• Lakeland Bancorp Announces Third Quarter Results

    Source: Nasdaq GlobeNewswire / 26 Oct 2021 07:00:05   America/Chicago

    OAK RIDGE, N.J., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $22.3 million and earnings per diluted share ("EPS") of $0.43 for the three months ended September 30, 2021 compared to net income of $14.4 million and EPS of $0.28 for the three months ended September 30, 2020.  For the third quarter of 2021, annualized return on average assets was 1.10%, annualized return on average common equity was 10.94% and annualized return on average tangible common equity was 13.63%. 

    For the nine months ended September 30, 2021, the Company reported net income of $72.9 million and EPS of $1.42 compared to net income of $38.7 million and EPS of $0.76 for the same period of 2020. Annualized return on average assets was 1.24%, annualized return on average common equity was 12.39% and annualized return on average tangible common equity was 15.53% for the first nine months of 2021 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value).

    The third quarter and year-to-date 2021 results were favorably impacted by negative provisions for credit losses of $2.7 million and $11.3 million, respectively, compared to provisions of $8.0 million and $26.2 million for the same periods last year as forecasted macroeconomic conditions have improved and Lakeland's asset quality continues to be strong.

    Thomas Shara, Lakeland Bancorp’s President and CEO commented on the financial results, “We are pleased with our results for the quarter marked by strong core earnings and continued improvement in asset quality. Our subordinated debt offering during the quarter was very successful, affording us the opportunity to increase the offering size to $150 million with an interest rate of 2.875% fixed for 5 years. We believe the overwhelming success of the offering further illustrates the strength of the Lakeland brand in the market.”

    Regarding Lakeland Bancorp's recently announced acquisition of 1st Constitution Bancorp, Mr. Shara continued, “We remain very excited regarding our opportunity to partner with 1st Constitution and expanding our product offerings and services to the customers of the combined company. The merger integration meetings are progressing very well and we anticipate closing the merger in January 2022.”

    Third Quarter 2021 Highlights

    • Non-performing assets decreased $10.3 million or 46% to $12.3 million at September 30, 2021 compared to $22.6 million at June 30, 2021.
    • During the third quarter, the Company sold $6.2 million in non-performing loans primarily in the commercial secured by real estate loan category. The sale resulted in net recoveries to the allowance for credit losses of $502,000 as well as recovered interest on non-accrual loans of $755,000, which favorably impacted third quarter 2021 net interest margin by four basis points.
    • On September 15, 2021, the Company closed the offering of $150 million of its Fixed-to-Floating Rate Subordinated Notes (the “Notes”) due 2031. The Notes bear interest at a rate of 2.875% per annum until September 2026 and the interest rate will then reset quarterly to the three-month Secured Overnight Financing Rate ("SOFR") plus a spread of 220 basis points.
    • During the third quarter, the Company redeemed $75 million of its 5.125% Fixed-to-Floating Rate Subordinated Notes due September 30, 2026, which were scheduled to reset quarterly to the current three-month LIBOR rate plus 397 basis points in September 2021. The Company expensed $831,000 in unamortized debt issuance costs on the $75 million redemption.
    • Deposit growth continues to be strong as saving and interest-bearing transaction accounts increased $202.7 million during the third quarter, while higher priced time deposits were allowed to run off. Noninterest-bearing deposits increased $40.8 million to $1.72 billion at September 30, 2021.
    • Paycheck Protection Program ("PPP") loans totaled $109.3 million at September 30, 2021 compared to $207.0 million at June 30, 2021.  Unamortized net deferred fees on PPP loans totaled $3.4 million at September 30, 2021 compared to $6.1 million at June 30, 2021. PPP loans contributed approximately $3.1 million to interest income during the third quarter of 2021.

    Net Interest Margin and Net Interest Income

    Net interest margin for the third quarter of 2021 of 3.10% increased 14 basis points compared to the third quarter of 2020 and decreased 17 basis points compared to the second quarter of 2021. Net interest margin for the first nine months of 2021 was 3.19% as compared to 3.09% for the same period in 2020. The increase in net interest margin compared to the third quarter 2020 and year-to-date 2020 was due primarily to a decrease in the cost of interest-bearing liabilities, while the decrease in net interest margin compared to the linked quarter was due primarily to a $326.7 million increase in lower yielding average federal funds sold.

    The yield on interest-earning assets for the third quarter of 2021 was 3.40% as compared to 3.49% for the third quarter of 2020 and 3.57% for the second quarter of 2021. The yield on interest-earning assets for the first nine months of 2021 was 3.51% as compared to 3.77% during the same period in 2020.  The current quarter decrease in yield on interest-earning assets, when compared to the third quarter of 2020 and the second quarter of 2021, was due primarily to a reduction in the yield on securities as well as an increase in lower yielding average securities and federal funds sold balances.  The 26 basis point reduction in yield on interest-earning assets for the first nine months of 2021 compared to the same period in 2020 was due primarily to a reduction in the yield on loans and securities resulting from decreases in market interest rates during 2020.

    The cost of interest-bearing liabilities for the third quarter of 2021 was 0.41% compared to 0.72% for the third quarter of 2020 and 0.42% for the second quarter of 2021. The cost of interest-bearing liabilities for the first nine months of 2021 was 0.45% compared to 0.91% during the same period in 2020.  The reduction in the cost of interest-bearing liabilities compared to prior periods was largely driven by reductions in market interest rates as well as a change in the mix of interest-bearing liabilities. Higher cost time deposits and borrowings balances have decreased while lower cost interest-bearing transaction account balances have increased.

    Net interest income for the third quarter of 2021 of $59.3 million increased $7.2 million compared to the third quarter of 2020.  Net interest income for the first nine months of 2021 was $175.8 million as compared to $152.6 million for the first nine months of 2020.  The increase in net interest income compared to prior periods was due primarily to a reduction in the cost of interest-bearing deposits as well as growth in the volume of interest-earning assets.

    Noninterest Income

    Noninterest income decreased $1.3 million to $5.5 million for the third quarter of 2021 from $6.8 million for the third quarter of 2020. Service charges on deposit accounts for the third quarter of 2021 increased $248,000 compared to the third quarter of 2020 due primarily to changes in customer behavior relating to the pandemic. Gains on sales of loans decreased $887,000 due primarily to retaining a greater percentage of originated residential mortgages.  Swap income decreased $624,000 compared to the third quarter of 2020 due primarily to the steepness of the yield curve which makes new swap agreements less attractive.

    For the first nine months of 2021, noninterest income decreased $3.8 million to $16.5 million compared to the first nine months of 2020 primarily due to a $3.6 million decrease in swap income resulting from the changes to the yield curve discussed above. Service charges on deposit accounts increased $614,000 compared to the first nine months of 2020 due to the same reasons discussed in the quarterly comparison, while commissions and fees increased $459,000 due primarily to an increase in commercial loan fees.  Losses on equity securities totaled $191,000 in the first nine months of 2021 compared to losses of $625,000 in the first nine months of 2020.  Gains on sales of loans decreased $697,000 due to the same reason discussed above. Other income decreased $567,000 due primarily to a $400,000 write-down on a branch location held for sale. Additionally, the first nine months of 2020 included gains on sales of investment securities of $342,000 compared to $9,000 for the same period in 2021.

    Noninterest Expense

    Noninterest expense totaled $37.2 million for the third quarter of 2021 and increased $5.1 million compared to the third quarter of 2020. Compensation and employee benefit expense for the third quarter of 2021 increased $2.4 million or 13% compared to the same quarter of 2020 as a result of staff additions and normal merit increases. Premises and equipment increased $624,000 compared to the third quarter of 2020 predominately driven by an increase in costs associated with the Company's digital strategy initiative.  The third quarter of 2021 included $1.1 million in merger related costs for the upcoming merger with 1st Constitution Bancorp.  Other operating expenses in the third quarter of 2021 were $881,000 greater than the third quarter of 2020 due primarily to $831,000 in long-term debt extinguishment costs resulting from the redemption of the $75 million in subordinated notes mentioned in the quarterly highlights.

    Noninterest expense for the first nine months of 2021 of $105.2 million increased $9.1 million compared to the first nine months of 2020. Compensation and employee benefit expense and premises and equipment expense increased $5.1 million and $2.4 million, respectively, compared to the first nine months of 2020 due to the same reasons discussed in the quarterly comparison. FDIC insurance expense in the first nine months of 2021 increased $420,000 due primarily to deposit growth and assessment credits recorded in the first nine months of 2020.  The first nine months of 2021 included $1.1 million in merger related costs for the upcoming merger with 1st Constitution Bancorp.   

    Income Tax Expense

    The effective tax rate for the third quarter of 2021 was 26.4% compared to 23.3% for the third quarter of 2020. The increased effective tax rate for the third quarter of 2021 was primarily a result of tax advantaged items declining as a percentage of pretax income due to the increase in pretax income.  

    Financial Condition

    At September 30, 2021, total assets were $8.17 billion, an increase of $508.2 million compared to December 31, 2020. For the nine months ended September 30, 2021, total loans decreased $140.4 million to $5.88 billion and investment securities increased $275.5 million to $1.25 billion. On the funding side, total deposits increased $475.1 million to $6.93 billion, while borrowings increased $11.2 million to $324.0 million. At September 30, 2021, total loans as a percent of total deposits was 84.8%.

    Asset Quality

    At September 30, 2021, non-performing assets decreased 71% to $12.3 million or 0.15% of total assets compared to $42.8 million or 0.56% of total assets at December 31, 2020. Non-accrual loans as a percent of total loans decreased to 0.21% at September 30, 2021 compared to 0.71% at December 31, 2020. The allowance for credit losses decreased to $58.0 million, 0.99% of total loans, at September 30, 2021, compared to $71.1 million, 1.18% of total loans, at December 31, 2020. In the third quarter of 2021, the Company had net recoveries of $269,000 or 0.02% of average loans, on an annualized basis, compared to net charge-offs of $597,000 or 0.04% for the same period in 2020. The provision for credit losses for the third quarter of 2021 was a benefit of $2.7 million compared to a provision of $8.0 million in the third quarter of 2020. In addition, the third quarter of 2021 included a sale of non-performing loans totaling $6.2 million and resulted in an improvement of asset quality ratios.

    Capital

    At September 30, 2021, stockholders' equity was $814.1 million compared to $763.8 million at December 31, 2020, a 7% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.60% at September 30, 2021. The book value per common share and tangible book value per common share increased 8% and 10% to $16.09 and $12.95, respectively, compared to $14.93 and $11.77 at September 30, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At September 30, 2021, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio were 9.96% and 8.18%, respectively, compared to 9.97% and 8.05% at December 31, 2020. On October 22, 2021, the Company declared a quarterly cash dividend of $0.135 per share to be paid on November 15, 2021, to shareholders of record as of November 5, 2021.

    Forward-Looking Statements

    The information disclosed in this document includes various forward-looking statements 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.  Accordingly, you should not place undue reliance on forward-looking statements. In addition to the specific risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, 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 and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, 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, competition, and failure to realize anticipated efficiencies and synergies from the merger of 1st Constitution  Bancorp into Lakeland Bancorp and the merger of 1st Constitution Bank into Lakeland Bank. Further, given its ongoing and dynamic nature, it is difficult to predict the continuing effects that the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely. 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 U.S. generally accepted accounting principles  ("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.

    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.

    Specifically, 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, 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, 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 "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures.

    About Lakeland

    Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $8.17 billion in total assets at September 30, 2021. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, New York, the Bank offers business and retail banking products and services. Business services include commercial loans and lines of credit, commercial real estate loans, loans for healthcare services, asset-based lending, equipment financing, small business loans and lines and cash management services. Consumer services include online and mobile banking, home equity loans and lines, mortgage options and wealth management solutions. Lakeland is proud to be recognized as one of New Jersey's Best-In State Banks by Forbes and Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jersey's 50 Fastest Growing Companies by NJBIZ. Visit LakelandBank.com or 973-697-2000 for more information.

    Thomas J. Shara
    President & CEO    		                                        Thomas F. Splaine
    EVP & CFO
       


    Lakeland Bancorp, Inc.
    Financial Highlights
    (Unaudited)
            
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
    (dollars in thousands, except per share amounts)2021 2020 2021 2020
    Income Statement       
    Net interest income$59,338  $52,134  $175,806  $152,552 
    Benefit (provision) for credit losses (2)2,703  (8,000) 11,304  (26,223)
    Gains on sales of investment securities—  —  9  342 
    Gains on sales of loans550  1,437  1,865  2,562 
    Loss on equity securities(58) (170) (191) (625)
    Other noninterest income4,977  5,506  14,814  17,986 
    Long-term debt extinguishment costs(831) —  (831) (356)
    Merger-related expenses(1,072) —  (1,072) — 
    Other noninterest expense(35,304) (32,097) (103,304) (95,707)
    Pretax income30,303  18,810  98,400  50,531 
    Provision for income taxes(8,014) (4,383) (25,529) (11,861)
    Net income$22,289  $14,427  $72,871  $38,670 
            
    Basic earnings per common share$0.43  $0.28  $1.42  $0.76 
    Diluted earnings per common share$0.43  $0.28  $1.42  $0.76 
    Dividends paid per common share$0.135  $0.125  $0.395  $0.375 
    Weighted average shares - basic50,637  50,526  50,616  50,544 
    Weighted average shares - diluted50,875  50,620  50,837  50,645 
            
    Selected Operating Ratios       
    Annualized return on average assets1.10% 0.76% 1.24% 0.73%
    Annualized return on average common equity10.94% 7.64% 12.39% 6.95%
    Annualized return on average tangible common equity (1)13.63% 9.71% 15.53% 8.86%
    Annualized yield on interest-earning assets3.40% 3.49% 3.51% 3.77%
    Annualized cost of interest-bearing liabilities0.41% 0.72% 0.45% 0.91%
    Annualized net interest spread2.99% 2.77% 3.06% 2.86%
    Annualized net interest margin3.10% 2.96% 3.19% 3.09%
    Efficiency ratio (1)54.02% 53.96% 53.24% 54.95%
    Stockholders' equity to total assets    9.96% 10.02%
    Book value per common share    $16.09  $14.93 
    Tangible book value per common share (1)    $12.95  $11.77 
    Tangible common equity to tangible assets (1)    8.18% 8.06%
            
    Asset Quality Ratios    September 30, 2021 September 30, 2020
    Ratio of allowance for credit losses to total loans (2)    0.99% 1.11%
    Non-performing loans to total loans    0.21% 0.57%
    Non-performing assets to total assets    0.15% 0.44%
    Annualized net charge-offs to average loans    0.05% 0.02%
            
    (1) See Supplemental Information - Non-GAAP Financial Measures
    (2) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") on December 31, 2020, with a $6.7 million transition adjustment retroactive to January 1, 2020. Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.
            
    Lakeland Bancorp, Inc.
    Financial Highlights
    (Unaudited)
            
    (dollars in thousands)    September 30, 2021 September 30, 2020
    Selected Balance Sheet Data at Period End      
    Loans    $5,880,802  $5,843,591 
    Allowance for credit losses (1)    57,953  65,242 
    Investment securities    1,248,705  909,535 
    Total assets    8,172,479  7,522,184 
    Total deposits    6,930,912  6,266,516 
    Short-term borrowings    111,907  97,874 
    Other borrowings    212,107  253,359 
    Stockholders' equity    814,128  753,572 
            
     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2021 2020 2021 2020
    Selected Average Balance Sheet Data       
    Loans$5,943,698  $5,775,093  $6,037,419  $5,519,621 
    Investment securities1,144,356  873,066  1,071,823  881,332 
    Interest-earning assets7,611,259  7,009,939  7,396,178  6,599,481 
    Total assets8,070,050  7,516,069  7,854,351  7,073,438 
    Noninterest-bearing demand deposits1,702,788  1,475,422  1,637,101  1,317,195 
    Savings deposits653,840  548,662  632,950  523,653 
    Interest-bearing transaction accounts3,701,676  3,086,260  3,529,586  2,942,307 
    Time deposits826,831  1,176,181  916,476  1,048,115 
    Total deposits6,885,135  6,286,525  6,716,113  5,831,270 
    Short-term borrowings108,519  58,845  89,240  100,303 
    Other borrowings162,216  269,093  148,616  273,567 
    Total interest-bearing liabilities5,453,082  5,139,042  5,316,868  4,887,945 
    Stockholders' equity807,956  751,099  786,642  743,318 
            

    (1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

    Lakeland Bancorp, Inc. and Subsidiaries
    Consolidated Statements of Income (Unaudited)

      For the Three Months Ended September 30, For the Nine Months Ended September 30,
    (in thousands, except per share data) 2021 2020 2021 2020
    Interest Income        
    Loans and fees $59,957  $56,801  $179,264  $170,483 
    Federal funds sold and interest-bearing deposits with banks 161  92  250  287 
    Taxable investment securities and other 4,232  4,139  12,242  14,131 
    Tax-exempt investment securities 588  401  1,831  1,082 
    Total Interest Income 64,938  61,433  193,587  185,983 
    Interest Expense        
    Deposits 3,987  7,012  13,349  25,969 
    Federal funds purchased and securities sold under agreements to repurchase 19  27  58  531 
    Other borrowings 1,594  2,260  4,374  6,931 
    Total Interest Expense 5,600  9,299  17,781  33,431 
    Net Interest Income 59,338  52,134  175,806  152,552 
    (Benefit) provision for credit losses (1) (2,703) 8,000  (11,304) 26,223 
    Net Interest Income after Provision for Credit Losses 62,041  44,134  187,110  126,329 
    Noninterest Income        
    Service charges on deposit accounts 2,536  2,288  7,277  6,663 
    Commissions and fees 1,609  1,667  4,962  4,503 
    Income on bank owned life insurance 645  670  1,922  2,000 
    Loss on equity securities (58) (170) (191) (625)
    Gains on sales of loans 550  1,437  1,865  2,562 
    Gains on sales of investment securities, net —  —  9  342 
    Swap income —   624  634  4,234 
    Other income 187  257  19  586 
    Total Noninterest Income 5,469  6,773  16,497  20,265 
    Noninterest Expense        
    Compensation and employee benefits 21,478  19,065  62,403  57,282 
    Premises and equipment 6,206  5,582  18,602  16,249 
    FDIC insurance 461  625  1,793  1,373 
    Data processing 1,495  1,211  4,049  3,900 
    Merger related expenses 1,072  —  1,072  — 
    Other operating expenses 6,495  5,614  17,288  17,259 
    Total Noninterest Expense 37,207  32,097  105,207  96,063 
    Income before provision for income taxes 30,303  18,810  98,400  50,531 
    Provision for income taxes 8,014  4,383  25,529  11,861 
    Net Income $22,289  $14,427  $72,871  $38,670 
    Per Share of Common Stock      
    Basic earnings $0.43  $0.28  $1.42  $0.76 
    Diluted earnings $0.43  $0.28  $1.42  $0.76 
    Dividends $0.135  $0.125  $0.395  $0.375 
                     

    (1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

    Lakeland Bancorp, Inc.
    Consolidated Balance Sheets
    (dollars in thousands)September 30, 2021 December 31, 2020
     (Unaudited)  
    Assets   
    Cash$641,861  $262,327 
    Interest-bearing deposits due from banks20,774  7,763 
    Total cash and cash equivalents662,635  270,090 
    Investment securities available for sale, at estimated fair value (allowance for credit losses of $50 at September 30, 2021 and $2 at December 31, 2020 )529,381  855,746 
    Investment securities held to maturity (estimated fair value of $686,728 at September 30, 2021 and $93,868 at December 31, 2020, allowance for credit losses of $183 at September 30, 2021 and none at December 31, 2020)693,562  90,766 
    Equity securities, at fair value16,422  14,694 
    Federal Home Loan Bank and other membership stocks, at cost9,340  11,979 
    Loans held for sale851  1,335 
    Loans, net of deferred fees5,880,802  6,021,232 
    Less: Allowance for credit  losses57,953  71,124 
    Net loans5,822,849  5,950,108 
    Premises and equipment, net46,163  48,495 
    Operating lease right-of-use assets14,809  16,772 
    Accrued interest receivable18,182  19,339 
    Goodwill156,277  156,277 
    Other identifiable intangible assets2,631  3,288 
    Bank owned life insurance117,073  115,115 
    Other assets82,304  110,293 
    Total Assets$8,172,479  $7,664,297 
    Liabilities and Stockholders' Equity   
    Liabilities   
    Deposits:   
    Noninterest-bearing$1,724,646  $1,510,224 
    Savings and interest-bearing transaction accounts4,401,367  3,867,303 
    Time deposits $250 thousand and under667,297  895,056 
    Time deposits over $250 thousand137,602  183,200 
    Total deposits6,930,912  6,455,783 
    Federal funds purchased and securities sold under agreements to repurchase111,907  169,560 
    Other borrowings25,000  25,000 
    Subordinated debentures187,107  118,257 
    Operating lease liabilities16,105  18,183 
    Other liabilities87,320  113,730 
    Total Liabilities7,358,351  6,900,513 
    Stockholders' Equity   
    Common stock, no par value; authorized 100,000,000 shares; issued 50,733,113 shares and outstanding 50,602,078 shares at September 30, 2021 and issued 50,610,681 shares and outstanding 50,479,646 shares at December 31, 2020564,974  562,421 
    Retained earnings244,092  191,418 
    Treasury shares, at cost, 131,035 shares at September 30, 2021 and December 31, 2020(1,452) (1,452)
    Accumulated other comprehensive income6,514  11,397 
    Total Stockholders' Equity814,128  763,784 
    Total Liabilities and Stockholders' Equity$8,172,479  $7,664,297 
            


    Lakeland Bancorp, Inc.
    Financial Highlights
    (Unaudited)
          
     For the Quarter Ended
     September 30,June 30,March 31,December 31,September 30,
    (dollars in thousands, except per share data)20212021202120202020
    Income Statement     
    Net interest income$59,338  $59,740  $56,728  $55,135  $52,134 
    Benefit (provision) for credit losses (1)2,703  5,959  2,642  (789) (8,000)
    Gains on sales of investment securities—  9  —  871  — 
    Gains on sales of loans550  607  708  760  1,437 
    (Loss) gain on equity securities(58) 11  (144) 73  (170)
    Other noninterest income4,977  4,642  5,195  5,141  5,506 
    Long-term debt extinguishment costs(831) —  —  (3,777) — 
    Merger-related expenses(1,072) —  —  —  — 
    Other noninterest expense(35,304) (34,097) (33,903) (33,168) (32,097)
    Pretax income30,303  36,871  31,226  24,246  18,810 
    Provision for income taxes(8,014) (9,464) (8,051) (5,398) (4,383)
    Net income$22,289  $27,407  $23,175  $18,848  $14,427 
          
    Basic earnings per common share$0.43  $0.53  $0.45  $0.37  $0.28 
    Diluted earnings per common share$0.43  $0.53  $0.45  $0.37  $0.28 
    Dividends paid per common share$0.135  $0.135  $0.125  $0.125  $0.125 
    Dividends paid$7,001  $6,828  $6,369  $6,364  $6,365 
    Weighted average shares - basic50,637  50,636  50,576  50,527  50,526 
    Weighted average shares - diluted50,875  50,858  50,780  50,672  50,620 
          
    Selected Operating Ratios     
    Annualized return on average assets1.10% 1.41% 1.22% 0.98% 0.76%
    Annualized return on average common equity10.94% 14.07% 12.20% 9.96% 7.64%
    Annualized return on average tangible common equity (2)13.63% 17.67% 15.39% 12.64% 9.71%
    Annualized net interest margin3.10% 3.27% 3.19% 3.08% 2.96%
    Efficiency ratio (2)54.02% 51.98% 53.75% 53.74% 53.96%
    Common stockholders' equity to total assets9.96% 10.14% 9.88% 9.97% 10.02%
    Tangible common equity to tangible assets (2)8.18% 8.29% 8.00% 8.05% 8.06%
    Tier 1 risk-based ratio11.19% 10.78% 10.47% 10.22% 10.34%
    Total risk-based ratio14.73% 13.11% 13.02% 12.85% 12.93%
    Tier 1 leverage ratio8.60% 8.70% 8.51% 8.37% 8.36%
    Common equity tier 1 capital ratio10.70% 10.29% 9.98% 9.73% 9.83%
    Book value per common share$16.09  $15.74  $15.18  $15.13  $14.93 
    Tangible book value per common share (2)$12.95  $12.60  $12.03  $11.97  $11.77 
                        

    (1)  Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.
    (2) See Supplemental Information - Non-GAAP Financial Measures

    Lakeland Bancorp, Inc.
    Financial Highlights
    (Unaudited)
     For the Quarter Ended
     September 30,June 30,March 31,December 31,September 30,
    (dollars in thousands)20212021202120202020
    Selected Balance Sheet Data at Period End    
    Loans$5,880,802 $5,988,832 $6,108,946 $6,021,232 $5,843,591 
    Allowance for credit losses on loans (1)57,953 60,389 67,252 71,124 65,242 
    Investment securities1,248,705 1,107,601 1,078,750 973,185 909,535 
    Total assets8,172,479 7,854,238 7,771,761 7,664,297 7,522,184 
    Total deposits6,930,912 6,715,035 6,635,226 6,455,783 6,266,516 
    Short-term borrowings111,907 100,190 111,999 169,560 97,874 
    Other borrowings212,107 138,045 143,267 143,257 253,359 
    Stockholders' equity814,128 796,676 768,065 763,784 753,572 
          
    Loans     
    Non-owner occupied commercial$2,300,637 $2,330,376 $2,375,024 $2,398,946  
    Owner occupied commercial884,144 870,535 857,506 827,092  
    Multifamily907,903 902,394 858,168 813,225  
    Non-owner occupied residential177,592 189,765 195,534 200,229  
    Total commercial, secured by real estate (1)$4,270,276 $4,293,070 $4,286,232 $4,239,492 $4,042,946 
    Commercial, industrial and other363,976 358,659 394,416 433,553 418,813 
    Construction332,868 335,167 291,252 266,883 275,716 
    Paycheck Protection Program109,348 207,045 346,150 284,636 325,115 
    Equipment financing119,709 121,096 119,428 116,690 118,320 
    Residential mortgages407,021 391,589 385,778 377,380 343,317 
    Consumer and home equity277,604 282,206 285,690 302,598 319,364 
    Total loans$5,880,802 $5,988,832 $6,108,946 $6,021,232 $5,843,591 
          
    Deposits     
    Noninterest-bearing$1,724,646 $1,683,887 $1,631,942 $1,510,224 $1,474,847 
    Savings and interest-bearing transaction accounts4,401,367 4,198,709 4,049,914 3,867,303 3,647,328 
    Time deposits804,899 832,439 953,370 1,078,256 1,144,341 
    Total deposits$6,930,912 $6,715,035 $6,635,226 $6,455,783 $6,266,516 
          
    Total loans to total deposits ratio84.8%89.2%92.1%93.3%93.3%
          
    Selected Average Balance Sheet Data     
    Loans$5,943,698 $6,080,408 $6,089,757 $5,939,904 $5,775,093 
    Investment securities1,144,356 1,066,086 1,003,479 912,723 873,066 
    Interest-earning assets7,611,259 7,342,952 7,230,136 7,137,884 7,009,939 
    Total assets8,070,050 7,784,385 7,704,603 7,625,458 7,516,069 
    Noninterest-bearing demand deposits1,702,788 1,660,825 1,545,968 1,499,093 1,475,422 
    Savings deposits653,840 639,540 604,931 571,794 548,662 
    Interest-bearing transaction accounts3,701,676 3,495,610 3,388,027 3,313,556 3,086,260 
    Time deposits826,831 880,079 1,044,915 1,112,053 1,176,181 
    Total deposits6,885,135 6,676,054 6,583,841 6,496,496 6,286,525 
    Short-term borrowings108,519 85,325 73,492 68,962 58,845 
    Other borrowings162,216 140,162 143,261 155,943 269,093 
    Total interest-bearing liabilities5,453,082 5,240,716 5,254,626 5,222,308 5,139,042 
    Stockholders' equity807,956 781,299 770,255 753,059 751,099 
               

    (1)  Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

    Lakeland Bancorp, Inc.
    Financial Highlights
    (Unaudited)
     For the Quarter Ended
     September 30,June 30,March 31,December 31,September 30,
    (dollars in thousands)20212021202120202020
    Average Annualized Yields (Taxable Equivalent Basis) and Costs   
    Assets     
    Loans4.00% 3.99% 3.91% 3.92% 3.91%
    Taxable investment securities and other1.68% 1.72% 1.81% 1.84% 2.09%
    Tax-exempt securities2.15% 2.50% 2.54% 2.51% 2.55%
    Federal funds sold and interest-bearing cash accounts0.12% 0.11% 0.11% 0.09% 0.10%
    Total interest-earning assets3.40% 3.57% 3.56% 3.51% 3.49%
    Liabilities                   
    Savings accounts0.05% 0.05% 0.05% 0.05% 0.06%
    Interest-bearing transaction accounts0.30% 0.32% 0.34% 0.38% 0.44%
    Time deposits0.55% 0.61% 0.83% 1.01% 1.19%
    Borrowings2.33% 2.22% 2.87% 2.84% 2.73%
    Total interest-bearing liabilities0.41% 0.42% 0.51% 0.59% 0.72%
    Net interest spread (taxable equivalent basis)2.99% 3.15% 3.05% 2.92% 2.77%
    Annualized net interest margin (taxable equivalent basis)3.10% 3.27% 3.19% 3.08% 2.96%
    Annualized cost of deposits0.23% 0.25% 0.32% 0.37% 0.44%
    Asset Quality Data     
    Allowance for Credit Losses on Loans     
    Balance at beginning of period$60,389  $67,252  $71,124  $65,242  $57,839 
    Impact of adopting ASU 2016-13 (1) —  —  6,656  — 
    (Benefit) provision for credit losses on loans(2,705) (5,314) (2,808) (246) 8,000 
    Charge-offs(969) (1,862) (1,270) (746) (682)
    Recoveries1,238  313  206  218  85 
    Balance at end of period$57,953  $60,389  $67,252  $71,124  $65,242 
          
    Net Loan Charge-Offs (Recoveries)     
    Commercial, real estate$(1) $1,590  $843  $(47) $298 
    Commercial, industrial and other(265) 5  221  478  173 
    Equipment financing139  4  83  64  95 
    Residential mortgages27  (82) (58) —  (1)
    Consumer and home equity(169) 32  (25) 33  32 
    Net (recoveries) charge-offs$(269) $1,549  $1,064  $528  $597 
    Non-Performing Assets (2)     
    Commercial, real estate$10,343  $20,594  $23,984  $35,091  $26,145 
    Commercial, industrial and other1,108  1,449  2,252  2,633  1,484 
    Equipment financing224  264  293  327  444 
    Residential mortgages123  —  2,323  2,469  2,695 
    Consumer and home equity452  308  2,274  2,243  2,322 
    Total non-accrual loans12,250  22,615  31,126  42,763  33,090 
    Property acquired through foreclosure or repossession—  —  —  —  — 
    Total non-performing assets$12,250  $22,615  $31,126  $42,763  $33,090 
    Loans past due 90 days or more and still accruing$—  $—  $—  $1  $165 
    Loans restructured and still accruing$3,414  $3,595  $3,799  $3,856  $4,299 
    Ratio of allowance for loan losses to total loans0.99% 1.01% 1.10% 1.18% 1.11%
    Total non-accrual loans to total loans0.21% 0.38% 0.51% 0.71% 0.57%
    Total non-performing assets to total assets0.15% 0.29% 0.40% 0.56% 0.44%
    Annualized net (recoveries)  charge-offs to average loans(0.02)% 0.10% 0.07% 0.04% 0.04%
                   

    (1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13
    (2) Includes non-accrual purchased credit deteriorated loans from December 31, 2020 forward

    Lakeland Bancorp, Inc.
    Supplemental Information - Non-GAAP Financial Measures
    (Unaudited)
     At or for the Quarter Ended
     September 30,June 30,March 31,December 31,September 30,
    (dollars in thousands, except per share amounts)20212021202120202020
    Calculation of Tangible Book Value Per Common Share    
    Total common stockholders' equity at end of period - GAAP$814,128  $796,676  $768,065  $763,784  $753,572 
    Less:  Goodwill156,277  156,277  156,277  156,277  156,277 
    Less:  Other identifiable intangible assets2,631  2,841  3,063  3,288  3,538 
    Total tangible common stockholders' equity at end of period - Non-GAAP$655,220  $637,558  $608,725  $604,219  $593,757 
    Shares outstanding at end of period50,602  50,601  50,598  50,480  50,468 
    Book value per share - GAAP$16.09  $15.74  $15.18  $15.13  $14.93 
    Tangible book value per share - Non-GAAP$12.95  $12.60  $12.03  $11.97  $11.77 
    Calculation of Tangible Common Equity to Tangible Assets   
    Total tangible common stockholders' equity at end of period - Non-GAAP$655,220  $637,558  $608,725  $604,219  $593,757 
    Total assets at end of period - GAAP$8,172,479  $7,854,238  $7,771,761  $7,664,297  $7,522,184 
    Less:  Goodwill156,277  156,277  156,277  156,277  156,277 
    Less:  Other identifiable intangible assets2,631  2,841  3,063  3,288  3,538 
    Total tangible assets at end of period - Non-GAAP$8,013,571  $7,695,120  $7,612,421  $7,504,732  $7,362,369 
    Common equity to assets - GAAP9.96% 10.14% 9.88% 9.97% 10.02%
    Tangible common equity to tangible assets - Non-GAAP8.18% 8.29% 8.00% 8.05% 8.06%
    Calculation of Return on Average Tangible Common Equity      
    Net income - GAAP$22,289  $27,407  $23,175  $18,848  $14,427 
    Total average common stockholders' equity - GAAP$807,956  $781,299  $770,255  $753,059  $751,099 
    Less:  Average goodwill156,277  156,277  156,277  156,277  156,277 
    Less:  Average other identifiable intangible assets2,758  2,979  3,192  3,433  3,689 
    Total average tangible common stockholders' equity - Non-GAAP$648,921  $622,043  $610,786  $593,349  $591,133 
    Return on average common stockholders' equity - GAAP10.94% 14.07% 12.20% 9.96% 7.64%
    Return on average tangible common stockholders' equity - Non-GAAP13.63% 17.67% 15.39% 12.64% 9.71%
    Calculation of Efficiency Ratio     
    Total noninterest expense$37,207  $34,097  $33,903  $36,945  $32,097 
    Amortization of core deposit intangibles(211) (221) (226) (249) (250)
    Merger-related expenses(1,072) —  —  —  — 
    Long term debt extinguishment costs(831) —  —  (3,777) — 
    Noninterest expense, as adjusted$35,093  $33,876  $33,677  $32,919  $31,847 
    Net interest income$59,338  $59,740  $56,728  $55,135  $52,134 
    Total noninterest income5,469  5,269  5,759  6,845  6,773 
    Total revenue64,807  65,009  62,487  61,980  58,907 
    Tax-equivalent adjustment on municipal securities157  167  163  149  108 
    Gains on sales of investment securities—  (9) —  (871) — 
    Total revenue, as adjusted$64,964  $65,167  $62,650  $61,258  $59,015 
    Efficiency ratio - Non-GAAP54.02% 51.98% 53.75% 53.74% 53.96%
                   


    Lakeland Bancorp, Inc.
    Supplemental Information - Non-GAAP Financial Measures
    (Unaudited)
     For the Nine Months Ended September 30,
    (dollars in thousands)2021 2020
    Calculation of Return on Average Tangible Common Equity   
    Net income - GAAP$72,871  $38,670 
        
    Total average common stockholders' equity - GAAP$786,642  $743,318 
    Less:  Average goodwill156,277  156,277 
    Less:  Average other identifiable intangible assets2,975  3,944 
    Total average tangible common stockholders' equity - Non-GAAP$627,390  $583,097 
    Return on average common stockholders' equity - GAAP12.39% 6.95%
    Return on average tangible common stockholders' equity - Non-GAAP15.53% 8.86%
        
    Calculation of Efficiency Ratio   
    Total noninterest expense$105,207  $96,063 
    Amortization of core deposit intangibles(658) (776)
    Long-term debt extinguishment costs(831) (356)
    Merger-related expenses(1,072) — 
    Noninterest expense, as adjusted$102,646  $94,931 
        
    Net interest income$175,806  $152,552 
    Noninterest income16,497  20,265 
    Total revenue$192,303  $172,817 
    Tax-equivalent adjustment on municipal securities487  289 
    Gains on sales of investment securities(9) (342)
    Total revenue, as adjusted$192,781  $172,764 
    Efficiency ratio - Non-GAAP53.24% 54.95%
          

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