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Lakeland Bancorp Reports Strong Second Quarter Results and Announces Gain on Early Extinguishment of Debt

OAK RIDGE, N.J., July 25, 2013 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (Nasdaq:LBAI) reported Net Income Available to Common Shareholders in the second quarter of 2013 of $5.9 million or $0.19 per diluted share compared to $5.5 million, or $0.20 per diluted share for the same period last year. Second quarter results included $1.5 million in merger expenses relating to the acquisition of Somerset Hills Bancorp. Excluding merger expenses, Net Income Available to Common Shareholders was $6.9 million, or $0.22 per diluted share. Second quarter results also included a $1.2 million pre-tax gain on the purchase and early extinguishment of $9.0 million of trust preferred securities previously issued. Net Income Available to Common Shareholders for the first six months of 2013 was $11.0 million or $0.36 per diluted share compared to $9.8 million, or $0.36 per diluted share for the same period last year. Excluding merger costs, Net Income Available to Common Shareholders was $12.6 million or $0.41 per diluted share for the first six months of 2013. The Return on Average Assets for the six months ended June 30, 2013 was 0.76%, the Return on Average Common Equity was 7.55% and the Return on Tangible Common Equity was 10.96%.

The Company declared a quarterly cash dividend of $0.07 per common share, payable on August 15, 2013 to holders of record as of the close of business on August 5, 2013.

Thomas J. Shara, Lakeland Bancorp's President and CEO said, "We are extremely pleased with the consummation of the merger with Somerset Hills Bancorp in the second quarter of 2013. After this acquisition, which increased our total assets to $3.3 billion, our footprint of 52 branches now extends into eight counties in the northern part of the state, including Somerset and Union. Additionally, our core earnings in the second quarter of 2013 were strong, driven by a stable Net Interest Margin and improved asset quality."

Somerset Hills Bancorp Acquisition

The Somerset Hills acquisition, which was consummated on May 31, 2013, added six full service branches, $355.9 million in total assets, $10.4 million in investment securities, $246.4 million in loans (including $2.5 million in mortgages held for sale), and $311.8 million in deposits ($80.8 million in non-interest bearing demand deposits and $231.0 million in interest-bearing deposits) at fair value. Goodwill amounted to $23.3 million and Core Deposit Intangibles were $2.7 million. Accordingly, the Company's financial statements reflect the impact of the merger from the date of acquisition, which should be considered when comparing comparable periods for net income in the second quarter of 2013 and six month's ended June 30, 2013. Merger related costs totaled $1.5 million and $2.1 million, respectively, for the second quarter of 2013 and first six months of 2013.

Earnings

Net Interest Income

Net interest income for the second quarter of 2013 was $25.1 million, as compared to $23.7 million for the same period in 2012. Annualized Net Interest Margin ("NIM") has been stable for the last five quarters. In the second quarter of 2013, NIM was 3.68%, which compared to 3.71% reported in the first quarter of 2013, and 3.70% in the second quarter of 2012. The annualized yield on interest-earning assets declined to 4.04% in the second quarter of 2013 compared to 4.35% for the same period last year. The annualized cost of interest-bearing liabilities decreased from 0.81% in the second quarter of 2012 to 0.47% in the second quarter of 2013.

Year-to-date, net interest income at $49.1 million compared to the $47.7 million reported for the first six months of 2012. Annualized Net Interest Margin for the first six months of 2013 at 3.69% compared to 3.73% for the same period last year. The Company's annualized yield on earning assets decreased from 4.39% for the first six months of 2012, to 4.07% for the same period this year. The Company's cost of interest bearing liabilities decreased from 0.82% for the first six months of 2012 to 0.49% for the first six months of this year.

Noninterest Income

Noninterest income, exclusive of gains on sales of investment securities, totaled $5.8 million for the second quarter of 2013, as compared to $4.5 million for the same period last year. In the second quarter of 2013, the Company acquired and extinguished Lakeland Bancorp Capital Trust I trust preferred securities having a notional value of $9.0 million, recording a $1.2 million gain on this transaction, or $0.03 per diluted share. The interest rate on this floating rate borrowing at the time of the extinguishment was 3.38%. In the second quarter of 2013, the Company recorded $1 thousand on gains on sales of investment securities, as compared to $241,000 on gains for the same period last year. Service charges on deposit accounts totaling $2.7 million were equivalent to the same period last year, while commissions and fees at $1.1 million decreased by $116,000 primarily due to reduced loan fees. Other income at $420,000 was $198,000, or 89% higher, primarily due to gains on sale of mortgage loans.

Noninterest income, exclusive of gains on sales of investment securities and the aforementioned gain on the acquisition and extinguishment of the referenced trust preferred issue, totaled $9.1 million for the first six months of 2013, which was $586,000 higher than last year's six month total. Gains on investment securities totaled $506,000 in 2013 as compared to $273,000 in 2012. Service charges on deposit accounts at $5.2 million were equivalent to last year's total, while commissions and fees at $2.4 million increased by $117,000, primarily due to increased investment commission income. Other income at $918,000 increased by $437,000 primarily due to an increase in gains on sales of mortgage loans.

Noninterest Expense

Noninterest expense for the second quarter of 2013 was $19.4 million, as compared to $16.5 million for the same period last year. Included in non-interest expenses in the second quarter of 2013 were $1.5 million in merger related expenses and one month's expenses post acquisition. Salary and benefit expense at $10.1 million increased by 3% in the second quarter this year excluding Somerset. Occupancy, furniture and equipment expense at $3.4 million increased by $617,000, or 22%, primarily due to the opening of a Training and Operations Center in the latter part of the second quarter last year, a new branch opening in the fourth quarter of 2012, as well as increases in service agreement and depreciation costs resulting from the updating of the bank's computer systems. Other expenses at $2.7 million increased $345,000, including an increase in data processing expenses of $148,000 reflecting technological improvements as well as Somerset costs. The efficiency ratio for the second quarter of 2013 was 59.7%.

For the first six months of 2013, non-interest expenses, exclusive of $2.1 million in merger related expenses and $526,000 in prepayment fees on long-term debt recorded in the first quarter of 2013, totaled $35.0 million, compared to $32.7 million in 2012. Salary and benefit costs at $20.1 million increased 6%, while occupancy, furniture and equipment expenses at $6.8 million increased by $1.2 million, primarily for the same reasons outlined in the three month analysis. Marketing expense at $723,000 decreased by $205,000, while legal expenses at $528,000 decreased by $217,000 reflecting the improvement in asset quality.

Financial Condition

At June 30, 2013, total assets were $3.26 billion, an increase of $343.7 million from December 31, 2012, or 12%. This includes Somerset Hills' assets of $355.9 million. Total loans were $2.45 billion, an increase of $302.8 million from $2.15 billion at year-end 2012. Somerset Hills' loans, including mortgages held for sale, totaled $246.4 million. Excluding Somerset Hills, total loans have increased by 3%, primarily in commercial real estate loans. Total deposits were $2.67 billion, an increase of $301.9 million from December 31, 2012. Somerset Hills' deposits totaled $311.8 million. Noninterest bearing demand deposits, excluding $80.8 million in Somerset Hills' demand deposits, have increased by $22.0 million or 4% from year-end 2012.

Asset Quality

At June 30, 2013, non-performing assets totaled $20.1 million (0.62% of total assets) compared to $25.8 million (0.89% of total assets) at March 31, 2013, a decline of 22%. The Allowance for Loan and Lease Losses totaled $29.6 million at June 30, 2013 and represented 1.21% of total loans (1.34% excluding Somerset). In the second quarter of 2013, the Company had net charge offs totaling $2.6 million. For the first six months of 2013, the Company had net charge-offs of $5.1 million, or 0.46% of average loans, as compared to $8.3 million for the same period last year.

Capital

At June 30, 2013, stockholders' equity was $341.1 million and book value per common share was $9.55. As of June 30, 2013, the Company's leverage ratio was 9.43%. Tier I and total risk based capital ratios were 11.53% and 12.78%, respectively. The Tangible Common Equity ratio was 7.24%, an increase from 6.84% reported at December 31, 2012. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words "anticipates", "projects", "intends", "estimates", "expects", "believes", "plans", "may", "will", "should", "could", and other similar expressions are intended to identify such forward-looking statements. Lakeland cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company's markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company's lending and leasing activities, customers' acceptance of the Company's products and services, competition and the failure to realize anticipated efficiencies and synergies of the merger between Lakeland Bancorp, Inc. and Somerset Hills Bancorp. Any statements made by Lakeland that are not historical facts should be considered to be forward-looking statements. Lakeland is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

EXPLANATION OF NON-GAAP FINANCIAL MEASURES

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The Company's management believes that the supplemental non-GAAP information, which consists of measurements and ratios based on tangible equity and tangible assets, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, expenses on other real estate owned and other repossessed assets, provision for unfunded lending commitments and, where applicable, long-term debt prepayment fees and merger related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes securities gains and losses and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a better comparison of period to period operating performance.

About Lakeland Bank

Lakeland Bancorp, the holding company for Lakeland Bank, has $3.3 billion in total assets with 52 offices spanning eight northern New Jersey counties: Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren. Lakeland Bank is the second largest commercial bank headquartered in the state and offers an extensive array of consumer and commercial products and services, including online and mobile banking, localized commercial lending teams, and 24-hour or less turnaround time on consumer loan applications. For more information about the full line of products and services, visit LakelandBank.com.

Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)
Three Months Ended June 30, Six months Ended June 30,
2013 2012 2013 2012
(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income $ 25,146 $ 23,748 $ 49,082 $ 47,694
Provision for Loan and Lease Losses (2,594) (3,877) (5,777) (8,433)
Noninterest Income (excluding investment securities gains/losses) 4,595 4,530 9,141 8,555
Gains on investment securities 1 241 506 273
Gain on debt extinguishment 1,197 -- 1,197 --
Long-term debt prepayment fee -- ` (526) --
Merger related expenses (1,452) -- (2,083) --
Noninterest Expense (17,941) (16,470) (35,011) (32,745)
Pretax Income 8,952 8,172 16,529 15,344
Tax Expense (3,049) (2,719) (5,518) (4,920)
Net Income $ 5,903 $ 5,453 $ 11,011 $ 10,424
Dividends on Preferred Stock and Discount Accretion -- -- -- (620)
Net Income Available to Common Stockholders $ 5,903 $ 5,453 $ 11,011 $ 9,804
Basic Earnings Per Common Share (1) $ 0.19 $ 0.20 $ 0.36 $ 0.36
Diluted Earnings Per Common Share (1) $ 0.19 $ 0.20 $ 0.36 $ 0.36
Dividends per Common Share (1) $ 0.07 $ 0.06 $ 0.14 $ 0.12
Weighted Average Shares - Basic (1) 31,527 26,737 30,551 26,719
Weighted Average Shares - Diluted (1) 31,618 26,800 30,627 26,774
SELECTED OPERATING RATIOS
Annualized Return on Average Assets 0.79% 0.78% 0.76% 0.75%
Annualized Return on Average Common Equity 7.76% 8.94% 7.55% 8.59%
Annualized Return on Average Tangible Common Equity (3) 11.31% 13.87% 10.96% 13.35%
Annualized Return on Interest Earning Assets 4.04% 4.35% 4.07% 4.39%
Annualized Cost of Interest Bearing Liabilities 0.47% 0.81% 0.49% 0.82%
Annualized Net Interest Spread 3.58% 3.54% 3.59% 3.57%
Annualized Net Interest Margin 3.68% 3.70% 3.69% 3.73%
Efficiency ratio (3) 59.70% 57.18% 59.77% 57.44%
Stockholders' equity to total assets 10.46% 8.65%
Book value per common share (1) (2) $ 9.55 $ 9.15
Tangible book value per common share (1) (2) (3) $ 6.39 $ 5.92
Tangible common equity to tangible assets (2) (3) 7.24% 5.78%
ASSET QUALITY RATIOS 6/30/2013 12/31/2012
Ratio of allowance for loan and lease losses to total loans 1.21% 1.35%
Non-performing loans to total loans 0.81% 1.30%
Non-performing assets to total assets 0.62% 0.98%
Annualized net charge-offs to average loans 0.46% 0.54%
SELECTED BALANCE SHEET DATA AT PERIOD-END 6/30/2013 12/31/2012
Loans and Leases $ 2,450,038 $ 2,147,207
Allowance for Loan and Lease Losses (29,626) (28,931)
Investment Securities 500,204 496,017
Total Assets 3,262,411 2,918,703
Total Deposits 2,672,859 2,370,997
Short-Term Borrowings 116,627 117,289
Other Borrowings 117,548 136,548
Stockholders' Equity 341,109 280,867
SELECTED AVERAGE BALANCE SHEET DATA For the Three Months Ended For the Six Months Ended
6/30/2013 6/30/2012 6/30/2013 6/30/2012
Loans and Leases, net $ 2,264,713 $ 2,077,813 $ 2,200,838 $ 2,063,953
Investment Securities 470,018 502,931 472,904 511,485
Interest-Earning Assets 2,765,229 2,605,294 2,704,284 2,599,719
Total Assets 3,001,360 2,820,789 2,935,053 2,813,493
Non Interest-Bearing Demand Deposits 542,976 473,853 522,708 461,407
Savings Deposits 369,703 352,095 363,739 345,158
Interest-Bearing Transaction Accounts 1,284,233 1,141,263 1,255,333 1,139,163
Time Deposits 311,230 332,669 306,719 341,806
Total Deposits 2,508,142 2,299,880 2,448,499 2,287,534
Short-Term Borrowings 48,652 71,558 49,143 70,085
Other Borrowings 125,268 190,478 129,336 194,515
Total Interest-Bearing Liabilities 2,139,086 2,088,062 2,104,270 2,090,727
Stockholders' Equity 304,950 245,253 293,934 247,964
Common Stockholders' Equity 304,950 245,253 293,934 244,105
(1) Adjusted for 5% stock dividend paid on April 16, 2012 to shareholders of record March 30, 2012.
(2) Excludes preferred stock
(3) See supplemental information - non-GAAP financial measures
Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2013 2012 2013 2012
(dollars in thousands, except per share amounts)
INTEREST INCOME
Loans and fees $25,365 $25,272 $49,772 $50,730
Federal funds sold and interest bearing deposits with banks 17 6 30 12
Taxable investment securities and other 1,808 2,207 3,527 4,547
Tax exempt investment securities 440 453 870 943
TOTAL INTEREST INCOME 27,630 27,938 54,199 56,232
INTEREST EXPENSE
Deposits 1,560 2,139 3,222 4,395
Federal funds purchased and securities sold under agreements to repurchase 13 28 22 56
Other borrowings 911 2,023 1,873 4,087
TOTAL INTEREST EXPENSE 2,484 4,190 5,117 8,538
NET INTEREST INCOME 25,146 23,748 49,082 47,694
Provision for loan and lease losses 2,594 3,877 5,777 8,433
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES 22,552 19,871 43,305 39,261
NONINTEREST INCOME
Service charges on deposit accounts 2,692 2,710 5,214 5,157
Commissions and fees 1,143 1,259 2,356 2,239
Gains on sales of investment securities 1 241 506 273
Gain on debt extinguishment 1,197 -- 1,197 --
Income on bank owned life insurance 340 339 653 678
Other income 420 222 918 481
TOTAL NONINTEREST INCOME 5,793 4,771 10,844 8,828
NONINTEREST EXPENSE
Salaries and employee benefits 10,133 9,565 20,086 19,000
Net occupancy expense 1,887 1,636 3,861 3,324
Furniture and equipment 1,505 1,139 2,910 2,222
Stationery, supplies and postage 368 355 738 691
Marketing expense 435 458 723 928
FDIC insurance expense 556 546 1,069 1,101
Legal expense 286 346 528 745
Other real estate owned and other repossessed asset expense (2) 38 17 76
Long-term debt prepayment fee -- -- 526 --
Merger related expenses 1,452 -- 2,083 --
Core deposit intangible amortization 41 -- 41 --
Other expenses 2,732 2,387 5,038 4,658
TOTAL NONINTEREST EXPENSE 19,393 16,470 37,620 32,745
INCOME BEFORE PROVISION FOR INCOME TAXES 8,952 8,172 16,529 15,344
Provision for income taxes 3,049 2,719 5,518 4,920
NET INCOME $5,903 $5,453 $11,011 $10,424
Dividends on Preferred Stock and Discount Accretion -- -- -- 620
Net Income Available to Common Stockholders $5,903 $5,453 $11,011 $9,804
EARNINGS PER COMMON SHARE
Basic $0.19 $0.20 $0.36 $0.36
Diluted $0.19 $0.20 $0.36 $0.36
DIVIDENDS PER COMMON SHARE $0.07 $0.06 $0.14 $0.12
Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 2013 2012
(dollars in thousands) (unaudited)
Cash and due from banks $102,260 $100,926
Federal funds sold and interest-bearing deposits due from banks 7,147 6,619
Total cash and cash equivalents 109,407 107,545
Investment securities available for sale, at fair value 397,763 393,710
Investment securities held to maturity; fair value of $96,105 in 2013 and $99,784 in 2012 96,466 96,925
Federal Home Loan Bank Stock, at cost 5,975 5,382
Loans:
Commercial, secured by real estate 1,394,698 1,171,409
Commercial, industrial and other 234,022 216,129
Leases 33,330 26,781
Residential mortgages 445,584 423,262
Consumer and home equity 340,010 309,626
Loans held for sale 2,394 --
Total loans 2,450,038 2,147,207
Deferred cost (1,012) (364)
Allowance for loan and lease losses (29,626) (28,931)
Net loans 2,419,400 2,117,912
Premises and equipment, net 37,883 33,280
Accrued interest receivable 8,629 7,643
Goodwill 110,381 87,111
Other identifiable intangible assets 2,671 --
Bank owned life insurance 55,152 46,143
Other assets 18,684 23,052
TOTAL ASSETS $3,262,411 $2,918,703
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest bearing $600,868 $498,066
Savings and interest-bearing transaction accounts 1,739,943 1,569,139
Time deposits under $100,000 194,666 188,278
Time deposits $100,000 and over 137,382 115,514
Total deposits 2,672,859 2,370,997
Federal funds purchased and securities sold under agreements to repurchase 116,627 117,289
Other borrowings 75,000 85,000
Subordinated debentures 42,548 51,548
Other liabilities 14,268 13,002
TOTAL LIABILITIES 2,921,302 2,637,836
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 70,000,000 shares; issued 35,736,046 shares at June 30, 2013 and 29,941,967 shares at December 31, 2012 361,797 303,794
Accumulated Deficit (17,305) (24,145)
Treasury shares, at cost, 34,595 shares at June 30, 2013 and 216,077 shares at December 31, 2012 (428) (2,718)
Accumulated other comprehensive (loss) gain (2,955) 3,936
TOTAL STOCKHOLDERS' EQUITY 341,109 280,867
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,262,411 $2,918,703
Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)
For the Quarter Ended
Jun 30, Mar 31, Dec 31, Sept 30, Jun 30,
(dollars in thousands, except per share data) 2013 2013 2012 2012 2012
INCOME STATEMENT (unaudited)
Net Interest Income $ 25,146 $ 23,936 $ 24,164 $ 23,655 $ 23,748
Provision for Loan and Lease Losses (2,594) (3,183) (3,124) (3,350) (3,877)
Noninterest Income (excluding investment securities gains) 4,595 4,546 4,661 4,640 4,530
Gains on investment securities 1 505 776 -- 241
Gain on debt extinguishment 1,197 -- -- -- --
Long-term debt prepayment fee -- (526) (782) -- --
Merger related expenses (1,452) (631) -- -- --
Core deposit intangible amortization (41) -- -- -- --
Noninterest Expense, excluding long-term debt prepayment fee (17,900) (17,070) (17,178) (16,968) (16,470)
Pretax Income 8,952 7,577 8,517 7,977 8,172
Tax Expense (3,049) (2,469) (2,688) (2,488) (2,719)
Net Income Available to Common Stockholders $ 5,903 $ 5,108 $ 5,829 $ 5,489 $ 5,453
Basic Earnings Per Common Share (1) $ 0.19 $ 0.17 $ 0.20 $ 0.20 $ 0.20
Diluted Earnings Per Common Share (1) $ 0.19 $ 0.17 $ 0.20 $ 0.20 $ 0.20
Dividends Per Common Share (1) $ 0.07 $ 0.07 $ 0.07 $ 0.06 $ 0.06
Weighted Average Shares - Basic (1) 31,527 29,563 29,467 27,550 26,737
Weighted Average Shares - Diluted (1) 31,618 29,625 29,566 27,642 26,800
SELECTED OPERATING RATIOS
Annualized Return on Average Assets 0.79% 0.72% 0.81% 0.77% 0.78%
Annualized Return on Average Common Equity 7.76% 7.33% 8.30% 8.48% 8.94%
Annualized Return on Tangible Common Equity (2) 11.31% 10.59% 12.06% 12.81% 13.87%
Annualized Net Interest Margin 3.68% 3.71% 3.67% 3.66% 3.70%
Efficiency ratio (2) 59.70% 59.85% 59.49% 58.91% 57.18%
Common stockholders' equity to total assets 10.46% 9.76% 9.62% 9.71% 8.65%
Tangible common equity to tangible assets (2) 7.24% 6.98% 6.84% 6.87% 5.78%
Tier 1 risk-based ratio 11.53% 11.60% 11.52% 12.24% 10.21%
Total risk-based ratio 12.78% 12.85% 12.77% 14.14% 12.59%
Tier 1 leverage ratio 9.43% 8.77% 8.62% 9.05% 7.62%
Book value per common share (1) $ 9.55 $ 9.51 $ 9.45 $ 9.35 $ 9.15
Tangible book value per common share (1) (2) $ 6.39 $ 6.59 $ 6.52 $ 6.41 $ 5.92
(1) Adjusted for 5% stock dividend paid on April 16, 2012 to shareholders of record March 30, 2012.
(2) See Supplemental Information - Non GAAP financial measures
Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)
For the Quarter Ended
Jun 30 Mar 31, Dec 31, Sept 30, Jun 30,
(dollars in thousands) 2013 2013 2012 2012 2012
(unaudited)
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and Leases $ 2,450,038 $ 2,171,456 $ 2,147,207 $ 2,064,913 $ 2,088,695
Allowance for Loan and Lease Losses (29,626) (29,623) (28,931) (28,669) (28,543)
Investment Securities 500,204 472,479 496,017 521,294 516,432
Total Assets 3,262,411 2,907,969 2,918,703 2,859,647 2,853,202
Total Deposits 2,672,859 2,388,675 2,370,997 2,341,108 2,277,400
Short-Term Borrowings 116,627 94,315 117,289 54,581 92,958
Other Borrowings 117,548 126,548 136,548 172,322 222,322
Stockholders' Equity 341,109 283,877 280,867 277,544 246,941
Loans and Leases
Commercial real estate $ 1,394,698 $ 1,214,467 $ 1,171,409 $ 1,107,907 $ 1,116,726
Commercial, industrial and other 234,022 211,078 216,129 201,308 216,406
Leases 33,330 28,190 26,781 26,548 25,603
Residential mortgages 445,584 412,006 423,262 419,685 421,338
Consumer and Home Equity 340,010 305,715 309,626 309,465 308,622
Total loans $ 2,447,644 $ 2,171,456 $ 2,147,207 $ 2,064,913 $ 2,088,695
Deposits
Noninterest bearing $ 600,868 $ 521,045 $ 498,066 $ 485,256 $ 474,233
Savings and interest-bearing transaction accounts 1,739,943 1,566,421 1,569,139 1,535,422 1,476,127
Time deposits under $100,000 194,666 184,356 188,278 196,939 201,817
Time deposits $100,000 and over 137,382 116,853 115,514 123,491 125,223
Total deposits $ 2,672,859 $ 2,388,675 $ 2,370,997 $ 2,341,108 $ 2,277,400
SELECTED AVERAGE BALANCE SHEET DATA
Loans and Leases, net $ 2,264,713 $ 2,136,254 $ 2,103,204 $ 2,062,928 $ 2,077,813
Investment Securities 470,018 475,823 499,455 501,862 502,931
Interest-Earning Assets 2,765,229 2,642,662 2,642,185 2,598,061 2,605,294
Total Assets 3,001,360 2,868,011 2,876,470 2,827,885 2,820,789
Non Interest-Bearing Demand Deposits 542,976 502,214 497,906 477,311 473,853
Savings Deposits 369,703 357,709 350,557 350,135 352,095
Interest-Bearing Transaction Accounts 1,284,233 1,226,112 1,236,294 1,169,953 1,141,263
Time Deposits 311,230 302,159 309,724 324,355 332,669
Total Deposits 2,508,142 2,388,194 2,394,481 2,321,754 2,299,880
Short-Term Borrowings 48,652 49,641 48,441 50,180 71,558
Other Borrowings 125,268 133,449 139,996 184,023 190,478
Total Interest-Bearing Liabilities 2,139,086 2,069,069 2,085,011 2,078,647 2,088,062
Stockholders' Equity 304,950 282,796 279,422 257,557 245,253
Common Stockholders' Equity 304,950 282,796 279,422 257,557 245,253
Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)
For the Quarter Ended
Jun 30, Mar 31, Dec 31, Sept 30, Jun 30,
(dollars in thousands) 2013 2013 2012 2012 2012
(unaudited)
AVERAGE ANNUALIZED YIELDS (taxable equivalent basis)
Assets:
Loans and leases 4.49% 4.63% 4.70% 4.81% 4.89%
Taxable investment securities and other 1.82% 1.70% 1.78% 1.96% 2.03%
Tax-exempt securities 3.67% 3.71% 3.86% 3.84% 4.09%
Federal funds sold and interest-bearing cash accounts 0.22% 0.17% 0.22% 0.20% 0.10%
Total interest-earning assets 4.04% 4.11% 4.14% 4.25% 4.35%
Liabilities:
Savings accounts 0.06% 0.07% 0.10% 0.10% 0.11%
Interest-bearing transaction accounts 0.30% 0.32% 0.36% 0.40% 0.44%
Time deposits 0.70% 0.81% 0.91% 0.94% 0.97%
Borrowings 2.13% 2.12% 2.43% 3.10% 3.13%
Total interest-bearing liabilities 0.47% 0.51% 0.59% 0.74% 0.81%
Net interest spread (taxable equivalent basis) 3.58% 3.60% 3.55% 3.51% 3.54%
Annualized Net Interest Margin (taxable equivalent basis) 3.68% 3.71% 3.67% 3.66% 3.70%
Annualized Cost of Deposits 0.25% 0.28% 0.32% 0.35% 0.37%
ASSET QUALITY DATA
Allowance for Loan and Lease Losses
Balance at beginning of period $ 29,623 $ 28,931 $ 28,669 $ 28,543 $ 28,700
Provision for loan losses 2,594 3,183 3,124 3,350 3,877
Net Charge-offs (2,591) (2,491) (2,862) (3,224) (4,034)
Balance at end of period $ 29,626 $ 29,623 $ 28,931 $ 28,669 $ 28,543
Net Loan Charge-offs (Recoveries)
Commercial real estate $ 1,778 $ 1,350 $ 1,945 $ 1,420 $ 2,938
Commercial, industrial and other 450 147 35 258 258
Leases 42 24 264 291 150
Home equity and consumer 196 406 289 334 528
Real estate - mortgage 125 564 329 921 160
Net charge-offs $ 2,591 $ 2,491 $ 2,862 $ 3,224 $ 4,034
Nonperforming Assets
Commercial real estate $ 9,209 $ 12,522 $ 14,542 $ 14,211 $ 18,843
Commercial, industrial and other 797 1,203 1,476 1,533 1,650
Leases -- -- 32 294 536
Home equity and consumer 2,921 2,838 3,197 3,104 2,818
Real estate - mortgage 6,840 8,481 8,733 9,235 10,197
Total non-accruing loans 19,767 25,044 27,980 28,377 34,044
Property acquired through foreclosure or repossession 337 715 529 775 1,250
Total non-performing assets $ 20,104 $ 25,759 $ 28,509 $ 29,152 $ 35,294
Loans past due 90 days or more $ 1,620 $ 1,752 $ 1,437 $ 1,828 $ 1,566
Loans restructured and still accruing $ 12,538 $ 9,012 $ 7,336 $ 10,937 $ 10,776
Ratio of allowance for loan and lease losses to total loans 1.21% 1.36% 1.35% 1.39% 1.37%
Non-performing loans to total loans 0.81% 1.15% 1.30% 1.37% 1.63%
Non-performing assets to total assets 0.62% 0.89% 0.98% 1.02% 1.24%
Annualized net charge-offs to average loans 0.46% 0.47% 0.54% 0.63% 0.78%
Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(unaudited)
At or for the Quarter Ended,
Jun 30, Mar 31, Dec 31, Sept 30, Jun 30,
(dollars in thousands, except per share amounts) 2013 2013 2012 2012 2012
Calculation of tangible book value per common share
Total common stockholders' equity at end of period - GAAP $ 341,109 $ 283,877 $ 280,867 $ 277,544 $ 246,941
Less:
Goodwill 110,381 87,111 87,111 87,111 87,111
Other identifiable intangible assets, net 2,671 -- -- -- --
Total tangible common stockholders' equity at end of period - Non- GAAP $ 228,057 $ 196,766 $ 193,756 $ 190,433 $ 159,830
Shares outstanding at end of period (1) 35,701 29,859 29,726 29,691 26,993
Book value per share - GAAP (1) $ 9.55 $ 9.51 $ 9.45 $ 9.35 $ 9.15
Tangible book value per share - Non-GAAP (1) $ 6.39 $ 6.59 $ 6.52 $ 6.41 $ 5.92
Calculation of tangible common equity to tangible assets
Total tangible common stockholders' equity at end of period - Non- GAAP $ 228,057 $ 196,766 $ 193,756 $ 190,433 $ 159,830
Total assets at end of period $ 3,262,411 $ 2,907,969 $ 2,918,703 $ 2,859,647 $ 2,853,202
Less:
Goodwill 110,381 87,111 87,111 87,111 87,111
Other identifiable intangible assets, net 2,671 -- -- -- --
Total tangible assets at end of period - Non-GAAP $ 3,149,359 $ 2,820,858 $ 2,831,592 $ 2,772,536 $ 2,766,091
Common equity to assets - GAAP 10.46% 9.76% 9.62% 9.71% 8.65%
Tangible common equity to tangible assets - Non-GAAP 7.24% 6.98% 6.84% 6.87% 5.78%
Calculation of return on average tangible common equity
Net income - GAAP $ 5,903 $ 5,108 $ 5,829 $ 5,489 $ 5,453
Total average common stockholders' equity 304,950 282,796 279,422 257,557 245,253
Less:
Average goodwill 94,783 87,111 87,111 87,111 87,111
Average other identifiable intangible assets, net 894 -- -- -- --
Total average tangible common stockholders' equity - Non - GAAP $ 209,273 $ 195,685 $ 192,311 $ 170,446 $ 158,142
Return on average common stockholders' equity - GAAP 7.76% 7.33% 8.30% 8.48% 8.94%
Return on average tangible common stockholders' equity - Non-GAAP 11.31% 10.59% 12.06% 12.81% 13.87%
Calculation of efficiency ratio
Total non-interest expense $ 19,393 $ 18,227 $ 17,960 $ 16,968 $ 16,470
Less:
Amortization of core deposit intangibles (41) -- -- -- --
Other real estate owned and other repossessed asset (expense) income 2 (19) (10) (13) (38)
Long-term debt prepayment fee -- (526) (782) -- --
Merger related expenses (1,452) (631)
Provision for unfunded lending commitments, net (6) 135 124 (150) (122)
Non-interest expense, as adjusted $ 17,896 $ 17,186 $ 17,292 $ 16,805 $ 16,310
Net interest income $ 25,146 $ 23,936 $ 24,164 $ 23,655 $ 23,748
Total noninterest income 5,793 5,051 5,437 4,640 4,771
Total revenue 30,939 28,987 29,601 28,295 28,519
Plus: Tax-equivalent adjustment on municipal securities 237 232 242 230 244
Less:
Gains on debt extinguishment (1,197) -- -- -- --
Gains on sales investment securities (1) (505) (776) -- (241)
Total revenue, as adjusted $ 29,978 $ 28,714 $ 29,067 $ 28,525 $ 28,522
Efficiency ratio - Non-GAAP 59.70% 59.85% 59.49% 58.91% 57.18%
(1) Adjusted for 5% stock dividend payable on April 16, 2012 to shareholders of record March 30, 2012.
Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(unaudited)
For the Six Months Ended,
June 30 June 30
(dollars in thousands, except per share amounts) 2013 2012
Calculation of return on average tangible common equity
Net income - GAAP $ 11,011 $ 10,424
Total average common stockholders' equity $ 293,934 $ 244,105
Less:
Average goodwill 90,968 87,111
Average other identifiable intangible assets, net 449 --
Total average tangible common stockholders' equity - Non GAAP $ 202,517 $ 156,994
Return on average common stockholders' equity - GAAP 7.55% 8.59%
Return on average tangible common stockholders' equity - Non-GAAP 10.96% 13.35%
Calculation of efficiency ratio
Total non-interest expense $ 37,620 $ 32,745
Less:
Amortization of core deposit intangibles (41) --
Other real estate owned and other repossessed asset expense (17) (76)
Long-term debt prepayment fee (526) --
Merger related expenses (2,083) --
Provision for unfunded lending commitments 129 (67)
Non-interest expense, as adjusted $ 35,082 $ 32,602
Net interest income $ 49,082 $ 47,694
Noninterest income 10,844 8,828
Total revenue 59,926 56,522
Plus: Tax-equivalent adjustment on municipal securities 468 508
Less:
Gains on investment securities (506) (273)
Gains on extinguishment of debt (1,197) --
Total revenue, as adjusted $ 58,691 $ 56,757
Efficiency ratio - Non - GAAP 59.77% 57.44%

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