Lakeland Bancorp Announces Second Quarter Results

Rhea-AI Summary

Lakeland Bancorp reported a net income of $11.9 million and earnings per diluted share of $0.23 for Q2 2020, down from $17.5 million and $0.34 in Q2 2019. The six-month figures also declined, with net income at $24.2 million compared to $33.1 million in 2019. A significant $9.0 million provision for loan losses was recorded in Q2 2020 due to COVID-19 impacts. Total assets reached $7.49 billion with loans increasing by $618.3 million. A dividend of $0.125 per share was declared for August 2020.

Positive

• Total assets rose to $7.49 billion, a $777.3 million increase from December 2019.
• Deposits surged by $831.7 million to $6.13 billion.
• Loans increased by $618.3 million, contributing to a strong balance sheet growth.
• The book value per common share increased by 7% to $14.77.
• A dividend of $0.125 per share was declared.

Negative

• Net income decreased to $11.9 million in Q2 2020 from $17.5 million in Q2 2019.
• Earnings per diluted share fell to $0.23 from $0.34 year-over-year.
• A provision for loan losses was recorded at $9.0 million, compared to no provision in Q2 2019.
• Non-performing assets increased to $33.2 million, or 0.44% of total assets.
• Net interest margin decreased to 3.06%, down 33 basis points from the previous year.

OAK RIDGE, N.J., July 23, 2020 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $11.9 million and earnings per diluted share (“EPS”) of $0.23 for the three months ended June 30, 2020 compared to net income of $17.5 million and diluted EPS of $0.34 for the second quarter of 2019. For the second quarter of 2020, annualized return on average assets was 0.67%, annualized return on average common equity was 6.42% and annualized return on average tangible common equity was 8.19%. 

For the six months ended June 30, 2020, the Company reported net income of $24.2 million and earnings per diluted share (“EPS”) of $0.47 compared to net income of $33.1 million and diluted EPS of $0.65 for the first six months of 2019. For the first six months of 2020, annualized return on average assets was 0.71%, annualized return on average common equity was 6.59% and annualized return on average tangible common equity was 8.42%.

The second quarter and year-to-date results were adversely impacted by a $9.0 million and $18.2 million provision for loan losses, respectively, compared to no provision and a $508,000 provision for the same periods last year. The increased provision for the first half of 2020 was primarily due to the impact of COVID-19 on certain qualitative factors and loans on payment deferment resulting in approximately $15.0 million of the provision. The remaining $3.2 million of the provision is attributable to loan growth, a change in the loan portfolio composition and a change in loss rates. As of June 30, 2020, the ratio of the allowance for loan loss to total loans was 1.00% compared to 0.78% as of December 31, 2019. The allowance for loan losses to total loans less Paycheck Protection Program (“PPP”) loans of $326.0 million, was 1.06% as of June 30, 2020.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, “While the pandemic has continued to impact our markets, Lakeland remains focused on expanding our customer relationships and carefully growing our franchise. Lakeland’s commitment to our communities is evident in our active participation in the PPP loan program, the recently launched Main Street Lending Program and numerous other charitable initiatives during this crisis. As conditions improved, the number of loan deferral requests has decreased dramatically and we are encouraged by the large volume of loans on payment deferment indicating a return to full or partial paying status. Although the pandemic has lessened in our markets and loan charge-offs continue to be negligible, we remain prudent with our elevated loan loss provision of $9.0 million which is consistent with last quarter.”

Mr. Shara continued, “Despite these conditions, Lakeland’s Q2 balance sheet growth has been robust as loans increased $111 million or 8% annualized, excluding originating $326.0 million in PPP loans, while deposits surged by $670 million. The additional liquidity combined with lower market interest rates and the impact of low yielding PPP loans reduced the net interest margin to 3.06% for the quarter. We will look to leverage this liquidity during the second half of the year as the economic forecast becomes clearer.”

COVID-19

As part of Lakeland’s response to COVID-19, we initiated remote working plans and encouraged the use of our mobile and online banking alternatives. To assist COVID-19 impacted borrowers, we are offering temporary payment deferrals on commercial, mortgage and consumer loans. As of June 30, 2020, we have deferred approximately $927.0 million of commercial loans, $40.0 million of equipment finance and $53.0 million of residential mortgage and consumer loans. We are also participating in the Small Business Administration Paycheck Protection Program (“PPP”) to help strengthen local businesses and preserve jobs in our communities and as of June 30, 2020 have funded 2,066 loans totaling $326.0 million with $11.1 million in related fees, as well as $1.1 million in deferred costs. Additionally, to further support our customers, the Company is participating in the Main Street Lending Program established by the Federal Reserve to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.

Net Interest Margin and Net Interest Income

Net interest margin for the second quarter of 2020 of 3.06% decreased 33 and 22 basis points, respectively, from the second quarter of 2019 and the first quarter of 2020. Net interest margin for the first six months of 2020 of 3.16% compared to 3.41% for the same period in 2019. The decrease in net interest margin was due primarily to a decrease in the yield on interest-earning assets partially offset by a decrease in the cost of interest bearing liabilities.

The yield on interest-earning assets for the second quarter of 2020 was 3.69% compared to 4.46% for the second quarter of 2019 and 4.17% for the first quarter of 2020. The yield on interest-earning assets for the first six months of 2020 was 3.92% compared to 4.45% during the same period in 2019. The current quarter and year-to-date decrease in yield on interest-earning assets, when compared to the prior periods, was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2019 and 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during the second quarter of 2020, which earn an effective yield of 2.50% including amortization of fees and costs.

The cost of interest-bearing liabilities for the second quarter of 2020 was 0.86% compared to 1.42% for the second quarter of 2019 and 1.18% for the first quarter of 2020. The cost of interest-bearing liabilities for the first six months of 2020 was 1.02% compared to 1.38% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings have decreased since 2019 largely driven by reductions in the federal funds rate.

Net interest income for the second quarter of 2020 of $50.5 million increased $1.3 million and $620,000, respectively, compared to the second quarter of 2019 and the first quarter of 2020.  Net interest income for the first six months of 2020 of $100.4 million compared to $97.8 million for the first six months of 2019.  The increase in net interest income compared to prior periods was due primarily to the growth in the volume of interest-earning assets and a decrease in interest rates on interest-bearing liabilities partially offset by a decrease in the yield on interest-earning assets.

Noninterest Income

Noninterest income decreased $908,000 to $5.5 million for the second quarter of 2020 from $6.4 million for the second quarter of 2019. Service charges on deposit accounts for the second quarter of 2020 decreased $880,000 compared to the second quarter of 2019 due primarily to changes in customer behavior resulting from the pandemic and New Jersey’s Stay in Place Order. Commissions and fees for the second quarter of 2020 decreased $529,000 compared to the second quarter of 2019 due primarily to decreases in commercial loan fees and investment commission income. Partially offsetting these unfavorable variances was gains on sales of loans and swap income which increased $282,000 and $111,000, respectively, due primarily to increased volume driven by lower interest rates.

For the first six months of 2020, noninterest income increased $1.4 million to $13.5 million compared to the first six months of 2019 primarily due to a $2.8 million increase in swap income. The first half of 2020 included gains on sales of investment securities of $342,000 compared to none for the same period last year. Gains on sales of loans for the first six months of 2020 totaling $1.1 million increased $326,000 compared to the first six months of 2019 due to the same reason discussed above. Service charges on deposit accounts and commissions and fees decreased $953,000 and $301,000, respectively, compared to the same period in 2019 due to the same reasons discussed in the quarterly comparison. The first half of 2020 also included a $455,000 loss on equity securities compared to a gain of $453,000 for the first half of 2019.

Noninterest Expense

Noninterest expense totaled $31.5 million for the second quarter of 2020 and decreased $224,000 compared to the second quarter of 2019. Salary and employee benefit expense for the second quarter of 2020 increased $890,000, or 5%, when compared to the same quarter of 2019 as a result of staff additions and normal merit increases. Furniture and equipment expense increased $618,000 compared to the second quarter of 2019 due primarily to an increase in costs associated with the Company’s digital strategy initiative, while marketing expense decreased $306,000 due partially to the delay of marketing campaigns resulting from the pandemic. The second quarter of 2019 also included $318,000 in merger related expenses from the Highlands Bancorp acquisition.

Noninterest expense for the first half of 2020 of $64.0 million decreased $1.7 million due primarily to merger related expenses in the first half of 2019 of $3.2 million. Salary and employee benefit expense and furniture and equipment expense increased $1.9 million and $1.1 million, respectively, compared to the first half of 2019 due to the same reasons discussed in the quarterly comparison. Marketing expenses for the first half of 2020 decreased $548,000 due to the same reason discussed in the quarterly comparison. First half of 2020 results included a long-term debt prepayment fee of $356,000 resulting from the payoff of $10.0 million in Federal Home Loan Bank debt yielding 2.89%. 

Income Tax Expense

The effective tax rate for the second quarter of 2020 was 23.7% compared to 27.0% for the second quarter of 2019.  The increased effective tax rate for the second quarter of 2019 was primarily a result of a technical bulletin issued by the New Jersey Division of Taxation during the second quarter of 2019, which resulted in increasing our 2019 year-to-date effective tax rate to 24.5%.

Financial Condition

At June 30, 2020, total assets were $7.49 billion, an increase of $777.3 million compared to December 31, 2019. For the six months ended June 30, 2020, total loans grew $618.3 million, including $326.0 million attributed to PPP loans, to $5.76 billion and investment securities increased $39.1 million to $958.0 million. On the funding side, total deposits increased $831.7 million to $6.13 billion, while borrowings decreased $155.6 million to $457.1 million. At June 30, 2020, total loans as a percent of total deposits was 94.2%.

Asset Quality

At June 30, 2020, non-performing assets increased to $33.2 million, 0.44% of total assets, compared to $21.7 million, 0.32% of total assets, at December 31, 2019. Non-accrual loans as a percent of total loans increased to 0.57% at June 30, 2020 compared to 0.41% at December 31, 2019. The increase in non-accrual loans from December 31, 2019, related primarily to one loan relationship totaling $9.5 million that was not COVID-19 related. The allowance for loan losses increased to $57.8 million, 1.00% of total loans, at June 30, 2020, compared to $40.0 million, 0.78% of total loans, at December 31, 2019. In the second quarter of 2020, the Company had net charge-offs of $45,000, or 0.00% of average loans, annualized, compared to net recoveries of $683,000, or 0.06%, for the same period in 2019. The provision for loan losses for the second quarter of 2020 was $9.0 million compared to no provision for loan losses in the second quarter of 2019.

Capital

At June 30, 2020, stockholders’ equity was $745.5 million compared to $725.3 million at December 31, 2019, a 3% increase. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.69% at June 30, 2020. The book value per common share and tangible book value per common share increased 7% and 9% to $14.77 and $11.60, respectively, compared to $13.85 and $10.66 at June 30, 2019. On July 21, 2020, the Company declared a quarterly cash dividend of $0.125 per share to be paid on August 17, 2020, to shareholders of record as of August 3, 2020.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements - including the statements regarding the prospective impact of COVID-19 and Lakeland’s ability to leverage its increased liquidity - 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. The following factors, among others, could cause the Company’s 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; public health crises (such as the governmental, social and economic effects of the novel coronavirus); 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 Lakeland’s lending and equipment financing activities; successful implementation, deployment and upgrades of new and existing technology, systems, services and products; and customers’ acceptance of Lakeland’s products and services.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America (“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. Specifically, the Company provides measures based on what it believes are its operating earnings on a consistent basis, and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods in question.

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.

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, 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 gains and losses from the sale of investment securities and gain on debt extinguishment, 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 non-GAAP tables.

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which has over $7 billion in total assets. 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 New Jersey’s #1 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 for more information.

Thomas J. Shara
President & CEO

Thomas F. Splaine
EVP & CFO
973-697-2000

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Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended June 30,		Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2020		2019		2020		2019
INCOME STATEMENT
45%; width:45%; min-width:45%;">Net interest income	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">50,519	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">49,198	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">100,418	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">97,804	1%; width:1%; min-width:1%;">
Provision for loan losses	(9,000	)		—			(18,223	)		(508	)
Gains on sales of investment securities	—			—			342			—
Gains on sales of loans	710			428			1,125			799
Gain on equity securities	198			100			(455	)		453
Other noninterest income	4,573			5,861			12,480			10,860
Long-term debt prepayment fee	—			—			(356	)		—
Merger-related expenses	—			(318	)		—			(3,178	)
Other noninterest expense	(31,462	)		(31,368	)		(63,610	)		(62,492	)
Pretax income	15,538			23,901			31,721			43,738
Provision for income taxes	(3,687	)		(6,444	)		(7,478	)		(10,655	)
Net income	$	11,851			$	17,457			$	24,243			$	33,083
Basic earnings per common share	$	0.23			$	0.34			$	0.48			$	0.65
Diluted earnings per common share	$	0.23			$	0.34			$	0.47			$	0.65
Dividends paid per common share	$	0.125			$	0.125			$	0.250			$	0.240
Weighted average shares - basic	50,522			50,509			50,554			50,393
Weighted average shares - diluted	50,593			50,649			50,660			50,544
SELECTED OPERATING RATIOS
Annualized return on average assets	0.67	%		1.12	%		0.71	%		1.07	%
Annualized return on average common equity	6.42	%		10.16	%		6.59	%		9.79	%
Annualized return on average tangible common equity (1)	8.19	%		13.21	%		8.42	%		12.77	%
Annualized yield on interest-earning assets	3.69	%		4.46	%		3.92	%		4.45	%
Annualized cost of interest-bearing liabilities	0.86	%		1.42	%		1.02	%		1.38	%
Annualized net interest spread	2.83	%		3.04	%		2.91	%		3.07	%
Annualized net interest margin	3.06	%		3.39	%		3.16	%		3.41	%
Efficiency ratio (1)	55.62	%		55.78	%		55.46	%		56.20	%
Stockholders' equity to total assets					9.96	%		10.90	%
Book value per common share					$	14.77			$	13.85
Tangible book value per common share (1)					$	11.60			$	10.66
Tangible common equity to tangible assets (1)					7.99	%		8.61	%
ASSET QUALITY RATIOS					June 30, 2020		June 30, 2019
Ratio of allowance for loan losses to total loans					1.00	%		0.78	%
Non-performing loans to total loans					0.57	%		0.29	%
Non-performing assets to total assets					0.44	%		0.23	%
Annualized net charge-offs (recoveries) to average loans					0.01	%		(0.02	)%
(1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands)					June 30, 2020		June 30, 2019
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans					$	5,756,155			$	4,922,373
Allowance for loan losses					57,839			38,662
Investment securities					957,985			863,474
Total assets					7,488,516			6,407,195
Total deposits					6,125,502			5,082,598
Short-term borrowings					183,116			258,703
Other borrowings					273,954			294,022
Stockholders' equity					745,489			698,463
	Three Months Ended June 30,		Six Months Ended June 30,
	2020		2019		2020		2019
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	5,572,865			$	4,917,109			$	5,390,481			$	4,894,447
Investment securities	891,037			854,608			885,512			856,318
Interest-earning assets	6,650,993			5,836,333			6,391,998			5,804,769
Total assets	7,137,529			6,256,523			6,851,415			6,220,076
Noninterest-bearing demand deposits	1,364,785			1,083,745			1,237,212			1,069,979
Savings deposits	525,224			502,340			511,011			507,775
Interest-bearing transaction accounts	2,908,299			2,562,365			2,869,539			2,558,636
Time deposits	1,093,760			961,212			983,379			925,837
Total deposits	5,892,068			5,109,662			5,601,141			5,062,227
Short-term borrowings	82,694			110,941			121,260			119,907
Other borrowings	273,904			283,177			275,828			294,788
Total interest-bearing liabilities	4,883,881			4,420,035			4,761,017			4,406,943
Stockholders' equity	742,050			689,324			739,385			681,309

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Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
		Three Months Ended June 30,		Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2020		2019		2020		2019
INTEREST INCOME
Loans and net deferred fees and costs	$	55,825			$	59,119			$	113,682			$	116,761
Federal funds sold and interest-bearing deposits with banks	36			348			195			602
Taxable investment securities and other	4,763			4,985			9,992			9,858
Tax exempt investment securities	349			396			681			804
	TOTAL INTEREST INCOME	60,973			64,848			124,550			128,025
INTEREST EXPENSE
Deposits	8,094			12,762			18,957			24,259
Federal funds purchased and securities sold under agreements to repurchase	75			494			504			1,102
Other borrowings	2,285			2,394			4,671			4,860
	TOTAL INTEREST EXPENSE	10,454			15,650			24,132			30,221
NET INTEREST INCOME	50,519			49,198			100,418			97,804
Provision for loan losses	9,000			—			18,223			508
	NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	41,519			49,198			82,195			97,296
NONINTEREST INCOME
Service charges on deposit accounts	1,875			2,755			4,375			5,328
Commissions and fees	1,196			1,725			2,836			3,137
Income on bank owned life insurance	665			690			1,330			1,373
Gain (loss) on equity securities	198			100			(455	)		453
Gains on sales of loans	710			428			1,125			799
Gains on sales of investment securities	—			—			342			—
Swap income	767			656			3,610			855
Other income	70			35			329			167
	TOTAL NONINTEREST INCOME	5,481			6,389			13,492			12,112
NONINTEREST EXPENSE
Salaries and employee benefit expense	20,269			19,379			40,504			38,610
Net occupancy expense	2,488			2,629			5,324			5,583
Furniture and equipment expense	2,783			2,165			5,343			4,281
FDIC insurance expense	450			401			748			851
Stationary, supplies and postage expense	381			401			780			848
Marketing expense	232			538			459			1,007
Data processing expense	1,436			1,225			2,689			2,552
Telecommunications expense	454			478			898			971
ATM and debit card expense	536			583			1,123			1,185
Core deposit intangible amortization	261			301			526			605
Other real estate owned and other repossessed assets expense	43			108			55			194
Long-term debt prepayment fee	—			—			356			—
Merger-related expenses	—			318			—			3,178
Other expenses	2,129			3,160			5,161			5,805
	TOTAL NONINTEREST EXPENSE	31,462			31,686			63,966			65,670
INCOME BEFORE PROVISION FOR INCOME TAXES	15,538			23,901			31,721			43,738
Provision for income taxes	3,687			6,444			7,478			10,655
NET INCOME	$	11,851			$	17,457			$	24,243			$	33,083
EARNINGS PER COMMON SHARE:
1%; width:1%; min-width:1%;">	44%; width:44%; min-width:44%;">Basic	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">0.23	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">0.34	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">0.48	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">0.65	1%; width:1%; min-width:1%;">
	Diluted	$	0.23			$	0.34			$	0.47			$	0.65
DIVIDENDS PAID PER COMMON SHARE	$	0.125			$	0.125			$	0.250			$	0.240

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Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)	June 30, 2020		December 31, 2019
	(Unaudited)
ASSETS
73%; width:73%; min-width:73%;">Cash	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">319,834	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">275,794	1%; width:1%; min-width:1%;">
Interest-bearing deposits due from banks	22,773			6,577
Total cash and cash equivalents	342,607			282,371
Investment securities available for sale, at fair value	811,981			755,900
Equity securities, at fair value	17,182			16,473
Investment securities held to maturity; fair value of $113,241 at June 30, 2020 and $124,904 at December 31, 2019	109,834			123,975
Federal Home Loan Bank and other membership stocks, at cost	18,988			22,505
Loans held for sale	2,793			1,743
Loans, net of deferred fees	5,756,155			5,137,823
Less: Allowance for loan losses	57,839			40,003
Net loans and leases	5,698,316			5,097,820
Premises and equipment, net	47,894			47,608
Operating lease right-of-use assets	17,502			18,282
Accrued interest receivable	23,344			16,832
Goodwill	156,277			156,277
Other identifiable intangible assets	3,788			4,314
Bank owned life insurance	113,748			112,392
Other assets	124,262			54,744
TOTAL ASSETS	$	7,488,516			$	6,711,236
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing	$	1,486,273			$	1,124,121
Savings and interest-bearing transaction accounts	3,510,723			3,298,854
Time deposits $250 thousand and under	910,351			652,144
Time deposits over $250 thousand	218,155			218,660
Total deposits	6,125,502			5,293,779
Federal funds purchased and securities sold under agreements to repurchase	183,116			328,658
Other borrowings	155,715			165,816
Subordinated debentures	118,239			118,220
Operating lease liabilities	18,976			19,814
Other liabilities	141,479			59,686
TOTAL LIABILITIES	6,743,027			5,985,973
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized shares, 100,000,000; issued shares 50,594,196 and outstanding shares 50,463,161 at June 30, 2020 and issued and outstanding shares 50,498,410 at December 31, 2019	561,257			560,263
Retained earnings	174,267			162,752
Treasury shares, at cost, 131,035 shares at June 30, 2020 and no shares at December 31, 2019	(1,452	)		—
Accumulated other comprehensive income	11,417			2,248
TOTAL STOCKHOLDERS' EQUITY	745,489			725,263
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,488,516			$	6,711,236

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Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,	March 31,	December 31,	September 30,	June 30,
(Dollars in thousands, except per share data)	2020	2020	2019	2019	2019
INCOME STATEMENT
45%; width:45%; min-width:45%;">Net interest income	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">50,519	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">49,899	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">49,548	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">48,682	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">49,198	1%; width:1%; min-width:1%;">
Provision for loan losses	(9,000		(9,223		(1,086		(536		—
Gains on sales of investment securities	—		342		—		—		—
Gains on sales of loans	710		415		375		486		428
(Loss) gain on equity securities	198		(653		(29		72		100
Other noninterest income	4,573		7,907		7,638		6,142		5,861
Long-term debt prepayment fee	—		(356		—		—		—
Merger-related expenses	—		—		—		—		(318
Other noninterest expense	(31,462		(32,148		(31,523		(29,563		(31,368
Pretax income	15,538		16,183		24,923		25,283		23,901
Provision for income taxes	(3,687		(3,791		(6,208		(6,409		(6,444
Net income	$	11,851		$	12,392		$	18,715		$	18,874		$	17,457
Basic earnings per common share	$	0.23		$	0.24		$	0.37		$	0.37		$	0.34
Diluted earnings per common share	$	0.23		$	0.24		$	0.37		$	0.37		$	0.34
Dividends paid per common share	$	0.125		$	0.125		$	0.125		$	0.125		$	0.125
Dividends paid	$	6,365		$	6,364		$	6,363		$	6,362		$	6,357
Weighted average shares - basic	50,522		50,586		50,566		50,553		50,509
Weighted average shares - diluted	50,593		50,728		50,748		50,694		50,649
SELECTED OPERATING RATIOS
Annualized return on average assets	0.67	%	0.76	%	1.15	%	1.17	%	1.12	%
Annualized return on average common equity	6.42	%	6.77	%	10.32	%	10.61	%	10.16	%
Annualized return on average tangible common equity (1)	8.19	%	8.65	%	13.29	%	13.74	%	13.21	%
Annualized net interest margin	3.06	%	3.28	%	3.27	%	3.25	%	3.39	%
Efficiency ratio (1)	55.62	%	55.30	%	54.20	%	52.77	%	55.78	%
Common stockholders' equity to total assets	9.96	%	10.51	%	10.81	%	10.99	%	10.90	%
Tangible common equity to tangible assets (1)	7.99	%	8.41	%	8.62	%	8.72	%	8.61	%
Tier 1 risk-based ratio	10.45	%	10.61	%	11.02	%	11.24	%	11.11	%
Total risk-based ratio	12.98	%	13.04	%	13.40	%	13.70	%	13.60	%
Tier 1 leverage ratio	8.69	%	9.38	%	9.41	%	9.34	%	9.30	%
Common equity tier 1 capital ratio	9.93	%	10.08	%	10.46	%	10.66	%	10.52	%
Book value per common share	$	14.77		$	14.60		$	14.36		$	14.13		$	13.85
Tangible book value per common share (1)	$	11.60		$	11.43		$	11.18		$	10.94		$	10.66
(1) See Supplemental Information - Non-GAAP Financial Measures

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Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,	March 31,	December 31,	September 30,	June 30,
(Dollars in thousands)	2020	2020	2019	2019	2019
SELECTED BALANCE SHEET DATA AT PERIOD-END
45%; width:45%; min-width:45%;">Loans	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">5,769,127	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">5,331,863	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">5,140,940	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">4,925,998	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">4,925,300	1%; width:1%; min-width:1%;">
Allowance for loan losses	57,839		48,884		40,003		38,655		38,662
Investment securities	957,985		974,319		918,853		905,078		863,474
Total assets	7,488,516		7,013,908		6,711,236		6,492,474		6,407,195
Total deposits	6,125,502		5,455,138		5,293,779		5,210,619		5,082,598
Short-term borrowings	183,116		419,085		328,658		199,326		258,703
Other borrowings	273,954		258,944		284,036		284,029		294,022
Stockholders' equity	745,489		736,922		725,263		713,204		698,463
LOANS
Commercial, real estate	$	4,260,917		$	4,073,911		$	3,924,762		$	3,749,413		$	3,737,447
Commercial, industrial and other	402,239		467,346		431,934		391,486		407,776
Paycheck Protection Program	325,999		—		—		—		—
Equipment financing	115,651		116,421		111,076		104,689		99,351
Residential mortgages	334,455		334,114		335,191		337,482		336,810
Consumer and home equity	329,866		340,071		337,977		342,928		343,916
Total loans	$	5,769,127		$	5,331,863		$	5,140,940		$	4,925,998		$	4,925,300
DEPOSITS
Noninterest-bearing	$	1,486,273		$	1,129,695		$	1,124,121		$	1,101,083		$	1,089,474
Savings and interest-bearing transaction accounts	3,510,723		3,241,397		3,298,854		3,196,323		3,007,784
Time deposits	1,128,506		1,084,046		870,804		913,213		985,340
Total deposits	$	6,125,502		$	5,455,138		$	5,293,779		$	5,210,619		$	5,082,598
Total loans to total deposits ratio	94.2	%	97.7	%	97.1	%	94.5	%	96.9	%
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	5,572,865		$	5,208,097		$	5,025,377		$	4,937,488		$	4,917,109
Investment securities	891,037		879,987		894,698		869,734		854,608
Interest-earning assets	6,650,993		6,133,003		6,022,525		5,947,645		5,836,333
Total assets	7,137,529		6,565,302		6,470,082		6,379,675		6,256,523
Noninterest-bearing demand deposits	1,364,785		1,109,638		1,130,192		1,100,413		1,083,745
Savings deposits	525,224		496,798		492,903		494,377		502,340
Interest-bearing transaction accounts	2,908,299		2,830,778		2,814,831		2,678,424		2,562,365
Time deposits	1,093,760		872,998		873,924		964,159		961,212
Total deposits	5,892,068		5,310,212		5,311,850		5,237,373		5,109,662
Short-term borrowings	82,694		159,825		67,097		74,042		110,941
Other borrowings	273,904		277,753		284,049		287,839		283,177
Total interest-bearing liabilities	4,883,881		4,638,152		4,532,804		4,498,841		4,420,035
Stockholders' equity	742,050		736,719		719,292		705,726		689,324

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Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	For the Quarter Ended
	June 30,	March 31,	December 31,	September 30,	June 30,
(Dollars in thousands)	2020	2020	2019	2019	2019
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS) AND COSTS
ASSETS
Loans	4.03	%	4.47	%	4.60	%	4.71	%	4.82	%
Taxable investment securities and other	2.31	%	2.56	%	2.34	%	2.50	%	2.55	%
Tax-exempt securities	2.70	%	2.67	%	2.69	%	2.70	%	2.74	%
Federal funds sold and interest-bearing cash accounts	0.08	%	1.42	%	1.65	%	1.98	%	2.15	%
Total interest-earning assets	3.69	%	4.17	%	4.21	%	4.32	%	4.46	%
LIABILITIES
Savings accounts	0.07	%	0.07	%	0.07	%	0.06	%	0.06	%
Interest-bearing transaction accounts	0.55	%	0.97	%	1.05	%	1.24	%	1.25	%
Time deposits	1.48	%	1.81	%	1.93	%	2.00	%	1.96	%
Borrowings	2.62	%	2.54	%	2.86	%	2.89	%	2.90	%
Total interest-bearing liabilities	0.86	%	1.18	%	1.26	%	1.41	%	1.42	%
Net interest spread (taxable equivalent basis)	2.83	%	2.99	%	2.96	%	2.91	%	3.04	%
Annualized net interest margin (taxable equivalent basis)	3.06	%	3.28	%	3.27	%	3.25	%	3.39	%
Annualized cost of deposits	0.55	%	0.82	%	0.88	%	1.00	%	1.00	%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN LOSSES
45%; width:45%; min-width:45%;">Balance at beginning of period	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">48,884	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">40,003	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">38,655	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">38,662	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">37,979	1%; width:1%; min-width:1%;">
Provision for loan losses	9,000		9,223		1,086		536		—
Charge-offs	(142	)	(483	)	(198	)	(809	)	(413	)
Recoveries	97		141		460		266		1,096
Balance at end of period	$	57,839		$	48,884		$	40,003		$	38,655		$	38,662
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial, real estate	$	(36	)	$	111		$	(18	)	$	203		$	(85	)
Commercial, industrial and other	(13	)	(31	)	13		393		(909	)
Equipment financing	(11	)	71		(297	)	—		293
Residential mortgages	—		96		—		(55	)	(2	)
Consumer and home equity	105		95		40		2		20
Net charge-offs (recoveries)	$	45		$	342		$	(262	)	$	543		$	(683	)
NON-PERFORMING ASSETS
Commercial, real estate	$	25,615		$	24,770		$	13,281		$	9,164		$	10,205
Commercial, industrial and other	1,546		1,909		1,539		795		662
Equipment financing	400		199		284		271		136
Residential mortgages	2,860		2,837		3,428		3,250		1,548
Consumer and home equity	2,432		2,689		2,606		2,437		1,873
Total non-accrual loans	32,853		32,404		21,138		15,917		14,424
Property acquired through foreclosure or repossession	354		393		563		944		532
Total non-performing assets	$	33,207		$	32,797		$	21,701		$	16,861		$	14,956
Loans past due 90 days or more and still accruing	$	58		$	99		$	—		$	—		$	—
Loans restructured and still accruing	$	4,667		$	4,719		$	5,650		$	5,029		$	5,139
Ratio of allowance for loan losses to total loans	1.00	%	0.92	%	0.78	%	0.78	%	0.78	%
Total non-accrual loans to total loans	0.57	%	0.61	%	0.41	%	0.32	%	0.29	%
Total non-performing assets to total assets	0.44	%	0.47	%	0.32	%	0.26	%	0.23	%
Annualized net charge-offs (recoveries) to average loans	—	%	0.03	%	(0.02	)%	0.04	%	(0.06	)%

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Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	At or for the Quarter Ended
	June 30,	March 31,	December 31,	September 30,	June 30,
(Dollars in thousands, except ratios and per share amounts)	2020	2020	2019	2019	2019
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
45%; width:45%; min-width:45%;">Total common stockholders' equity at end of period - GAAP	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">745,489	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">736,922	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">725,263	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">713,204	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	9%; width:9%; min-width:9%;">698,463	1%; width:1%; min-width:1%;">
Less:  Goodwill	156,277		156,277		156,277		156,277		155,830
Less:  Other identifiable intangible assets	3,788		4,049		4,314		4,602		4,891
Total tangible common stockholders' equity at end of period - Non-GAAP	$	585,424		$	576,596		$	564,672		$	552,325		$	537,742
Shares outstanding at end of period	50,463		50,462		50,498		50,489		50,441
Book value per share - GAAP	$	14.77		$	14.60		$	14.36		$	14.13		$	13.85
Tangible book value per share - Non-GAAP	$	11.60		$	11.43		$	11.18		$	10.94		$	10.66
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP	$	585,424		$	576,596		$	564,672		$	552,325		$	537,742
Total assets at end of period - GAAP	$	7,488,516		$	7,013,908		$	6,711,236		$	6,492,474		$	6,407,195
Less:  Goodwill	156,277		156,277		156,277		156,277		155,830
Less:  Other identifiable intangible assets	3,788		4,049		4,314		4,602		4,891
Total tangible assets at end of period - Non-GAAP	$	7,328,451		$	6,853,582		$	6,550,645		$	6,331,595		$	6,246,474
Common equity to assets - GAAP	9.96	%	10.51	%	10.81	%	10.99	%	10.90	%
Tangible common equity to tangible assets - Non-GAAP	7.99	%	8.41	%	8.62	%	8.72	%	8.61	%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP	$	11,851		$	12,392		$	18,715		$	18,874		$	17,457
Total average common stockholders' equity - GAAP	$	742,050		$	736,719		$	719,292		$	705,726		$	689,324
Less:  Average goodwill	156,277		156,277		156,277		155,835		154,171
Less:  Average other identifiable intangible assets	3,942		4,205		4,468		4,761		5,058
Total average tangible common stockholders' equity - Non-GAAP	$	581,831		$	576,237		$	558,547		$	545,130		$	530,095
Return on average common stockholders' equity - GAAP	6.42	%	6.77	%	10.32	%	10.61	%	10.16	%
Return on average tangible common stockholders' equity - Non-GAAP	8.19	%	8.65	%	13.29	%	13.74	%	13.21	%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	31,462		$	32,504		$	31,523		$	29,563		$	31,686
Amortization of core deposit intangibles	(261	)	(265	)	(289	)	(288	)	(301	)
Merger-related expenses	—		—		—		—		(318	)
Long term debt prepayment fees	$	—		$	(356	)
Noninterest expense, as adjusted	$	31,201		$	31,883		$	31,234		$	29,275		$	31,067
Net interest income	$	50,519		$	49,899		$	49,548		$	48,682		$	49,198
Total noninterest income	5,481		8,011		7,984		6,700		6,389
Total revenue	56,000		57,910		57,532		55,382		55,587
Tax-equivalent adjustment on municipal securities	93		88		91		97		105
(Gains) on sales of investment securities	—		(342	)	—		—		—
Total revenue, as adjusted	$	56,093		$	57,656		$	57,623		$	55,479		$	55,692
Efficiency ratio - Non-GAAP	55.62	%	55.30	%	54.20	%	52.77	%	55.78	%

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Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
	For the Six Months Ended June 30,
(Dollars in thousands)	2020		2019
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
73%; width:73%; min-width:73%;">Net income - GAAP	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">24,243	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	11%; width:11%; min-width:11%;">33,083	1%; width:1%; min-width:1%;">
Total average common stockholders' equity - GAAP	$	739,385			$	681,309
Less:  Average goodwill	$	156,277			$	153,868
Less:  Average other identifiable intangible assets	$	4,073			$	5,155
Total average tangible common stockholders' equity - Non-GAAP	$	579,035			$	522,286
Return on average common stockholders' equity - GAAP	6.59	%		9.79	%
Return on average tangible common stockholders' equity - Non-GAAP	8.42	%		12.77	%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense	$	63,966			$	65,670
Amortization of core deposit intangibles	$	(526	)		$	(605	)
Long-term debt prepayment fee	$	(356	)		$	—
Merger-related expenses	$	—			$	(3,178	)
Noninterest expense, as adjusted	$	63,084			$	61,887
Net interest income	$	100,418			$	97,804
Noninterest income	$	13,492			$	12,112
Total revenue	$	113,910			$	109,916
Tax-equivalent adjustment on municipal securities	$	181			$	213
Gains on sales of investment securities	$	(342	)		$	—
Total revenue, as adjusted	$	113,749			$	110,129
Efficiency ratio - Non-GAAP	55.46	%		56.20	%

 

FAQ

What were Lakeland Bancorp's financial results for Q2 2020?

Lakeland Bancorp reported a net income of $11.9 million and earnings per diluted share of $0.23 for Q2 2020.

How has COVID-19 impacted Lakeland Bancorp's loan loss provisions?

The company recorded a provision for loan losses of $9.0 million in Q2 2020 due mainly to COVID-19 factors.

What was the dividend declared by Lakeland Bancorp in July 2020?

The company declared a quarterly cash dividend of $0.125 per share to be paid on August 17, 2020.

What was the total assets figure for Lakeland Bancorp as of June 30, 2020?

As of June 30, 2020, Lakeland Bancorp's total assets were $7.49 billion.

How did Lakeland Bancorp's net interest margin change in Q2 2020?

The net interest margin decreased to 3.06% in Q2 2020, down 33 basis points from the prior year.