Lakeland Bancorp Announces Quarterly and Year-End 2021 Earnings

Rhea-AI Summary

Lakeland Bancorp (NASDAQ: LBAI) reported net income of $22.2 million and earnings per share (EPS) of $0.43 for Q4 2021, increasing from $18.8 million and $0.37 in Q4 2020. Annual net income for 2021 reached $95.0 million, a 65% increase from $57.5 million in 2020, with a diluted EPS of $1.85. The bank's assets grew 7% to $8.20 billion, and deposits rose 8%. The acquisition of 1st Constitution Bancorp on January 6, 2022, is expected to enhance market presence. The company also declared a quarterly cash dividend of $0.135 per share.

Positive

• Net income for 2021 increased 65% to $95.0 million.
• Earnings per share rose to $1.85 from $1.13 in 2020.
• Annualized return on average assets was 1.19% for 2021.
• Total assets grew by 7% to $8.20 billion.
• Total deposits increased by 8% to $6.97 billion.
• Non-performing assets decreased by 60% to $17.0 million.

Negative

• Net interest margin for Q4 2021 decreased by 10 basis points year-over-year.
• Noninterest income fell by $981,000 in Q4 2021 compared to Q4 2020.
• Total loans declined by $45.1 million, primarily due to a drop in PPP loans.

OAK RIDGE, N.J., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $22.2 million and earnings per diluted share ("EPS") of $0.43 for the three months ended December 31, 2021, compared to net income of $18.8 million and diluted EPS of $0.37 for the fourth quarter of 2020. For the fourth quarter of 2021, annualized return on average assets was 1.06%, annualized return on average common equity was 10.70% and annualized return on average tangible common equity was 13.26%.

For the year ended December 31, 2021, the Company reported net income of $95.0 million, a 65% increase compared to $57.5 million for the same period in 2020, resulting in return on average assets of 1.19%, return on average common equity of 11.95%, and return on average tangible common equity of 14.93%. For 2021, the Company reported diluted EPS of $1.85, compared to diluted EPS of $1.13 for 2020.

The current year results were favorably impacted by negative provisions for credit losses of $10.9 million compared to provisions of $27.2 million for 2020 as forecasted macroeconomic conditions have improved and Lakeland's asset quality continues to be strong. Fourth quarter 2021 results were favorably impacted by a $3.9 million increase in net interest income and a $1.4 million reduction in non-interest expenses compared to the fourth quarter of 2020.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We ended 2021 with strong quarterly and annual earnings. We experienced total asset growth of 7%, deposit growth of 8% and non-performing assets declined by 60% during 2021. With the acquisition of 1st Constitution Bancorp on January 6, 2022, we expanded Lakeland's presence into central New Jersey and look forward to bringing our banking model into the desirable markets of Mercer, Middlesex and Monmouth counties. Full systems integration is progressing well and is expected to be completed in February 2021."

Full Year 2021 Highlights

• Total asset growth of 7% to $8.20 billion at December 31, 2021.
• Deposit generation of 8% or $510.0 million, including 15% growth in noninterest-bearing deposits.
• In September 2021, the Company issued $150.0 million Fixed-to-Floating Rate Subordinated Notes at a fixed rate of 2.875% per annum until September 2026 when the interest rate will reset to the three-month Secured Overnight Financing Rate plus a spread of 220 basis points, and redeemed $75.0 million of its outstanding 5.125% Fixed-to-Floating Rate Subordinated Notes.
• Net interest margin for 2021 increased four basis points to 3.13% compared to 2020 due primarily to a reduction in the cost of interest-bearing liabilities.
• Non-performing assets declined to $17.0 million at December 31, 2021 compared to $42.8 million at December 31, 2020.
• Paycheck Protection Program ("PPP") loans outstanding totaled $56.6 million at December 31, 2021 compared to $284.6 million at December 31, 2020. Unamortized net deferred fees on PPP loans totaled $1.6 million at December 31, 2021 compared to $5.8 million at December 31, 2020.
• Net loan charge-offs for the year totaled $2.2 million, or 0.04% of average loans.
  

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2021 of 2.98% decreased 10 basis points compared to the fourth quarter of 2020 and decreased 12 basis points compared to the third quarter of 2021. The decrease compared to the fourth quarter of 2020 was primarily a result of a decrease in the yield on loans and securities as well as an increase in lower yielding federal funds sold. The decrease in net interest margin compared to the third quarter of 2021 was due primarily to a decrease in the yield on loans and an increase in lower yielding average securities balances. Net interest margin for 2021 of 3.13% increased four basis points compared to 3.09% for 2020 due primarily to a reduction in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the fourth quarter of 2021 was 3.22% compared to 3.51% for the fourth quarter of 2020 and 3.40% for the third quarter of 2021. The decrease in yield on interest-earning assets when compared to the fourth quarter 2020 was due primarily to a reduction in the yield on loans and securities as well as increased balances in lower yielding average federal funds sold. The decrease in yield on interest-earning assets when compared to the third quarter of 2021 was due primarily to a reduction in the yield on loans and increased balances in lower yielding average securities. The yield on interest-earning assets for 2021 was 3.43% compared to 3.70% for 2020 resulting primarily from a reduction in the yield on interest earning assets and increased balances in lower yielding average federal funds sold as a result of maintaining excess liquidity during the pandemic.

The cost of interest-bearing liabilities decreased in the fourth quarter of 2021 to 0.33% compared to 0.59% for the fourth quarter of 2020 and 0.41% for the third quarter of 2021. The cost of interest-bearing liabilities for 2021 was 0.42% compared to 0.83% 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 as balances of higher cost time deposits decreased while lower cost interest-bearing transaction account balances increased. Additionally, replacing the Company's existing subordinated debt with a new issuance at a lower interest rate during 2021 decreased the cost of borrowings.

Net interest income increased to $59.0 million for the fourth quarter of 2021 compared to $55.1 million for the fourth quarter of 2020, due primarily to lower interest rates on interest-bearing liabilities as well as the growth of interest-earning assets partially offset by lower yields on interest-earning assets. Net interest income for 2021 was $234.8 million, as compared to $207.7 million for 2020 due to the same reasons discussed in the quarterly comparison.

Noninterest Income

Noninterest income decreased $981,000 to $5.9 million for the fourth quarter of 2021 from $6.8 million for the fourth quarter of 2020. Commissions and fees in the fourth quarter of 2021 increased $612,000 compared to the same period in 2020 due primarily to increases in investment commission income and commercial loan fees. Gain on sales of loans in the fourth quarter of 2021 decreased $361,000 due primarily to the Company retaining more originated residential mortgage loans in the loan portfolio. Fourth quarter 2020 results included an $871,000 gain on sales of securities compared to no gain on sales of securities during the same period in 2021. There was no swap income recorded in the fourth quarter of 2021 compared to $485,000 during the same period in 2020 due primarily to changes in the yield curve which decreases the demand for swap transactions.

For 2021, noninterest income decreased $4.7 million to $22.4 million compared to 2020 due primarily to a reduction in swap income. Service charges on deposit accounts increased $708,000 compared to 2020 due primarily to increases in debit card income. Commissions and fees in 2021 increased $1.1 million compared to 2020 due to the same reasons discussed in the quarterly comparison. Gains on sales of loans and swap income decreased $1.1 million and $4.1 million, respectively, compared to 2020, both due primarily to the same reasons discussed in the quarterly comparison. Gain on sales and calls of investment securities totaled $9,000 in 2021 compared to $1.2 million in 2020.

Noninterest Expense

Noninterest expense totaled $35.6 million for the fourth quarter of 2021, a decrease of $1.4 million compared to the fourth quarter of 2020 due primarily to long-term debt prepayment fees of $3.8 million recorded in the fourth quarter of 2020 to deploy excess liquidity. Compensation and employee benefit expense in the fourth quarter of 2021 increased $1.0 million, or 5%, compared to the fourth quarter of 2020 due primarily to staff additions and normal merit increases. In the fourth quarter of 2021, premises and equipment expense increased $549,000 due primarily to an increase in IT service agreement expense, and data processing expense increased $341,000 due primarily to increased fees from service providers compared to the fourth quarter of 2020. The fourth quarter of 2021 included $710,000 in merger-related costs for the acquisition of 1^st Constitution Bancorp.

For 2021, noninterest expense increased $8.0 million to $140.8 million compared to $132.8 million for 2020 due primarily to compensation and employee benefit expense which increased $6.1 million, or 8%. The increase in compensation and employee benefits expense was due primarily to the same reasons discussed in the quarterly comparison. Premises and equipment expense in 2021 increased $2.9 million due to the same reason discussed in the quarterly comparison. Noninterest expense in 2021 included merger-related expenses of $1.8 million for the acquisition of 1^st Constitution Bancorp. Additionally, noninterest expense in 2020 included $4.1 million in long-term debt prepayment fees compared to none in 2021.

Income Tax Expense

The effective tax rate for the fourth quarter of 2021 was 23.4% compared to 22.3% for the fourth quarter of 2020. The effective tax rate for 2021 was 25.4% compared to 23.1% for 2020. The increased effective tax rate for 2021 periods 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 December 31, 2021, total assets were $8.20 billion, an increase of $533.8 million or 7% compared to December 31, 2020. For the year ended December 31, 2021, total loans declined $45.1 million to $5.98 billion due to a decline in PPP loans of $228.1 million, partially offset by an increase in other loan categories of $183.0 million, primarily in the multifamily and residential mortgage loan segments. Investment securities increased $648.1 million or 67% to $1.62 billion during 2021 as the Company deployed liquidity into the investment portfolio. On the funding side, total deposits increased $510.0 million or 8% to $6.97 billion primarily in the saving and interest bearing transaction accounts category, while borrowings decreased $2.3 million or 1% to $310.5 million for the year ended December 31, 2021. At December 31, 2021, total loans as a percent of total deposits was 85.8%.

Asset Quality

At December 31, 2021, non-performing assets decreased 60% to $17.0 million, 0.21% of total assets, compared to $42.8 million, 0.56% of total assets, at December 31, 2020. Non-accrual loans as a percent of total loans decreased to 0.28% at December 31, 2021 compared to 0.71% at December 31, 2020. At December 31, 2021, the allowance for credit losses decreased to $58.0 million, 0.97% of total loans compared to $71.1 million, 1.18% of total loans, at December 31, 2020. In the fourth quarter of 2021, the Company had net recoveries of $181,000, or 0.01% of average loans, annualized, compared to net charge-offs of $528,000, or 0.04% of average loans, annualized, for the same period in 2020. Provision for credit losses on loans for the fourth quarter of 2021 was a benefit of $87,000 compared to a benefit of $246,000 in the fourth quarter of 2020.

Capital

At December 31, 2021, stockholders' equity increased 8% to $827.0 million as compared to $763.8 million at December 31, 2020. Lakeland Bancorp remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.51% at December 31, 2021. The book value per common share and tangible book value per common share increased 8.0% and 10.4% to $16.34 and $13.21, respectively, compared to $15.13 and $11.97 at December 31, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). On January 24, 2022, the Company declared a quarterly cash dividend of $0.135 per share to be paid on February 17, 2022, to shareholders of record as of February 7, 2022.

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, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, 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 1^st Constitution Bancorp into Lakeland Bancorp and the merger of 1^st 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 $8.20 billion in total assets at December 31, 2021. On January 6, 2022, the Company completed its acquisition of 1st Constitution Bancorp, which represents a significant addition to the Company's New Jersey franchise. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, N.Y., 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 December 31,								Year Ended December 31,
(dollars in thousands, except per share amounts)		2021				2020				2021				2020
Income Statement
Net interest income	$	59,029			$	55,135			$	234,835			$	207,687
(Provision) benefit for credit losses		(408	)			(789	)			10,896				(27,222	)
Gain on investment securities transactions, net		—				871				9				1,213
Gain on sales of loans		399				760				2,264				3,322
(Loss) gain on equity securities		(94	)			73				(285	)			(552	)
Other noninterest income		5,559				5,141				20,373				23,127
Long-term debt prepayment fees		—				(3,777	)			—				(4,133	)
Long-term debt extinguishment costs		—				—				(831	)			—
Merger-related expenses		(710	)			—				(1,782	)			—
Other noninterest expense		(34,840	)			(33,168	)			(138,144	)			(128,665	)
Pretax income		28,935				24,246				127,335				74,777
Provision for income taxes		(6,765	)			(5,398	)			(32,294	)			(17,259	)
Net income	$	22,170			$	18,848			$	95,041			$	57,518
Basic earnings per common share	$	0.43			$	0.37			$	1.85			$	1.13
Diluted earnings per common share	$	0.43			$	0.37			$	1.85			$	1.13
Dividends paid per common share	$	0.135			$	0.125			$	0.530			$	0.500
Weighted average shares - basic		50,647				50,527				50,624				50,540
Weighted average shares - diluted		50,959				50,672				50,870				50,650
Selected Operating Ratios
Annualized return on average assets		1.06	%			0.98	%			1.19	%			0.80	%
Annualized return on average common equity		10.70	%			9.96	%			11.95	%			7.74	%
Annualized return on average tangible common equity (1)		13.26	%			12.64	%			14.93	%			9.86	%
Annualized yield on interest-earning assets		3.22	%			3.51	%			3.43	%			3.70	%
Annualized cost of interest-bearing liabilities		0.33	%			0.59	%			0.42	%			0.83	%
Annualized net interest spread		2.89	%			2.92	%			3.02	%			2.87	%
Annualized net interest margin		2.98	%			3.08	%			3.13	%			3.09	%
Efficiency ratio (1)		53.19	%			53.74	%			53.23	%			54.54	%
Stockholders' equity to total assets										10.09	%			9.97	%
Book value per common share									$	16.34			$	15.13
Tangible book value per common share (1)									$	13.21			$	11.97
Tangible common equity to tangible assets (1)										8.31	%			8.05	%
Asset Quality Ratios									December 31, 2021				December 31, 2020
Ratio of allowance for credit losses on loans to total loans										0.97	%			1.18	%
Non-performing loans to total loans										0.28	%			0.71	%
Non-performing assets to total assets										0.21	%			0.47	%
Net charge-offs to average loans										0.04	%			0.03	%
(1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
(dollars in thousands)									December 31,				December 31,
Selected Balance Sheet Data at Period End										2021				2020
Loans									$	5,976,148			$	6,021,232
Allowance for credit losses on loans										58,047				71,124
Investment securities										1,621,329				973,185
Total assets										8,198,056				7,664,297
Total deposits										6,965,823				6,455,783
Short-term borrowings										106,453				169,560
Other borrowings										204,043				143,257
Stockholders' equity										827,014				763,784
	Three Months Ended December 31,								Year Ended December 31,
		2021				2020				2021				2020
Selected Average Balance Sheet Data
Loans	$	5,902,152			$	5,939,904			$	6,003,325			$	5,626,273
Investment securities		1,423,650				912,723				1,160,503				889,223
Interest-earning assets		7,874,181				7,137,884				7,516,662				6,735,825
Total assets		8,332,637				7,625,458				7,974,905				7,208,366
Noninterest-bearing demand deposits		1,775,119				1,499,093				1,671,889				1,362,918
Savings deposits		670,039				571,794				642,298				535,754
Interest-bearing transaction accounts		3,862,443				3,313,556				3,613,484				3,035,626
Time deposits		781,199				1,112,053				882,379				1,064,187
Total deposits		7,088,800				6,496,496				6,810,050				5,998,485
Short-term borrowings		112,533				68,962				95,111				92,425
Other borrowings		204,266				155,943				162,643				244,000
Total interest-bearing liabilities		5,630,479				5,222,308				5,395,915				4,971,992
Stockholders' equity		822,001				753,059				795,554				743,225

Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
	Three Months Ended December 31,						Year Ended December 31,
(in thousands, except per share amounts)		2021			2020			2021			2020
Interest Income
Loans and fees	$	57,773		$	58,553		$	237,037		$	229,036
Federal funds sold and interest-bearing deposits with banks		190			61			440			348
Taxable investment securities and other		4,966			3,680			17,208			17,811
Tax exempt investment securities		802			565			2,633			1,647
Total Interest Income		63,731			62,859			257,318			248,842
Interest Expense
Deposits		3,444			6,090			16,793			32,059
Federal funds purchased and securities sold under agreements to repurchase		20			25			78			556
Other borrowings		1,238			1,609			5,612			8,540
Total Interest Expense		4,702			7,724			22,483			41,155
Net Interest Income		59,029			55,135			234,835			207,687
Provision (benefit) for credit losses		408			789			(10,896	)		27,222
Net Interest Income after Provision for Credit Losses		58,621			54,346			245,731			180,465
Noninterest Income
Service charges on deposit accounts		2,579			2,485			9,856			9,148
Commissions and fees		1,977			1,365			6,939			5,868
Income on bank owned life insurance		754			657			2,676			2,657
(Loss) gain on equity securities		(94	)		73			(285	)		(552	)
Gain on sales of loans		399			760			2,264			3,322
Gain on investment securities transactions, net		—			871			9			1,213
Swap income		—			485			634			4,719
Other income		249			149			268			735
Total Noninterest Income		5,864			6,845			22,361			27,110
Noninterest Expense
Compensation and employee benefits		20,186			19,188			82,589			76,470
Premises and equipment		6,171			5,622			24,773			21,871
FDIC insurance		548			750			2,341			2,123
Data processing		1,405			1,064			5,454			4,964
Merger-related expenses		710			—			1,782			—
Long-term debt prepayment fees		—			3,777			—			4,133
Other operating expenses		6,530			6,544			23,818			23,237
Total Noninterest Expense		35,550			36,945			140,757			132,798
Income before provision for income taxes		28,935			24,246			127,335			74,777
Provision for income taxes		6,765			5,398			32,294			17,259
Net Income	$	22,170		$	18,848		$	95,041		$	57,518
Per Share of Common Stock
Basic earnings	$	0.43		$	0.37		$	1.85		$	1.13
Basic earnings	$	0.43		$	0.37		$	1.85		$	1.13
Dividends	$	0.135		$	0.125		$	0.530		$	0.500

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(dollars in thousands)	December 31, 2021				December 31, 2020
	(Unaudited)
Assets
Cash	$	199,158			$	262,327
Interest-bearing deposits due from banks		29,372				7,763
Total cash and cash equivalents		228,530				270,090
Investment securities available for sale, at estimated fair value (allowance for credit losses of $83 at December 31, 2021 and $2 at December 31, 2020 )		769,956				855,746
Investment securities held to maturity (estimated fair value of $815,211 at December 31, 2021 and $93,868 at December 31, 2020, allowance for credit losses of $181 at December 31, 2021 and none at December 31, 2020)		824,956				90,766
Equity securities, at fair value		17,368				14,694
Federal Home Loan Bank and other membership stocks, at cost		9,049				11,979
Loans held for sale		1,943				1,335
Loans, net of deferred fees		5,976,148				6,021,232
Less: Allowance for credit losses		58,047				71,124
Net loans		5,918,101				5,950,108
Premises and equipment, net		45,916				48,495
Operating lease right-of-use assets		15,222				16,772
Accrued interest receivable		19,209				19,339
Goodwill		156,277				156,277
Other identifiable intangible assets		2,420				3,288
Bank owned life insurance		117,356				115,115
Other assets		71,753				110,293
Total Assets	$	8,198,056			$	7,664,297
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing	$	1,732,452			$	1,510,224
Savings and interest-bearing transaction accounts		4,474,144				3,867,303
Time deposits $250 thousand and under		623,393				895,056
Time deposits over $250 thousand		135,834				183,200
Total deposits		6,965,823				6,455,783
Federal funds purchased and securities sold under agreements to repurchase		106,453				169,560
Other borrowings		25,000				25,000
Subordinated debentures		179,043				118,257
Operating lease liabilities		16,523				18,183
Other liabilities		78,200				113,730
Total Liabilities		7,371,042				6,900,513
Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares; issued 50,737,400 shares and outstanding 50,606,365 shares at December 31, 2021 and issued 50,610,681 shares and outstanding 50,479,646 shares at December 31, 2020		565,862				562,421
Retained earnings		259,340				191,418
Treasury shares, at cost, 131,035 shares at December 31, 2021 and December 31, 2020		(1,452	)			(1,452	)
Accumulated other comprehensive income		3,264				11,397
Total Stockholders' Equity		827,014				763,784
Total Liabilities and Stockholders' Equity	$	8,198,056			$	7,664,297

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands, except per share data)		2021			2021			2021			2021			2020
Income Statement
Net interest income	$	59,029		$	59,338		$	59,740		$	56,728		$	55,135
(Provision) benefit for credit losses (1)		(408	)		2,703			5,959			2,642			(789	)
Gain on investment securities transactions, net		—			—			9			—			871
Gain on sales of loans		399			550			607			708			760
(Loss) gain on equity securities		(94	)		(58	)		11			(144	)		73
Other noninterest income		5,559			4,977			4,642			5,195			5,141
Long-term debt extinguishment costs		—			(831	)		—			—			—
Long-term debt prepayment fees		—			—			—			—			(3,777	)
Merger-related expenses		(710	)		(1,072	)		—			—			—
Other noninterest expense		(34,840	)		(35,304	)		(34,097	)		(33,903	)		(33,168	)
Pretax income		28,935			30,303			36,871			31,226			24,246
Provision for income taxes		(6,765	)		(8,014	)		(9,464	)		(8,051	)		(5,398	)
Net income	$	22,170		$	22,289		$	27,407		$	23,175		$	18,848
Basic earnings per common share	$	0.43		$	0.43		$	0.53		$	0.45		$	0.37
Diluted earnings per common share	$	0.43		$	0.43		$	0.53		$	0.45		$	0.37
Dividends paid per common share	$	0.135		$	0.135		$	0.135		$	0.125		$	0.125
Dividends paid	$	6,921		$	7,001		$	6,828		$	6,369		$	6,364
Weighted average shares - basic		50,647			50,637			50,636			50,576			50,527
Weighted average shares - diluted		50,959			50,875			50,858			50,780			50,672
Selected Operating Ratios
Annualized return on average assets		1.06	%		1.10	%		1.41	%		1.22	%		0.98	%
Annualized return on average common equity		10.70	%		10.94	%		14.07	%		12.20	%		9.96	%
Annualized return on average tangible common equity (2)		13.26	%		13.63	%		17.67	%		15.39	%		12.64	%
Annualized net interest margin		2.98	%		3.10	%		3.27	%		3.19	%		3.08	%
Efficiency ratio (2)		53.19	%		54.02	%		51.98	%		53.75	%		53.74	%
Common stockholders' equity to total assets		10.09	%		9.96	%		10.14	%		9.88	%		9.97	%
Tangible common equity to tangible assets (2)		8.31	%		8.18	%		8.29	%		8.00	%		8.05	%
Tier 1 risk-based ratio		11.15	%		11.19	%		10.78	%		10.47	%		10.22	%
Total risk-based ratio		14.48	%		14.73	%		13.11	%		13.02	%		12.85	%
Tier 1 leverage ratio		8.51	%		8.60	%		8.70	%		8.51	%		8.37	%
Common equity tier 1 capital ratio		10.67	%		10.70	%		10.29	%		9.98	%		9.73	%
Book value per common share	$	16.34		$	16.09		$	15.74		$	15.18		$	15.13
Tangible book value per common share (2)	$	13.21		$	12.95		$	12.60		$	12.03		$	11.97

(1) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on December 31, 2020, with a transition adjustment retroactive to January 1, 2020.

(2) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)		2021			2021			2021			2021			2020
Selected Balance Sheet Data at Period End
Loans	$	5,976,148		$	5,880,802		$	5,988,832		$	6,108,946		$	6,021,232
Allowance for credit losses on loans (3)		58,047			57,953			60,389			67,252			71,124
Investment securities		1,621,329			1,248,705			1,107,601			1,078,750			973,185
Total assets		8,198,056			8,172,479			7,854,238			7,771,761			7,664,297
Total deposits		6,965,823			6,930,912			6,715,035			6,635,226			6,455,783
Short-term borrowings		106,453			111,907			100,190			111,999			169,560
Other borrowings		204,043			212,107			138,045			143,267			143,257
Stockholders' equity		827,014			814,128			796,676			768,065			763,784
Loans
Non owner occupied commercial	$	2,316,284		$	2,300,637		$	2,330,376		$	2,375,024		$	2,398,946
Owner occupied commercial		908,449			884,144			870,535			857,506			827,092
Multifamily		972,233			907,903			902,394			858,168			813,225
Non owner occupied residential		177,097			177,592			189,765			195,534			200,229
Commercial, industrial and other		405,832			363,976			358,659			394,416			433,553
Construction		302,228			332,868			335,167			291,252			266,883
Paycheck Protection Program		56,574			109,348			207,045			346,150			284,636
Equipment financing		123,212			119,709			121,096			119,428			116,690
Residential mortgages		438,710			407,021			391,589			385,778			377,380
Consumer and home equity		275,529			277,604			282,206			285,690			302,598
Total loans	$	5,976,148		$	5,880,802		$	5,988,832		$	6,108,946		$	6,021,232
Deposits
Noninterest-bearing	$	1,732,452		$	1,724,646		$	1,683,887		$	1,631,942		$	1,510,224
Savings and interest-bearing transaction accounts		4,474,144			4,401,367			4,198,709			4,049,914			3,867,303
Time deposits		759,227			804,899			832,439			953,370			1,078,256
Total deposits	$	6,965,823		$	6,930,912		$	6,715,035		$	6,635,226		$	6,455,783
Total loans to total deposits ratio		85.8	%		84.8	%		89.2	%		92.1	%		93.3	%
Selected Average Balance Sheet Data
Loans	$	5,902,152		$	5,943,698		$	6,080,408		$	6,089,757		$	5,939,904
Investment securities		1,423,650			1,144,356			1,066,086			1,003,479			912,723
Interest-earning assets		7,874,181			7,611,259			7,342,952			7,230,136			7,137,884
Total assets		8,332,637			8,070,050			7,784,385			7,704,603			7,625,458
Noninterest-bearing demand deposits		1,775,119			1,702,788			1,660,825			1,545,968			1,499,093
Savings deposits		670,039			653,840			639,540			604,931			571,794
Interest-bearing transaction accounts		3,862,443			3,701,676			3,495,610			3,388,027			3,313,556
Time deposits		781,199			826,831			880,079			1,044,915			1,112,053
Total deposits		7,088,800			6,885,135			6,676,054			6,583,841			6,496,496
Short-term borrowings		112,533			108,519			85,325			73,492			68,962
Other borrowings		204,266			162,216			140,162			143,261			155,943
Total interest-bearing liabilities		5,630,479			5,453,082			5,240,716			5,254,626			5,222,308
Stockholders' equity		822,001			807,956			781,299			770,255			753,059

(3) The Company adopted CECL on December 31, 2020, with a transition adjustment retroactive to January 1, 2020.

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands)		2021			2021			2021			2021			2020
Average Annualized Yields (Taxable Equivalent Basis) and Costs
Assets
Loans		3.88	%		4.00	%		3.99	%		3.91	%		3.92	%
Taxable investment securities and other		1.60	%		1.68	%		1.72	%		1.81	%		1.84	%
Tax-exempt securities		2.20	%		2.15	%		2.50	%		2.54	%		2.51	%
Federal funds sold and interest-bearing cash accounts		0.14	%		0.12	%		0.11	%		0.11	%		0.09	%
Total interest-earning assets		3.22	%		3.40	%		3.57	%		3.56	%		3.51	%
Liabilities
Savings accounts		0.05	%		0.05	%		0.05	%		0.05	%		0.05	%
Interest-bearing transaction accounts		0.24	%		0.30	%		0.32	%		0.34	%		0.38	%
Time deposits		0.51	%		0.55	%		0.61	%		0.83	%		1.01	%
Borrowings		1.55	%		2.33	%		2.22	%		2.87	%		2.84	%
Total interest-bearing liabilities		0.33	%		0.41	%		0.42	%		0.51	%		0.59	%
Net interest spread (taxable equivalent basis)		2.89	%		2.99	%		3.15	%		3.05	%		2.92	%
Annualized net interest margin (taxable equivalent basis)		2.98	%		3.10	%		3.27	%		3.19	%		3.08	%
Annualized cost of deposits		0.19	%		0.23	%		0.25	%		0.32	%		0.37	%
Asset Quality Data
Allowance for Credit Losses on Loans
Balance at beginning of period	$	57,953		$	60,389		$	67,252		$	71,124		$	65,242
Impact of adopting ASU 2016-13 (4)		—			—			—			—			6,656
Benefit for credit losses on loans		(87	)		(2,705	)		(5,314	)		(2,808	)		(246	)
Charge-offs		(461	)		(969	)		(1,862	)		(1,270	)		(746	)
Recoveries		642			1,238			313			206			218
Balance at end of period	$	58,047		$	57,953		$	60,389		$	67,252		$	71,124
Net Loan Charge-Offs (Recoveries)
Non owner occupied commercial	$	—		$	6		$	1,649		$	592
Owner occupied commercial		(1	)		(80	)		(9	)		70
Multifamily		—			28			—			—
Non owner occupied residential		(136	)		(5	)		(8	)		206
Total commercial, secured by real estate (4)	$	(137	)	$	(51	)	$	1,632		$	868		$	(45	)
Commercial, industrial and other		(449	)		(265	)		5			221			477
Construction		(4	)		50			(42	)		(25	)
Equipment financing		60			139			4			83			64
Residential mortgages		49			27			(82	)		(58	)		—
Consumer and home equity		300			(169	)		32			(25	)		32
Net (recoveries) charge-offs	$	(181	)	$	(269	)	$	1,549		$	1,064		$	528
(4) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13
Non-Performing Assets
Non owner occupied commercial	$	3,009		$	4,748		$	11,427		$	12,835		$	16,537
Owner occupied commercial		2,810			4,656			7,152			8,797			14,271
Multifamily		—			—			195			201			626
Non owner occupied residential		2,852			922			1,305			1,417			2,217
Construction		—			—			515			718			1,440
Commercial, industrial and other		6,763			1,108			1,449			2,252			2,633
Equipment financing		43			238			264			300			327
Residential mortgages		817			123			—			2,328			2,469
Consumer and home equity		687			453			308			2,277			2,243
Total non-accrual loans		16,981			12,248			22,615			31,125			42,763
Property acquired through foreclosure or repossession		—			—			—			—			—
Total non-performing assets	$	16,981		$	12,248		$	22,615		$	31,125		$	42,763
Loans past due 90 days or more and still accruing	$	1		$	—		$	—		$	—		$	1
Loans restructured and still accruing	$	3,342		$	3,414		$	3,595		$	3,799		$	3,856
Ratio of allowance for credit losses to total loans		0.97	%		0.99	%		1.01	%		1.10	%		1.18	%
Total non-accrual loans to total loans		0.28	%		0.21	%		0.38	%		0.51	%		0.71	%
Total non-performing assets to total assets		0.21	%		0.15	%		0.29	%		0.40	%		0.56	%
Annualized net (recoveries) charge-offs to average loans		(0.01	)%		(0.02	)%		0.10	%		0.07	%		0.04	%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	At or for the Quarter Ended
	December 31,			September 30,			June 30,			March 31,			December 31,
(dollars in thousands, except per share amounts)		2021			2021			2021			2021			2020
Calculation of Tangible Book Value Per Common Share
Total common stockholders' equity at end of period - GAAP	$	827,014		$	814,128		$	796,676		$	768,065		$	763,784
Less: Goodwill		156,277			156,277			156,277			156,277			156,277
Less: Other identifiable intangible assets		2,420			2,631			2,841			3,063			3,288
Total tangible common stockholders' equity at end of period - Non-GAAP	$	668,317		$	655,220		$	637,558		$	608,725		$	604,219
Shares outstanding at end of period		50,606			50,602			50,601			50,598			50,480
Book value per share - GAAP	$	16.34		$	16.09		$	15.74		$	15.18		$	15.13
Tangible book value per share - Non-GAAP	$	13.21		$	12.95		$	12.60		$	12.03		$	11.97
Calculation of Tangible Common Equity to Tangible Assets
Total tangible common stockholders' equity at end of period - Non-GAAP	$	668,317		$	655,220		$	637,558		$	608,725		$	604,219
Total assets at end of period - GAAP	$	8,198,056		$	8,172,479		$	7,854,238		$	7,771,761		$	7,664,297
Less: Goodwill		156,277			156,277			156,277			156,277			156,277
Less: Other identifiable intangible assets		2,420			2,631			2,841			3,063			3,288
Total tangible assets at end of period - Non-GAAP	$	8,039,359		$	8,013,571		$	7,695,120		$	7,612,421		$	7,504,732
Common equity to assets - GAAP		10.09	%		9.96	%		10.14	%		9.88	%		9.97	%
Tangible common equity to tangible assets - Non-GAAP		8.31	%		8.18	%		8.29	%		8.00	%		8.05	%
Calculation of Return on Average Tangible Common Equity
Net income - GAAP	$	22,170		$	22,289		$	27,407		$	23,175		$	18,848
Total average common stockholders' equity - GAAP	$	822,001		$	807,956		$	781,299		$	770,255		$	753,059
Less: Average goodwill		156,277			156,277			156,277			156,277			156,277
Less: Average other identifiable intangible assets		2,544			2,758			2,979			3,192			3,433
Total average tangible common stockholders' equity - Non-GAAP	$	663,180		$	648,921		$	622,043		$	610,786		$	593,349
Return on average common stockholders' equity - GAAP		10.70	%		10.94	%		14.07	%		12.20	%		9.96	%
Return on average tangible common stockholders' equity - Non-GAAP		13.26	%		13.63	%		17.67	%		15.39	%		12.64	%
Calculation of Efficiency Ratio
Total noninterest expense	$	35,550		$	37,207		$	34,097		$	33,903		$	36,945
Amortization of core deposit intangibles		(210	)		(211	)		(221	)		(226	)		(249	)
Merger-related expenses		(710	)		(1,072	)		—			—			—
Long-term debt extinguishment costs		—			(831	)		—			—			—
Long-term debt prepayment fee		—			—			—			—			(3,777	)
Noninterest expense, as adjusted	$	34,630		$	35,093		$	33,876		$	33,677		$	32,919
Net interest income	$	59,029		$	59,338		$	59,740		$	56,728		$	55,135
Total noninterest income		5,864			5,469			5,269			5,759			6,845
Total revenue	$	64,893		$	64,807		$	65,009		$	62,487		$	61,980
Tax-equivalent adjustment on municipal securities		213			157			167			163			149
Gain on sales of investment securities		—			—			(9	)		—			(871	)
Total revenue, as adjusted	$	65,106		$	64,964		$	65,167		$	62,650		$	61,258
Efficiency ratio - Non-GAAP		53.19	%		54.02	%		51.98	%		53.75	%		53.74	%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	For the Twelve Months Ended December 31,
(dollars in thousands)		2021				2020
Calculation of Return on Average Tangible Common Equity
Net income - GAAP	$	95,040			$	57,518
Total average common stockholders' equity - GAAP	$	795,554			$	743,225
Less: Average goodwill		156,277				156,277
Less: Average other identifiable intangible assets		2,866				3,816
Total average tangible common stockholders' equity - Non-GAAP	$	636,411			$	583,132
Return on average common stockholders' equity - GAAP		11.95	%			7.74	%
Return on average tangible common stockholders' equity - Non-GAAP		14.93	%			9.86	%
Calculation of Efficiency Ratio
Total noninterest expense	$	140,756			$	132,798
Amortization of core deposit intangibles		(868	)			(1,025	)
Long-term debt prepayment fees		—				(4,133	)
Long-term debt extinguishment costs		(831	)			—
Merger-related expenses		(1,782	)			—
Noninterest expense, as adjusted	$	137,275			$	127,640
Net interest income	$	234,834			$	207,687
Noninterest income		22,361				27,110
Total revenue	$	257,195			$	234,797
Tax-equivalent adjustment on municipal securities		700				438
Gain on sales and calls of investment securities		(9	)			(1,213	)
Total revenue, as adjusted	$	257,886			$	234,022
Efficiency ratio - Non-GAAP		53.23	%			54.54	%

FAQ

What were Lakeland Bancorp's earnings results for Q4 2021?

Lakeland Bancorp reported net income of $22.2 million and diluted earnings per share of $0.43 for Q4 2021.

How did Lakeland Bancorp perform in 2021 compared to 2020?

In 2021, Lakeland Bancorp achieved a net income of $95.0 million, a 65% increase from $57.5 million in 2020.

What is the significance of the acquisition of 1st Constitution Bancorp?

The acquisition, completed on January 6, 2022, expands Lakeland's presence into central New Jersey, enhancing its market opportunities.

What is the current dividend offered by Lakeland Bancorp?

Lakeland Bancorp declared a quarterly cash dividend of $0.135 per share, payable on February 17, 2022.

What was the return on average assets for Lakeland Bancorp in 2021?

The annualized return on average assets was 1.19% for the year ended December 31, 2021.