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Lakeland Bancorp Increases Earnings by 17%

OAK RIDGE, N.J., July 20, 2017 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $13.4 million for the three months ended June 30, 2017 compared to $10.1 million for the same period in 2016. For the three months ended June 30, 2017, diluted earnings per share (“EPS”) of $0.28 increased 17% from $0.24 for the same period in 2016. For the second quarter of 2017, return on average assets was 1.02%, return on average common equity was 9.49%, and return on average tangible common equity was 12.58%.

For the six months ended June 30, 2017, the Company reported net income of $25.7 million, a 41% increase over $18.2 million for the same period in 2016. Over the same period, the Company reported EPS of $0.53 in 2017, an increase of 20% over $0.44 in 2016. Year-to-date 2017, return on average assets was 1.00%, return on average common equity was 9.26%, and return on average tangible common equity was 12.31%.

Thomas Shara, Lakeland Bancorp’s President and CEO, commented on the quarterly results, “Our strong financial results were driven by the expansion of our net interest margin by 8 basis points for the quarter and 14 basis points year-to-date. We continue to improve our financial performance with a return on assets over 1%, return on equity of 9.5%, return on tangible common equity of 12.6%, a reduction in our efficiency ratio below 53% and our non-performing assets to total assets ratio dropping to 33 basis points – the lowest in ten years.”

The following represents performance highlights and significant events for the second quarter of 2017:

  • Net interest margin (“NIM”) was 3.41% compared to 3.33% in the prior quarter and 3.27% in the quarter ended December 31, 2016. The NIM increase from the linked quarter was primarily due to loan yields increasing seven basis points partially offset by rising deposit costs.
  • Total loans grew $79.6 million, or 2.0%, during the quarter to $4.05 billion.
  • Noninterest bearing deposits increased $54.1 million during the quarter, or 5.8%, to $978.7 million.
  • The efficiency ratio of 52.6% decreased from 56.4% in the prior quarter and 56.3% for the same period in 2016.
  • Tangible book value per share increased to $9.05 at June 30, 2017, an annualized increase of 9.5% for the quarter.
  • On July 19, 2017, the Company declared a cash dividend of $0.10 per share to be paid on August 15, 2017 to stockholders of record as of July 31, 2017.

Earnings
Net income for the second quarter of 2017 was $13.4 million, a 32% increase compared to $10.1 million for the same period in 2016. After excluding merger related expenses incurred in the second quarter of 2016, this increase was 25%.

Year-to-date net income for 2017 was $25.7 million, a 41% increase compared to $18.2 million for the same period in 2016. After excluding merger related expenses incurred in 2016, this increase was 29%.

Net Interest Income
Net interest income for the second quarter of 2017 was $41.4 million, compared to $35.1 million for the same period in 2016. Year-to-date net interest income for 2017 was $80.7 million, as compared to $69.0 million for the same period in 2016. Total interest income increased due to the organic growth of earning assets as well as the merger with Harmony Bank in July 2016 (the “merger”). Total interest expense increased primarily due to additional deposits from the merger, organic deposit growth and the impact of the subordinated debt offering in September 2016.

Noninterest Income
Noninterest income totaled $6.1 million for the second quarter of 2017 compared to $4.9 million for the same period in 2016. This increase was primarily due a $0.3 million gain on the sale of a former branch, a $0.3 million gain on the payoff of an acquired loan as well as higher fee income.

Year-to-date 2017 noninterest income totaled $14.2 million compared to $9.8 million for the same period in 2016. This increase was primarily due to $2.2 million in additional gains on the sales of investment securities, $0.7 million from the sales of two former branches in 2017, $0.4 million increase on the sales of other real estate, $0.3 million gain on the payoff of an acquired loan and $0.3 million increase in swap income.

Noninterest Expense
Noninterest expense totaled $25.4 million for the second quarter of 2017 compared to $23.7 million for the same period in 2016, which included $0.7 million in merger related expenses. This increase was primarily due to $2.0 million in additional salary and employee benefit expenses associated with the merger and increases in employee salary and benefit costs. These increases were partially offset by a $0.3 million reduction in the cost of FDIC insurance.

Year-to-date 2017 noninterest expense totaled $53.8 million compared to $49.1 million for the same period in 2016. During 2017, the Company incurred long-term debt prepayment penalties of $2.8 million, and during 2016, the Company incurred $2.4 million in merger related expenses. The resulting $4.3 million net increase was primarily due to $3.3 million in additional salary and employee benefit expenses associated with the merger and increases in employee salary and benefit costs. In addition, other expenses increased by $0.4 million, primarily due to higher legal, correspondent and audit fees.

Financial Condition
In 2017, total assets increased $269.1 million, or 5.3%, to $5.36 billion as total loans and leases grew $180.4 million, or 4.7%, to $4.05 billion and investment securities increased $61.1 million, or 7.9%, to $830.5 million. On the funding side, total deposits grew $134.4 million, or 3.3%, to $4.23 billion while borrowings increased $113.6 million, or 26.9%, to $535.6 million.

Asset Quality
At June 30, 2017, non-performing assets totaled $17.7 million (0.33% of total assets) compared to $21.5 million (0.42% of total assets) at December 31, 2016. Non-performing loans and leases as a percent of total loans and leases decreased to 0.40% at June 30, 2017 from 0.53% at December 31, 2016. The allowance for loan and lease losses increased to $32.8 million at June 30, 2017, and represented 0.81% of total loans and leases. For the six months ended June 30, 2017, the Company had net charge-offs of $1.5 million (annualized 0.07% of average loans and leases) compared to $2.3 million (annualized 0.14% of average loans and leases) for the same period in 2016. The year-to-date provision for loan and lease losses was $3.0 million compared to $2.1 million for the same period in 2016.

Capital
At June 30, 2017, stockholders' equity was $567.5 million compared to $550.0 million at December 31, 2016. At June 30, 2017, the book value per common share and tangible book value per common share were $11.99 and $9.05 compared to $11.65 and $8.70, respectively, at December 31, 2016.

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. 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 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, and competition. 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 better comparison of period to period operating performance.

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 Bank
Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which has $5.4 billion in total assets. The Bank 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; six New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Newton, Teaneck and Waldwick; and one in New York 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.

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
INCOME STATEMENT
Net interest income $ 41,421 $ 35,102 $ 80,744 $ 68,952
Provision for loan and lease losses (1,827) (1,010) (3,045) (2,085)
Other noninterest income 5,655 4,460 10,812 8,537
Gains (losses) on sales of investment securities (15) - 2,524 370
Gains on sales of loans 471 425 869 845
Long-term debt prepayment fee - - (2,828) -
Merger related expenses - (685) - (2,406)
Other noninterest expense (25,366) (23,030) (51,008) (46,733)
Pretax income 20,339 15,262 38,068 27,480
Provision for income taxes (6,969) (5,132) (12,386) (9,242)
Net income $ 13,370 $ 10,130 $ 25,682 $ 18,238
Basic earnings per common share $ 0.28 $ 0.24 $ 0.54 $ 0.44
Diluted earnings per common share $ 0.28 $ 0.24 $ 0.53 $ 0.44
Dividends per common share $ 0.10 $ 0.095 $ 0.195 $ 0.180
Weighted average shares - basic 47,465 41,238 47,410 41,084
Weighted average shares - diluted 47,674 41,406 47,646 41,245
SELECTED OPERATING RATIOS
Annualized return on average assets 1.02% 0.93% 1.00% 0.85%
Annualized return on average common equity 9.49% 9.04% 9.26% 8.23%
Annualized return on average tangible common equity (1) 12.58% 12.63% 12.31% 11.53%
Annualized return on interest-earning assets 3.88% 3.85% 3.83% 3.86%
Annualized cost of interest-bearing liabilities 0.63% 0.50% 0.62% 0.50%
Annualized net interest spread 3.25% 3.35% 3.22% 3.36%
Annualized net interest margin 3.41% 3.47% 3.37% 3.48%
Efficiency ratio (1) 52.64% 56.29% 54.44% 58.34%
Stockholders' equity to total assets 10.58% 10.18%
Book value per common share $ 11.99 $ 11.03
Tangible book value per common share (1) $ 9.05 $ 7.93
Tangible common equity to tangible assets (1) 8.20% 7.53%
ASSET QUALITY RATIOS 6/30/2017 6/30/2016
Ratio of allowance for loan and lease losses to total loans and leases 0.81% 0.89%
Non-performing loans and leases to total loans and leases 0.40% 0.72%
Non-performing assets to total assets 0.33% 0.59%
Annualized net charge-offs to average loans and leases 0.07% 0.14%
SELECTED BALANCE SHEET DATA AT PERIOD-END 6/30/2017 6/30/2016
Loans and leases $ 4,054,276 $ 3,454,304
Allowance for loan and lease losses (32,823) (30,667)
Investment securities 830,531 602,408
Total assets 5,362,187 4,467,860
Total deposits 4,227,204 3,537,331
Short-term borrowings 118,487 123,662
Other borrowings 417,093 326,009
Stockholders' equity 567,545 454,934
SELECTED AVERAGE BALANCE SHEET DATAFor the Three Months Ended For the Six Months Ended
6/30/2017 6/30/2016 6/30/2017 6/30/2016
Loans and leases $ 4,011,325 $ 3,412,503 $ 3,958,564 $ 3,348,421
Investment securities 837,075 575,206 813,690 572,894
Interest-earning assets 4,907,488 4,094,575 4,866,897 4,013,868
Total assets 5,241,155 4,403,589 5,197,765 4,326,030
Noninterest-bearing demand deposits 954,966 801,488 938,460 780,843
Savings deposits 492,991 485,580 491,890 480,725
Interest-bearing transaction accounts 2,295,256 1,775,129 2,268,752 1,728,855
Time deposits 559,665 487,169 557,479 476,097
Total deposits 4,302,878 3,549,366 4,256,581 3,466,520
Short-term borrowings 52,951 31,591 40,722 40,963
Other borrowings 291,882 346,347 312,203 347,718
Total interest-bearing liabilities 3,692,745 3,125,815 3,671,047 3,074,357
Stockholders' equity 565,211 450,806 559,528 445,815
(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) 2017 2016 2017 2016
INTEREST INCOME
Loans, leases and fees $ 42,740 $ 35,800 $ 83,151$ 69,921
Federal funds sold and interest-bearing deposits with banks 132 124 408 199
Taxable investment securities and other 3,818 2,696 7,417 5,658
Tax exempt investment securities 522 417 1,032 830
TOTAL INTEREST INCOME 47,212 39,037 92,008 76,608
INTEREST EXPENSE
Deposits 3,784 2,404 7,118 4,609
Federal funds purchased and securities sold under agreements to repurchase 98 9 108 47
Other borrowings 1,909 1,522 4,038 3,000
TOTAL INTEREST EXPENSE 5,791 3,935 11,264 7,656
NET INTEREST INCOME 41,421 35,102 80,744 68,952
Provision for loan and lease losses 1,827 1,010 3,045 2,085
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 39,594 34,092 77,699 66,867
NONINTEREST INCOME
Service charges on deposit accounts 2,674 2,523 5,129 4,965
Commissions and fees 1,135 1,099 2,291 2,078
Gains (losses) on sales of investment securities (15) - 2,524 370
Gains on sales of loans 471 425 869 845
Income on bank owned life insurance 500 414 926 822
Other income 1,346 424 2,466 672
TOTAL NONINTEREST INCOME 6,111 4,885 14,205 9,752
NONINTEREST EXPENSE
Salaries and employee benefit expense 15,096 13,091 30,513 27,176
Net occupancy expense 2,507 2,341 5,343 5,029
Furniture and equipment expense 1,996 2,082 4,093 4,028
Stationary, supplies and postage expense 572 416 1,015 859
Marketing expense 508 385 909 694
FDIC insurance expense 425 681 743 1,271
ATM and debit card expense 517 383 958 729
Telecommunications expense 372 386 776 810
Data processing expense 502 459 1,055 979
Other real estate owned and other repossessed assets expense 4 26 41 65
Long-term debt prepayment fee - - 2,828 -
Merger related expenses - 685 - 2,406
Core deposit intangible amortization 190 164 385 331
Other expenses 2,677 2,616 5,177 4,762
TOTAL NONINTEREST EXPENSE 25,366 23,715 53,836 49,139
INCOME BEFORE PROVISION FOR INCOME TAXES 20,339 15,262 38,068 27,480
Provision for income taxes 6,969 5,132 12,386 9,242
NET INCOME $ 13,370 $ 10,130 $ 25,682$ 18,238
EARNINGS PER COMMON SHARE
Basic $ 0.28 $ 0.24 $ 0.54$ 0.44
Diluted $ 0.28 $ 0.24 $ 0.53$ 0.44
DIVIDENDS PER COMMON SHARE $ 0.100 $ 0.095 $ 0.195$ 0.180

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
June 30, December 31,
(Dollars in thousands) 2017 2016
(Unaudited)
ASSETS
Cash $ 169,109 $ 169,149
Interest-bearing deposits due from banks 16,573 6,652
Total cash and cash equivalents 185,682 175,801
Investment securities available for sale, at fair value 673,164 606,704
Investment securities held to maturity; fair value of $138,619 at June 30, 2017
and $146,990 at December 31, 2016 138,468 147,614
Federal Home Loan Bank and other membership stocks, at cost 18,899 15,099
Loans held for sale 877 1,742
Loans and leases:
Commercial, real estate 2,955,596 2,767,710
Commercial, industrial and other 352,977 350,228
Leases 70,295 67,016
Residential mortgages 337,765 349,581
Consumer and home equity 337,643 339,360
Total loans and leases 4,054,276 3,873,895
Net deferred costs (fees) (3,545) (3,297)
Allowance for loan and lease losses (32,823) (31,245)
Net loans and leases 4,017,908 3,839,353
Premises and equipment, net 50,411 52,236
Accrued interest receivable 13,192 12,557
Goodwill 136,433 135,747
Other identifiable intangible assets 2,631 3,344
Bank owned life insurance 89,339 72,384
Other assets 35,183 30,550
TOTAL ASSETS $ 5,362,187 $ 5,093,131
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $ 978,668 $ 927,270
Savings and interest-bearing transaction accounts 2,682,291 2,620,657
Time deposits $250 thousand and under 408,228 404,680
Time deposits over $250 thousand 158,017 140,228
Total deposits 4,227,204 4,092,835
Federal funds purchased and securities sold under agreements to repurchase 118,487 56,354
Other borrowings 312,251 260,866
Subordinated debentures 104,842 104,784
Other liabilities 31,858 28,248
TOTAL LIABILITIES 4,794,642 4,543,087
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 70,000,000 shares;
issued 47,352,725 shares at June 30, 2017
and 47,222,914 shares at December 31, 2016 511,967 510,861
Retained earnings 54,969 38,590
Accumulated other comprehensive gain 609 593
TOTAL STOCKHOLDERS' EQUITY 567,545 550,044
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,362,187 $ 5,093,131

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,June 30,
(Dollars in thousands, except per share data) 2017 2017 2016 2016 2016
INCOME STATEMENT
Net interest income $ 41,421 $ 39,323 $ 38,179 $ 38,518 $ 35,102
Provision for loan and lease losses (1,827) (1,218) (375) (1,763) (1,010)
Other noninterest income 5,655 5,157 4,636 5,664 4,460
Gains (losses) on sales of investment securities (15) 2,539 - - -
Gains on sales of loans 471 398 525 753 425
Long-term debt prepayment fee - (2,828) - - -
Merger related expenses - - - (1,697) (685)
Other noninterest expense (25,366) (25,642) (24,772) (24,309) (23,030)
Pretax income 20,339 17,729 18,193 17,166 15,262
Provision for income taxes (6,969) (5,417) (6,240) (5,839) (5,132)
Net income $ 13,370 $ 12,312 $ 11,953 $ 11,327 $ 10,130
Basic earnings per common share $ 0.28 $ 0.26 $ 0.26 $ 0.25 $ 0.24
Diluted earnings per common share $ 0.28 $ 0.26 $ 0.26 $ 0.25 $ 0.24
Dividends per common share $ 0.10 $ 0.095 $ 0.095 $ 0.095 $ 0.095
Dividends paid $ 4,775 $ 4,527 $ 4,265 $ 4,261 $ 3,955
Weighted average shares - basic 47,465 47,354 45,002 44,439 41,238
Weighted average shares - diluted 47,674 47,623 45,257 44,659 41,406
SELECTED OPERATING RATIOS
Annualized return on average assets 1.02% 0.97% 0.95% 0.94% 0.93%
Annualized return on average common equity 9.49% 9.02% 9.31% 9.10% 9.04%
Annualized return on average tangible common equity (1) 12.58% 12.04% 12.83% 12.68% 12.63%
Annualized net interest margin 3.41% 3.33% 3.27% 3.45% 3.47%
Efficiency ratio (1) 52.64% 56.36% 56.35% 53.35% 56.29%
Common stockholders' equity to total assets 10.58% 10.63% 10.80% 10.17% 10.18%
Tangible common equity to tangible assets (1) 8.20% 8.20% 8.30% 7.53% 7.53%
Tier 1 risk-based ratio 10.77% 10.73% 10.85% 9.70% 9.73%
Total risk-based ratio 13.32% 13.29% 13.48% 12.40% 10.65%
Tier 1 leverage ratio 8.99% 8.97% 9.07% 8.26% 8.24%
Common equity tier 1 capital ratio 10.06% 10.01% 10.11% 8.94% 8.90%
Book value per common share $ 11.99 $ 11.78 $ 11.65 $ 11.22 $ 11.03
Tangible book value per common share (1) $ 9.05 $ 8.84 $ 8.70 $ 8.07 $ 7.93
(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,June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and leases $ 4,054,276 $ 3,974,718 $ 3,873,895 $ 3,794,519 $ 3,454,304
Allowance for loan and lease losses (32,823) (31,590) (31,245) (31,369) (30,667)
Investment securities 830,531 847,833 769,417 638,091 602,408
Total assets 5,362,187 5,247,815 5,093,131 4,904,291 4,467,860
Total deposits 4,227,204 4,293,393 4,092,835 3,941,742 3,537,331
Short-term borrowings 118,487 84,850 56,354 29,699 123,662
Other borrowings 417,093 278,238 365,650 398,671 326,009
Stockholders' equity 567,545 557,642 550,044 498,722 454,934
LOANS AND LEASES
Commercial, real estate $ 2,955,596 $ 2,881,972 $ 2,767,710 $ 2,675,154 $ 2,353,125
Commercial, industrial and other 352,977 342,264 350,228 339,291 313,062
Leases 70,295 67,488 67,016 65,659 63,338
Residential mortgages 337,765 344,890 349,581 370,766 383,823
Consumer and home equity 337,643 338,104 339,360 343,649 340,956
Total loans and leases $ 4,054,276 $ 3,974,718 $ 3,873,895 $ 3,794,519 $ 3,454,304
DEPOSITS
Noninterest-bearing $ 978,668 $ 924,581 $ 927,270 $ 931,385 $ 824,077
Savings and interest-bearing transaction accounts 2,682,291 2,809,705 2,620,657 2,471,097 2,235,918
Time deposits 566,245 559,107 544,908 539,260 477,336
Total deposits $ 4,227,204 $ 4,293,393 $ 4,092,835 $ 3,941,742 $ 3,537,331
SELECTED AVERAGE BALANCE SHEET DATA
Loans and leases $ 4,011,325 $ 3,905,216 $ 3,806,588 $ 3,743,434 $ 3,412,503
Investment securities 837,075 790,046 683,986 606,779 575,206
Interest-earning assets 4,907,488 4,825,855 4,680,156 4,467,524 4,094,575
Total assets 5,241,155 5,153,893 5,015,439 4,805,381 4,403,588
Noninterest-bearing demand deposits 954,966 921,770 951,418 895,851 801,488
Savings deposits 492,991 490,777 490,556 487,918 485,580
Interest-bearing transaction accounts 2,295,256 2,241,954 2,072,154 1,988,405 1,775,129
Time deposits 559,665 555,270 539,870 533,224 487,169
Total deposits 4,302,878 4,209,771 4,053,998 3,905,398 3,549,366
Short-term borrowings 52,951 28,358 27,538 35,608 31,591
Other borrowings 291,882 332,750 392,789 339,204 346,347
Total interest-bearing liabilities 3,692,745 3,649,109 3,522,907 3,384,359 3,125,815
Stockholders' equity 565,211 553,782 510,562 495,343 450,806

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,June 30,
(Dollars in thousands) 2017 2017 2016 2016 2016
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans and leases 4.27% 4.20% 4.19% 4.23% 4.22%
Taxable investment securities and other 2.11% 2.13% 2.00% 2.06% 2.18%
Tax-exempt securities 2.86% 2.78% 2.75% 3.01% 3.15%
Federal funds sold and interest-bearing cash accounts 0.89% 0.85% 0.48% 0.48% 0.46%
Total interest-earning assets 3.88% 3.78% 3.74% 3.85% 3.85%
LIABILITIES
Savings accounts 0.06% 0.06% 0.06% 0.06% 0.05%
Interest-bearing transaction accounts 0.44% 0.38% 0.35% 0.34% 0.31%
Time deposits 0.86% 0.83% 0.84% 0.81% 0.79%
Borrowings 2.30% 2.37% 2.37% 1.71% 1.62%
Total interest-bearing liabilities 0.63% 0.60% 0.62% 0.53% 0.50%
Net interest spread (taxable equivalent basis) 3.25% 3.18% 3.12% 3.32% 3.35%
Annualized net interest margin (taxable equivalent basis) 3.41% 3.33% 3.27% 3.45% 3.47%
Annualized cost of deposits 0.35% 0.32% 0.30% 0.29% 0.27%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN AND LEASE LOSSES
Balance at beginning of period $ 31,590 $ 31,245 $ 31,369 $ 30,667 $ 30,553
Provision for loan and lease losses 1,827 1,218 375 1,763 1,010
Charge-offs (870) (1,360) (795) (1,273) (1,045)
Recoveries 276 487 296 212 149
Balance at end of period $ 32,823 $ 31,590 $ 31,245 $ 31,369 $ 30,667
NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)
Commercial, real estate $ (67)$ 595 $ (87)$ (11)$ 113
Commercial, industrial and other 44 68 (96) (30) 137
Leases 92 39 42 40 183
Residential mortgages 169 141 231 385 213
Consumer and home equity 356 30 409 677 250
Net charge-offs (recoveries) $ 594 $ 873 $ 499 $ 1,061 $ 896
NON-PERFORMING ASSETS
Commercial, real estate $ 10,240 $ 10,443 $ 11,885 $ 13,068 $ 12,554
Commercial, industrial and other 378 136 167 39 41
Leases 81 179 153 78 159
Residential mortgages 3,857 4,715 6,048 7,264 8,865
Consumer and home equity 1,689 2,270 2,151 2,210 3,325
Total non-accrual loans and leases 16,245 17,743 20,404 22,659 24,944
Property acquired through foreclosure or repossession 1,415 710 1,072 1,918 1,594
Total non-performing assets $ 17,660 $ 18,453 $ 21,476 $ 24,577 $ 26,538
Loans past due 90 days or more and still accruing$ 20 $- $ 10 $ 10 $ 42
Loans restructured and still accruing $ 11,697 $ 11,553 $ 8,802 $ 9,251 $ 9,509
Ratio of allowance for loan and lease losses to total loans and leases 0.81% 0.79% 0.81% 0.83% 0.89%
Total non-accrual loans and leases to total loans and leases 0.40% 0.45% 0.53% 0.60% 0.72%
Total non-performing assets to total assets 0.33% 0.35% 0.42% 0.50% 0.59%
Annualized net charge-offs (recoveries) to average loans and leases 0.06% 0.09% 0.05% 0.11% 0.11%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
At or for the Quarter Ended
June 30,Mar 31,Dec 31,Sept 30,June 30,
(Dollars in thousands, except per share amounts) 2017 2017 2016 2016 2016
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP$ 567,545 $ 557,642 $ 550,044 $ 498,722 $ 454,934
Less: Goodwill 136,433 135,747 135,747 136,392 125,285
Less: Other identifiable intangible assets 2,631 3,149 3,344 3,545 2,728
Total tangible common stockholders' equity at end of period - Non-GAAP$ 428,481 $ 418,746 $ 410,953 $ 358,785 $ 326,921
Shares outstanding at end of period 47,353 47,350 47,223 44,443 41,241
Book value per share - GAAP $ 11.99 $ 11.78 $ 11.65 $ 11.22 $ 11.03
Tangible book value per share - Non-GAAP $ 9.05 $ 8.84 $ 8.70 $ 8.07 $ 7.93
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP$ 428,481 $ 418,746 $ 410,953 $ 358,785 $ 326,921
Total assets at end of period - GAAP $ 5,362,187 $ 5,247,815 $ 5,093,131 $ 4,904,291 $ 4,467,860
Less: Goodwill 136,433 135,747 135,747 136,392 125,285
Less: Other identifiable intangible assets 2,631 3,149 3,344 3,545 2,728
Total tangible assets at end of period - Non-GAAP$ 5,223,123 $ 5,108,919 $ 4,954,040 $ 4,764,354 $ 4,339,847
Common equity to assets - GAAP 10.58% 10.63% 10.80% 10.17% 10.18%
Tangible common equity to tangible assets - Non-GAAP 8.20% 8.20% 8.30% 7.53% 7.53%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 13,370 $ 12,312 $ 11,953 $ 11,327 $ 10,130
Total average common stockholders' equity - GAAP$ 565,211 $ 553,782 $ 510,562 $ 495,343 $ 450,806
Less: Average goodwill 135,755 135,747 136,385 136,392 125,424
Less: Average other identifiable intangible assets 3,069 3,276 3,459 3,685 2,828
Total average tangible common stockholders' equity - Non-GAAP$ 426,387 $ 414,759 $ 370,718 $ 355,266 $ 322,554
Return on average common stockholders' equity - GAAP 9.49% 9.02% 9.31% 9.10% 9.04%
Return on average tangible common stockholders' equity - Non-GAAP 12.58% 12.04% 12.83% 12.68% 12.63%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 25,366 $ 28,470 $ 24,772 $ 26,006 $ 23,715
Amortization of core deposit intangibles (190) (195) (202) (201) (164)
Long-term debt prepayment fee - (2,828) - - -
Merger related expenses - - - (1,697) (685)
Provision for unfunded lending commitments - - - - (230)
Noninterest expense, as adjusted $ 25,176 $ 25,447 $ 24,570 $ 24,108 $ 22,636
Net interest income $ 41,421 $ 39,323 $ 38,179 $ 38,518 $ 35,102
Total noninterest income 6,111 8,094 5,161 6,417 4,885
Total revenue 47,532 47,417 43,340 44,935 39,987
Tax-equivalent adjustment on municipal securities 281 275 262 253 225
(Gains) losses on sales of investment securities 15 (2,539) - - -
Total revenue, as adjusted $ 47,828 $ 45,153 $ 43,602 $ 45,188 $ 40,212
Efficiency ratio - Non-GAAP 52.64% 56.36% 56.35% 53.35% 56.29%
For the Quarter EndedFor the Six Months Ended
June 30,June 30,June 30,June 30,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
RECONCILIATION OF EARNINGS PER SHARE
Net income - GAAP $ 13,370 $ 10,130 $ 25,682 $ 18,238
NON-ROUTINE TRANSACTIONS, NET OF TAX
Tax deductible merger related expenses - 175 - 986
Non-tax deductible merger related expenses - 389 - 739
Net effect of non-routine transactions - 564 - 1,725
Net income available to common shareholders excluding non-routine transactions 13,370 10,694 25,682 19,963
Less: Earnings allocated to participating securities (120) (106) (241) (161)
$ 13,250 $ 10,588 $ 25,441 $ 19,802
Weighted average shares - Basic 47,465 41,238 47,410 41,084
Weighted average shares - Diluted 47,674 41,406 47,646 41,245
Basic earnings per share - GAAP $ 0.28 $ 0.24 $ 0.54 $ 0.44
Diluted earnings per share - GAAP $ 0.28 $ 0.24 $ 0.53 $ 0.44
Basic earnings per share, adjusted for non-routine transactions$ 0.28 $ 0.26 $ 0.54 $ 0.48
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)
$ 0.28 $ 0.26 $ 0.53 $ 0.48

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
For the Six Months Ended,
June 30,June 30,
(Dollars in thousands) 2017 2016
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 25,682 $ 18,238
Total average common stockholders' equity - GAAP $ 559,528 $ 445,815
Less: Average goodwill 135,751 124,923
Less: Average other identifiable intangible assets 3,172 2,874
Total average tangible common stockholders' equity - Non-GAAP $ 420,605 $ 318,018
Return on average common stockholders' equity - GAAP 9.26% 8.23%
Return on average tangible common stockholders' equity - Non-GAAP 12.31% 11.53%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 53,836 $ 49,139
Amortization of core deposit intangibles (385) (331)
Long-term debt prepayment fee (2,828) -
Merger related expenses - (2,406)
Provision for unfunded lending commitments - (438)
Noninterest expense, as adjusted $ 50,623 $ 45,964
Net interest income $ 80,744 $ 68,952
Noninterest income 14,205 9,752
Total revenue 94,949 78,704
Tax-equivalent adjustment on municipal securities 556 447
Gains on sales of investment securities (2,524) (370)
Total revenue, as adjusted $ 92,981 $ 78,781
Efficiency ratio - Non-GAAP 54.44% 58.34%


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

Source:Lakeland Bancorp, Inc.