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Lakeland Bancorp Completes Sixth Consecutive Year of Record Earnings

OAK RIDGE, N.J., Jan. 26, 2018 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income and diluted earnings per share (“EPS”) of $13.2 million and $0.27 for the three months ended December 31, 2017, compared to $12.0 million and $0.26 for the three months ended December 31, 2016. For the fourth quarter of 2017, return on average assets was 0.97%, return on average common equity was 8.99%, and return on average tangible common equity was 11.82%. Excluding the impact of the $0.6 million one-time charge taken in the fourth quarter of 2017 for the implementation of the Tax Cuts and Jobs Act of 2017, net income would have been $13.8 million and EPS would have been $0.29.

In 2017, the Company reported net income of $52.6 million, compared to $41.5 million in 2016. The Company reported EPS of $1.09 in 2017 compared to $0.95 in 2016. In 2017, return on average assets was 1.00%, return on average common equity was 9.25%, and return on average tangible common equity was 12.24%. Excluding the impact of the $0.6 million one-time charge taken in 2017 for the implementation of the Tax Cuts and Jobs Act of 2017, net income would have been $53.2 million and EPS would have been $1.11 in 2017. Excluding the impact of merger costs in 2016, net income would have been $44.3 million and EPS would have been $1.02 in 2016.

Thomas Shara, Lakeland Bancorp’s President and CEO, commented on the Company’s results, “We are pleased to announce 2017’s financial results as another year of record earnings. We have continued to focus on growing shareholder value with net income growth of 20%, earnings per share growth of 9% and a return on average assets of 1% in 2017. Our results are highlighted by our continued improvement in asset quality, reduction in our efficiency ratio to 53% and a consistent loan-to-deposit ratio of 95%.”

Regarding the recently passed changes to the tax laws, Mr. Shara continued, “The decrease in the corporate tax rate allows Lakeland to further invest in our future. We intend to utilize approximately 20% of the tax savings by accelerating and expanding our investments in personnel and technology that will continue to enhance the delivery of banking services and products to our customers. In addition, we plan to further increase our financial support of non-profits in the communities we serve.”

The following represents performance highlights and significant events related to the fourth quarter of 2017:

  • Return on average assets of 0.97% grew from 0.95% in the fourth quarter of 2016.
  • The efficiency ratio of 53.06% improved from 56.35% in the fourth quarter of 2016.
  • Net interest margin of 3.37% decreased 2 basis points from the prior quarter and increased 10 basis points from the fourth quarter of 2016.
  • Tangible book value per share increased 8% to $9.38 at December 31, 2017 from $8.70 at December 31, 2016.
  • Total non-performing assets decreased to 0.27% of total assets at December 31, 2017 from 0.42% of total assets at December 31, 2016.
  • On January 23, 2018, the Company declared a cash dividend of $0.10 per share to be paid on February 15, 2018 to stockholders of record as of February 5, 2018.

Earnings
Net income for the fourth quarter of 2017 was $13.2 million, a 10% increase compared to $12.0 million in 2016. EPS for the fourth quarter of 2017 was $0.27, a 4% increase compared to $0.26 in 2016. Excluding the $0.6 million one-time tax charge during the quarter, quarterly net income increased 15% and EPS increased 12%.

Net income for 2017 was $52.6 million, a 27% increase compared to $41.5 million in 2016. EPS for 2017 was $1.09, a 15% increase compared to $0.95 in 2016. Excluding merger related expenses incurred in 2016 and the $0.6 million one-time tax charge in 2017, net income increased 20% and EPS increased 9%.

Net Interest Income
Net interest income increased to $42.4 million for the fourth quarter of 2017, compared to $38.2 million for the fourth quarter of 2016 due primarily to the organic growth of earning assets.

Net interest income for 2017 was $165.2 million, as compared to $145.6 million in 2016. Total interest income increased $26.9 million primarily due to higher interest earning assets from organic growth and the merger with Harmony Bank in July 2016 (the “merger”). Total interest expense increased $7.3 million primarily due to the deposits acquired in the merger, continued organic deposit growth coupled with higher CD rates and the impact of the additional interest expense from the subordinated debt offering in September 2016.

Noninterest Income
Noninterest income totaled $5.8 million for the fourth quarter of 2017 compared to $5.2 million for the fourth quarter of 2016. This change was primarily due to increases in service charges on deposit accounts and income on additional bank owned life insurance policies.

In 2017, noninterest income totaled $25.4 million compared to $21.3 million in 2016. This increase was primarily due to $2.5 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, a $0.4 million increase on the sales of other real estate owned in 2017 and a $0.3 million gain on the payoff of an acquired loan in 2017, partially offset by a $0.3 million decline in gains on sales of loans during 2017.

Noninterest Expense
Noninterest expense totaled $25.8 million for the fourth quarter of 2017 compared to $24.8 million for the fourth quarter of 2016. The increase in noninterest expense was primarily due to additional salary and employee benefit expense from additional personnel and bonus accruals, partially offset by a decrease in other expenses.

In 2017, noninterest expense totaled $104.5 million, compared to $99.9 million 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 items, the resulting $5.9 million net increase in noninterest expense was primarily due to $5.1 million in increased salary and employee benefit expense related to additional headcount from the merger and new hiring as well as year-over-year salary increases and additional bonus accruals. This increase in salary and employee benefit expense was partially offset by a decrease in FDIC expense of $0.7 million.

Financial Condition
In 2017, total assets increased $312.5 million, or 6%, to $5.41 billion as total loans and leases grew $282.8 million, or 7%, to $4.16 billion, investment in bank owned life insurance grew $35.1 million, or 48%, to $107.5 million and investment securities increased $29.0 million, or 4%, to $798.4 million. On the funding side, total deposits grew $275.9 million, or 7%, to $4.37 billion. As of December 31, 2017, total loans and leases to total deposits was 95%.

Asset Quality
At December 31, 2017, non-performing assets totaled $14.5 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 December 31, 2017 from 0.53% at December 31, 2016. The allowance for loan and lease losses increased to $35.5 million at December 31, 2017 (0.85% of total loans and leases) compared to $31.2 million at December 31, 2016 (0.81% of total loans and leases). In 2017, the Company had net charge-offs of $1.9 million (0.05% of average loans and leases) compared to $3.9 million (0.11% of average loans and leases) in 2016. The 2017 provision for loan and lease losses was $6.1 million compared to $4.2 million in 2016.

Capital
At December 31, 2017, stockholders' equity was $583.1 million compared to $550.0 million at December 31, 2016, a 6% increase. At December 31, 2017, the book value per common share and tangible book value per common share were $12.31 and $9.38 compared to $11.65 and $8.70 at December 31, 2016.

Forward-Looking Statements
The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, the expected impact from the Tax Cuts and Jobs Act of 2017, 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 December 31, Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
INCOME STATEMENT
Net interest income $ 42,379 $ 38,179 $ 165,238 $ 145,649
Provision for loan and lease losses (1,218) (375) (6,090) (4,223)
Gains (losses) on sales of investment securities - - 2,524 370
Gains on sales of loans 489 525 1,836 2,123
Other noninterest income 5,287 4,636 21,075 18,837
Long-term debt prepayment fee - - (2,828) -
Merger related expenses - - - (4,103)
Other noninterest expense (25,849) (24,772) (101,706) (95,814)
Pretax income 21,088 18,193 80,049 62,839
Provision for income taxes (7,913) (6,240) (27,469) (21,321)
Net income $ 13,175 $ 11,953 $ 52,580 $ 41,518
Basic earnings per common share $ 0.28 $ 0.26 $ 1.10 $ 0.96
Diluted earnings per common share $ 0.27 $ 0.26 $ 1.09 $ 0.95
Dividends per common share $ 0.10 $ 0.095 $ 0.395 $ 0.37
Weighted average shares - basic 47,466 45,002 47,438 42,912
Weighted average shares - diluted 47,719 45,257 47,674 43,114
SELECTED OPERATING RATIOS
Annualized return on average assets 0.97% 0.95% 1.00% 0.90%
Annualized return on average common equity 8.99% 9.31% 9.25% 8.75%
Annualized return on average tangible common equity (1) 11.82% 12.83% 12.24% 12.19%
Annualized return on interest-earning assets 3.95% 3.74% 3.88% 3.82%
Annualized cost of interest-bearing liabilities 0.75% 0.62% 0.67% 0.54%
Annualized net interest spread 3.20% 3.12% 3.21% 3.28%
Annualized net interest margin 3.37% 3.27% 3.38% 3.41%
Efficiency ratio (1) 53.06% 56.35% 53.40% 56.48%
Stockholders' equity to total assets 10.79% 10.80%
Book value per common share $ 12.31 $ 11.65
Tangible book value per common share (1) $ 9.38 $ 8.70
Tangible common equity to tangible assets (1) 8.44% 8.30%
ASSET QUALITY RATIOS 12/31/2017 12/31/2016
Ratio of allowance for loan and lease losses to total loans and leases 0.85% 0.81%
Non-performing loans and leases to total loans and leases 0.33% 0.53%
Non-performing assets to total assets 0.27% 0.42%
Annualized net charge-offs to average loans and leases 0.05% 0.11%
SELECTED BALANCE SHEET DATA AT PERIOD-END 12/31/2017 12/31/2016
Loans and leases $ 4,156,680 $ 3,873,895
Allowance for loan and lease losses 35,455 31,245
Investment securities 798,396 769,417
Total assets 5,405,639 5,093,131
Total deposits 4,368,748 4,092,835
Short-term borrowings 124,936 56,354
Other borrowings 296,913 365,650
Stockholders' equity 583,122 550,044
SELECTED AVERAGE BALANCE SHEET DATAFor the Three Months Ended For the Twelve Months Ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
Loans and leases $ 4,116,920 $ 3,806,588 $ 4,024,257 $ 3,562,882
Investment securities 798,687 683,986 810,434 609,336
Interest-earning assets 5,014,333 4,680,156 4,926,986 4,295,384
Total assets 5,372,248 5,015,439 5,267,561 4,619,816
Noninterest-bearing demand deposits 988,451 951,418 959,298 852,629
Savings deposits 478,685 490,556 486,821 485,004
Interest-bearing transaction accounts 2,222,221 2,072,154 2,241,259 1,880,391
Time deposits 730,590 539,870 623,257 506,487
Total deposits 4,419,947 4,053,998 4,310,635 3,724,511
Short-term borrowings 43,130 27,538 41,695 36,242
Other borrowings 295,818 392,789 316,283 356,907
Total interest-bearing liabilities 3,770,444 3,522,907 3,709,315 3,265,031
Stockholders' equity 581,254 510,562 568,680 474,540
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended December 31, Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
INTEREST INCOME
Loans, leases and fees $ 44,889$ 40,090 $ 172,342$ 149,777
Federal funds sold and interest-bearing deposits with banks 262 228 880 569
Taxable investment securities and other 3,850 2,878 14,987 11,163
Tax exempt investment securities 460 487 1,995 1,787
TOTAL INTEREST INCOME 49,461 43,683 190,204 163,296
INTEREST EXPENSE
Deposits 5,039 3,017 16,600 10,512
Federal funds purchased and securities sold under agreements to repurchase 38 3 198 69
Other borrowings 2,005 2,484 8,168 7,066
TOTAL INTEREST EXPENSE 7,082 5,504 24,966 17,647
NET INTEREST INCOME 42,379 38,179 165,238 145,649
Provision for loan and lease losses 1,218 375 6,090 4,223
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 41,161 37,804 159,148 141,426
NONINTEREST INCOME
Service charges on deposit accounts 2,814 2,577 10,740 10,157
Commissions and fees 1,309 1,089 4,858 4,349
Income on bank owned life insurance 804 437 2,354 2,562
Gains on sales of loans 489 525 1,836 2,123
Gains on sales of investment securities - - 2,524 370
Other income 360 533 3,123 1,769
TOTAL NONINTEREST INCOME 5,776 5,161 25,435 21,330
NONINTEREST EXPENSE
Salaries and employee benefit expense 15,553 14,305 61,166 56,107
Net occupancy expense 2,573 2,534 10,243 9,935
Furniture and equipment expense 2,103 2,113 8,269 8,017
FDIC insurance expense 404 262 1,577 2,248
Stationary, supplies and postage expense 378 456 1,797 1,727
Marketing expense 324 549 1,675 1,672
Data processing expense 497 394 1,993 1,891
Telecommunications expense 451 342 1,607 1,631
ATM and debit card expense 547 433 2,051 1,582
Core deposit intangible amortization 165 202 654 734
Other real estate owned and other repossessed assets expense 73 83 181 116
Long-term debt prepayment fee - - 2,828 -
Merger related expenses - - - 4,103
Other expenses 2,781 3,099 10,493 10,154
TOTAL NONINTEREST EXPENSE 25,849 24,772 104,534 99,917
INCOME BEFORE PROVISION FOR INCOME TAXES 21,088 18,193 80,049 62,839
Provision for income taxes 7,913 6,240 27,469 21,321
NET INCOME $ 13,175$ 11,953 $ 52,580$ 41,518
EARNINGS PER COMMON SHARE
Basic $ 0.28$ 0.26 $ 1.10$ 0.96
Diluted $ 0.27$ 0.26 $ 1.09$ 0.95
DIVIDENDS PER COMMON SHARE $ 0.10$ 0.095 $ 0.395$ 0.37

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
December 31, December 31,
(Dollars in thousands) 2017 2016
(Unaudited)
ASSETS
Cash $ 114,138 $ 169,149
Interest-bearing deposits due from banks 28,795 6,652
Total cash and cash equivalents 142,933 175,801
Investment securities available for sale, at fair value 646,135 606,704
Investment securities held to maturity; fair value of $138,688 at December 31, 2017
and $146,990 at December 31, 2016 139,685 147,614
Federal Home Loan Bank and other membership stocks, at cost 12,576 15,099
Loans held for sale 456 1,742
Loans and leases:
Commercial, real estate 3,096,092 2,767,710
Commercial, industrial and other 340,400 350,228
Leases 75,039 67,016
Residential mortgages 322,880 349,581
Consumer and home equity 322,269 339,360
Total loans and leases 4,156,680 3,873,895
Net deferred costs (fees) (3,960) (3,297)
Allowance for loan and lease losses (35,455) (31,245)
Net loans and leases 4,117,265 3,839,353
Premises and equipment, net 50,313 52,236
Accrued interest receivable 14,416 12,557
Goodwill 136,433 135,747
Other identifiable intangible assets 2,362 3,344
Bank owned life insurance 107,489 72,384
Other assets 35,576 30,550
TOTAL ASSETS $ 5,405,639 $ 5,093,131
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing $ 967,335 $ 927,270
Savings and interest-bearing transaction accounts 2,663,985 2,620,657
Time deposits $250 thousand and under 556,863 404,680
Time deposits over $250 thousand 180,565 140,228
Total deposits 4,368,748 4,092,835
Federal funds purchased and securities sold under agreements to repurchase 124,936 56,354
Other borrowings 192,011 260,866
Subordinated debentures 104,902 104,784
Other liabilities 31,920 28,248
TOTAL LIABILITIES 4,822,517 4,543,087
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 70,000,000 shares;
issued 47,353,864 shares at December 31, 2017
and 47,222,914 shares at December 31, 2016 512,734 510,861
Retained earnings 72,737 38,590
Accumulated other comprehensive gain (loss) (2,349) 593
TOTAL STOCKHOLDERS' EQUITY 583,122 550,044
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,405,639 $ 5,093,131

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Dec 31,Sept 30,June 30,Mar 31,Dec 31,
(Dollars in thousands, except per share data) 2017 2017 2017 2017 2016
INCOME STATEMENT
Net interest income $ 42,379 $ 42,115 $ 41,421 $ 39,323 $ 38,179
Provision for loan and lease losses (1,218) (1,827) (1,827) (1,218) (375)
Gains (losses) on sales of investment securities - - (15) 2,539 -
Gains on sales of loans 489 478 471 398 525
Other noninterest income 5,287 4,976 5,655 5,157 4,636
Long-term debt prepayment fee - - - (2,828) -
Other noninterest expense (25,849) (24,849) (25,366) (25,642) (24,772)
Pretax income 21,088 20,893 20,339 17,729 18,193
Provision for income taxes (7,913) (7,170) (6,969) (5,417) (6,240)
Net income $ 13,175 $ 13,723 $ 13,370 $ 12,312 $ 11,953
Basic earnings per common share $ 0.28 $ 0.29 $ 0.28 $ 0.26 $ 0.26
Diluted earnings per common share $ 0.27 $ 0.29 $ 0.28 $ 0.26 $ 0.26
Dividends per common share $ 0.10 $ 0.10 $ 0.10 $ 0.095 $ 0.095
Dividends paid $ 4,776 $ 4,775 $ 4,775 $ 4,527 $ 4,265
Weighted average shares - basic 47,466 47,466 47,465 47,354 45,002
Weighted average shares - diluted 47,719 47,692 47,674 47,623 45,257
SELECTED OPERATING RATIOS
Annualized return on average assets 0.97% 1.03% 1.02% 0.97% 0.95%
Annualized return on average common equity 8.99% 9.48% 9.49% 9.02% 9.31%
Annualized return on average tangible common equity (1) 11.82% 12.51% 12.58% 12.04% 12.83%
Annualized net interest margin 3.37% 3.39% 3.41% 3.33% 3.27%
Efficiency ratio (1) 53.06% 51.72% 52.64% 56.36% 56.35%
Common stockholders' equity to total assets 10.79% 10.69% 10.58% 10.63% 10.80%
Tangible common equity to tangible assets (1) 8.44% 8.33% 8.20% 8.20% 8.30%
Tier 1 risk-based ratio 10.87% 10.82% 10.77% 10.73% 10.85%
Total risk-based ratio 13.40% 13.37% 13.32% 13.29% 13.48%
Tier 1 leverage ratio 9.12% 9.07% 8.99% 8.97% 9.07%
Common equity tier 1 capital ratio 10.18% 10.13% 10.06% 10.01% 10.11%
Book value per common share $ 12.31 $ 12.19 $ 11.99 $ 11.78 $ 11.65
Tangible book value per common share (1) $ 9.38 $ 9.25 $ 9.05 $ 8.84 $ 8.70
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Dec 31,Sept 30,June 30,Mar 31,Dec 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and leases $ 4,156,680 $ 4,092,893 $ 4,054,276 $ 3,974,718 $ 3,873,895
Allowance for loan and lease losses 35,455 33,925 32,823 31,590 31,245
Investment securities 798,396 795,096 830,531 847,833 769,417
Total assets 5,405,639 5,399,481 5,362,187 5,247,815 5,093,131
Total deposits 4,368,748 4,356,996 4,227,204 4,293,393 4,092,835
Short-term borrowings 124,936 133,960 118,487 84,850 56,354
Other borrowings 296,913 301,411 417,093 278,238 365,650
Stockholders' equity 583,122 577,081 567,545 557,642 550,044
LOANS AND LEASES
Commercial, real estate $ 3,096,092 $ 3,018,106 $ 2,955,596 $ 2,881,972 $ 2,767,710
Commercial, industrial and other 340,400 342,775 352,977 342,264 350,228
Leases 75,039 71,698 70,295 67,488 67,016
Residential mortgages 322,880 329,625 337,765 344,890 349,581
Consumer and home equity 322,269 330,689 337,643 338,104 339,360
Total loans and leases $ 4,156,680 $ 4,092,893 $ 4,054,276 $ 3,974,718 $ 3,873,895
DEPOSITS
Noninterest-bearing $ 967,335 $ 955,444 $ 978,668 $ 924,581 $ 927,270
Savings and interest-bearing transaction accounts 2,663,985 2,681,512 2,682,291 2,809,705 2,620,657
Time deposits 737,428 720,040 566,245 559,107 544,908
Total deposits $ 4,368,748 $ 4,356,996 $ 4,227,204 $ 4,293,393 $ 4,092,835
Total loans and leases to total deposits ratio 95.1% 93.9% 95.9% 92.6% 94.7%
SELECTED AVERAGE BALANCE SHEET DATA
Loans and leases $ 4,116,920 $ 4,060,838 $ 4,011,325 $ 3,905,216 $ 3,806,588
Investment securities 798,687 815,773 837,075 790,046 683,986
Interest-earning assets 5,014,333 4,957,856 4,907,488 4,825,855 4,680,156
Total assets 5,372,248 5,300,191 5,241,155 5,153,893 5,015,439
Noninterest-bearing demand deposits 988,451 971,143 954,966 921,770 951,418
Savings deposits 478,685 484,982 492,991 490,777 490,556
Interest-bearing transaction accounts 2,222,221 2,206,206 2,295,256 2,241,954 2,072,154
Time deposits 730,590 645,333 559,665 555,270 539,870
Total deposits 4,419,947 4,307,664 4,302,878 4,209,771 4,053,998
Short-term borrowings 43,130 42,172 52,951 28,358 27,538
Other borrowings 295,818 344,775 291,882 332,750 392,789
Total interest-bearing liabilities 3,770,444 3,723,468 3,692,745 3,649,109 3,522,907
Stockholders' equity 581,254 574,113 565,211 553,782 510,562

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
For the Quarter Ended
Dec 31,Sept 30,June 30,Mar 31,Dec 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans and leases 4.33% 4.33% 4.27% 4.20% 4.19%
Taxable investment securities and other 2.17% 2.09% 2.11% 2.13% 2.00%
Tax-exempt securities 3.21% 2.98% 2.86% 2.78% 2.75%
Federal funds sold and interest-bearing cash accounts 1.06% 1.03% 0.89% 0.85% 0.48%
Total interest-earning assets 3.95% 3.93% 3.88% 3.78% 3.74%
LIABILITIES
Savings accounts 0.06% 0.06% 0.06% 0.06% 0.06%
Interest-bearing transaction accounts 0.51% 0.49% 0.44% 0.38% 0.35%
Time deposits 1.17% 1.03% 0.86% 0.83% 0.84%
Borrowings 2.36% 2.20% 2.30% 2.37% 2.37%
Total interest-bearing liabilities 0.75% 0.71% 0.63% 0.60% 0.62%
Net interest spread (taxable equivalent basis) 3.20% 3.22% 3.25% 3.18% 3.12%
Annualized net interest margin (taxable equivalent basis) 3.37% 3.39% 3.41% 3.33% 3.27%
Annualized cost of deposits 0.45% 0.41% 0.35% 0.32% 0.30%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN AND LEASE LOSSES
Balance at beginning of period $ 33,925 $ 32,823 $ 31,590 $ 31,245 $ 31,369
Provision for loan and lease losses 1,218 1,827 1,827 1,218 375
Charge-offs (347) (869) (870) (1,360) (795)
Recoveries 659 144 276 487 296
Balance at end of period $ 35,455 $ 33,925 $ 32,823 $ 31,590 $ 31,245
NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)
Commercial, real estate $ 132 $ 285 $ (67)$ 595 $ (87)
Commercial, industrial and other 25 168 44 68 (96)
Leases 34 80 92 39 42
Residential mortgages 31 95 169 141 231
Consumer and home equity (534) 97 356 30 409
Net charge-offs (recoveries) $ (312)$ 725 $ 594 $ 873 $ 499
NON-PERFORMING ASSETS
Commercial, real estate $ 7,362 $ 6,820 $ 10,240 $ 10,443 $ 11,885
Commercial, industrial and other 184 172 378 136 167
Leases 144 110 81 179 153
Residential mortgages 3,860 4,410 3,857 4,715 6,048
Consumer and home equity 2,105 2,033 1,689 2,270 2,151
Total non-accrual loans and leases 13,655 13,545 16,245 17,743 20,404
Property acquired through foreclosure or repossession 843 1,168 1,415 710 1,072
Total non-performing assets $ 14,498 $ 14,713 $ 17,660 $ 18,453 $ 21,476
Loans past due 90 days or more and still accruing$ 200 $ 9 $ 20 $- $ 10
Loans restructured and still accruing $ 11,462 $ 11,279 $ 11,697 $ 11,553 $ 8,802
Ratio of allowance for loan and lease losses to total loans and leases 0.85% 0.83% 0.81% 0.79% 0.81%
Total non-accrual loans and leases to total loans and leases 0.33% 0.33% 0.40% 0.45% 0.53%
Total non-performing assets to total assets 0.27% 0.27% 0.33% 0.35% 0.42%
Annualized net charge-offs (recoveries) to average loans and leases -0.03% 0.07% 0.06% 0.09% 0.05%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
At or for the Quarter Ended
Dec 31,Sept 30,June 30,Mar 31,Dec 31,
(Dollars in thousands, except per share amounts) 2017 2017 2017 2017 2016
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP$ 583,122 $ 577,081 $ 567,545 $ 557,642 $ 550,044
Less: Goodwill 136,433 136,433 136,433 135,747 135,747
Less: Other identifiable intangible assets 2,362 2,526 2,631 3,149 3,344
Total tangible common stockholders' equity at end of period - Non-GAAP$ 444,327 $ 438,122 $ 428,481 $ 418,746 $ 410,953
Shares outstanding at end of period 47,354 47,353 47,353 47,350 47,223
Book value per share - GAAP $ 12.31 $ 12.19 $ 11.99 $ 11.78 $ 11.65
Tangible book value per share - Non-GAAP $ 9.38 $ 9.25 $ 9.05 $ 8.84 $ 8.70
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP$ 444,327 $ 438,122 $ 428,481 $ 418,746 $ 410,953
Total assets at end of period - GAAP $ 5,405,639 $ 5,399,481 $ 5,362,187 $ 5,247,815 $ 5,093,131
Less: Goodwill 136,433 136,433 136,433 135,747 135,747
Less: Other identifiable intangible assets 2,362 2,526 2,631 3,149 3,344
Total tangible assets at end of period - Non-GAAP$ 5,266,844 $ 5,260,522 $ 5,223,123 $ 5,108,919 $ 4,954,040
Common equity to assets - GAAP 10.79% 10.69% 10.58% 10.63% 10.80%
Tangible common equity to tangible assets - Non-GAAP 8.44% 8.33% 8.20% 8.20% 8.30%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 13,175 $ 13,723 $ 13,370 $ 12,312 $ 11,953
Total average common stockholders' equity - GAAP$ 581,254 $ 574,113 $ 565,211 $ 553,782 $ 510,562
Less: Average goodwill 136,433 136,433 135,755 135,747 136,385
Less: Average other identifiable intangible assets 2,450 2,606 3,069 3,276 3,459
Total average tangible common stockholders' equity - Non-GAAP$ 442,371 $ 435,074 $ 426,387 $ 414,759 $ 370,718
Return on average common stockholders' equity - GAAP 8.99% 9.48% 9.49% 9.02% 9.31%
Return on average tangible common stockholders' equity - Non-GAAP 11.82% 12.51% 12.58% 12.04% 12.83%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 25,849 $ 24,849 $ 25,366 $ 28,470 $ 24,772
Amortization of core deposit intangibles (165) (104) (190) (195) (202)
Long-term debt prepayment fee - - - (2,828) -
Merger related expenses - - - - -
Noninterest expense, as adjusted $ 25,684 $ 24,745 $ 25,176 $ 25,447 $ 24,570
Net interest income $ 42,379 $ 42,115 $ 41,421 $ 39,323 $ 38,179
Total noninterest income 5,776 5,454 6,111 8,094 5,161
Total revenue 48,155 47,569 47,532 47,417 43,340
Tax-equivalent adjustment on municipal securities 247 271 281 275 262
(Gains) losses on sales of investment securities - - 15 (2,539) -
Total revenue, as adjusted $ 48,402 $ 47,840 $ 47,828 $ 45,153 $ 43,602
Efficiency ratio - Non-GAAP 53.06% 51.72% 52.64% 56.36% 56.35%
For the Quarter EndedFor the Twelve Months Ended
Dec 31,Dec 31,Dec 31,Dec 31,
(Dollars in thousands, except per share amounts) 2017 2016 2017 2016
RECONCILIATION OF EARNINGS PER SHARE
Net income - GAAP $ 13,175 $ 11,953 $ 52,580 $ 41,518
NON-ROUTINE TRANSACTIONS, NET OF TAX
One-time impact of Tax Cuts and Jobs Act of 2017 602 - 602 -
Tax deductible merger related expenses - - - 1,915
Non-tax deductible merger related expenses - - - 866
Net effect of non-routine transactions 602 - 602 2,781
Net income available to common shareholders excluding non-routine transactions 13,777 11,953 53,182 44,299
Less: Earnings allocated to participating securities (118) (122) (480) (396)
$ 13,659 $ 11,831 $ 52,702 $ 43,903
Weighted average shares - Basic 47,466 45,002 47,438 42,912
Weighted average shares - Diluted 47,719 45,257 47,674 43,114
Basic earnings per share - GAAP $ 0.28 $ 0.26 $ 1.10 $ 0.96
Diluted earnings per share - GAAP $ 0.27 $ 0.26 $ 1.09 $ 0.95
Basic earnings per share, adjusted for non-routine transactions$ 0.29 $ 0.26 $ 1.11 $ 1.02
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)
$ 0.29 $ 0.26 $ 1.11 $ 1.02

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
For the Twelve Months Ended,
Dec 31,Dec 31,
(Dollars in thousands) 2017 2016
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP $ 52,580 $ 41,518
Total average common stockholders' equity - GAAP $ 568,680 $ 474,540
Less: Average goodwill 136,095 130,689
Less: Average other identifiable intangible assets 2,847 3,225
Total average tangible common stockholders' equity - Non-GAAP $ 429,738 $ 340,626
Return on average common stockholders' equity - GAAP 9.25% 8.75%
Return on average tangible common stockholders' equity - Non-GAAP 12.24% 12.19%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense $ 104,534 $ 99,917
Amortization of core deposit intangibles (654) (734)
Long-term debt prepayment fee (2,828) -
Merger related expenses - (4,103)
Provision for unfunded lending commitments - (438)
Noninterest expense, as adjusted $ 101,052 $ 94,642
Net interest income $ 165,238 $ 145,649
Noninterest income 25,435 21,330
Total revenue 190,673 166,979
Tax-equivalent adjustment on municipal securities 1,074 962
Gains on sales of investment securities (2,524) (370)
Total revenue, as adjusted $ 189,223 $ 167,571
Efficiency ratio - Non-GAAP 53.40% 56.48%



Source:Lakeland Bancorp, Inc.

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