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Lakeland Bancorp Announces Third Quarter Results

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Lakeland Bancorp, Inc. (NASDAQ: LBAI) reported a net income of $22.3 million and EPS of $0.43 for Q3 2021, up from $14.4 million and EPS of $0.28 year-over-year. For the first nine months, net income reached $72.9 million, nearly doubling from $38.7 million in 2020. The Company benefitted from a $2.7 million provision benefit for credit losses, and non-performing assets fell 71% to $12.3 million. Deposit growth was strong, increasing $202.7 million in Q3. An upcoming merger with 1st Constitution Bancorp is anticipated to close in January 2022.

Positive
  • Net income increased to $22.3 million for Q3 2021, compared to $14.4 million in Q3 2020.
  • EPS rose to $0.43 from $0.28 year-over-year.
  • Strong deposit growth of $202.7 million during Q3.
  • Non-performing assets decreased 71% to $12.3 million.
  • Successful $150 million subordinated debt offering with a 2.875% interest rate.
Negative
  • Noninterest income decreased by $1.3 million to $5.5 million in Q3 2021 compared to Q3 2020.
  • Total loans decreased by $140.4 million to $5.88 billion for the nine months ended September 30, 2021.

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

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

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

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

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

Third Quarter 2021 Highlights

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

Net Interest Margin and Net Interest Income

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

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

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

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

Noninterest Income

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

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

Noninterest Expense

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

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

Income Tax Expense

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

Financial Condition

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

Asset Quality

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

Capital

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

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “anticipates,” “projects,” “intends,” “estimates,” “expects,” “believes,” “plans,” “may,” “will,” “should,” “could,” and other similar expressions are intended to identify such forward-looking statements. The Company cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements.  Accordingly, you should not place undue reliance on forward-looking statements. In addition to the specific risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, the following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Company’s markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Company’s lending and leasing activities, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, customers’ acceptance of the Company’s products and services, competition, and failure to realize anticipated efficiencies and synergies from the merger of 1st Constitution  Bancorp into Lakeland Bancorp and the merger of 1st Constitution Bank into Lakeland Bank. Further, given its ongoing and dynamic nature, it is difficult to predict the continuing effects that the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with U.S. generally accepted accounting principles  ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company’s management uses in its analysis of the Company’s financial results.

The Company also provides measurements and ratios based on tangible equity and tangible assets. These measures are utilized by regulators and market analysts to evaluate a company’s financial condition and,therefore, the Company’s management believes that such information is useful to investors.

Specifically, the Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, and, where applicable, long-term debt prepayment fees and merger-related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes gains and losses from the sale of investment securities, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period.

These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures.

About Lakeland

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

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


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

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

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

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

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

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


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

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

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

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

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

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

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


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

FAQ

What are Lakeland Bancorp's Q3 2021 earnings results?

Lakeland Bancorp reported a net income of $22.3 million and EPS of $0.43 for Q3 2021.

How did Lakeland Bancorp perform in 2021 compared to 2020?

For the first nine months of 2021, net income was $72.9 million, compared to $38.7 million in 2020.

What was the impact of the recent subordinated debt offering by LBAI?

The recent $150 million subordinated debt offering was successful, with an interest rate of 2.875% fixed for five years.

What is the status of the merger between Lakeland Bancorp and 1st Constitution Bancorp?

The merger is expected to close in January 2022, with integration meetings progressing well.

How did non-performing assets change for Lakeland Bancorp?

Non-performing assets decreased by 71% to $12.3 million as of September 30, 2021.

Lakeland Bancorp Inc

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