LBAI Lakeland Bancorp Inc

Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”) reported the following results for the quarter ended March 31, 2016:

• Net income for the first quarter of 2016 was $8.1 million and earnings per diluted share was $0.20.  Excluding the pre-tax impact of $1.7 million in merger related expenses pertaining to the Company’s acquisition of Pascack Bancorp, Inc. (“Pascack”), which closed on January 7, 2016, net income for the first quarter of 2016 was $9.3 million, or $0.22 per diluted share.  The Company reported net income of $8.3 million, or $0.22 per diluted share, in the first quarter of 2015.
• For the first quarter of 2016, annualized return on average assets was 0.77%, annualized return on average common equity was 7.40%, and annualized return on average tangible common equity was 10.40%.  Excluding merger related expenses, these ratios were 0.88%, 8.45% and 11.88%, respectively.
• On April 20, 2016, the Company declared a quarterly cash dividend of $0.095 per common share, payable on May 16, 2016 to holders of record as of the close of business on May 6, 2016.  This dividend represents a 12% increase over the first quarter 2016 dividend of $0.085 per common share.
• The Company reported strong growth in commercial loans and total deposits during the first quarter of 2016.  Excluding loans obtained through the acquisition of Pascack, commercial loans increased by $92.7 million, or 4%.  Excluding Pascack, deposits increased $162.6 million, or 5%, since December 31, 2015.
• Net interest margin (“NIM”) in the first quarter of 2016 was 3.48% as compared to 3.43% for the fourth quarter of 2015.

Thomas J. Shara, Lakeland Bancorp’s President and CEO, said, “Following a successful acquisition, we are extremely pleased to welcome the former Pascack shareholders and employees to Lakeland Bank.  We are equally pleased to report that work has commenced on the upcoming merger with Harmony Bank and, given our performance during the first quarter, we were able to raise our second quarter 2016 cash dividend by 12% to $0.095 per share.”

Pascack Acquisition

On January 7, 2016, the Company completed its acquisition of Pascack.  This acquisition added $410.0 million in total assets, $319.6 million in total loans and $304.5 million in total deposits.  Anticipated synergies and overlapping markets allowed the Company to close three branches during the quarter.  Goodwill amounted to $15.5 million and core deposit intangibles were $1.5 million.  The Company’s financial statements reflect the impact of the merger from the date of acquisition, which should be considered when comparing periods.     

Earnings

Net income for the first quarter of 2016 was $8.1 million, as compared to $8.3 million for the first quarter of 2015.  Excluding the pre-tax impact of $1.7 million in merger related expenses, net income for the first quarter of 2016 was $9.3 million. 

Net Interest Income

Net interest income for the first quarter of 2016 was $33.9 million, as compared to $28.5 million for the same period in 2015, an increase of 19%.  In the first quarter of 2016, NIM was 3.48%, as compared to 3.56% in the first quarter of 2015.  This decrease primarily occurred because savings and interest bearing deposits acquired from Pascack generally carried higher interest rates.  In addition, since the first quarter of 2015, the Company has seen an increasingly competitive market for deposits.  The annualized yield on interest-earning assets remained constant at 3.86% from the first quarter of 2015 to the first quarter of 2016.  The annualized cost of interest-bearing liabilities increased from 0.40% in the first quarter of 2015 to 0.49% in the first quarter of 2016, reflecting the higher cost of deposit accounts.  

Noninterest Income

Noninterest income totaled $4.9 million for the first quarter of 2016, as compared to $4.7 million for the same period in 2015.  In 2016, gains on the sale of loans exceeded the same period in 2015 by $155 thousand.  The Company earned $370 thousand from the sale of investment securities in the first quarter of 2016, compared to no gains in the first quarter of 2015.  Income from bank owned life insurance declined $291 thousand because of beneficiary payments received in 2015 that did not recur in 2016.  Commissions and fees declined $328 thousand from 2015 to 2016, due primarily to a decrease in financial services fees.  

Noninterest Expense  

Noninterest expense for the first quarter of 2016 was $25.4 million, compared to $20.0 million for the same period in 2015.  Excluding $1.7 million in merger related expenses, noninterest expense increased by $3.7 million.  Salary and benefit expense increased by $2.3 million, due primarily to a full quarter of expenses associated with the loan production offices that opened in 2015, the addition of Pascack employees during the quarter and an increase in employee benefit costs.  Data processing increased $185 thousand, primarily due to increases in the cost of mobile banking and the addition of the Pascack branches.  The efficiency ratio for the first quarter of 2016 was 60.38%.

Financial Condition

At March 31, 2016, total assets were $4.40 billion, an increase of $534.7 million, or 14%, from December 31, 2015, including $410.0 million from Pascack.  Total loans were $3.37 billion, an increase of $401.0 million, or 14%, in 2016, including $319.6 million from Pascack.  Total deposits were $3.46 billion as of March 31, 2016, an increase of $467.1 million, or 16%, from December 31, 2015, including $304.5 million from Pascack.  Noninterest bearing demand deposits at $774.5 million increased by $80.7 million, or 12%, in 2016, $64.4 million of which was from the Pascack acquisition.

Asset Quality

At March 31, 2016, non-performing assets totaled $25.8 million (0.58% of total assets) compared to $23.7 million (0.61% of total assets) at December 31, 2015.  The Allowance for Loan and Lease Losses totaled $30.6 million at March 31, 2016 and represented 0.91% of total loans, and 122% of non-accruing loans.  In the first quarter of 2016, the Company had net charge-offs totaling $1.4 million, compared to $1.0 million in the first quarter of 2015.  The provision for loan and lease losses in the first quarter of 2016 was $1.1 million, compared to $0.9 million for the same period in 2015.

Capital

At March 31, 2016, stockholders' equity was $446.9 million and book value per common share was $10.84.  Tangible book value per common share was $7.72 at March 31, 2016.  As of March 31, 2016, the Company’s leverage ratio was 8.33%.  Tier 1 and total risk based capital ratios were 9.99% and 10.94%, respectively.  The common equity tier 1 capital ratio was 9.12% and the tangible common equity ratio was 7.45%.  The regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines.

Regulatory and Shareholder Approvals

Regulatory applications have been filed with the Federal Deposit Insurance Corporation (the “FDIC”) and the New Jersey Department of Banking and Insurance (the “NJ Department”) for the merger of Harmony Bank with and into Lakeland Bank.  The NJ Department approved the merger on April 21, 2016, and FDIC approval is pending.  The merger is also subject to the approval of Harmony Bank’s shareholders and other customary closing conditions.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.  In connection with the proposed merger, Lakeland Bancorp has filed with the Securities and Exchange Commission a registration statement on Form S-4 that includes a preliminary proxy statement of Harmony Bank and a preliminary prospectus of Lakeland Bancorp.  The registration statement has not yet become effective.  This material is not a substitute for the final proxy statement and prospectus or any other document Lakeland Bancorp may file with the SEC.  After the registration statement has been declared effective by the SEC, the definitive proxy statement and prospectus will be delivered to the shareholders of Harmony Bank.  INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE DEFINITIVE PROXY STATEMENT AND PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE TRANSACTIONS THAT HAVE BEEN OR WILL BE FILED BY LAKELAND BANCORP CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN AND WILL CONTAIN IMPORTANT INFORMATION.  Investors and security holders may obtain a free copy of the registration statement and the definitive proxy statement and prospectus (when available) and other documents filed by Lakeland Bancorp with the SEC at the SEC’s website at www.sec.gov.  These documents may be accessed and downloaded for free at Lakeland Bancorp’s website at www.lakelandbank.com or by directing a request to Investor Relations, Lakeland Bancorp, Inc., 250 Oak Ridge Road, Oak Ridge, NJ 07438 (973-697-2000).  Requests for the definitive proxy statement and prospectus (when available) may also be made to Investor Relations, Harmony Bank, 732-719-3710.

Participants in the Solicitation

This communication is not a solicitation of a proxy from any security holder of Lakeland Bancorp or Harmony Bank.  However, Lakeland Bancorp, Harmony Bank and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Harmony Bank’s shareholders in respect of the proposed merger of Harmony Bank into Lakeland Bank.  Information regarding the directors and executive officers of Lakeland Bancorp may be found in its definitive proxy statement relating to its 2016 Annual Meeting of Shareholders, which was filed with the SEC on April 12, 2016, and can be obtained free of charge from Lakeland Bancorp’s website.  Information regarding the directors and executive officers of Harmony Bank may be found in its definitive proxy statement relating to its 2015 Annual Meeting of Shareholders, and can be obtained free of charge from Harmony Bank by calling 732-719-3710.  Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interest, by security holdings or otherwise, will be contained in the definitive proxy statement and prospectus and other relevant materials to be filed with the SEC when they become available. 

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements (with respect to corporate objectives, trends, and other financial and business matters) that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  The words “anticipates”, “projects”, “intends”, “estimates”, “expects”, “believes”, “plans”, “may”, “will”, “should”, “could”, and other similar expressions are intended to identify such forward-looking statements.  Lakeland cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time.  Actual results could differ materially from such forward-looking statements.  The following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company’s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation affecting the financial services industry, government intervention in the U.S. financial system, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company’s lending and leasing activities, customers’ acceptance of the Company’s products and services, competition, failure to successfully integrate Pascack Community Bank into Lakeland Bank, failure to obtain Harmony Bank shareholder or regulatory approval for the merger of Harmony Bank into Lakeland Bank, and failure to realize anticipated efficiencies and synergies if the Harmony Bank merger is consummated.  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 BankLakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which has $4.4 billion in total assets.  The Bank operates 53 New Jersey branch offices in Bergen, Essex, Morris, Passaic, Somerset, Sussex, Union and Warren counties; five New Jersey regional commercial lending centers in Bernardsville, Montville, Newton, Teaneck and Wyckoff/Waldwick; and, two commercial loan production offices serving Middlesex and Monmouth counties in New Jersey and the Hudson Valley region of New York.  Lakeland Bank offers an extensive suite of financial products and services for businesses and consumers.  Visit LakelandBank.com for more information.

Lakeland Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
						Three Months Ended March 31,
(Dollars in thousands, except per share amounts)							2016			2015
INTEREST INCOME
Loans and fees						$	34,121		$	27,896
Federal funds sold and interest bearing deposits with banks							75			12
Taxable investment securities and other							2,962			2,674
Tax exempt investment securities							413			410
	TOTAL INTEREST INCOME						37,571			30,992
INTEREST EXPENSE
Deposits							2,205			1,283
Federal funds purchased and securities sold under agreements to repurchase							38			22
Other borrowings							1,478			1,169
	TOTAL INTEREST EXPENSE						3,721			2,474
NET INTEREST INCOME							33,850			28,518
Provision for loan and lease losses							1,075			870
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES							32,775			27,648
NONINTEREST INCOME
Service charges on deposit accounts							2,442			2,340
Commissions and fees							979			1,307
Gain on investment securities							370			-
Gain on sale of loans							420			265
Income on bank owned life insurance							408			699
Other income							248			127
	TOTAL NONINTEREST INCOME						4,867			4,738
NONINTEREST EXPENSE
Salaries and employee benefits							14,085			11,750
Net occupancy expense							2,688			2,548
Furniture and equipment							1,946			1,656
Stationary, supplies and postage							443			365
Marketing expense							309			240
FDIC insurance expense							590			518
ATM and debit card expense							346			342
Telecommunications expense							424			345
Data processing expense							520			335
Other real estate owned and other repossessed assets expense (income)							39			(8	)
Merger related expenses							1,721			-
Core deposit intangible amortization							167			111
Provision for unfunded lending commitments							208			130
Other expenses							1,938			1,710
	TOTAL NONINTEREST EXPENSE						25,424			20,042
INCOME BEFORE PROVISION FOR INCOME TAXES							12,218			12,344
Provision for income taxes							4,110			4,014
NET INCOME						$	8,108		$	8,330
EARNINGS PER COMMON SHARE
Basic						$	0.20		$	0.22
Diluted						$	0.20		$	0.22
DIVIDENDS PER COMMON SHARE						$	0.085		$	0.075

 

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
					March 31,				December 31,
(Dollars in thousands)						2016				2015
					(Unaudited)
ASSETS
Cash and due from banks					$	188,414			$	113,894
Federal funds sold and interest bearing deposits due from banks						25,205				4,599
Total cash and cash equivalents						213,619				118,493
Investment securities available for sale, at fair value						441,147				442,349
Investment securities held to maturity; fair value of $118,357 in 2016
and $117,594 in 2015						115,796				116,740
Federal Home Loan Bank and other membership stocks, at cost						16,193				14,087
Loans held for sale						1,150				1,233
Loans:
Commercial, secured by real estate						2,243,335				1,879,659
Commercial, industrial and other						332,097				307,044
Leases						60,925				56,660
Residential mortgages						392,387				389,692
Consumer and home equity						340,217				334,891
Total loans						3,368,961				2,967,946
Net deferred costs						(2,589	)			(2,746	)
Allowance for loan and lease losses						(30,553	)			(30,874	)
Net loans						3,335,819				2,934,326
Premises and equipment, net						49,929				35,881
Accrued interest receivable						10,658				9,208
Goodwill						125,443				109,974
Other identifiable intangible assets						2,891				1,545
Bank owned life insurance						65,769				65,361
Other assets						25,819				20,353
TOTAL ASSETS					$	4,404,233			$	3,869,550
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest bearing					$	774,487			$	693,741
Savings and interest bearing transaction accounts						2,204,356				1,958,510
Time deposits through $250,000						348,825				270,624
Time deposits over $250,000						134,968				72,697
Total deposits						3,462,636				2,995,572
Federal funds purchased and securities sold under agreements to repurchase						128,841				151,234
Other borrowings						310,031				271,905
Subordinated debentures						31,238				31,238
Other liabilities						24,612				19,085
TOTAL LIABILITIES						3,957,358				3,469,034
STOCKHOLDERS' EQUITY:
Common stock, no par value; authorized 70,000,000 shares;
issued 41,240,824 shares at March 31, 2016
and 37,906,481 shares at December 31, 2015						424,101				386,287
Retained earnings						17,662				13,079
Accumulated other comprehensive gain						5,112				1,150
TOTAL STOCKHOLDERS' EQUITY						446,875				400,516
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY					$	4,404,233			$	3,869,550

 

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
			For the Quarter Ended
			Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,
(Dollars in thousands, except per share data)				2016			2015			2015			2015			2015
INCOME STATEMENT
Net Interest Income			$	33,850		$	30,119		$	29,334		$	28,669		$	28,518
Provision for Loan and Lease Losses				(1,075	)		-			(332	)		(740	)		(870	)
Other Noninterest Income				4,077			4,290			4,169			4,477			4,473
Gain on Investment Securities				370			51			173			17			-
Gain on Sale of Loans				420			437			515			464			265
Gain on Debt Extinguishment				-			-			1,830			-			-
Long-Term Debt Prepayment Fee				-			-			(2,407	)		-			-
Merger Related Expenses				(1,721	)		(822	)		(330	)		-			-
Provision for Unfunded Lending Commitments				(208	)		(506	)		(168	)		(60	)		(130	)
Other Noninterest Expense				(23,495	)		(20,814	)		(20,927	)		(21,135	)		(19,912	)
Pretax Income				12,218			12,755			11,857			11,692			12,344
Tax Expense				(4,110	)		(4,291	)		(4,032	)		(3,830	)		(4,014	)
Net Income			$	8,108		$	8,464		$	7,825		$	7,862		$	8,330
Basic Earnings Per Common Share			$	0.20		$	0.22		$	0.20		$	0.21		$	0.22
Diluted Earnings Per Common Share			$	0.20		$	0.22		$	0.20		$	0.21		$	0.22
Dividends Per Common Share			$	0.085		$	0.085		$	0.085		$	0.085		$	0.075
Dividends Paid			$	3,525		$	3,246		$	3,244		$	3,243		$	2,852
Weighted Average Shares - Basic				40,931			37,865			37,856			37,854			37,800
Weighted Average Shares - Diluted				41,091			38,048			38,016			37,988			37,937
SELECTED OPERATING RATIOS
Annualized Return on Average Assets				0.77	%		0.89	%		0.84	%		0.88	%		0.96	%
Annualized Return on Average Common Equity				7.40	%		8.40	%		7.86	%		8.08	%		8.81	%
Annualized Return on Average Tangible Common Equity (1)				10.40	%		11.64	%		10.96	%		11.33	%		12.43	%
Annualized Net Interest Margin				3.48	%		3.43	%		3.42	%		3.46	%		3.56	%
Efficiency Ratio (1)				60.38	%		58.70	%		60.77	%		62.09	%		59.17	%
Common Stockholders' Equity to Total Assets				10.15	%		10.35	%		10.62	%		10.57	%		10.70	%
Tangible Common Equity to Tangible Assets (1)				7.45	%		7.69	%		7.88	%		7.78	%		7.86	%
Tier 1 Risk-Based Ratio				9.99	%		10.53	%		10.81	%		11.05	%		11.23	%
Total Risk-Based Ratio				10.94	%		11.61	%		11.93	%		12.15	%		12.37	%
Tier 1 Leverage Ratio				8.33	%		8.70	%		8.77	%		9.12	%		9.17	%
Common Equity Tier 1 Capital Ratio				9.12	%		9.54	%		9.78	%		9.66	%		9.79	%
Book Value per Common Share			$	10.84		$	10.57		$	10.49		$	10.31		$	10.24
Tangible Book Value per Common Share (1)			$	7.72		$	7.62		$	7.55		$	7.36		$	7.29
(1) See Supplemental Information - Non-GAAP Financial Measures

 

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
				For the Quarter Ended
				Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,
(Dollars in thousands)					2016			2015			2015			2015			2015
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans and Leases				$	3,368,961		$	2,967,946		$	2,853,764		$	2,756,694		$	2,691,705
Allowance for Loan and Lease Losses					(30,553	)		(30,874	)		(30,994	)		(30,174	)		(30,505	)
Investment Securities					573,136			573,176			559,295			597,598			599,986
Total Assets					4,404,233			3,869,550			3,743,100			3,699,127			3,627,764
Total Deposits					3,462,636			2,995,571			2,919,673			2,842,953			2,842,565
Short-Term Borrowings					128,841			151,234			131,356			146,249			117,351
Other Borrowings					341,269			303,143			275,666			303,966			263,966
Stockholders' Equity					446,875			400,516			397,687			390,860			388,084
Loans and Leases
Commercial Real Estate				$	2,243,335		$	1,879,659		$	1,776,911		$	1,695,276		$	1,636,128
Commercial, Industrial and Other					332,097			307,044			290,961			262,617			244,162
Leases					60,925			56,660			55,057			53,798			54,271
Residential Mortgages					392,387			389,692			400,247			414,339			426,339
Consumer and Home Equity					340,217			334,891			330,588			330,664			330,805
Total Loans				$	3,368,961		$	2,967,946		$	2,853,764		$	2,756,694		$	2,691,705
Deposits
Noninterest Bearing				$	774,487		$	693,741		$	694,267		$	714,227		$	672,264
Savings and Interest Bearing Transaction Accounts					2,204,356			1,958,509			1,907,858			1,822,295			1,878,598
Time Deposits					483,793			343,321			317,548			306,431			291,703
Total Deposits				$	3,462,636		$	2,995,571		$	2,919,673		$	2,842,953		$	2,842,565
SELECTED AVERAGE BALANCE SHEET DATA
Loans and Leases, net				$	3,284,339		$	2,898,477		$	2,811,581		$	2,720,801		$	2,660,512
Investment Securities					570,581			561,024			581,565			600,547			582,912
Interest Earning Assets					3,933,160			3,509,867			3,431,018			3,345,380			3,271,110
Total Assets					4,248,468			3,779,819			3,685,573			3,600,416			3,526,898
Noninterest Bearing Demand Deposits					760,198			722,270			710,011			688,854			660,548
Savings Deposits					475,870			402,217			398,147			402,142			395,153
Interest Bearing Transaction Accounts					1,682,580			1,573,638			1,497,340			1,480,866			1,495,270
Time Deposits					465,024			328,080			309,235			295,996			280,837
Total Deposits					3,383,672			3,026,205			2,914,733			2,867,858			2,831,808
Short-Term Borrowings					50,335			47,276			61,679			59,249			47,827
Other Borrowings					349,088			286,887			297,140			267,610			247,316
Total Interest Bearing Liabilities					3,022,897			2,638,098			2,563,542			2,505,863			2,466,403
Stockholders' Equity					440,823			399,987			394,948			390,151			383,587

 

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
				For the Quarter Ended
				Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,
(Dollars in thousands)					2016			2015			2015			2015			2015
AVERAGE ANNUALIZED YIELDS (Taxable Equivalent Basis)
Assets:
Loans and leases					4.18	%		4.12	%		4.11	%		4.16	%		4.25	%
Taxable investment securities and other					2.39	%		2.09	%		2.06	%		2.02	%		2.08	%
Tax-exempt securities					3.40	%		3.49	%		3.41	%		3.58	%		3.67	%
Federal funds sold and interest bearing cash accounts					0.38	%		0.25	%		0.07	%		0.18	%		0.17	%
Total interest earning assets					3.86	%		3.76	%		3.75	%		3.78	%		3.86	%
Liabilities:
Savings accounts					0.08	%		0.05	%		0.05	%		0.05	%		0.05	%
Interest bearing transaction accounts					0.30	%		0.26	%		0.25	%		0.23	%		0.23	%
Time deposits					0.74	%		0.70	%		0.63	%		0.59	%		0.56	%
Borrowings					1.52	%		1.53	%		1.52	%		1.58	%		1.61	%
Total interest bearing liabilities					0.49	%		0.44	%		0.44	%		0.42	%		0.40	%
Net interest spread (taxable equivalent basis)					3.37	%		3.32	%		3.31	%		3.36	%		3.46	%
Annualized net interest margin (taxable equivalent basis)					3.48	%		3.43	%		3.42	%		3.46	%		3.56	%
Annualized cost of deposits					0.26	%		0.22	%		0.20	%		0.19	%		0.18	%
ASSET QUALITY DATA
Allowance for Loan and Lease Losses
Balance at beginning of period				$	30,874		$	30,994		$	30,174		$	30,505		$	30,684
Provision for loan losses					1,075			-			332			740			870
Charge-offs					(1,543	)		(1,140	)		(584	)		(1,475	)		(1,281	)
Recoveries					147			1,020			1,072			404			232
Balance at end of period				$	30,553		$	30,874		$	30,994		$	30,174		$	30,505
Net Loan Charge-Offs (Recoveries)
Commercial real estate				$	81		$	(450	)	$	(936	)	$	476		$	426
Commercial, industrial and other					583			(56	)		88			21			(31	)
Leases					69			(1	)		13			102			407
Home equity and consumer					574			561			204			386			231
Real estate - mortgage					89			66			143			86			16
Net charge-offs (recoveries)				$	1,396		$	120		$	(488	)	$	1,071		$	1,049
Non-Performing Assets
Commercial real estate				$	11,943		$	10,446		$	8,176		$	5,307		$	6,994
Commercial, industrial and other					1,163			103			832			1,354			285
Leases					282			316			154			79			111
Home equity and consumer					3,249			3,167			3,530			3,143			3,472
Real estate - mortgage					8,330			8,664			8,805			9,098			9,552
Total non-accruing loans					24,967			22,696			21,497			18,981			20,414
Property acquired through foreclosure or repossession					792			983			819			1,078			826
Total non-performing assets				$	25,759		$	23,679		$	22,316		$	20,059		$	21,240
Loans past due 90 days or more and still accruing				$	101		$	331		$	123		$	102		$	134
Loans restructured and still accruing				$	10,545		$	10,108		$	11,927		$	12,419		$	11,538
Ratio of allowance for loan and lease losses to total loans					0.91	%		1.04	%		1.09	%		1.09	%		1.13	%
Non-performing loans to total loans					0.74	%		0.76	%		0.75	%		0.69	%		0.76	%
Non-performing assets to total assets					0.58	%		0.61	%		0.60	%		0.54	%		0.59	%
Annualized net charge-offs (recoveries) to average loans					0.17	%		0.02	%		-0.07	%		0.16	%		0.16	%

 

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
				At or for the Quarter Ended
				Mar 31,			Dec 31,			Sept 30,			Jun 30,			Mar 31,
(Dollars in thousands, except per share amounts)					2016			2015			2015			2015			2015
Calculation of tangible book value per common share
Total common stockholders' equity at end of period - GAAP				$	446,875		$	400,516		$	397,687		$	390,860		$	388,084
Less:
Goodwill					125,443			109,974			109,974			109,974			109,974
Other identifiable intangible assets, net					2,891			1,545			1,644			1,742			1,849
Total tangible common stockholders' equity at end of period - Non-GAAP				$	318,541		$	288,997		$	286,069		$	279,144		$	276,261
Shares outstanding at end of period					41,241			37,906			37,906			37,903			37,900
Book value per share - GAAP				$	10.84		$	10.57		$	10.49		$	10.31		$	10.24
Tangible book value per share - Non-GAAP				$	7.72		$	7.62		$	7.55		$	7.36		$	7.29
Calculation of tangible common equity to tangible assets
Total tangible common stockholders' equity at end of period - Non-GAAP				$	318,541		$	288,997		$	286,069		$	279,144		$	276,261
Total assets at end of period				$	4,404,233		$	3,869,550		$	3,743,100		$	3,699,127		$	3,627,764
Less:
Goodwill					125,443			109,974			109,974			109,974			109,974
Other identifiable intangible assets, net					2,891			1,545			1,644			1,742			1,849
Total tangible assets at end of period - Non-GAAP				$	4,275,899		$	3,758,031		$	3,631,482		$	3,587,411		$	3,515,941
Common equity to assets - GAAP					10.15	%		10.35	%		10.62	%		10.57	%		10.70	%
Tangible common equity to tangible assets - Non-GAAP					7.45	%		7.69	%		7.88	%		7.78	%		7.86	%
Calculation of return on average tangible common equity
Net income - GAAP				$	8,108		$	8,464		$	7,825		$	7,862		$	8,330
Total average common stockholders' equity				$	440,823		$	399,987		$	394,948		$	390,151		$	383,587
Less:
Average goodwill					124,423			109,974			109,974			109,974			109,974
Average other identifiable intangible assets, net					2,920			1,606			1,706			1,807			1,919
Total average tangible common stockholders' equity - Non-GAAP				$	313,480		$	288,407		$	283,268		$	278,370		$	271,694
Return on average common stockholders' equity - GAAP					7.40	%		8.40	%		7.86	%		8.08	%		8.81	%
Return on average tangible common stockholders' equity - Non-GAAP					10.40	%		11.64	%		10.96	%		11.33	%		12.43	%
Calculation of efficiency ratio
Total noninterest expense				$	25,424		$	22,142		$	23,832		$	21,195		$	20,042
Amortization of core deposit intangibles					(167	)		(99	)		(98	)		(107	)		(111	)
Other real estate owned and other repossessed asset (expense) income					(39	)		(135	)		(27	)		(27	)		8
Long-term debt prepayment fee					-			-			(2,407	)		-			-
Merger related expenses					(1,721	)		(822	)		(330	)		-			-
Provision for unfunded lending commitments, net					(208	)		(506	)		(168	)		(60	)		(130	)
Noninterest expense, as adjusted				$	23,289		$	20,580		$	20,802		$	21,001		$	19,809
Net interest income				$	33,850		$	30,119		$	29,334		$	28,669		$	28,518
Total noninterest income					4,867			4,778			6,687			4,958			4,738
Total revenue					38,717			34,897			36,021			33,627			33,256
Tax-equivalent adjustment on municipal securities					222			212			210			214			221
Gains on debt extinguishment					-			-			(1,830	)		-			-
Gains on sales investment securities					(370	)		(51	)		(173	)		(17	)		-
Total revenue, as adjusted				$	38,569		$	35,058		$	34,228		$	33,824		$	33,477
Efficiency ratio - Non-GAAP					60.38	%		58.70	%		60.77	%		62.09	%		59.17	%

Thomas J. Shara
President & CEO

Joseph F. Hurley
EVP & CFO
973-697-2000