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

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

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

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

Somerset Hills Bancorp Acquisition

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

Earnings

Net Interest Income

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

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

Noninterest Income

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

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

Noninterest Expense

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

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

Financial Condition

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

Asset Quality

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

Capital

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

Forward-Looking Statements

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

EXPLANATION OF NON-GAAP FINANCIAL MEASURES

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

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

About Lakeland Bank

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

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

         Joseph F. Hurley
         EVP & CFO
         973-697-2000
Source: Lakeland Bancorp, Inc.