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Lakeland Bancorp Reports Strong Earnings and Closes Harmony Acquisition

OAK RIDGE, N.J., July 22, 2016 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”) reported the following results for the quarter ended June 30, 2016:

  • Net income in the second quarter of 2016 was $10.1 million, 29% higher than the $7.9 million for the same period in 2015. Excluding merger related expenses of $0.6 million after tax, pertaining to the Company’s acquisitions of Pascack Bancorp, Inc. (“Pascack”), which closed on January 7, 2016, and Harmony Bank (“Harmony”), which closed on July 1, 2016, net income for the second quarter of 2016 was $10.7 million.
  • Earnings per diluted share was $0.24 in the second quarter of 2016, 14% higher than the $0.21 per diluted share reported in the second quarter of 2015. Excluding merger related expenses, earnings per diluted share was $0.26 in the second quarter of 2016, a 24% increase over the same period in 2015.

  • For the second quarter of 2016, annualized return on average assets was 0.93%, annualized return on average common equity was 9.04%, and annualized return on average tangible common equity was 12.63%. Excluding merger related expenses, these ratios were 0.98%, 9.54% and 13.33%, respectively.

  • Net income for the first six months of 2016 was $18.2 million, or $0.44 per diluted share, compared to $16.2 million, or $0.42 per diluted share, for the same period in 2015. Excluding merger related expenses of $1.7 million after tax, net income for the first six months of 2016 was $20.0 million, or $0.48 per diluted share.

  • The annualized return on average assets for the six months ended June 30, 2016 was 0.85%, the annualized return on average common equity was 8.23%, and the annualized return on average tangible common equity was 11.53%. Excluding merger related expenses, these ratios were 0.93%, 9.00% and 12.62%, respectively.

  • The Company reported strong loan growth in the second quarter of 2016. Total loans and leases increased by $85.3 million, or 3%, to $3.45 billion during the quarter. This overall increase was primarily due to the addition of $109.8 million, or 5%, in commercial real estate loans. For the first six months of 2016, total loans and leases increased by $486.4 million, or 16%, to $3.45 billion during the quarter. This increase was $166.4 million, or 6%, after excluding the $320 million in loans acquired from Pascack.

  • The Company also reported strong deposit growth in the second quarter of 2016. Total deposits increased $74.7 million, or 2%, to $3.54 billion during the quarter. Most notably, non-interest bearing deposits increased $49.6 million, or 6%, during the quarter. Total deposits have increased $541.8 million, or 18%, since December 31, 2015. This increase was $238.8 million, or 8%, after excluding the $303 million in deposits acquired from Pascack. Non-interest bearing deposits increased $130.3 million, or 19%, in 2016. This increase was $66.3, or 10%, after excluding the $64 million in deposits acquired from Pascack.

  • Net interest margin (“NIM”) was 3.47% for the second quarter of 2016, compared to 3.48% for the first quarter of 2016 and 3.46% for the second quarter of 2015.

  • The efficiency ratio was 56.23% for the three months ended June 30, 2016, as compared to 62.09% for the same period in 2015. The decrease in this ratio, in part, reflects the realization of cost savings from the Pascack acquisition, including the closing of three branches.

  • On July 20, 2016, the Company declared a quarterly cash dividend of $0.095 per common share, payable on August 12, 2016 to holders of record as of the close of business on August 3, 2016.

Thomas J. Shara, Lakeland Bancorp’s President and CEO said, “We are very proud of the earnings growth during the second quarter of 2016 and our lowest efficiency ratio in six years. It reflects the success of several significant initiatives we have undertaken, including the acquisition of Pascack earlier in 2016, the opening of two loan production offices in 2015, a commitment to growing our commercial loan portfolio and prudent management of our expenses. In addition, since June 30, 2015, our assets have grown 21% to $4.5 billion at June 30, 2016 and 27% to $4.7 billion including the acquisition of Harmony Bank at the beginning of the third quarter.”

Earnings

Net income for the second quarter of 2016 was $10.1 million, as compared to $7.9 million for the second quarter of 2015. Excluding merger related expenses of $0.6 million after tax, net income for the second quarter of 2016 was $10.7 million.

Net income for the first six months of 2016 was $18.2 million, as compared to $16.2 million for the same period in 2015. Excluding merger related expenses of $1.7 million after tax, net income for the first six months of 2016 was $20.0 million.

Net Interest Income

Net interest income for the second quarter of 2016 was $35.1 million, as compared to $28.7 million for the same period in 2015. This increase was primarily due to higher levels of loans in 2016 than 2015. NIM was 3.47% for the second quarter of 2016, compared to 3.46% for the second quarter of 2015. Included within these percentages were $0.6 million of prepayment fees, gains on called securities, and interest recoveries in 2016, versus $0.3 million in 2015. The yield on interest earning assets for the second quarter of 2016 was 3.85%, as compared to 3.78% reported in the second quarter of 2015. The cost of interest bearing liabilities for the second quarter of 2016 was 0.50%, as compared to 0.42% in the second quarter of 2015, reflecting the higher cost of deposits.

Net interest income for the first six months of 2016 was $69.0 million, as compared to $57.2 million reported for the first six months of 2015. NIM for the first six months of 2016 was 3.48%, compared to 3.51% for the same period in 2015. Included within these percentages were $1.0 million of prepayment fees, gains on called securities, and interest recoveries in 2016, versus $0.8 million in 2015. The yield on earning assets was 3.86% for the first six months of 2016 and 3.82% for the same period in 2015. The cost of interest bearing liabilities for 2016 was 0.50%, as compared to 0.41% in the first six months of 2015, reflecting the higher cost of deposits.

Non-interest Income

Non-interest income totaled $4.9 million for the second quarter of 2016, as compared to $5.0 million for the same period in 2015.

Non-interest income totaled $9.8 million for the first six months of 2016, as compared to $9.7 million for the same period in 2015. Commissions and fees of $2.1 million declined $0.4 million from the first six months of 2015 to the first six months of 2016, primarily because of a decline in financial services income related to a decrease in demand for annuities. Income on bank owned life insurance of $0.8 million declined $0.3 million from the first six months of 2015 to the first six months of 2016 because of death benefits received on a bank owned life insurance policy in 2015 that did not recur in 2016. These decreases were partially offset by $0.4 million in additional realized gains from the sale of investment securities and a $0.2 million increase in service charges on deposit accounts from higher debit card interchange fee income.

Non-interest Expense

Non-interest expense for the second quarter of 2016 was $23.7 million, an increase of $2.5 million compared to $21.2 million for the same period in 2015. Excluding the pre-tax impact of $0.7 million in merger related expenses, non-interest expense increased by $1.8 million. Salary and benefit expense of $13.1 million increased by $0.9 million, due primarily to a full quarter of expenses associated with the loan production offices that opened in the first and second quarters of 2015, the addition of Pascack employees during the first quarter in 2016 and year-over-year increases in employee salary and benefit costs. Net occupancy expense of $2.3 million, furniture and equipment at $2.1 million, and FDIC insurance expense of $0.7 million increased a combined $0.7 million, primarily due to the addition of Pascack branches and deposits.

For the first six months of 2016, non-interest expenses were $49.1 million, an increase of $7.9 million when compared to $41.2 million for the same period in 2015. Excluding the pre-tax impact of $2.4 million in merger related expenses, non-interest expense increased by $5.5 million. Salary and benefit expense of $27.2 million increased by $3.3 million, due primarily to two full quarters of expenses associated with the loan production offices that opened in the first and second quarters of 2015, the addition of Pascack employees during the first quarter in 2016 and year-over-year increases in employee salary and benefit costs. The remaining increases in non-interest expense categories were primarily due to the costs related to the addition of Pascack branches, including occupancy, FDIC insurance expense and supplies.

Financial Condition

From December 31, 2015 to June 30, 2016, total assets increased $598.3 million to $4.47 billion, including $390 million from Pascack. During the same period, total loans and leases increased by $486.4 million, including $320 million from Pascack, and total deposits increased $541.8 million to $3.54 billion, including $303 million from Pascack. Excluding Pascack, total loans and leases increased 6% and deposits increased 8%. Also, non-interest bearing deposits increased $130.3 million to $824.1 million in 2016, including $64 million from Pascack, while interest bearing deposits increased $411.4 million to $2.71 billion, including $239 million from Pascack.

Asset Quality

At June 30, 2016, non-performing assets totaled $26.5 million (0.59% of total assets), compared to $23.7 million (0.61% of total assets) at December 31, 2015. Non-performing loans and leases as a percent of total loans and leases at 0.72% decreased four basis points from December 31, 2015. The allowance for loan and lease losses totaled $30.7 million at June 30, 2016, and represented 0.89% of total loans and leases, compared to $30.9 million at December 31, 2015, which represented 1.04% of total loans and leases, prior to the Pascack acquisition. For the first six months of 2016, the Company had net charge-offs of $2.3 million (0.14% of average loans), as compared to $2.1 million (0.16% of average loans) for the same period in 2015. The provision for loan and lease losses for the first six months of 2016 was $2.1 million, compared to $1.6 million for the same period in 2015.

Capital

At June 30, 2016, stockholders' equity was $454.9 million, while book value per common share was $11.03. Tangible book value per common share was $7.93, an increase of 4% from December 31, 2015. As of June 30, 2016, the Company’s leverage ratio was 8.24%. Tier I and total risk based capital ratios were 9.74% and 10.65%, respectively. The common equity tier 1 capital ratio was 8.91%. The tangible common equity ratio was 7.53%. The regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal regulatory guidelines.

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 successfully integrate and realize anticipated efficiencies and synergies after the Pascack Community Bank and Harmony Bank mergers. 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 approximately $4.7 billion in total assets with 56 New Jersey branch offices in Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, Union and Warren counties, five New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Teaneck and Waldwick 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 June 30, Six Months Ended June 30,
(Dollars in thousands, except per share amounts) 2016 2015 2016 2015
INCOME STATEMENT
Net interest income $35,102 $28,669 $68,952 $57,187
Provision for loan and lease losses (1,010) (740) (2,085) (1,610)
Other non-interest income 4,460 4,477 8,537 8,950
Gain on investment securities - 17 370 17
Gain on sale of loans 425 464 845 729
Merger related expenses (685) - (2,406) -
Provision for unfunded lending commitments (230) (60) (438) (190)
Other non-interest expense (22,800) (21,135) (46,295) (41,047)
Pretax income 15,262 11,692 27,480 24,036
Provision for income taxes (5,132) (3,830) (9,242) (7,844)
Net income $10,130 $7,862 $18,238 $16,192
Basic earnings per common share $0.24 $0.21 $0.44 $0.42
Diluted earnings per common share $0.24 $0.21 $0.44 $0.42
Dividends per common share $0.095 $0.085 $0.180 $0.160
Weighted average shares - basic 41,238 37,854 41,084 37,827
Weighted average shares - diluted 41,406 37,988 41,245 37,961
SELECTED OPERATING RATIOS
Annualized return on average assets 0.93% 0.88% 0.85% 0.92%
Annualized return on average common equity 9.04% 8.08% 8.23% 8.44%
Annualized return on average tangible common equity (1) 12.63% 11.33% 11.53% 11.87%
Annualized return on interest earning assets 3.85% 3.78% 3.86% 3.82%
Annualized cost of interest bearing liabilities 0.50% 0.42% 0.50% 0.41%
Annualized net interest spread 3.35% 3.36% 3.36% 3.41%
Annualized net interest margin 3.47% 3.46% 3.48% 3.51%
Efficiency ratio (1) 56.23% 62.09% 58.26% 60.64%
Stockholders' equity to total assets 10.18% 10.57%
Book value per common share $11.03 $10.31
Tangible book value per common share (1) $7.93 $7.36
Tangible common equity to tangible assets (1) 7.53% 7.78%
ASSET QUALITY RATIOS 6/30/2016 6/30/2015
Ratio of allowance for loan and lease losses to total loans and leases 0.89% 1.09%
Non-performing loans and leases to total loans and leases 0.72% 0.69%
Non-performing assets to total assets 0.59% 0.54%
Annualized net charge-offs to average loans and leases 0.14% 0.16%
SELECTED BALANCE SHEET DATA AT PERIOD-END 6/30/2016 6/30/2015
Loans and leases $3,454,304 $2,756,694
Allowance for loan and lease losses (30,667) (30,174)
Investment securities 602,408 597,598
Total assets 4,467,860 3,699,127
Total deposits 3,537,331 2,842,953
Short-term borrowings 123,662 146,249
Other borrowings 326,009 303,966
Stockholders' equity 454,934 390,860
SELECTED AVERAGE BALANCE SHEET DATAFor the Three Months Ended For the Six Months Ended
6/30/2016 6/30/2015 6/30/2016 6/30/2015
Loans and leases $3,412,503 $2,720,801 $3,348,421 $2,690,823
Investment securities 575,206 600,547 572,894 591,778
Interest earning assets 4,094,575 3,345,380 4,013,868 3,308,450
Total assets 4,403,588 3,600,416 4,326,028 3,563,860
Non-interest bearing demand deposits 801,488 688,854 780,843 674,780
Savings deposits 485,580 402,142 480,725 398,667
Interest bearing transaction accounts 1,775,129 1,480,866 1,728,855 1,488,028
Time deposits 487,169 295,996 476,097 288,459
Total deposits 3,549,366 2,867,858 3,466,520 2,849,934
Short-term borrowings 31,591 59,249 40,963 53,570
Other borrowings 346,347 267,610 347,718 257,519
Total interest bearing liabilities 3,125,815 2,505,863 3,074,357 2,486,243
Stockholders' equity 450,806 390,151 445,815 386,887
(1) See Supplemental Information - Non-GAAP Financial Measures


Lakeland Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands, except per share amounts) 2016 2015 2016 2015
INTEREST INCOME
Loans and fees $35,800 $28,211 $69,921 $56,107
Federal funds sold and interest bearing deposits with banks 124 11 199 23
Taxable investment securities and other 2,696 2,688 5,658 5,362
Tax exempt investment securities 417 398 830 808
TOTAL INTEREST INCOME 39,037 31,308 76,608 62,300
INTEREST EXPENSE
Deposits 2,404 1,346 4,609 2,629
Federal funds purchased and securities sold under agreements to repurchase 9 37 47 59
Other borrowings 1,522 1,256 3,000 2,425
TOTAL INTEREST EXPENSE 3,935 2,639 7,656 5,113
NET INTEREST INCOME 35,102 28,669 68,952 57,187
Provision for loan and lease losses 1,010 740 2,085 1,610
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 34,092 27,929 66,867 55,577
NON-INTEREST INCOME
Service charges on deposit accounts 2,523 2,450 4,965 4,790
Commissions and fees 1,099 1,196 2,078 2,503
Gain on investment securities - 17 370 17
Gain on sale of loans 425 464 845 729
Income on bank owned life insurance 414 388 822 1,087
Other income 424 443 672 570
TOTAL NON-INTEREST INCOME 4,885 4,958 9,752 9,696
NON-INTEREST EXPENSE
Salaries and employee benefits 13,091 12,144 27,176 23,894
Net occupancy expense 2,341 2,273 5,029 4,821
Furniture and equipment 2,082 1,629 4,028 3,285
Stationary, supplies and postage 416 377 859 742
Marketing expense 385 416 694 656
FDIC insurance expense 681 531 1,271 1,049
ATM and debit card expense 383 382 729 724
Telecommunications expense 386 358 810 703
Data processing expense 459 438 979 773
Other real estate owned and other repossessed assets expense 26 27 65 19
Merger related expenses 685 - 2,406 -
Core deposit intangible amortization 164 107 331 218
Provision for unfunded lending commitments 230 60 438 190
Other expenses 2,386 2,453 4,324 4,163
TOTAL NON-INTEREST EXPENSE 23,715 21,195 49,139 41,237
INCOME BEFORE PROVISION FOR INCOME TAXES 15,262 11,692 27,480 24,036
Provision for income taxes 5,132 3,830 9,242 7,844
NET INCOME $10,130 $7,862 $18,238 $16,192
EARNINGS PER COMMON SHARE
Basic $0.24 $0.21 $0.44 $0.42
Diluted $0.24 $0.21 $0.44 $0.42
DIVIDENDS PER COMMON SHARE $0.095 $0.085 $0.180 $0.160


Lakeland Bancorp, Inc.
Consolidated Balance Sheets
June 30, December 31,
(Dollars in thousands) 2016 2015
(Unaudited)
ASSETS
Cash and due from banks $146,306 $113,894
Federal funds sold and interest bearing deposits due from banks 6,577 4,599
Total cash and cash equivalents 152,883 118,493
Investment securities available for sale, at fair value 460,390 442,349
Investment securities held to maturity; fair value of $129,447 in 2016
and $117,594 in 2015 126,221 116,740
Federal Home Loan Bank and other membership stocks, at cost 15,797 14,087
Loans held for sale 6,463 1,233
Loans and leases:
Commercial, real estate 2,353,125 1,879,659
Commercial, industrial and other 313,062 307,044
Leases 63,338 56,660
Residential mortgages 383,823 389,692
Consumer and home equity 340,956 334,891
Total loans and leases 3,454,304 2,967,946
Net deferred costs (2,922) (2,746)
Allowance for loan and lease losses (30,667) (30,874)
Net loans and leases 3,420,715 2,934,326
Premises and equipment, net 49,322 35,881
Accrued interest receivable 10,480 9,208
Goodwill 125,285 109,974
Other identifiable intangible assets 2,728 1,545
Bank owned life insurance 66,212 65,361
Other assets 31,364 20,353
TOTAL ASSETS $4,467,860 $3,869,550
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $824,077 $693,741
Savings and interest bearing transaction accounts 2,235,918 1,958,510
Time deposits through $250,000 359,471 270,623
Time deposits over $250,000 117,865 72,698
Total deposits 3,537,331 2,995,572
Federal funds purchased and securities sold under agreements to repurchase 123,662 151,234
Other borrowings 294,771 271,905
Subordinated debentures 31,238 31,238
Other liabilities 25,924 19,085
TOTAL LIABILITIES 4,012,926 3,469,034
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 70,000,000 shares;
issued 41,240,826 shares at June 30, 2016
and 37,906,481 shares at December 31, 2015 424,409 386,287
Retained earnings 23,836 13,079
Accumulated other comprehensive gain 6,689 1,150
TOTAL STOCKHOLDERS' EQUITY 454,934 400,516
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $4,467,860 $3,869,550


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,Jun 30,
(Dollars in thousands, except per share data) 2016 2016 2015 2015 2015
INCOME STATEMENT
Net interest income $35,102 $33,850 $30,119 $29,334 $28,669
Provision for loan and lease losses (1,010) (1,075) - (332) (740)
Other non-interest income 4,460 4,077 4,290 4,169 4,477
Gain on investment securities - 370 51 173 17
Gain on sale of loans 425 420 437 515 464
Gain on debt extinguishment - - - 1,830 -
Long-term debt prepayment fee - - - (2,407) -
Merger related expenses (685) (1,721) (822) (330) -
Provision for unfunded lending commitments (230) (208) (506) (168) (60)
Other non-interest expense (22,800) (23,495) (20,814) (20,927) (21,135)
Pretax income 15,262 12,218 12,755 11,857 11,692
Provision for income taxes (5,132) (4,110) (4,291) (4,032) (3,830)
Net income $10,130 $8,108 $8,464 $7,825 $7,862
Basic earnings per common share $0.24 $0.20 $0.22 $0.20 $0.21
Diluted earnings per common share $0.24 $0.20 $0.22 $0.20 $0.21
Dividends per common share $0.095 $0.085 $0.085 $0.085 $0.085
Dividends paid $3,955 $3,525 $3,246 $3,244 $3,243
Weighted average shares - basic 41,238 40,931 37,865 37,856 37,854
Weighted average shares - diluted 41,406 41,091 38,048 38,016 37,988
SELECTED OPERATING RATIOS
Annualized return on average assets 0.93% 0.77% 0.89% 0.84% 0.88%
Annualized return on average common equity 9.04% 7.40% 8.40% 7.86% 8.08%
Annualized return on average tangible common equity (1) 12.63% 10.40% 11.64% 10.96% 11.33%
Annualized net interest margin 3.47% 3.48% 3.43% 3.42% 3.46%
Efficiency ratio (1) 56.23% 60.38% 58.70% 60.77% 62.09%
Common stockholders' equity to total assets 10.18% 10.15% 10.35% 10.62% 10.57%
Tangible common equity to tangible assets (1) 7.53% 7.45% 7.69% 7.88% 7.78%
Tier 1 risk-based ratio 9.74% 9.93% 10.53% 10.81% 11.05%
Total risk-based ratio 10.65% 10.87% 11.61% 11.93% 12.15%
Tier 1 leverage ratio 8.24% 8.33% 8.70% 8.77% 9.12%
Common equity tier 1 capital ratio 8.91% 9.06% 9.54% 9.78% 9.66%
Book value per common share $11.03 $10.84 $10.57 $10.49 $10.31
Tangible book value per common share (1) $7.93 $7.72 $7.62 $7.55 $7.36
(1) See Supplemental Information - Non-GAAP Financial Measures


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,Jun 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and leases $3,454,304 $3,368,961 $2,967,946 $2,853,764 $2,756,694
Allowance for loan and lease losses (30,667) (30,553) (30,874) (30,994) (30,174)
Investment securities 602,408 573,136 573,176 559,295 597,598
Total assets 4,467,860 4,404,233 3,869,550 3,743,100 3,699,127
Total deposits 3,537,331 3,462,636 2,995,571 2,919,673 2,842,953
Short-term borrowings 123,662 128,841 151,234 131,356 146,249
Other borrowings 326,009 341,269 303,143 275,666 303,966
Stockholders' equity 454,934 446,875 400,516 397,687 390,860
LOANS AND LEASES
Commercial, real estate $2,353,125 $2,243,335 $1,879,659 $1,776,911 $1,695,276
Commercial, industrial and other 313,062 332,097 307,044 290,961 262,617
Leases 63,338 60,925 56,660 55,057 53,798
Residential mortgages 383,823 392,387 389,692 400,247 414,339
Consumer and home equity 340,956 340,217 334,891 330,588 330,664
Total loans and leases $3,454,304 $3,368,961 $2,967,946 $2,853,764 $2,756,694
DEPOSITS
Non-interest bearing $824,077 $774,487 $693,741 $694,267 $714,227
Savings and interest bearing transaction accounts 2,235,918 2,204,356 1,958,510 1,907,858 1,822,295
Time deposits 477,336 483,793 343,321 317,548 306,431
Total deposits $3,537,331 $3,462,636 $2,995,572 $2,919,673 $2,842,953
SELECTED AVERAGE BALANCE SHEET DATA
Loans and leases $3,412,503 $3,284,339 $2,898,477 $2,811,581 $2,720,801
Investment securities 575,206 570,581 561,024 581,565 600,547
Interest earning assets 4,094,575 3,933,160 3,509,867 3,431,018 3,345,380
Total assets 4,403,588 4,248,468 3,779,819 3,685,573 3,600,416
Non-interest bearing demand deposits 801,488 760,198 722,270 710,011 688,854
Savings deposits 485,580 475,870 402,217 398,147 402,142
Interest bearing transaction accounts 1,775,129 1,682,580 1,573,638 1,497,340 1,480,866
Time deposits 487,169 465,024 328,080 309,235 295,996
Total deposits 3,549,366 3,383,672 3,026,205 2,914,733 2,867,858
Short-term borrowings 31,591 50,335 47,276 61,679 59,249
Other borrowings 346,347 349,088 286,887 297,140 267,610
Total interest bearing liabilities 3,125,815 3,022,897 2,638,098 2,563,542 2,505,863
Stockholders' equity 450,806 440,823 399,987 394,948 390,151


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,Jun 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans and leases 4.22% 4.18% 4.12% 4.11% 4.16%
Taxable investment securities and other 2.18% 2.39% 2.09% 2.06% 2.02%
Tax-exempt securities 3.15% 3.40% 3.49% 3.41% 3.58%
Federal funds sold and interest bearing cash accounts 0.46% 0.38% 0.25% 0.07% 0.18%
Total interest earning assets 3.85% 3.86% 3.76% 3.75% 3.78%
LIABILITIES
Savings accounts 0.05% 0.08% 0.05% 0.05% 0.05%
Interest bearing transaction accounts 0.31% 0.30% 0.26% 0.25% 0.23%
Time deposits 0.79% 0.74% 0.70% 0.63% 0.59%
Borrowings 1.62% 1.52% 1.53% 1.52% 1.58%
Total interest bearing liabilities 0.50% 0.49% 0.44% 0.44% 0.42%
Net interest spread (taxable equivalent basis) 3.35% 3.37% 3.32% 3.31% 3.36%
Annualized net interest margin (taxable equivalent basis) 3.47% 3.48% 3.43% 3.42% 3.46%
Annualized cost of deposits 0.27% 0.26% 0.22% 0.20% 0.19%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN AND LEASE LOSSES
Balance at beginning of period $30,553 $30,874 $30,994 $30,174 $30,505
Provision for loan and lease losses 1,010 1,075 - 332 740
Charge-offs (1,045) (1,543) (1,140) (584) (1,475)
Recoveries 149 147 1,020 1,072 404
Balance at end of period $30,667 $30,553 $30,874 $30,994 $30,174
NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)
Commercial, real estate $113 $81 $(450)$(936)$476
Commercial, industrial and other 137 583 (56) 88 21
Leases 183 69 (1) 13 102
Home equity and consumer 250 574 561 204 386
Real estate - mortgage 213 89 66 143 86
Net charge-offs (recoveries) $896 $1,396 $120 $(488)$1,071
NON-PERFORMING ASSETS
Commercial, real estate $12,554 $11,943 $10,446 $8,176 $5,307
Commercial, industrial and other 41 1,163 103 832 1,354
Leases 159 282 316 154 79
Home equity and consumer 3,325 3,249 3,167 3,530 3,143
Real estate - mortgage 8,865 8,330 8,664 8,805 9,098
Total non-accruing loans and leases 24,944 24,967 22,696 21,497 18,981
Property acquired through foreclosure or repossession 1,594 792 983 819 1,078
Total non-performing assets $26,538 $25,759 $23,679 $22,316 $20,059
Loans past due 90 days or more and still accruing$42 $101 $331 $123 $102
Loans restructured and still accruing $9,509 $10,545 $10,108 $11,927 $12,419
Ratio of allowance for loan and lease losses to total loans and leases 0.89% 0.91% 1.04% 1.09% 1.09%
Non-performing loans and leases to total loans and leases 0.72% 0.74% 0.76% 0.75% 0.69%
Non-performing assets to total assets 0.59% 0.58% 0.61% 0.60% 0.54%
Annualized net charge-offs (recoveries) to average loans 0.11% 0.17% 0.02% -0.07% 0.16%


Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
At or for the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,Jun 30,
(Dollars in thousands, except per share amounts) 2016 2016 2015 2015 2015
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP$454,934 $446,875 $400,516 $397,687 $390,860
Less: Goodwill 125,285 125,443 109,974 109,974 109,974
Less: Other identifiable intangible assets 2,728 2,891 1,545 1,644 1,742
Total tangible common stockholders' equity at end of period - Non-GAAP$326,921 $318,541 $288,997 $286,069 $279,144
Shares outstanding at end of period 41,241 41,241 37,906 37,906 37,903
Book value per share - GAAP $11.03 $10.84 $10.57 $10.49 $10.31
Tangible book value per share - Non-GAAP $7.93 $7.72 $7.62 $7.55 $7.36
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP$326,921 $318,541 $288,997 $286,069 $279,144
Total assets at end of period - GAAP $4,467,860 $4,404,233 $3,869,550 $3,743,100 $3,699,127
Less: Goodwill 125,285 125,443 109,974 109,974 109,974
Less: Other identifiable intangible assets 2,728 2,891 1,545 1,644 1,742
Total tangible assets at end of period - Non-GAAP$4,339,847 $4,275,899 $3,758,031 $3,631,482 $3,587,411
Common equity to assets - GAAP 10.18% 10.15% 10.35% 10.62% 10.57%
Tangible common equity to tangible assets - Non-GAAP 7.53% 7.45% 7.69% 7.88% 7.78%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $10,130 $8,108 $8,464 $7,825 $7,862
Total average common stockholders' equity - GAAP$450,806 $440,823 $399,987 $394,948 $390,151
Less: Average goodwill 125,424 124,423 109,974 109,974 109,974
Less: Average other identifiable intangible assets 2,828 2,920 1,606 1,706 1,807
Total average tangible common stockholders' equity - Non-GAAP$322,554 $313,480 $288,407 $283,268 $278,370
Return on average common stockholders' equity - GAAP 9.04% 7.40% 8.40% 7.86% 8.08%
Return on average tangible common stockholders' equity - Non-GAAP 12.63% 10.40% 11.64% 10.96% 11.33%
CALCULATION OF EFFICIENCY RATIO
Total non-interest expense $23,715 $25,424 $22,142 $23,832 $21,195
Amortization of core deposit intangibles (164) (167) (99) (98) (107)
Other real estate owned and other repossessed asset (expense) income (26) (39) (135) (27) (27)
Long-term debt prepayment fee - - - (2,407) -
Merger related expenses (685) (1,721) (822) (330) -
Provision for unfunded lending commitments (230) (208) (506) (168) (60)
Non-interest expense, as adjusted $22,610 $23,289 $20,580 $20,802 $21,001
Net interest income $35,102 $33,850 $30,119 $29,334 $28,669
Total non-interest income 4,885 4,867 4,778 6,687 4,958
Total revenue 39,987 38,717 34,897 36,021 33,627
Tax-equivalent adjustment on municipal securities 225 222 212 210 214
Gains on debt extinguishment - - - (1,830) -
Gains on sales investment securities - (370) (51) (173) (17)
Total revenue, as adjusted $40,212 $38,569 $35,058 $34,228 $33,824
Efficiency ratio - Non-GAAP 56.23% 60.38% 58.70% 60.77% 62.09%


Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
For the Six Months Ended,
June 30,June 30,
(Dollars in thousands) 2016 2015
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $18,238 $16,192
Total average common stockholders' equity - GAAP $445,815 $386,887
Less: Average goodwill 124,923 109,974
Less: Average other identifiable intangible assets 2,874 1,863
Total average tangible common stockholders' equity - Non-GAAP $318,018 $275,050
Return on average common stockholders' equity - GAAP 8.23% 8.44%
Return on average tangible common stockholders' equity - Non-GAAP 11.53% 11.87%
CALCULATION OF EFFICIENCY RATIO
Total non-interest expense $49,139 $41,237
Amortization of core deposit intangibles (331) (218)
Other real estate owned and other repossessed asset expense (65) (19)
Long-term debt prepayment fee - -
Merger related expenses (2,406) -
Provision for unfunded lending commitments (438) (190)
Non-interest expense, as adjusted $45,899 $40,810
Net interest income $68,952 $57,187
Non-interest income 9,752 9,696
Total revenue 78,704 66,883
Tax-equivalent adjustment on municipal securities 447 435
Gain on investment securities (370) (17)
Gains on extinguishment of debt - -
Total revenue, as adjusted $78,781 $67,301
Efficiency ratio - Non-GAAP 58.26% 60.64%

Thomas J. Shara President & CEO Joseph F. Hurley EVP & CFO 973-697-2000

Source:Lakeland Bancorp, Inc.