website. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interest, by security holdings or otherwise, will be contained in the definitive proxy statement and prospectus and other relevant materials to be filed with the Commission when they become available.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) 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. Lakeland 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 affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company's lending and leasing activities, customers' acceptance of the Company's products and services, competition, failure to obtain the required approval from Pascack Bancorp, Inc. shareholders for the merger of Pascack Bancorp, Inc. into Lakeland Bancorp, Inc. and failure to realize anticipated efficiencies and synergies if the holding company merger and the merger of Pascack Community Bank into Lakeland Bank are consummated. Any statements made by Lakeland that are not historical facts should be considered to be forward-looking statements. Lakeland 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"). The Company's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. 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.

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, expenses on other real estate owned and other repossessed assets, 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 securities gains and losses and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a better comparison of period to period operating performance.

About Lakeland Bank

Lakeland Bancorp, the holding company for Lakeland Bank, has $3.7 billion in total assets with 48 New Jersey branch offices in Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren counties, five New Jersey regional commercial lending centers in Bernardsville, Montville, Newton, Teaneck and Wyckoff and two commercial loan production offices serving Middlesex and Monmouth counties in New Jersey and the Hudson Valley region of New York. Lakeland Bank offers an extensive array of consumer and commercial products and services, including online and mobile banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. For more information about the full line of products and services, visit LakelandBank.com.

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share amounts) 2015 2014 2015 2014
INCOME STATEMENT
Net Interest Income $ 29,334 $ 28,452 $ 86,521 $ 84,716
Provision for Loan and Lease Losses (332) (1,194) (1,942) (4,276)
Other Noninterest Income 4,169 4,666 13,119 12,873
Gain on Investment Securities 173 -- 190 2
Gain on Sale of Loans 515 143 1,244 378
Gain on Debt Extinguishment 1,830 -- 1,830 --
Long-Term Debt Prepayment Fee (2,407) -- (2,407) --
Merger Related Expenses (330) -- (330) --
Other Noninterest Expense (21,095) (19,685) (62,332) (58,957)
Pretax Income 11,857 12,382 35,893 34,736
Tax Expense (4,032) (4,136) (11,876) (11,546)
Net Income $ 7,825 $ 8,246 $ 24,017 $ 23,190
Basic Earnings per Common Share $ 0.20 $ 0.22 $ 0.63 $ 0.61
Diluted Earnings per Common Share $ 0.20 $ 0.22 $ 0.63 $ 0.61
Dividends per Common Share $ 0.085 $ 0.075 $ 0.245 $ 0.218
Weighted Average Shares - Basic 37,856 37,738 37,837 37,720
Weighted Average Shares - Diluted 38,016 37,862 37,976 37,838
SELECTED OPERATING RATIOS
Annualized Return on Average Assets 0.84% 0.95% 0.89% 0.92%
Annualized Return on Average Common Equity 7.86% 8.83% 8.24% 8.52%
Annualized Return on Average Tangible Common Equity (1) 10.96% 12.66% 11.56% 12.33%
Annualized Return on Interest Earning Assets 3.75% 3.87% 3.79% 3.94%
Annualized Cost of Interest Bearing Liabilities 0.44% 0.39% 0.42% 0.37%
Annualized Net Interest Spread 3.31% 3.48% 3.37% 3.57%
Annualized Net Interest Margin 3.42% 3.58% 3.48% 3.66%
Efficiency Ratio (1) 60.77% 57.97% 60.68% 59.18%
Stockholders' Equity to Total Assets 10.62% 10.65%
Book Value per Common Share $ 10.49 $ 9.83
Tangible Book Value per Common Share (1) $ 7.55 $ 6.87
Tangible Common Equity to Tangible Assets (1) 7.88% 7.69%
ASSET QUALITY RATIOS 9/30/2015 9/30/2014
Ratio of Allowance for Loan and Lease Losses to Total Loans 1.09% 1.15%
Non-accruing Loans to Total Loans 0.75% 0.71%
Non-performing Assets to Total Assets 0.60% 0.56%
Annualized Net Charge-Offs to Average Loans 0.08% 0.21%
SELECTED BALANCE SHEET DATA AT PERIOD-END 9/30/2015 9/30/2014
Loans and Leases $ 2,853,764 $ 2,613,404
Allowance for Loan and Lease Losses (30,994) (30,047)
Investment Securities 559,295 558,032
Total Assets 3,743,100 3,498,905
Total Deposits 2,919,673 2,776,931
Short-Term Borrowings 131,356 112,796
Other Borrowings 275,666 220,938
Stockholders' Equity 397,687 372,539
SELECTED AVERAGE BALANCE SHEET DATA For the Three Months Ended For the Nine Months Ended
9/30/2015 9/30/2014 9/30/2015 9/30/2014
Loans and Leases, net $ 2,811,581 $ 2,608,687 $ 2,731,518 $ 2,549,675
Investment Securities 581,565 529,379 588,337 536,313
Interest Earning Assets 3,431,018 3,183,361 3,349,755 3,120,265
Total Assets 3,685,573 3,443,946 3,604,713 3,372,591
Noninterest Bearing Demand Deposits 710,011 671,049 686,652 643,548
Savings Deposits 398,147 382,642 398,491 384,934
Interest Bearing Transaction Accounts 1,497,340 1,457,680 1,491,166 1,444,006
Time Deposits 309,235 280,200 295,460 285,919
Total Deposits 2,914,733 2,791,571 2,871,769 2,758,407
Short-Term Borrowings 61,679 49,725 56,303 61,575
Other Borrowings 297,140 217,049 270,871 173,949
Total Interest Bearing Liabilities 2,563,542 2,387,295 2,512,291 2,350,383
Stockholders' Equity 394,948 370,448 389,604 363,783
(1) See supplemental information - Non-GAAP financial measures
Lakeland Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share amounts) 2015 2014 2015 2014
INTEREST INCOME
Loans and fees $29,123 $27,949 $85,230 $82,405
Federal funds sold and interest bearing deposits with banks 7 24 30 46
Taxable investment securities and other 2,639 2,387 8,001 7,448
Tax exempt investment securities 390 436 1,198 1,376
TOTAL INTEREST INCOME 32,159 30,796 94,459 91,275
INTEREST EXPENSE
Deposits 1,464 1,256 4,093 3,762
Federal funds purchased and securities sold under agreements to repurchase 33 19 92 69
Other borrowings 1,328 1,069 3,753 2,728
TOTAL INTEREST EXPENSE 2,825 2,344 7,938 6,559
NET INTEREST INCOME 29,334 28,452 86,521 84,716
Provision for loan and lease losses 332 1,194 1,942 4,276
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 29,002 27,258 84,579 80,440
NONINTEREST INCOME
Service charges on deposit accounts 2,614 2,689 7,404 7,911
Commissions and fees 984 1,371 3,487 3,466
Gain on investment securities 173 -- 190 2
Gain on sale of loans 515 143 1,244 378
Gain on debt extinguishment 1,830 -- 1,830 --
Income on bank owned life insurance 455 365 1,542 1,090
Other income 116 241 686 406
TOTAL NONINTEREST INCOME 6,687 4,809 16,383 13,253
NONINTEREST EXPENSE
Salaries and employee benefits 12,376 11,327 36,270 33,340
Net occupancy expense 2,067 2,017 6,888 6,675
Furniture and equipment 1,881 1,605 5,166 4,958
Stationery, supplies and postage 395 368 1,137 1,056
Marketing expense 396 629 1,052 1,491
FDIC insurance expense 474 489 1,523 1,501
Legal expense 301 144 742 636
Other real estate owned and other repossessed assets expense 27 50 46 165
Long-term debt prepayment fee 2,407 -- 2,407 --
Merger related expenses 330 -- 330 --
Core deposit intangible amortization 98 111 316 353
Other expenses 3,080 2,945 9,192 8,782
TOTAL NONINTEREST EXPENSE 23,832 19,685 65,069 58,957
INCOME BEFORE PROVISION FOR INCOME TAXES 11,857 12,382 35,893 34,736
Provision for income taxes 4,032 4,136 11,876 11,546
NET INCOME $7,825 $8,246 $24,017 $23,190
EARNINGS PER COMMON SHARE
Basic $0.20 $0.22 $0.63 $0.61
Diluted $0.20 $0.22 $0.63 $0.61
DIVIDENDS PER COMMON SHARE $0.085 $0.075 $0.245 $0.218
Lakeland Bancorp, Inc.
Consolidated Balance Sheets
September 30, December 31,
(Dollars in thousands) 2015 2014
(Unaudited)
ASSETS
Cash and due from banks $117,743 $102,549
Federal funds sold and interest bearing deposits due from banks 5,396 6,767
Total cash and cash equivalents 123,139 109,316
Investment securities available for sale, at fair value 424,893 457,449
Investment securities held to maturity; fair value of $123,154 in 2015 and $109,030 in 2014 121,550 107,976
Federal Home Loan Bank and other membership stocks, at cost 12,852 9,846
Loans held for sale 1,920 592
Loans:
Commercial, secured by real estate 1,776,911 1,593,781
Commercial, industrial and other 290,961 238,252
Leases 55,057 54,749
Residential mortgages 400,247 431,190
Consumer and home equity 330,588 337,642
Total loans 2,853,764 2,655,614
Net deferred costs (2,417) (1,788)
Allowance for loan and lease losses (30,994) (30,684)
Net loans 2,820,353 2,623,142
Premises and equipment, net 35,439 35,675
Accrued interest receivable 8,827 8,896
Goodwill 109,974 109,974
Other identifiable intangible assets 1,644 1,960
Bank owned life insurance 65,014 57,476
Other assets 17,495 16,023
TOTAL ASSETS $3,743,100 $3,538,325
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest bearing $694,267 $646,052
Savings and interest bearing transaction accounts 1,907,858 1,864,805
Time deposits under $100,000 164,291 165,625
Time deposits $100,000 and over 153,257 114,337
Total deposits 2,919,673 2,790,819
Federal funds purchased and securities sold under agreements to repurchase 131,356 108,935
Other borrowings 244,428 202,498
Subordinated debentures 31,238 41,238
Other liabilities 18,718 15,397
TOTAL LIABILITIES 3,345,413 3,158,887
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized 70,000,000 shares; issued 37,906,481 shares at September 30, 2015 and 37,910,840 shares at December 31, 2014 385,941 384,731
Retained Earnings (Accumulated Deficit) 7,861 (6,816)
Accumulated other comprehensive gain 3,885 1,523
TOTAL STOCKHOLDERS' EQUITY 397,687 379,438
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,743,100 $3,538,325
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30,
(Dollars in thousands, except per share data) 2015 2015 2015 2014 2014
INCOME STATEMENT
Net Interest Income $ 29,334 $ 28,669 $ 28,518 $ 28,850 $ 28,452
Provision for Loan and Lease Losses (332) (740) (870) (1,589) (1,194)
Other Noninterest Income 4,169 4,477 4,473 4,274 4,666
Gain on Investment Securities 173 17 -- -- --
Gain on Sale of Loans 515 464 265 195 143
Gain on Debt Extinguishment 1,830 -- -- -- --
Long-Term Debt Prepayment Fee (2,407) -- -- -- --
Merger Related Expenses (330) -- -- -- --
Other Noninterest Expense (21,095) (21,195) (20,042) (20,178) (19,685)
Pretax Income 11,857 11,692 12,344 11,552 12,382
Tax Expense (4,032) (3,830) (4,014) (3,613) (4,136)
Net Income $ 7,825 $ 7,862 $ 8,330 $ 7,939 $ 8,246
Basic Earnings Per Common Share $ 0.20 $ 0.21 $ 0.22 $ 0.21 $ 0.22
Diluted Earnings Per Common Share $ 0.20 $ 0.21 $ 0.22 $ 0.21 $ 0.22
Dividends Per Common Share $ 0.085 $ 0.085 $ 0.075 $ 0.075 $ 0.075
Dividends Paid $ 3,244 $ 3,243 $ 2,852 $ 2,853 $ 2,853
Weighted Average Shares - Basic 37,856 37,854 37,800 37,765 37,738
Weighted Average Shares - Diluted 38,016 37,988 37,937 37,920 37,862
SELECTED OPERATING RATIOS
Annualized Return on Average Assets 0.84% 0.88% 0.96% 0.90% 0.95%
Annualized Return on Average Common Equity 7.86% 8.08% 8.81% 8.35% 8.83%
Annualized Return on Tangible Common Equity (1) 10.96% 11.33% 12.43% 11.87% 12.66%
Annualized Net Interest Margin 3.42% 3.46% 3.56% 3.58% 3.58%
Efficiency Ratio (1) 60.77% 62.09% 59.17% 59.87% 57.97%
Common Stockholders' Equity to Total Assets 10.62% 10.57% 10.70% 10.72% 10.65%
Tangible Common Equity to Tangible Assets (1) 7.88% 7.78% 7.86% 7.81% 7.69%
Tier 1 Risk-Based Ratio (2) 10.81% 11.05% 11.23% 11.76% 11.75%
Total Risk-Based Ratio (2) 11.93% 12.15% 12.37% 12.98% 12.97%
Tier 1 Leverage Ratio (2) 8.77% 9.12% 9.17% 9.08% 9.02%
Common Equity Tier 1 Capital Ratio (2) 9.78% 9.66% 9.79% N/A N/A
Book Value per Common Share $ 10.49 $ 10.31 $ 10.24 $ 10.01 $ 9.83
Tangible Book Value per Common Share (1) $ 7.55 $ 7.36 $ 7.29 $ 7.06 $ 6.87
(1) See Supplemental Information - Non-GAAP financial measures
(2) Beginning March 31, 2015, these ratios were calculated according to the Basel III capital rules that took effect on January 1, 2015.
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30,
(Dollars in thousands) 2015 2015 2015 2014 2014
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and Leases $ 2,853,764 $ 2,756,694 $ 2,691,705 $ 2,655,614 $ 2,613,404
Allowance for Loan and Lease Losses (30,994) (30,174) (30,505) (30,684) (30,047)
Investment Securities 559,295 597,598 599,986 575,271 558,032
Total Assets 3,743,100 3,699,127 3,627,764 3,538,325 3,498,905
Total Deposits 2,919,673 2,842,953 2,842,565 2,790,819 2,776,931
Short-Term Borrowings 131,356 146,249 117,351 108,935 112,796
Other Borrowings 275,666 303,966 263,966 243,736 220,938
Stockholders' Equity 397,687 390,860 388,084 379,438 372,539
Loans and Leases
Commercial Real Estate $ 1,776,911 $ 1,695,276 $ 1,636,128 $ 1,593,781 $ 1,557,168
Commercial, Industrial and Other 290,961 262,617 244,162 238,252 231,961
Leases 55,057 53,798 54,271 54,749 52,285
Residential Mortgages 400,247 414,339 426,339 431,190 431,477
Consumer and Home Equity 330,588 330,664 330,805 337,642 340,513
Total Loans $ 2,853,764 $ 2,756,694 $ 2,691,705 $ 2,655,614 $ 2,613,404
Deposits
Noninterest Bearing $ 694,267 $ 714,227 $ 672,264 $ 646,052 $ 674,933
Savings and Interest Bearing Transaction Accounts 1,907,858 1,822,295 1,878,598 1,864,805 1,820,657
Time Deposits Under $100,000 164,291 165,105 164,946 165,625 168,391
Time Deposits $100,000 and Over 153,257 141,326 126,757 114,337 112,950
Total Deposits $ 2,919,673 $ 2,842,953 $ 2,842,565 $ 2,790,819 $ 2,776,931
SELECTED AVERAGE BALANCE SHEET DATA
Loans and Leases, net $ 2,811,581 $ 2,720,801 $ 2,660,512 $ 2,622,602 $ 2,608,687
Investment Securities 581,565 600,547 582,912 566,039 529,379
Interest Earning Assets 3,431,018 3,345,380 3,271,110 3,227,390 3,183,361
Total Assets 3,685,573 3,600,416 3,526,898 3,483,162 3,443,946
Noninterest Bearing Demand Deposits 710,011 688,854 660,548 679,796 671,049
Savings Deposits 398,147 402,142 395,153 384,064 382,642
Interest Bearing Transaction Accounts 1,497,340 1,480,866 1,495,270 1,487,492 1,457,680
Time Deposits 309,235 295,996 280,837 277,930 280,200
Total Deposits 2,914,733 2,867,858 2,831,808 2,829,282 2,791,571
Short-Term Borrowings 61,679 59,249 47,827 38,653 49,725
Other Borrowings 297,140 267,610 247,316 221,848 217,049
Total Interest Bearing Liabilities 2,563,542 2,505,863 2,466,403 2,409,988 2,387,295
Stockholders' Equity 394,948 390,151 383,587 377,379 370,448
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30,
(Dollars in thousands) 2015 2015 2015 2014 2014
AVERAGE ANNUALIZED YIELDS (Taxable Equivalent Basis)
Assets:
Loans and leases 4.11% 4.16% 4.25% 4.26% 4.25%
Taxable investment securities and other 2.06% 2.02% 2.08% 2.09% 2.08%
Tax-exempt securities 3.41% 3.58% 3.67% 3.75% 3.79%
Federal funds sold and interest bearing cash accounts 0.07% 0.18% 0.17% 0.26% 0.21%
Total interest earning assets 3.75% 3.78% 3.86% 3.87% 3.87%
Liabilities:
Savings accounts 0.05% 0.05% 0.05% 0.05% 0.05%
Interest bearing transaction accounts 0.25% 0.23% 0.23% 0.23% 0.23%
Time deposits 0.63% 0.59% 0.56% 0.54% 0.49%
Borrowings 1.52% 1.58% 1.61% 1.65% 1.63%
Total interest bearing liabilities 0.44% 0.42% 0.40% 0.39% 0.39%
Net interest spread (taxable equivalent basis) 3.31% 3.36% 3.46% 3.48% 3.48%
Annualized net interest margin (taxable equivalent basis) 3.42% 3.46% 3.56% 3.58% 3.58%
Annualized cost of deposits 0.20% 0.19% 0.18% 0.18% 0.18%
ASSET QUALITY DATA
Allowance for Loan and Lease Losses
Balance at beginning of period $ 30,174 $ 30,505 $ 30,684 $ 30,047 $ 29,866
Provision for loan losses 332 740 870 1,589 1,194
Net recoveries (charge-offs) 488 (1,071) (1,049) (952) (1,013)
Balance at end of period $ 30,994 $ 30,174 $ 30,505 $ 30,684 $ 30,047
Net Loan Charge-offs (Recoveries)
Commercial real estate $ (936) $ 476 $ 426 $ (287) $ 28
Commercial, industrial and other 88 21 (31) 99 (71)
Leases 13 102 407 185 229
Home equity and consumer 204 386 231 860 638
Real estate - mortgage 143 86 16 95 189
Net charge-offs (recoveries) $ (488) $ 1,071 $ 1,049 $ 952 $ 1,013
Non-performing Assets
Commercial real estate $ 8,176 $ 5,307 $ 6,994 $ 7,612 $ 8,549
Commercial, industrial and other 832 1,354 285 308 599
Leases 154 79 111 88 141
Home equity and consumer 3,530 3,143 3,472 3,415 2,114
Real estate - mortgage 8,805 9,098 9,552 9,246 7,221
Total non-accruing loans 21,497 18,981 20,414 20,669 18,624
Property acquired through foreclosure or repossession 819 1,078 826 1,026 982
Total non-performing assets $ 22,316 $ 20,059 $ 21,240 $ 21,695 $ 19,606
Loans past due 90 days or more and still accruing $ 123 $ 102 $ 134 $ 66 $ 429
Loans restructured and still accruing $ 11,927 $ 12,419 $ 11,538 $ 10,579 $ 7,957
Ratio of allowance for loan and lease losses to total loans 1.09% 1.09% 1.13% 1.16% 1.15%
Non-performing loans to total loans 0.75% 0.69% 0.76% 0.78% 0.71%
Non-performing assets to total assets 0.60% 0.54% 0.59% 0.61% 0.56%
Annualized net charge-offs (recoveries) to average loans -0.07% 0.16% 0.16% 0.15% 0.16%
Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
At or for the Quarter Ended
Sept 30, Jun 30, Mar 31, Dec 31, Sept 30,
(Dollars in thousands, except per share amounts) 2015 2015 2015 2014 2014
Calculation of tangible book value per common share
Total common stockholders' equity at end of period - GAAP $ 397,687 $ 390,860 $ 388,084 $ 379,438 $ 372,539
Less:
Goodwill 109,974 109,974 109,974 109,974 109,974
Other identifiable intangible assets, net 1,644 1,742 1,849 1,960 2,071
Total tangible common stockholders' equity at end of period - Non-GAAP $ 286,069 $ 279,144 $ 276,261 $ 267,504 $ 260,494
Shares outstanding at end of period 37,906 37,903 37,900 37,911 37,910
Book value per share - GAAP $ 10.49 $ 10.31 $ 10.24 $ 10.01 $ 9.83
Tangible book value per share - Non-GAAP $ 7.55 $ 7.36 $ 7.29 $ 7.06 $ 6.87
Calculation of tangible common equity to tangible assets
Total tangible common stockholders' equity at end of period - Non-GAAP $ 286,069 $ 279,144 $ 276,261 $ 267,504 $ 260,494
Total assets at end of period $ 3,743,100 $ 3,699,127 $ 3,627,764 $ 3,538,325 $ 3,498,905
Less:
Goodwill 109,974 109,974 109,974 109,974 109,974
Other identifiable intangible assets, net 1,644 1,742 1,849 1,960 2,071
Total tangible assets at end of period - Non-GAAP $ 3,631,482 $ 3,587,411 $ 3,515,941 $ 3,426,391 $ 3,386,860
Common equity to assets - GAAP 10.62% 10.57% 10.70% 10.72% 10.65%
Tangible common equity to tangible assets - Non-GAAP 7.88% 7.78% 7.86% 7.81% 7.69%
Calculation of return on average tangible common equity
Net income - GAAP $ 7,825 $ 7,862 $ 8,330 $ 7,939 $ 8,246
Total average common stockholders' equity $ 394,948 $ 390,151 $ 383,587 $ 377,379 $ 370,448
Less:
Average goodwill 109,974 109,974 109,974 109,974 109,974
Average other identifiable intangible assets, net 1,706 1,807 1,919 2,028 2,141
Total average tangible common stockholders' equity - Non-GAAP $ 283,268 $ 278,370 $ 271,694 $ 265,377 $ 258,333
Return on average common stockholders' equity - GAAP 7.86% 8.08% 8.81% 8.35% 8.83%
Return on average tangible common stockholders' equity - Non-GAAP 10.96% 11.33% 12.43% 11.87% 12.66%
Calculation of efficiency ratio
Total noninterest expense $ 23,832 $ 21,195 $ 20,042 $ 20,178 $ 19,685
Amortization of core deposit intangibles (98) (107) (111) (111) (111)
Other real estate owned and other repossessed asset (expense) income (27) (27) 8 (69) (50)
Long-term debt prepayment fee (2,407) -- -- -- --
Merger related expenses (330) -- -- -- --
Provision for unfunded lending commitments, net (168) (60) (130) 89 (106)
Noninterest expense, as adjusted $ 20,802 $ 21,001 $ 19,809 $ 20,087 $ 19,418
Net interest income $ 29,334 $ 28,669 $ 28,518 $ 28,850 $ 28,452
Total noninterest income 6,687 4,958 4,738 4,469 4,809
Total revenue 36,021 33,627 33,256 33,319 33,261
Tax-equivalent adjustment on municipal securities 210 214 221 231 235
Gains on debt extinguishment (1,830) -- -- -- --
Gains on sales investment securities (173) (17) -- -- --
Total revenue, as adjusted $ 34,228 $ 33,824 $ 33,477 $ 33,550 $ 33,496
Efficiency ratio - Non-GAAP 60.77% 62.09% 59.17% 59.87% 57.97%
Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
For the Nine Months Ended,
Sept 30, Sept 30,
(Dollars in thousands, except per share amounts) 2015 2014
Calculation of return on average tangible common equity
Net income - GAAP $ 24,017 $ 23,190
Total average common stockholders' equity $ 389,604 $ 363,783
Less:
Average goodwill 109,974 109,974
Average other identifiable intangible assets, net 1,810 2,257
Total average tangible common stockholders' equity - Non-GAAP $ 277,820 $ 251,552
Return on average common stockholders' equity - GAAP 8.24% 8.52%
Return on average tangible common stockholders' equity - Non-GAAP 11.56% 12.33%
Calculation of efficiency ratio
Total noninterest expense $ 65,069 $ 58,957
Amortization of core deposit intangibles (316) (353)
Other real estate owned and other repossessed asset expense (46) (165)
Long-term debt prepayment fee (2,407) --
Merger related expenses (330) --
Provision for unfunded lending commitments (358) (24)
Noninterest expense, as adjusted $ 61,612 $ 58,415
Net interest income $ 86,521 $ 84,716
Noninterest income 16,383 13,253
Total revenue 102,904 97,969
Tax-equivalent adjustment on municipal securities 645 741
Gains on investment securities (190) (2)
Gains on extinguishment of debt (1,830) --
Total revenue, as adjusted $ 101,529 $ 98,708
Efficiency ratio - Non-GAAP 60.68% 59.18%

CONTACT: Thomas J. Shara President & CEO Joseph F. Hurley EVP & CFO 973-697-2000Source:Lakeland Bancorp, Inc.