OREANDA-NEWS. Lakeland Bancorp, Inc. (NASDAQ:LBAI) (the “Company”) reported the following results for the quarter ended June 30, 2016:

  • Net income in the second quarter of 2016 was $10.1 million, 29% higher than the $7.9 million for the same period in 2015.  Excluding merger related expenses of $0.6 million after tax, pertaining to the Company’s acquisitions of Pascack Bancorp, Inc. (“Pascack”), which closed on January 7, 2016, and Harmony Bank (“Harmony”), which closed on July 1, 2016, net income for the second quarter of 2016 was $10.7 million.
     
  • Earnings per diluted share was $0.24 in the second quarter of 2016, 14% higher than the $0.21 per diluted share reported in the second quarter of 2015.  Excluding merger related expenses, earnings per diluted share was $0.26 in the second quarter of 2016, a 24% increase over the same period in 2015. 
  • For the second quarter of 2016, annualized return on average assets was 0.93%, annualized return on average common equity was 9.04%, and annualized return on average tangible common equity was 12.63%.  Excluding merger related expenses, these ratios were 0.98%, 9.54% and 13.33%, respectively. 
  • Net income for the first six months of 2016 was $18.2 million, or $0.44 per diluted share, compared to $16.2 million, or $0.42 per diluted share, for the same period in 2015.  Excluding merger related expenses of $1.7 million after tax, net income for the first six months of 2016 was $20.0 million, or $0.48 per diluted share.
  • The annualized return on average assets for the six months ended June 30, 2016 was 0.85%, the annualized return on average common equity was 8.23%, and the annualized return on average tangible common equity was 11.53%.  Excluding merger related expenses, these ratios were 0.93%, 9.00% and 12.62%, respectively. 
  • The Company reported strong loan growth in the second quarter of 2016.  Total loans and leases increased by $85.3 million, or 3%, to $3.45 billion during the quarter.  This overall increase was primarily due to the addition of $109.8 million, or 5%, in commercial real estate loans.  For the first six months of 2016, total loans and leases increased by $486.4 million, or 16%, to $3.45 billion during the quarter.  This increase was $166.4 million, or 6%, after excluding the $320 million in loans acquired from Pascack.
  • The Company also reported strong deposit growth in the second quarter of 2016.  Total deposits increased $74.7 million, or 2%, to $3.54 billion during the quarter.  Most notably, non-interest bearing deposits increased $49.6 million, or 6%, during the quarter.  Total deposits have increased $541.8 million, or 18%, since December 31, 2015.  This increase was $238.8 million, or 8%, after excluding the $303 million in deposits acquired from Pascack.  Non-interest bearing deposits increased $130.3 million, or 19%, in 2016.  This increase was $66.3, or 10%, after excluding the $64 million in deposits acquired from Pascack.
  • Net interest margin (“NIM”) was 3.47% for the second quarter of 2016, compared to 3.48% for the first quarter of 2016 and 3.46% for the second quarter of 2015.    
  • The efficiency ratio was 56.23% for the three months ended June 30, 2016, as compared to 62.09% for the same period in 2015.  The decrease in this ratio, in part, reflects the realization of cost savings from the Pascack acquisition, including the closing of three branches.  
  • On July 20, 2016, the Company declared a quarterly cash dividend of $0.095 per common share, payable on August 12, 2016 to holders of record as of the close of business on August 3, 2016.

Thomas J. Shara, Lakeland Bancorp’s President and CEO said, “We are very proud of the earnings growth during the second quarter of 2016 and our lowest efficiency ratio in six years.  It reflects the success of several significant initiatives we have undertaken, including the acquisition of Pascack earlier in 2016, the opening of two loan production offices in 2015, a commitment to growing our commercial loan portfolio and prudent management of our expenses.  In addition, since June 30, 2015, our assets have grown 21% to $4.5 billion at June 30, 2016 and 27% to $4.7 billion including the acquisition of Harmony Bank at the beginning of the third quarter.”

Earnings

Net income for the second quarter of 2016 was $10.1 million, as compared to $7.9 million for the second quarter of 2015.  Excluding merger related expenses of $0.6 million after tax, net income for the second quarter of 2016 was $10.7 million.

Net income for the first six months of 2016 was $18.2 million, as compared to $16.2 million for the same period in 2015.  Excluding merger related expenses of $1.7 million after tax, net income for the first six months of 2016 was $20.0 million.

Net Interest Income

Net interest income for the second quarter of 2016 was $35.1 million, as compared to $28.7 million for the same period in 2015.  This increase was primarily due to higher levels of loans in 2016 than 2015.  NIM was 3.47% for the second quarter of 2016, compared to 3.46% for the second quarter of 2015.  Included within these percentages were $0.6 million of prepayment fees, gains on called securities, and interest recoveries in 2016, versus $0.3 million in 2015.  The yield on interest earning assets for the second quarter of 2016 was 3.85%, as compared to 3.78% reported in the second quarter of 2015.  The cost of interest bearing liabilities for the second quarter of 2016 was 0.50%, as compared to 0.42% in the second quarter of 2015, reflecting the higher cost of deposits.

Net interest income for the first six months of 2016 was $69.0 million, as compared to $57.2 million reported for the first six months of 2015.  NIM for the first six months of 2016 was 3.48%, compared to 3.51% for the same period in 2015.  Included within these percentages were $1.0 million of prepayment fees, gains on called securities, and interest recoveries in 2016, versus $0.8 million in 2015.  The yield on earning assets was 3.86% for the first six months of 2016 and 3.82% for the same period in 2015.  The cost of interest bearing liabilities for 2016 was 0.50%, as compared to 0.41% in the first six months of 2015, reflecting the higher cost of deposits.

Non-interest Income

Non-interest income totaled $4.9 million for the second quarter of 2016, as compared to $5.0 million for the same period in 2015.  

Non-interest income totaled $9.8 million for the first six months of 2016, as compared to $9.7 million for the same period in 2015.  Commissions and fees of $2.1 million declined $0.4 million from the first six months of 2015 to the first six months of 2016, primarily because of a decline in financial services income related to a decrease in demand for annuities.  Income on bank owned life insurance of $0.8 million declined $0.3 million from the first six months of 2015 to the first six months of 2016 because of death benefits received on a bank owned life insurance policy in 2015 that did not recur in 2016.  These decreases were partially offset by $0.4 million in additional realized gains from the sale of investment securities and a $0.2 million increase in service charges on deposit accounts from higher debit card interchange fee income. 

Non-interest Expense  

Non-interest expense for the second quarter of 2016 was $23.7 million, an increase of $2.5 million compared to $21.2 million for the same period in 2015. Excluding the pre-tax impact of $0.7 million in merger related expenses, non-interest expense increased by $1.8 million.  Salary and benefit expense of $13.1 million increased by $0.9 million, due primarily to a full quarter of expenses associated with the loan production offices that opened in the first and second quarters of 2015, the addition of Pascack employees during the first quarter in 2016 and year-over-year increases in employee salary and benefit costs.  Net occupancy expense of $2.3 million, furniture and equipment at $2.1 million, and FDIC insurance expense of $0.7 million increased a combined $0.7 million, primarily due to the addition of Pascack branches and deposits. 

For the first six months of 2016, non-interest expenses were $49.1 million, an increase of $7.9 million when compared to $41.2 million for the same period in 2015.  Excluding the pre-tax impact of $2.4 million in merger related expenses, non-interest expense increased by $5.5 million.  Salary and benefit expense of $27.2 million increased by $3.3 million, due primarily to two full quarters of expenses associated with the loan production offices that opened in the first and second quarters of 2015, the addition of Pascack employees during the first quarter in 2016 and year-over-year increases in employee salary and benefit costs.  The remaining increases in non-interest expense categories were primarily due to the costs related to the addition of Pascack branches, including occupancy, FDIC insurance expense and supplies. 

Financial Condition

From December 31, 2015 to June 30, 2016, total assets increased $598.3 million to $4.47 billion, including $390 million from Pascack.  During the same period, total loans and leases increased by $486.4 million, including $320 million from Pascack, and total deposits increased $541.8 million to $3.54 billion, including $303 million from Pascack.  Excluding Pascack, total loans and leases increased 6% and deposits increased 8%.  Also, non-interest bearing deposits increased $130.3 million to $824.1 million in 2016, including $64 million from Pascack, while interest bearing deposits increased $411.4 million to $2.71 billion, including $239 million from Pascack. 

Asset Quality

At June 30, 2016, non-performing assets totaled $26.5 million (0.59% of total assets), compared to $23.7 million (0.61% of total assets) at December 31, 2015.  Non-performing loans and leases as a percent of total loans and leases at 0.72% decreased four basis points from December 31, 2015.  The allowance for loan and lease losses totaled $30.7 million at June 30, 2016, and represented 0.89% of total loans and leases, compared to $30.9 million at December 31, 2015, which represented 1.04% of total loans and leases, prior to the Pascack acquisition.  For the first six months of 2016, the Company had net charge-offs of $2.3 million (0.14% of average loans), as compared to $2.1 million (0.16% of average loans) for the same period in 2015.  The provision for loan and lease losses for the first six months of 2016 was $2.1 million, compared to $1.6 million for the same period in 2015.

Capital

At June 30, 2016, stockholders' equity was $454.9 million, while book value per common share was $11.03.  Tangible book value per common share was $7.93, an increase of 4% from December 31, 2015.  As of June 30, 2016, the Company’s leverage ratio was 8.24%.  Tier I and total risk based capital ratios were 9.74% and 10.65%, respectively.  The common equity tier 1 capital ratio was 8.91%.  The tangible common equity ratio was 7.53%.  The regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal regulatory guidelines.

About Lakeland Bank
Lakeland Bancorp, the holding company for Lakeland Bank, has approximately $4.7 billion in total assets with 56 New Jersey branch offices in Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, Union and Warren counties, five New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Teaneck and 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 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.

 
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
                     
        Three Months Ended June 30,   Six Months Ended June 30,
(Dollars in thousands, except per share amounts)   2016       2015       2016       2015  
                     
INCOME STATEMENT                
Net interest income     $ 35,102     $ 28,669     $ 68,952     $ 57,187  
Provision for loan and lease losses     (1,010 )     (740 )     (2,085 )     (1,610 )
Other non-interest income     4,460       4,477       8,537       8,950  
Gain on investment securities     -       17       370       17  
Gain on sale of loans       425       464       845       729  
Merger related expenses       (685 )     -       (2,406 )     -  
Provision for unfunded lending commitments   (230 )     (60 )     (438 )     (190 )
Other non-interest expense     (22,800 )     (21,135 )     (46,295 )     (41,047 )
Pretax income       15,262       11,692       27,480       24,036  
Provision for income taxes     (5,132 )     (3,830 )     (9,242 )     (7,844 )
Net income     $ 10,130     $ 7,862     $ 18,238     $ 16,192  
                     
Basic earnings per common share   $ 0.24     $ 0.21     $ 0.44     $ 0.42  
Diluted earnings per common share   $ 0.24     $ 0.21     $ 0.44     $ 0.42  
Dividends per common share   $ 0.095     $ 0.085     $ 0.180     $ 0.160  
Weighted average shares - basic     41,238       37,854       41,084       37,827  
Weighted average shares - diluted     41,406       37,988       41,245       37,961  
                     
SELECTED OPERATING RATIOS                
Annualized return on average assets     0.93 %     0.88 %     0.85 %     0.92 %
Annualized return on average common equity   9.04 %     8.08 %     8.23 %     8.44 %
Annualized return on average tangible common equity (1)   12.63 %     11.33 %     11.53 %     11.87 %
Annualized return on interest earning assets   3.85 %     3.78 %     3.86 %     3.82 %
Annualized cost of interest bearing liabilities   0.50 %     0.42 %     0.50 %     0.41 %
Annualized net interest spread     3.35 %     3.36 %     3.36 %     3.41 %
Annualized net interest margin     3.47 %     3.46 %     3.48 %     3.51 %
Efficiency ratio (1)       56.23 %     62.09 %     58.26 %     60.64 %
Stockholders' equity to total assets             10.18 %     10.57 %
Book value per common share           $ 11.03     $ 10.31  
Tangible book value per common share (1)         $ 7.93     $ 7.36  
Tangible common equity to tangible assets (1)           7.53 %     7.78 %
                     
ASSET QUALITY RATIOS           6/30/2016   6/30/2015
Ratio of allowance for loan and lease losses to total loans and leases         0.89 %     1.09 %
Non-performing loans and leases to total loans and leases           0.72 %     0.69 %
Non-performing assets to total assets             0.59 %     0.54 %
Annualized net charge-offs to average loans and leases           0.14 %     0.16 %
                     
SELECTED BALANCE SHEET DATA AT PERIOD-END       6/30/2016   6/30/2015
Loans and leases             $ 3,454,304     $ 2,756,694  
Allowance for loan and lease losses           (30,667 )     (30,174 )
Investment securities               602,408       597,598  
Total assets                 4,467,860       3,699,127  
Total deposits             3,537,331       2,842,953  
Short-term borrowings               123,662       146,249  
Other borrowings               326,009       303,966  
Stockholders' equity             454,934       390,860  
                     
SELECTED AVERAGE BALANCE SHEET DATA For the Three Months Ended   For the Six Months Ended
        6/30/2016   6/30/2015   6/30/2016   6/30/2015
Loans and leases     $ 3,412,503     $ 2,720,801     $ 3,348,421     $ 2,690,823  
Investment securities       575,206       600,547       572,894       591,778  
Interest earning assets     4,094,575       3,345,380       4,013,868       3,308,450  
Total assets     4,403,588       3,600,416       4,326,028       3,563,860  
Non-interest bearing demand deposits     801,488       688,854       780,843       674,780  
Savings deposits       485,580       402,142       480,725       398,667  
Interest bearing transaction accounts     1,775,129       1,480,866       1,728,855       1,488,028  
Time deposits       487,169       295,996       476,097       288,459  
Total deposits     3,549,366       2,867,858       3,466,520       2,849,934  
Short-term borrowings       31,591       59,249       40,963       53,570  
Other borrowings       346,347       267,610       347,718       257,519  
Total interest bearing liabilities     3,125,815       2,505,863       3,074,357       2,486,243  
Stockholders' equity       450,806       390,151       445,815       386,887  
                     
(1) See Supplemental Information - Non-GAAP Financial Measures            
                       
Lakeland Bancorp, Inc.   
Consolidated Statements of Operations  
(Unaudited)  
                       
            Three Months Ended June 30,   Six Months Ended June 30,  
(Dollars in thousands, except per share amounts)           2016     2015       2016     2015    
                       
INTEREST INCOME                    
Loans and fees         $ 35,800   $ 28,211     $ 69,921   $ 56,107    
Federal funds sold and interest bearing deposits with banks     124     11       199     23    
Taxable investment securities and other       2,696     2,688       5,658     5,362    
Tax exempt investment securities         417     398       830     808    
  TOTAL INTEREST INCOME         39,037     31,308       76,608     62,300    
INTEREST EXPENSE                    
Deposits             2,404     1,346       4,609     2,629    
Federal funds purchased and securities sold under agreements to repurchase     9     37       47     59    
Other borrowings           1,522     1,256       3,000     2,425    
  TOTAL INTEREST EXPENSE       3,935     2,639       7,656     5,113    
NET INTEREST INCOME         35,102     28,669       68,952     57,187    
Provision for loan and lease losses         1,010     740       2,085     1,610    
  NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES   34,092     27,929       66,867     55,577    
NON-INTEREST INCOME                  
Service charges on deposit accounts         2,523     2,450       4,965     4,790    
Commissions and fees           1,099     1,196       2,078     2,503    
Gain on investment securities         -     17       370     17    
Gain on sale of loans           425     464       845     729    
Income on bank owned life insurance         414     388       822     1,087    
Other income             424     443       672     570    
  TOTAL NON-INTEREST INCOME           4,885     4,958       9,752     9,696    
NON-INTEREST EXPENSE                  
Salaries and employee benefits         13,091     12,144       27,176     23,894    
Net occupancy expense           2,341     2,273       5,029     4,821    
Furniture and equipment           2,082     1,629       4,028     3,285    
Stationary, supplies and postage         416     377       859     742    
Marketing expense           385     416       694     656    
FDIC insurance expense           681     531       1,271     1,049    
ATM and debit card expense         383     382       729     724    
Telecommunications expense         386     358       810     703    
Data processing expense           459     438       979     773    
Other real estate owned and other repossessed assets expense     26     27       65     19    
Merger related expenses           685     -       2,406     -    
Core deposit intangible amortization         164     107       331     218    
Provision for unfunded lending commitments       230     60       438     190    
Other expenses             2,386     2,453       4,324     4,163    
  TOTAL NON-INTEREST EXPENSE     23,715     21,195       49,139     41,237    
INCOME BEFORE PROVISION FOR INCOME TAXES             15,262     11,692       27,480     24,036    
Provision for income taxes             5,132     3,830       9,242     7,844    
NET INCOME           $ 10,130   $ 7,862     $ 18,238   $ 16,192    
EARNINGS PER COMMON SHARE                
Basic           $ 0.24   $ 0.21     $ 0.44   $ 0.42    
Diluted           $ 0.24   $ 0.21     $ 0.44   $ 0.42    
DIVIDENDS PER COMMON SHARE           $ 0.095   $ 0.085     $ 0.180   $ 0.160    
                       
Lakeland Bancorp, Inc.
Consolidated Balance Sheets
               
          June 30,   December 31,
(Dollars in thousands)         2016       2015  
          (Unaudited)    
ASSETS              
Cash and due from banks       $ 146,306     $ 113,894  
Federal funds sold and interest bearing deposits due from banks           6,577       4,599  
Total cash and cash equivalents           152,883       118,493  
               
Investment securities available for sale, at fair value     460,390       442,349  
Investment securities held to maturity; fair value of $129,447 in 2016      
and $117,594 in 2015         126,221       116,740  
Federal Home Loan Bank and other membership stocks, at cost   15,797       14,087  
Loans held for sale         6,463       1,233  
Loans and leases:            
Commercial, real estate         2,353,125       1,879,659  
Commercial, industrial and other       313,062       307,044  
Leases           63,338       56,660  
Residential mortgages         383,823       389,692  
Consumer and home equity       340,956       334,891  
Total loans and leases       3,454,304       2,967,946  
Net deferred costs         (2,922 )     (2,746 )
Allowance for loan and lease losses       (30,667 )     (30,874 )
Net loans and leases           3,420,715       2,934,326  
Premises and equipment, net       49,322       35,881  
Accrued interest receivable       10,480       9,208  
Goodwill           125,285       109,974  
Other identifiable intangible assets       2,728       1,545  
Bank owned life insurance         66,212       65,361  
Other assets           31,364       20,353  
TOTAL ASSETS         $ 4,467,860     $ 3,869,550  
               
LIABILITIES AND STOCKHOLDERS' EQUITY        
LIABILITIES            
Deposits:              
Non-interest bearing       $ 824,077     $ 693,741  
Savings and interest bearing transaction accounts     2,235,918       1,958,510  
Time deposits through $250,000           359,471       270,623  
Time deposits over $250,000           117,865       72,698  
Total deposits           3,537,331       2,995,572  
Federal funds purchased and securities sold under agreements to repurchase   123,662       151,234  
Other borrowings         294,771       271,905  
Subordinated debentures         31,238       31,238  
Other liabilities           25,924       19,085  
TOTAL LIABILITIES         4,012,926       3,469,034  
               
STOCKHOLDERS' EQUITY          
Common stock, no par value; authorized 70,000,000 shares;      
issued 41,240,826 shares at June 30, 2016              
and 37,906,481 shares at December 31, 2015           424,409       386,287  
Retained earnings         23,836       13,079  
Accumulated other comprehensive gain         6,689       1,150  
TOTAL STOCKHOLDERS' EQUITY           454,934       400,516  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $ 4,467,860     $ 3,869,550  
               
Lakeland Bancorp, Inc.  
Financial Highlights  
(Unaudited)  
                 
      For the Quarter Ended  
      June 30, Mar 31, Dec 31, Sept 30, Jun 30,  
(Dollars in thousands, except per share data)     2016     2016     2015     2015     2015    
                 
INCOME STATEMENT              
Net interest income   $ 35,102   $ 33,850   $ 30,119   $ 29,334   $ 28,669    
Provision for loan and lease losses     (1,010 )   (1,075 )   -     (332 )   (740 )  
Other non-interest income     4,460     4,077     4,290     4,169     4,477    
Gain on investment securities     -     370     51     173     17    
Gain on sale of loans     425     420     437     515     464    
Gain on debt extinguishment     -     -     -     1,830     -    
Long-term debt prepayment fee     -     -     -     (2,407 )   -    
Merger related expenses     (685 )   (1,721 )   (822 )   (330 )   -    
Provision for unfunded lending commitments     (230 )   (208 )   (506 )   (168 )   (60 )  
Other non-interest expense     (22,800 )   (23,495 )   (20,814 )   (20,927 )   (21,135 )  
Pretax income     15,262     12,218     12,755     11,857     11,692    
Provision for income taxes     (5,132 )   (4,110 )   (4,291 )   (4,032 )   (3,830 )  
Net income   $ 10,130   $ 8,108   $ 8,464   $ 7,825   $ 7,862    
                 
Basic earnings per common share   $ 0.24   $ 0.20   $ 0.22   $ 0.20   $ 0.21    
Diluted earnings per common share   $ 0.24   $ 0.20   $ 0.22   $ 0.20   $ 0.21    
Dividends per common share   $ 0.095   $ 0.085   $ 0.085   $ 0.085   $ 0.085    
Dividends paid   $ 3,955   $ 3,525   $ 3,246   $ 3,244   $ 3,243    
Weighted average shares - basic     41,238     40,931     37,865     37,856     37,854    
Weighted average shares - diluted     41,406     41,091     38,048     38,016     37,988    
                 
SELECTED OPERATING RATIOS              
Annualized return on average assets     0.93 %   0.77 %   0.89 %   0.84 %   0.88 %  
Annualized return on average common equity     9.04 %   7.40 %   8.40 %   7.86 %   8.08 %  
Annualized return on average tangible common equity (1)   12.63 %   10.40 %   11.64 %   10.96 %   11.33 %  
Annualized net interest margin     3.47 %   3.48 %   3.43 %   3.42 %   3.46 %  
Efficiency ratio (1)     56.23 %   60.38 %   58.70 %   60.77 %   62.09 %  
Common stockholders' equity to total assets     10.18 %   10.15 %   10.35 %   10.62 %   10.57 %  
Tangible common equity to tangible assets (1)     7.53 %   7.45 %   7.69 %   7.88 %   7.78 %  
Tier 1 risk-based ratio     9.74 %   9.93 %   10.53 %   10.81 %   11.05 %  
Total risk-based ratio     10.65 %   10.87 %   11.61 %   11.93 %   12.15 %  
Tier 1 leverage ratio     8.24 %   8.33 %   8.70 %   8.77 %   9.12 %  
Common equity tier 1 capital ratio     8.91 %   9.06 %   9.54 %   9.78 %   9.66 %  
Book value per common share   $ 11.03   $ 10.84   $ 10.57   $ 10.49   $ 10.31    
Tangible book value per common share (1)   $ 7.93   $ 7.72   $ 7.62   $ 7.55   $ 7.36    
                 
(1) See Supplemental Information - Non-GAAP Financial Measures          
                 
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
                 
        For the Quarter Ended
        June 30, Mar 31, Dec 31, Sept 30, Jun 30,
(Dollars in thousands)       2016     2016     2015     2015     2015  
             
SELECTED BALANCE SHEET DATA AT PERIOD-END        
Loans and leases     $ 3,454,304   $ 3,368,961   $ 2,967,946   $ 2,853,764   $ 2,756,694  
Allowance for loan and lease losses   (30,667 )   (30,553 )   (30,874 )   (30,994 )   (30,174 )
Investment securities       602,408     573,136     573,176     559,295     597,598  
Total assets         4,467,860     4,404,233     3,869,550     3,743,100     3,699,127  
Total deposits       3,537,331     3,462,636     2,995,571     2,919,673     2,842,953  
Short-term borrowings       123,662     128,841     151,234     131,356     146,249  
Other borrowings       326,009     341,269     303,143     275,666     303,966  
Stockholders' equity       454,934     446,875     400,516     397,687     390,860  
                 
LOANS AND LEASES              
Commercial, real estate     $ 2,353,125   $ 2,243,335   $ 1,879,659   $ 1,776,911   $ 1,695,276  
Commercial, industrial and other     313,062     332,097     307,044     290,961     262,617  
Leases         63,338     60,925     56,660     55,057     53,798  
Residential mortgages       383,823     392,387     389,692     400,247     414,339  
Consumer and home equity     340,956     340,217     334,891     330,588     330,664  
Total loans and leases     $ 3,454,304   $ 3,368,961   $ 2,967,946   $ 2,853,764   $ 2,756,694  
                 
DEPOSITS                
Non-interest bearing     $ 824,077   $ 774,487   $ 693,741   $ 694,267   $ 714,227  
Savings and interest bearing transaction accounts     2,235,918     2,204,356     1,958,510     1,907,858     1,822,295  
Time deposits       477,336     483,793     343,321     317,548     306,431  
Total deposits     $ 3,537,331   $ 3,462,636   $ 2,995,572   $ 2,919,673   $ 2,842,953  
                 
SELECTED AVERAGE BALANCE SHEET DATA        
Loans and leases     $ 3,412,503   $ 3,284,339   $ 2,898,477   $ 2,811,581   $ 2,720,801  
Investment securities       575,206     570,581     561,024     581,565     600,547  
Interest earning assets       4,094,575     3,933,160     3,509,867     3,431,018     3,345,380  
Total assets     4,403,588     4,248,468     3,779,819     3,685,573     3,600,416  
Non-interest bearing demand deposits     801,488     760,198     722,270     710,011     688,854  
Savings deposits       485,580     475,870     402,217     398,147     402,142  
Interest bearing transaction accounts     1,775,129     1,682,580     1,573,638     1,497,340     1,480,866  
Time deposits       487,169     465,024     328,080     309,235     295,996  
Total deposits     3,549,366     3,383,672     3,026,205     2,914,733     2,867,858  
Short-term borrowings       31,591     50,335     47,276     61,679     59,249  
Other borrowings       346,347     349,088     286,887     297,140     267,610  
Total interest bearing liabilities     3,125,815     3,022,897     2,638,098     2,563,542     2,505,863  
Stockholders' equity       450,806     440,823     399,987     394,948     390,151  
           
                   
Lakeland Bancorp, Inc.  
Financial Highlights  
(Unaudited)  
                   
        For the Quarter Ended  
        June 30, Mar 31, Dec 31, Sept 30, Jun 30,  
(Dollars in thousands)       2016     2016     2015     2015     2015    
             
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)          
ASSETS                  
Loans and leases       4.22 %   4.18 %   4.12 %   4.11 %   4.16 %  
Taxable investment securities and other     2.18 %   2.39 %   2.09 %   2.06 %   2.02 %  
Tax-exempt securities       3.15 %   3.40 %   3.49 %   3.41 %   3.58 %  
Federal funds sold and interest bearing cash accounts   0.46 %   0.38 %   0.25 %   0.07 %   0.18 %  
Total interest earning assets     3.85 %   3.86 %   3.76 %   3.75 %   3.78 %  
                   
LIABILITIES                
Savings accounts       0.05 %   0.08 %   0.05 %   0.05 %   0.05 %  
Interest bearing transaction accounts     0.31 %   0.30 %   0.26 %   0.25 %   0.23 %  
Time deposits       0.79 %   0.74 %   0.70 %   0.63 %   0.59 %  
Borrowings         1.62 %   1.52 %   1.53 %   1.52 %   1.58 %  
Total interest bearing liabilities     0.50 %   0.49 %   0.44 %   0.44 %   0.42 %  
Net interest spread (taxable equivalent basis)   3.35 %   3.37 %   3.32 %   3.31 %   3.36 %  
                   
Annualized net interest margin (taxable equivalent basis)   3.47 %   3.48 %   3.43 %   3.42 %   3.46 %  
Annualized cost of deposits     0.27 %   0.26 %   0.22 %   0.20 %   0.19 %  
                   
ASSET QUALITY DATA              
ALLOWANCE FOR LOAN AND LEASE LOSSES            
Balance at beginning of period   $ 30,553   $ 30,874   $ 30,994   $ 30,174   $ 30,505    
Provision for loan and lease losses     1,010     1,075     -     332     740    
Charge-offs         (1,045 )   (1,543 )   (1,140 )   (584 )   (1,475 )  
Recoveries         149     147     1,020     1,072     404    
Balance at end of period     $ 30,667   $ 30,553   $ 30,874   $ 30,994   $ 30,174    
                   
NET LOAN AND LEASE CHARGE-OFFS (RECOVERIES)            
Commercial, real estate     $ 113   $ 81   $ (450 ) $ (936 ) $ 476    
Commercial, industrial and other     137     583     (56 )   88     21    
Leases         183     69     (1 )   13     102    
Home equity and consumer     250     574     561     204     386    
Real estate - mortgage       213     89     66     143     86    
Net charge-offs (recoveries)   $ 896   $ 1,396   $ 120   $ (488 ) $ 1,071    
                   
NON-PERFORMING ASSETS              
Commercial, real estate     $ 12,554   $ 11,943   $ 10,446   $ 8,176   $ 5,307    
Commercial, industrial and other     41     1,163     103     832     1,354    
Leases         159     282     316     154     79    
Home equity and consumer     3,325     3,249     3,167     3,530     3,143    
Real estate - mortgage       8,865     8,330     8,664     8,805     9,098    
Total non-accruing loans and leases     24,944     24,967     22,696     21,497     18,981    
Property acquired through foreclosure or repossession   1,594     792     983     819     1,078    
Total non-performing assets   $ 26,538   $ 25,759   $ 23,679   $ 22,316   $ 20,059    
                   
Loans past due 90 days or more and still accruing $ 42   $ 101   $ 331   $ 123   $ 102    
Loans restructured and still accruing   $ 9,509   $ 10,545   $ 10,108   $ 11,927   $ 12,419    
                   
Ratio of allowance for loan and lease losses to total loans and leases         0.89 %   0.91 %   1.04 %   1.09 %   1.09 %  
Non-performing loans and leases to total loans and leases         0.72 %   0.74 %   0.76 %   0.75 %   0.69 %  
Non-performing assets to total assets         0.59 %   0.58 %   0.61 %   0.60 %   0.54 %  
Annualized net charge-offs (recoveries) to average loans         0.11 %   0.17 %   0.02 %   -0.07 %   0.16 %  
                   
Lakeland Bancorp, Inc.  
Supplemental Information - Non-GAAP Financial Measures  
(Unaudited)  
                   
        At or for the Quarter Ended  
        June 30, Mar 31, Dec 31, Sept 30, Jun 30,  
(Dollars in thousands, except per share amounts)   2016     2016     2015     2015     2015    
                   
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE          
Total common stockholders' equity at end of period - GAAP $ 454,934   $ 446,875   $ 400,516   $ 397,687   $ 390,860    
Less:  Goodwill         125,285     125,443     109,974     109,974     109,974    
Less:  Other identifiable intangible assets     2,728     2,891     1,545     1,644     1,742    
Total tangible common stockholders' equity at end of period - Non-GAAP $ 326,921   $ 318,541   $ 288,997   $ 286,069   $ 279,144    
                   
Shares outstanding at end of period     41,241     41,241     37,906     37,906     37,903    
                   
Book value per share - GAAP     $ 11.03   $ 10.84   $ 10.57   $ 10.49   $ 10.31    
                   
Tangible book value per share - Non-GAAP   $ 7.93   $ 7.72   $ 7.62   $ 7.55   $ 7.36    
                   
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS          
Total tangible common stockholders' equity at end of period - Non-GAAP $ 326,921   $ 318,541   $ 288,997   $ 286,069   $ 279,144    
                   
Total assets at end of period - GAAP   $ 4,467,860   $ 4,404,233   $ 3,869,550   $ 3,743,100   $ 3,699,127    
Less:  Goodwill         125,285     125,443     109,974     109,974     109,974    
Less:  Other identifiable intangible assets     2,728     2,891     1,545     1,644     1,742    
Total tangible assets at end of period - Non-GAAP $ 4,339,847   $ 4,275,899   $ 3,758,031   $ 3,631,482   $ 3,587,411    
                   
Common equity to assets - GAAP       10.18 %   10.15 %   10.35 %   10.62 %   10.57 %  
                   
Tangible common equity to tangible assets - Non-GAAP   7.53 %   7.45 %   7.69 %   7.88 %   7.78 %  
                   
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY          
Net income - GAAP       $ 10,130   $ 8,108   $ 8,464   $ 7,825   $ 7,862    
                   
Total average common stockholders' equity - GAAP $ 450,806   $ 440,823   $ 399,987   $ 394,948   $ 390,151    
Less:  Average goodwill       125,424     124,423     109,974     109,974     109,974    
Less:  Average other identifiable intangible assets   2,828     2,920     1,606     1,706     1,807    
Total average tangible common stockholders' equity - Non-GAAP $ 322,554   $ 313,480   $ 288,407   $ 283,268   $ 278,370    
                   
Return on average common stockholders' equity - GAAP   9.04 %   7.40 %   8.40 %   7.86 %   8.08 %  
                   
Return on average tangible common stockholders' equity - Non-GAAP   12.63 %   10.40 %   11.64 %   10.96 %   11.33 %  
                   
CALCULATION OF EFFICIENCY RATIO              
Total non-interest expense     $ 23,715   $ 25,424   $ 22,142   $ 23,832   $ 21,195    
Amortization of core deposit intangibles     (164 )   (167 )   (99 )   (98 )   (107 )  
Other real estate owned and other repossessed asset (expense) income   (26 )   (39 )   (135 )   (27 )   (27 )  
Long-term debt prepayment fee       -     -     -     (2,407 )   -    
Merger related expenses       (685 )   (1,721 )   (822 )   (330 )   -    
Provision for unfunded lending commitments     (230 )   (208 )   (506 )   (168 )   (60 )  
Non-interest expense, as adjusted   $ 22,610   $ 23,289   $ 20,580   $ 20,802   $ 21,001    
                   
Net interest income       $ 35,102   $ 33,850   $ 30,119   $ 29,334   $ 28,669    
Total non-interest income       4,885     4,867     4,778     6,687     4,958    
Total revenue         39,987     38,717     34,897     36,021     33,627    
Tax-equivalent adjustment on municipal securities   225     222     212     210     214    
Gains on debt extinguishment       -     -     -     (1,830 )   -    
Gains on sales investment securities     -     (370 )   (51 )   (173 )   (17 )  
Total revenue, as adjusted     $ 40,212   $ 38,569   $ 35,058   $ 34,228   $ 33,824    
                   
Efficiency ratio - Non-GAAP       56.23 %   60.38 %   58.70 %   60.77 %   62.09 %  
                   
Lakeland Bancorp, Inc.  
Supplemental Information - Non-GAAP Financial Measures  
(Unaudited)  
        For the Six Months Ended,  
        June 30, June 30,  
(Dollars in thousands)         2016     2015    
             
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY          
Net income - GAAP       $ 18,238   $ 16,192    
             
Total average common stockholders' equity - GAAP     $ 445,815   $ 386,887    
Less:  Average goodwill         124,923     109,974    
Less:  Average other identifiable intangible assets       2,874     1,863    
Total average tangible common stockholders' equity - Non-GAAP   $ 318,018   $ 275,050    
             
Return on average common stockholders' equity - GAAP       8.23 %   8.44 %  
             
Return on average tangible common stockholders' equity - Non-GAAP     11.53 %   11.87 %  
             
CALCULATION OF EFFICIENCY RATIO            
Total non-interest expense       $ 49,139   $ 41,237    
Amortization of core deposit intangibles         (331 )   (218 )  
Other real estate owned and other repossessed asset expense       (65 )   (19 )  
Long-term debt prepayment fee         -     -    
Merger related expenses         (2,406 )   -    
Provision for unfunded lending commitments         (438 )   (190 )  
Non-interest expense, as adjusted       $ 45,899   $ 40,810    
             
Net interest income       $ 68,952   $ 57,187    
Non-interest income         9,752     9,696    
Total revenue         78,704     66,883    
Tax-equivalent adjustment on municipal securities       447     435    
Gain on investment securities         (370 )   (17 )  
Gains on extinguishment of debt         -     -    
Total revenue, as adjusted       $ 78,781   $ 67,301    
             
Efficiency ratio - Non-GAAP         58.26 %   60.64 %