×

Lakeland Bancorp Announces Strong 3rd Quarter Earnings

OAK RIDGE, N.J., Oct. 26, 2017 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $13.7 million for the three months ended September 30, 2017 compared to $11.3 million for the same period in 2016. For the three months ended September 30, 2017, diluted earnings per share (“EPS”) of $0.29 increased 16% from $0.25 for the same period in 2016. For the third quarter of 2017, return on average assets was 1.03%, return on average common equity was 9.48%, and return on average tangible common equity was 12.51%.

For the nine months ended September 30, 2017, the Company reported net income of $39.4 million, compared to $29.6 million for the same period in 2016. Over the same period, the Company reported diluted EPS of $0.82 in 2017 compared to $0.69 in 2016. Year-to-date 2017, return on average assets was 1.01%, return on average common equity was 9.33%, and return on average tangible common equity was 12.38%.

Thomas Shara, Lakeland Bancorp’s President and CEO, commented on the Company’s quarterly results, “We are pleased with our continued strong quarterly financial metrics as demonstrated by our enhancements in net income, earnings per share, return on assets, return on equity, efficiency ratio and asset quality. We continue to grow our Bank by generating new customers with our relationship banking philosophy and providing best in class customer service.”

The following represents performance highlights and significant events as of or for the third quarter of 2017:

  • Net income of $13.7 million increased from $13.4 million in the second quarter of 2017 and $11.3 million in the third quarter of 2016.
  • Return on average assets of 1.03% grew from 1.02% in the second quarter of 2017 and 0.94% in the third quarter of 2016.
  • The efficiency ratio of 51.72% improved from 52.64% in the second quarter of 2017 and 53.35% in the third quarter of 2016.
  • Tangible book value per share rose to $9.25 at September 30, 2017, a 14.6% increase from $8.07 at September 30, 2016.
  • Net interest margin of 3.39% fell slightly from 3.41% in the second quarter of 2017 and 3.45% in the third quarter of 2016.
  • Total deposits grew $129.8 million, or 3.1%, during the third quarter of 2017 and $415.3 million, or 10.5%, since September 30, 2016.
  • Total loans and leases grew $38.6 million, or 1.0%, during the third quarter of 2017 and $298.4 million, or 7.9%, since September 30, 2016.
  • On October 24, 2017, the Company declared a cash dividend of $0.10 per share to be paid on November 15, 2017 to stockholders of record as of November 6, 2017.

Earnings
Net income for the third quarter of 2017 was $13.7 million, a 21% increase compared to $11.3 million for the same period in 2016. Excluding merger related expenses incurred in the third quarter of 2016, this increase was 11%.

Year-to-date net income for 2017 was $39.4 million, a 33% increase compared to $29.6 million for the same period in 2016. After excluding merger related expenses incurred in 2016, this increase was 22%.

Net Interest Income
Net interest income for the third quarter of 2017 was $42.1 million, compared to $38.5 million for the same period in 2016 due to the organic growth of earning assets. Year-to-date net interest income for 2017 was $122.9 million, as compared to $107.5 million for the same period in 2016. For 2017, year-to-date total interest income increased due to higher interest earning assets from organic growth and the merger with Harmony Bank in July 2016 (the “merger”). For 2017, year-to-date total interest expense increased primarily due to increased deposits related to the merger, continued organic deposit growth coupled with higher CD rates in the third quarter of 2017 due to market competition and the impact of the additional interest expense from the subordinated debt offering in September 2016.

Noninterest Income
Noninterest income totaled $5.5 million for the third quarter of 2017 compared to $6.4 million for the same period in 2016. This decrease was primarily due to $0.9 million in death benefits received on bank owned life insurance in 2016.

Year-to-date 2017 noninterest income totaled $19.7 million compared to $16.2 million for the same period in 2016. This increase was primarily due to $2.2 million in gains on sales of investment securities in the first quarter of 2017, $0.9 million in gains on sales of three former branches during 2017, $0.3 million gain on the payoff of an acquired loan in 2017 and a $0.2 million increase on the sales of other real estate owned in 2017, partially offset by $0.9 million in death benefits received on bank owned life insurance in 2016 and a $0.3 million decline in gains on sales of loans during 2017.

Noninterest Expense
Noninterest expense totaled $24.8 million for the third quarter of 2017 compared to $26.0 million for the same period in 2016. Excluding $1.7 million in merger related expenses incurred in 2016, noninterest expense would have increased $0.5 million due to additional salary and employee benefit expense, partially offset by a $0.3 million reduction in the cost of FDIC insurance.

Year-to-date 2017 noninterest expense totaled $78.7 million compared to $75.1 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 $4.1 million in merger related expenses. Excluding these one-time items, the resulting $4.8 million net increase in noninterest expense was primarily due to $3.8 million in increased salary and employee benefit expense related to additional headcount from the merger as well as supplementing the operating infrastructure of the Company. In addition, other expenses increased by $0.7 million primarily due to higher legal, correspondent, audit and consulting fees.

Financial Condition
For the nine months ended September 30, 2017, total assets increased $306.4 million, or 6%, to $5.40 billion as total loans and leases grew $219.0 million, or 6%, to $4.09 billion, investment in bank owned life insurance grew $34.4 million, or 48%, to $106.8 million and investment securities increased $25.7 million, or 3%, to $795.1 million. On the funding side, total deposits grew $264.2 million, or 6%, to $4.36 billion while borrowings increased $13.4 million, or 3%, to $435.4 million. As of September 30, 2017, total loans and leases to total deposits was 93.9%.

Asset Quality
At September 30, 2017, non-performing assets totaled $14.7 million (0.27% of total assets) compared to $21.5 million (0.42% of total assets) at December 31, 2016. Non-accrual loans and leases as a percent of total loans and leases decreased to 0.33% at September 30, 2017 from 0.53% at December 31, 2016. The allowance for loan and lease losses increased to $33.9 million at September 30, 2017, and represented 0.83% of total loans and leases. For the nine months ended September 30, 2017, the Company had net charge-offs of $2.2 million (annualized 0.07% of average loans and leases) compared to $3.4 million (annualized 0.13% of average loans and leases) for the same period in 2016. The year-to-date provision for loan and lease losses was $4.9 million compared to $3.8 million for the same period in 2016.

Capital
At September 30, 2017, stockholders' equity was $577.1 million compared to $550.0 million at December 31, 2016. At September 30, 2017, the book value per common share and tangible book value per common share were $12.19 and $9.25 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, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, 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 relevant measure to compare the operating performance period to period.

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

About Lakeland 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.

Thomas J. Shara
President & CEO

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

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
INCOME STATEMENT
Net interest income $ 42,115 $ 38,518 $ 122,859 $ 107,470
Provision for loan and lease losses (1,827) (1,763) (4,872) (3,848)
Other noninterest income 4,976 5,664 15,788 14,201
Gains (losses) on sales of investment securities - - 2,524 370
Gains on sales of loans 478 753 1,347 1,598
Long-term debt prepayment fee - - (2,828) -
Merger related expenses - (1,697) - (4,103)
Other noninterest expense (24,849) (24,309) (75,857) (71,042)
Pretax income 20,893 17,166 58,961 44,646
Provision for income taxes (7,170) (5,839) (19,556) (15,081)
Net income $ 13,723 $ 11,327 $ 39,405 $ 29,565
Basic earnings per common share $ 0.29 $ 0.25 $ 0.82 $ 0.69
Diluted earnings per common share $ 0.29 $ 0.25 $ 0.82 $ 0.69
Dividends per common share $ 0.10 $ 0.095 $ 0.295 $ 0.275
Weighted average shares - basic 47,466 44,439 47,429 42,211
Weighted average shares - diluted 47,692 44,659 47,660 42,390
SELECTED OPERATING RATIOS
Annualized return on average assets 1.03% 0.94% 1.01% 0.88%
Annualized return on average common equity 9.48% 9.10% 9.33% 8.54%
Annualized return on average tangible common equity (1) 12.51% 12.68% 12.38% 11.95%
Annualized return on interest-earning assets 3.93% 3.85% 3.86% 3.86%
Annualized cost of interest-bearing liabilities 0.71% 0.53% 0.65% 0.51%
Annualized net interest spread 3.22% 3.32% 3.22% 3.35%
Annualized net interest margin 3.39% 3.45% 3.38% 3.47%
Efficiency ratio (1) 51.72% 53.35% 53.52% 56.52%
Stockholders' equity to total assets 10.69% 10.17%
Book value per common share $ 12.19 $ 11.22
Tangible book value per common share (1) $ 9.25 $ 8.07
Tangible common equity to tangible assets (1) 8.33% 7.53%
ASSET QUALITY RATIOS 9/30/2017 9/30/2016
Ratio of allowance for loan and lease losses to total loans and leases 0.83% 0.83%
Non-performing loans and leases to total loans and leases 0.33% 0.60%
Non-performing assets to total assets 0.27% 0.50%
Annualized net charge-offs to average loans and leases 0.07% 0.13%
SELECTED BALANCE SHEET DATA AT PERIOD-END 9/30/2017 9/30/2016
Loans and leases $ 4,092,893 $ 3,794,519
Allowance for loan and lease losses (33,925) (31,369)
Investment securities 795,096 638,091
Total assets 5,399,481 4,904,291
Total deposits 4,356,996 3,941,742
Short-term borrowings 133,960 29,699
Other borrowings 301,411 398,671
Stockholders' equity 577,081 498,722
SELECTED AVERAGE BALANCE SHEET DATAFor the Three Months Ended For the Nine Months Ended
9/30/2017 9/30/2016 9/30/2017 9/30/2016
Loans and leases $ 4,060,838 $ 3,743,434 $ 3,993,030 $ 3,481,053
Investment securities 815,773 606,779 814,392 584,271
Interest-earning assets 4,957,856 4,467,524 4,897,550 4,166,190
Total assets 5,300,191 4,805,381 5,232,283 4,486,979
Noninterest-bearing demand deposits 971,143 895,851 949,474 819,459
Savings deposits 484,982 487,918 489,562 483,140
Interest-bearing transaction accounts 2,206,206 1,988,405 2,247,674 1,816,003
Time deposits 645,333 533,224 587,086 495,278
Total deposits 4,307,664 3,905,398 4,273,796 3,613,880
Short-term borrowings 42,172 35,608 41,211 39,165
Other borrowings 344,775 339,204 323,180 344,859
Total interest-bearing liabilities 3,723,468 3,384,359 3,688,713 3,178,445
Stockholders' equity 574,113 495,343 564,443 462,445
(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) 2017 2016 2017 2016
INTEREST INCOME
Loans, leases and fees $ 44,302$ 39,766 $ 127,453$ 109,687
Federal funds sold and interest-bearing deposits with banks 210 142 618 341
Taxable investment securities and other 3,720 2,627 11,137 8,285
Tax exempt investment securities 503 470 1,535 1,300
TOTAL INTEREST INCOME 48,735 43,005 140,743 119,613
INTEREST EXPENSE
Deposits 4,443 2,886 11,561 7,495
Federal funds purchased and securities sold under agreements to repurchase 52 19 160 66
Other borrowings 2,125 1,582 6,163 4,582
TOTAL INTEREST EXPENSE 6,620 4,487 17,884 12,143
NET INTEREST INCOME 42,115 38,518 122,859 107,470
Provision for loan and lease losses 1,827 1,763 4,872 3,848
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 40,288 36,755 117,987 103,622
NONINTEREST INCOME
Service charges on deposit accounts 2,797 2,615 7,926 7,580
Commissions and fees 1,258 1,182 3,549 3,260
Gains on sales of investment securities - - 2,524 370
Gains on sales of loans 478 753 1,347 1,598
Income on bank owned life insurance 624 1,303 1,550 2,125
Other income 297 564 2,763 1,236
TOTAL NONINTEREST INCOME 5,454 6,417 19,659 16,169
NONINTEREST EXPENSE
Salaries and employee benefit expense 15,100 14,626 45,613 41,802
Net occupancy expense 2,327 2,372 7,670 7,401
Furniture and equipment expense 2,073 1,876 6,166 5,904
Stationary, supplies and postage expense 404 412 1,419 1,271
Marketing expense 442 429 1,351 1,123
FDIC insurance expense 430 715 1,173 1,986
ATM and debit card expense 546 420 1,504 1,149
Telecommunications expense 380 479 1,156 1,289
Data processing expense 441 518 1,496 1,497
Other real estate owned and other repossessed assets expense 67 (32) 108 33
Long-term debt prepayment fee - - 2,828 -
Merger related expenses - 1,697 - 4,103
Core deposit intangible amortization 104 201 489 532
Other expenses 2,535 2,293 7,712 7,055
TOTAL NONINTEREST EXPENSE 24,849 26,006 78,685 75,145
INCOME BEFORE PROVISION FOR INCOME TAXES 20,893 17,166 58,961 44,646
Provision for income taxes 7,170 5,839 19,556 15,081
NET INCOME $ 13,723$ 11,327 $ 39,405$ 29,565
EARNINGS PER COMMON SHARE
Basic $ 0.29$ 0.25 $ 0.82$ 0.69
Diluted $ 0.29$ 0.25 $ 0.82$ 0.69
DIVIDENDS PER COMMON SHARE $ 0.100$ 0.095 $ 0.295$ 0.275

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
September 30, December 31,
(Dollars in thousands) 2017 2016
(Unaudited)
ASSETS
Cash $ 178,905 $ 169,149
Interest-bearing deposits due from banks 24,012 6,652
Total cash and cash equivalents 202,917 175,801
Investment securities available for sale, at fair value 647,292 606,704
Investment securities held to maturity; fair value of $135,085 at September 30, 2017
and $146,990 at December 31, 2016 135,021 147,614
Federal Home Loan Bank and other membership stocks, at cost 12,783 15,099
Loans held for sale 2,221 1,742
Loans and leases:
Commercial, real estate 3,018,106 2,767,710
Commercial, industrial and other 342,775 350,228
Leases 71,698 67,016
Residential mortgages 329,625 349,581
Consumer and home equity 330,689 339,360
Total loans and leases 4,092,893 3,873,895
Net deferred costs (fees) (3,720) (3,297)
Allowance for loan and lease losses (33,925) (31,245)
Net loans and leases 4,055,248 3,839,353
Premises and equipment, net 49,699 52,236
Accrued interest receivable 13,592 12,557
Goodwill 136,433 135,747
Other identifiable intangible assets 2,526 3,344
Bank owned life insurance 106,831 72,384
Other assets 34,918 30,550
TOTAL ASSETS $ 5,399,481 $ 5,093,131
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $ 955,444 $ 927,270
Savings and interest-bearing transaction accounts 2,681,512 2,620,657
Time deposits $250 thousand and under 549,893 404,680
Time deposits over $250 thousand 170,147 140,228
Total deposits 4,356,996 4,092,835
Federal funds purchased and securities sold under agreements to repurchase 133,960 56,354
Other borrowings 196,539 260,866
Subordinated debentures 104,872 104,784
Other liabilities 30,033 28,248
TOTAL LIABILITIES 4,822,400 4,543,087
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 70,000,000 shares;
issued 47,352,714 shares at September 30, 2017
and 47,222,914 shares at December 31, 2016 512,383 510,861
Retained earnings 63,917 38,590
Accumulated other comprehensive gain 781 593
TOTAL STOCKHOLDERS' EQUITY 577,081 550,044
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,399,481 $ 5,093,131

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30,June 30,Mar 31,Dec 31,Sept 30,
(Dollars in thousands, except per share data) 2017 2017 2017 2016 2016
INCOME STATEMENT
Net interest income $ 42,115 $ 41,421 $ 39,323 $ 38,179 $ 38,518
Provision for loan and lease losses (1,827) (1,827) (1,218) (375) (1,763)
Other noninterest income 4,976 5,655 5,157 4,636 5,664
Gains (losses) on sales of investment securities - (15) 2,539 - -
Gains on sales of loans 478 471 398 525 753
Long-term debt prepayment fee - - (2,828) - -
Merger related expenses - - - - (1,697)
Other noninterest expense (24,849) (25,366) (25,642) (24,772) (24,309)
Pretax income 20,893 20,339 17,729 18,193 17,166
Provision for income taxes (7,170) (6,969) (5,417) (6,240) (5,839)
Net income $ 13,723 $ 13,370 $ 12,312 $ 11,953 $ 11,327
Basic earnings per common share $ 0.29 $ 0.28 $ 0.26 $ 0.26 $ 0.25
Diluted earnings per common share $ 0.29 $ 0.28 $ 0.26 $ 0.26 $ 0.25
Dividends per common share $ 0.10 $ 0.100 $ 0.095 $ 0.095 $ 0.095
Dividends paid $ 4,775 $ 4,775 $ 4,527 $ 4,265 $ 4,261
Weighted average shares - basic 47,466 47,465 47,354 45,002 44,439
Weighted average shares - diluted 47,692 47,674 47,623 45,257 44,659
SELECTED OPERATING RATIOS
Annualized return on average assets 1.03% 1.02% 0.97% 0.95% 0.94%
Annualized return on average common equity 9.48% 9.49% 9.02% 9.31% 9.10%
Annualized return on average tangible common equity (1) 12.51% 12.58% 12.04% 12.83% 12.68%
Annualized net interest margin 3.39% 3.41% 3.33% 3.27% 3.45%
Efficiency ratio (1) 51.72% 52.64% 56.36% 56.35% 53.35%
Common stockholders' equity to total assets 10.69% 10.58% 10.63% 10.80% 10.17%
Tangible common equity to tangible assets (1) 8.33% 8.20% 8.20% 8.30% 7.53%
Tier 1 risk-based ratio 10.82% 10.77% 10.73% 10.85% 9.70%
Total risk-based ratio 13.37% 13.32% 13.29% 13.48% 12.40%
Tier 1 leverage ratio 9.07% 8.99% 8.97% 9.07% 8.26%
Common equity tier 1 capital ratio 10.13% 10.06% 10.01% 10.11% 8.94%
Book value per common share $ 12.19 $ 11.99 $ 11.78 $ 11.65 $ 11.22
Tangible book value per common share (1) $ 9.25 $ 9.05 $ 8.84 $ 8.70 $ 8.07
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30,June 30,Mar 31,Dec 31,Sept 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and leases $ 4,092,893 $ 4,054,276 $ 3,974,718 $ 3,873,895 $ 3,794,519
Allowance for loan and lease losses (33,925) (32,823) (31,590) (31,245) (31,369)
Investment securities 795,096 830,531 847,833 769,417 638,091
Total assets 5,399,481 5,362,187 5,247,815 5,093,131 4,904,291
Total deposits 4,356,996 4,227,204 4,293,393 4,092,835 3,941,742
Short-term borrowings 133,960 118,487 84,850 56,354 29,699
Other borrowings 301,411 417,093 278,238 365,650 398,671
Stockholders' equity 577,081 567,545 557,642 550,044 498,722
LOANS AND LEASES
Commercial, real estate $ 3,018,106 $ 2,955,596 $ 2,881,972 $ 2,767,710 $ 2,675,154
Commercial, industrial and other 342,775 352,977 342,264 350,228 339,291
Leases 71,698 70,295 67,488 67,016 65,659
Residential mortgages 329,625 337,765 344,890 349,581 370,766
Consumer and home equity 330,689 337,643 338,104 339,360 343,649
Total loans and leases $ 4,092,893 $ 4,054,276 $ 3,974,718 $ 3,873,895 $ 3,794,519
DEPOSITS
Noninterest-bearing $ 955,444 $ 978,668 $ 924,581 $ 927,270 $ 931,385
Savings and interest-bearing transaction accounts 2,681,512 2,682,291 2,809,705 2,620,657 2,471,097
Time deposits 720,040 566,245 559,107 544,908 539,260
Total deposits $ 4,356,996 $ 4,227,204 $ 4,293,393 $ 4,092,835 $ 3,941,742
Total loans and leases to total deposits 93.9% 95.9% 92.6% 94.7% 96.3%
SELECTED AVERAGE BALANCE SHEET DATA
Loans and leases $ 4,060,838 $ 4,011,325 $ 3,905,216 $ 3,806,588 $ 3,743,434
Investment securities 815,773 837,075 790,046 683,986 606,779
Interest-earning assets 4,957,856 4,907,488 4,825,855 4,680,156 4,467,524
Total assets 5,300,191 5,241,155 5,153,893 5,015,439 4,805,381
Noninterest-bearing demand deposits 971,143 954,966 921,770 951,418 895,851
Savings deposits 484,982 492,991 490,777 490,556 487,918
Interest-bearing transaction accounts 2,206,206 2,295,256 2,241,954 2,072,154 1,988,405
Time deposits 645,333 559,665 555,270 539,870 533,224
Total deposits 4,307,664 4,302,878 4,209,771 4,053,998 3,905,398
Short-term borrowings 42,172 52,951 28,358 27,538 35,608
Other borrowings 344,775 291,882 332,750 392,789 339,204
Total interest-bearing liabilities 3,723,468 3,692,745 3,649,109 3,522,907 3,384,359
Stockholders' equity 574,113 565,211 553,782 510,562 495,343

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Sept 30,June 30,Mar 31,Dec 31,Sept 30,
(Dollars in thousands) 2017 2017 2017 2016 2016
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans and leases 4.33% 4.27% 4.20% 4.19% 4.23%
Taxable investment securities and other 2.09% 2.11% 2.13% 2.00% 2.06%
Tax-exempt securities 2.98% 2.86% 2.78% 2.75% 3.01%
Federal funds sold and interest-bearing cash accounts 1.03% 0.89% 0.85% 0.48% 0.48%
Total interest-earning assets 3.93% 3.88% 3.78% 3.74% 3.85%
LIABILITIES
Savings accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Interest-bearing transaction accounts 0.49% 0.44% 0.38% 0.35% 0.34%
Time deposits 1.03% 0.86% 0.83% 0.84% 0.81%
Borrowings 2.20% 2.30% 2.37% 2.37% 1.71%
Total interest-bearing liabilities 0.71% 0.63% 0.60% 0.62% 0.53%
Net interest spread (taxable equivalent basis) 3.22% 3.25% 3.18% 3.12% 3.32%
Annualized net interest margin (taxable equivalent basis) 3.39% 3.41% 3.33% 3.27% 3.45%
Annualized cost of deposits 0.41% 0.35% 0.32% 0.30% 0.29%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN AND LEASE LOSSES
Balance at beginning of period $ 32,823 $ 31,590 $ 31,245 $ 31,369 $ 30,667
Provision for loan and lease losses 1,827 1,827 1,218 375 1,763
Charge-offs (869) (870) (1,360) (795) (1,273)
Recoveries 144 276 487 296 212
Balance at end of period $ 33,925 $ 32,823 $ 31,590 $ 31,245 $ 31,369
NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)
Commercial, real estate $ 285 $ (67)$ 595 $ (87)$ (11)
Commercial, industrial and other 168 44 68 (96) (30)
Leases 80 92 39 42 40
Residential mortgages 95 169 141 231 385
Consumer and home equity 97 356 30 409 677
Net charge-offs (recoveries) $ 725 $ 594 $ 873 $ 499 $ 1,061
NON-PERFORMING ASSETS
Commercial, real estate $ 6,820 $ 10,240 $ 10,443 $ 11,885 $ 13,068
Commercial, industrial and other 172 378 136 167 39
Leases 110 81 179 153 78
Residential mortgages 4,410 3,857 4,715 6,048 7,264
Consumer and home equity 2,033 1,689 2,270 2,151 2,210
Total non-accrual loans and leases 13,545 16,245 17,743 20,404 22,659
Property acquired through foreclosure or repossession 1,168 1,415 710 1,072 1,918
Total non-performing assets $ 14,713 $ 17,660 $ 18,453 $ 21,476 $ 24,577
Loans past due 90 days or more and still accruing$ 9 $ 20 $ - $ 10 $ 10
Loans restructured and still accruing $ 11,279 $ 11,697 $ 11,553 $ 8,802 $ 9,251
Ratio of allowance for loan and lease losses to total loans and leases 0.83% 0.81% 0.79% 0.81% 0.83%
Total non-accrual loans and leases to total loans and leases 0.33% 0.40% 0.45% 0.53% 0.60%
Total non-performing assets to total assets 0.27% 0.33% 0.35% 0.42% 0.50%
Annualized net charge-offs (recoveries) to average loans and leases 0.07% 0.06% 0.09% 0.05% 0.11%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
At or for the Quarter Ended
Sept 30,June 30,Mar 31,Dec 31,Sept 30,
(Dollars in thousands, except per share amounts) 2017 2017 2017 2016 2016
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP$ 577,081 $ 567,545 $ 557,642 $ 550,044 $ 498,722
Less: Goodwill 136,433 136,433 135,747 135,747 136,392
Less: Other identifiable intangible assets 2,526 2,631 3,149 3,344 3,545
Total tangible common stockholders' equity at end of period - Non-GAAP$ 438,122 $ 428,481 $ 418,746 $ 410,953 $ 358,785
Shares outstanding at end of period 47,353 47,353 47,350 47,223 44,443
Book value per share - GAAP $ 12.19 $ 11.99 $ 11.78 $ 11.65 $ 11.22
Tangible book value per share - Non-GAAP $ 9.25 $ 9.05 $ 8.84 $ 8.70 $ 8.07
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP$ 438,122 $ 428,481 $ 418,746 $ 410,953 $ 358,785
Total assets at end of period - GAAP $ 5,399,481 $ 5,362,187 $ 5,247,815 $ 5,093,131 $ 4,904,291
Less: Goodwill 136,433 136,433 135,747 135,747 136,392
Less: Other identifiable intangible assets 2,526 2,631 3,149 3,344 3,545
Total tangible assets at end of period - Non-GAAP$ 5,260,522 $ 5,223,123 $ 5,108,919 $ 4,954,040 $ 4,764,354
Common equity to assets - GAAP 10.69% 10.58% 10.63% 10.80% 10.17%
Tangible common equity to tangible assets - Non-GAAP 8.33% 8.20% 8.20% 8.30% 7.53%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 13,723 $ 13,370 $ 12,312 $ 11,953 $ 11,327
Total average common stockholders' equity - GAAP$ 574,113 $ 565,211 $ 553,782 $ 510,562 $ 495,343
Less: Average goodwill 136,433 135,755 135,747 136,385 136,392
Less: Average other identifiable intangible assets 2,606 3,069 3,276 3,459 3,685
Total average tangible common stockholders' equity - Non-GAAP$ 435,074 $ 426,387 $ 414,759 $ 370,718 $ 355,266
Return on average common stockholders' equity - GAAP 9.48% 9.49% 9.02% 9.31% 9.10%
Return on average tangible common stockholders' equity - Non-GAAP 12.51% 12.58% 12.04% 12.83% 12.68%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 24,849 $ 25,366 $ 28,470 $ 24,772 $ 26,006
Amortization of core deposit intangibles (104) (190) (195) (202) (201)
Long-term debt prepayment fee - - (2,828) - -
Merger related expenses - - - - (1,697)
Noninterest expense, as adjusted $ 24,745 $ 25,176 $ 25,447 $ 24,570 $ 24,108
Net interest income $ 42,115 $ 41,421 $ 39,323 $ 38,179 $ 38,518
Total noninterest income 5,454 6,111 8,094 5,161 6,417
Total revenue 47,569 47,532 47,417 43,340 44,935
Tax-equivalent adjustment on municipal securities 271 281 275 262 253
(Gains) losses on sales of investment securities - 15 (2,539) - -
Total revenue, as adjusted $ 47,840 $ 47,828 $ 45,153 $ 43,602 $ 45,188
Efficiency ratio - Non-GAAP 51.72% 52.64% 56.36% 56.35% 53.35%
For the Quarter EndedFor the Nine Months Ended
Sept 30,Sept 30,Sept 30,Sept 30,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
RECONCILIATION OF EARNINGS PER SHARE
Net income - GAAP $ 13,723 $ 11,327 $ 39,405 $ 29,565
NON-ROUTINE TRANSACTIONS, NET OF TAX
Tax deductible merger related expenses - 893 - 1,915
Non-tax deductible merger related expenses - 187 - 866
Net effect of non-routine transactions - 1,080 - 2,781
Net income available to common shareholders excluding non-routine transactions 13,723 12,407 39,405 32,346
Less: Earnings allocated to participating securities (122) (114) (362) (275)
$ 13,601 $ 12,293 $ 39,043 $ 32,071
Weighted average shares - Basic 47,466 44,439 47,429 42,211
Weighted average shares - Diluted 47,692 44,659 47,660 42,390
Basic earnings per share - GAAP $ 0.29 $ 0.25 $ 0.82 $ 0.69
Diluted earnings per share - GAAP $ 0.29 $ 0.25 $ 0.82 $ 0.69
Basic earnings per share, adjusted for non-routine transactions$ 0.29 $ 0.28 $ 0.82 $ 0.76
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)
$ 0.29 $ 0.28 $ 0.82 $ 0.76

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
For the Nine Months Ended,
Sept 30,Sept 30,
(Dollars in thousands) 2017 2016
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 39,405 $ 29,565
Total average common stockholders' equity - GAAP $ 564,443 $ 462,445
Less: Average goodwill 135,981 128,774
Less: Average other identifiable intangible assets 2,981 3,146
Total average tangible common stockholders' equity - Non-GAAP $ 425,481 $ 330,525
Return on average common stockholders' equity - GAAP 9.33% 8.54%
Return on average tangible common stockholders' equity - Non-GAAP 12.38% 11.95%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 78,685 $ 75,145
Amortization of core deposit intangibles (489) (532)
Long-term debt prepayment fee (2,828) -
Merger related expenses - (4,103)
Provision for unfunded lending commitments - (438)
Noninterest expense, as adjusted $ 75,368 $ 70,072
Net interest income $ 122,859 $ 107,470
Noninterest income 19,659 16,169
Total revenue 142,518 123,639
Tax-equivalent adjustment on municipal securities 827 700
Gains on sales of investment securities (2,524) (370)
Total revenue, as adjusted $ 140,821 $ 123,969
Efficiency ratio - Non-GAAP 53.52% 56.52%



Source:Lakeland Bancorp, Inc.