Lakeland Bancorp Announces Record 2019 Earnings

OAK RIDGE, N.J., Jan. 24, 2020 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $18.7 million and earnings per diluted share ("EPS") of $0.37 for the three months ended December 31, 2019 compared to net income of $15.6 million and diluted EPS of $0.32 for the fourth quarter of 2018. For the fourth quarter of 2019, annualized return on average assets was 1.15%, annualized return on average common equity was 10.32% and annualized return on average tangible common equity was 13.29%.

For the year ended December 31, 2019, the Company reported net income of $70.7 million, an 11% increase compared to $63.4 million for the same period in 2018 resulting in annualized return on average assets of 1.12%, annualized return on average common equity of 10.14%, and annualized return on average tangible common equity of 13.16%. For 2019, the Company reported diluted EPS of $1.38, compared to diluted EPS of $1.32 for 2018. Excluding merger-related expenses pertaining to the Company’s January 2019 acquisition of Highlands Bancorp, Inc. ("Highlands") of $2.4 million, tax-effected, net income for the year ended December 31, 2019 was $73.0 million, or $1.43 per diluted share. Excluding merger-related expenses, annualized return on average assets was 1.16%, annualized return on average common equity was 10.48% and annualized return on average tangible common equity was 13.60%.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "2019 was another fantastic year for our Company, marking our 8th consecutive year of record earnings. Our strong loan and deposit growth enabled us to conclude 2019 on an extremely positive note. This success is the result of our associates’ hard work, commitment and passion for excellence.

Some of the 2019 highlights are

• Total asset growth of 16% to $6.7 billion
   
• Solid organic loan growth of 6%, including 4% in the 4th quarter
   
• Consistent deposit generation of 6%, including 10% growth in non-interest bearing deposits
   
• Seamless integration of Highlands State Bank acquisition
   
• Forbes recognition as the Best-In-State Bank in New Jersey

To sustain our high performance and increase shareholder value, we have embarked on a digital strategy initiative, impacting all operational areas of the Bank.  Enhancing our digital capabilities will allow Lakeland to expand our market presence as a community bank, as well as compete long-term in a fast-paced digital marketplace.”

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2019 of 3.27% increased two basis points from the linked quarter and decreased two basis points compared to the fourth quarter of 2018, which was due primarily to an increase in the cost of interest bearing liabilities. Net interest margin for 2019 was 3.33% compared to 3.36% for the same period in 2018.

The yield on interest-earning assets for the fourth quarter of 2019 was 4.21% compared to 4.20% for the fourth quarter of 2018. The yield on interest-earning assets for 2019 was 4.36% compared to 4.12% for 2018. The year-to-date increase in yield on interest-earning assets, when compared to the prior year period, was a result of originating higher yielding loans, increased prepayment fees, additional accretion income on loans resulting from the Highlands acquisition and higher investment securities yields.

The cost of interest-bearing liabilities for the fourth quarter of 2019 was 1.26% compared to 1.41% for the linked quarter and 1.21% for the fourth quarter of 2018. The cost of interest-bearing liabilities for 2019 was 1.35% compared to 1.01% during the same period in 2018. The cost of interest-bearing transaction accounts, time deposits and borrowings have increased since 2018 largely driven by competitive pressures and higher market interest rates.

Net interest income increased to $49.5 million for the fourth quarter of 2019 compared to $44.2 million for the fourth quarter of 2018, due primarily to the growth of interest-earning assets and increases in loan yields, partially offset by an increase in average interest-bearing liabilities and higher interest rates on interest-bearing liabilities. Net interest income for 2019 was $196.0 million, as compared to $173.6 million for the same period in 2018 due to the same reasons as the quarterly comparison.

Noninterest Income

Noninterest income increased $2.4 million to $8.0 million for the fourth quarter of 2019 from $5.6 million for the fourth quarter of 2018. Other income increased $1.8 million compared to the fourth quarter of 2018 due primarily to an increase in swap income and gains resulting from payoffs of purchased credit impaired loans during the fourth quarter of 2019.

For 2019, noninterest income totaled $26.8 million compared to $22.3 million for the same period in 2018 as the Company recorded a $496,000 gain on equity securities in 2019 compared to losses of $583,000 during the same period in 2018. In addition, commissions and fees increased $688,000 compared to 2018 due primarily to an increase in investment services income and commercial loan fees, while service charges on deposit accounts increased $621,000 due primarily to deposit growth.  Income on bank owned life insurance decreased $516,000 compared to 2018 due primarily to the receipt of insurance proceeds of $421,000 in 2018.  Other income increased $2.3 million compared to 2018 due primarily to the same reasons discussed above in the quarterly comparison.

Noninterest Expense

Noninterest expense totaled $31.5 million for the fourth quarter of 2019 and increased $2.9 million compared to the fourth quarter of 2018 due primarily to salary and employee benefit expense which increased $1.9 million as a result of staff additions from the Highlands merger, normal merit increases and higher benefit costs.  Furniture and equipment increased $306,000 due primarily to an increase in service agreement expense compared to the fourth quarter of 2018, while marketing expense increased $238,000 due primarily to  the timing of marketing campaigns.  In the fourth quarter of 2019, no FDIC expense was recorded compared to $383,000 in the fourth quarter of 2018 due to assessment credits from the FDIC, resulting from the insurance fund reserve ratio exceeding the required level. Additionally, there were no merger-related expenses booked in the fourth quarter of 2019 compared to  $464,000 during the same period in 2018. Other expenses in 2019 were $811,000 greater than 2018 due primarily to increased donations, audit expense and loan-related expenses.

For 2019, noninterest expense totaled $126.8 million compared to $111.2 million for the same period in 2018. Excluding merger-related expenses of $3.2 million in 2019 and $464,000 in 2018, noninterest expense increased $12.9 million compared to 2018 primarily as a result of additional salary and benefit expenses, as well as Highlands expenses from the merger date in January 2019 through the system conversion date in April and increased data processing expenses. Net occupancy increased $874,000 during 2019 compared to 2018 due primarily to the addition of Highlands branches as well as the acceleration of rental expense on a leased branch slated to close. FDIC insurance expense decreased $1.2 million compared to 2018 due to the credits mentioned above. Other expenses increased $1.3 million compared to 2018 due primarily to increased consulting expense and donations.

Income Tax Expense

The effective tax rate for the fourth quarter of 2019 was 24.9% compared to 24.4% for the fourth quarter of 2018. The effective tax rate for 2019 was 24.8% compared to 21.0% for 2018.

Financial Condition

At December 31, 2019, total assets were $6.71 billion, an increase of $905.1 million, including $496.5 million from the Highlands acquisition compared to December 31, 2018. For the twelve months ended December 31, 2019, total loans grew $681.1 million, including $425.0 million from Highlands, to $5.14 billion and investment securities increased $97.4 million, including $24.5 million from Highlands, to $918.9 million. On the funding side, total deposits increased $673.1 million, including $409.6 million from Highlands, to $5.29 billion, while borrowings increased $92.6 million to $612.7 million. At December 31, 2019, total loans as a percent of total deposits was 97.1%.

Asset Quality

At December 31, 2019, non-performing assets increased to $21.7 million, 0.32% of total assets, compared to $13.0 million, 0.22% of total assets, at December 31, 2018. Non-accrual loans as a percent of total loans increased to 0.41% at December 31, 2019 compared to 0.27% at December 31, 2018. The allowance for loan losses increased to $40.0 million, 0.78% of total loans, at December 31, 2019, compared to $37.7 million, 0.84% of total loans, at December 31, 2018. The Company's allowance for loan losses excluding acquired loans would be 0.88%. In the fourth quarter of 2019, the Company had net recoveries of $262,000, or 0.02% of average loans, annualized, compared to net charge-offs of $196,000, or 0.02% of average loans, annualized, for the same period in 2018. Provision for loan losses for the fourth quarter of 2019 was $1.1 million compared to provision for loan losses of $591,000 in the fourth quarter of 2018.

Capital

At December 31, 2019, stockholders' equity was $725.3 million compared to $623.7 million at December 31, 2018, a 16% increase. Lakeland Bancorp remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 9.41% at December 31, 2019. The book value per common share and tangible book value per common share both increased 9% to $14.36 and $11.18, respectively, compared to $13.14 and $10.22 at December 31, 2018. On January 22, 2020, the Company declared a quarterly cash dividend of $0.125 per share to be paid on February 14, 2020, to shareholders of record as of February 4, 2020.

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. 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 Highlands Bancorp, Inc. into Lakeland Bancorp and the merger of Highlands State Bank into Lakeland Bank. 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 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 Bancorp, Inc. (NASDAQ:LBAI) has approximately $6.71 billion in total assets. Lakeland Bank, a wholly-owned subsidiary of Lakeland Bancorp, Inc., operates 52 branch offices throughout Bergen, Essex, Morris, Ocean, Passaic, Somerset, Sussex, and Union counties in New Jersey including one branch in Highland Mills, New York; five New Jersey regional commercial lending centers in Bernardsville, Jackson, Montville, Teaneck and Waldwick; and one New York commercial lending center to serve the Hudson Valley region. Lakeland also has a commercial loan production office serving Middlesex and Monmouth counties in New Jersey. Lakeland Bank offers an extensive suite of financial products and services for businesses and consumers. Visit LakelandBank.com for more information.

Thomas J. Shara
President & CEO

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

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
	Three Months Ended December 31,								Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts)	2019				2018				2019				2018
INCOME STATEMENT
Net interest income	$	49,548			$	44,206			$	196,034			$	173,559
Provision for loan losses	(1,086		)		(591		)		(2,130		)		(4,413		)
Gains on sales of loans	375				299				1,660				1,329
Gain (loss) on equity securities	(29		)		(199		)		496				(583		)
Other noninterest income	7,638				5,528				24,640				21,564
Merger-related expenses	—				(464		)		(3,178		)		(464		)
Other noninterest expense	(31,523		)		(28,199		)		(123,578		)		(110,703		)
Pretax income	24,923				20,580				93,944				80,289
Provision for income taxes	(6,208		)		(5,030		)		(23,272		)		(16,888		)
Net income	$	18,715			$	15,550			$	70,672			$	63,401
Basic earnings per common share	$	0.37			$	0.32			$	1.39			$	1.32
Diluted earnings per common share	$	0.37			$	0.32			$	1.38			$	1.32
Dividends paid per common share	$	0.125			$	0.115			$	0.490			$	0.445
Weighted average shares - basic	50,566				47,605				50,477				47,578
Weighted average shares - diluted	50,748				47,780				50,642				47,766
SELECTED OPERATING RATIOS
Annualized return on average assets	1.15		%		1.08		%		1.12		%		1.15		%
Annualized return on average common equity	10.32		%		10.05		%		10.14		%		10.59		%
Annualized return on average tangible common equity (1)	13.29		%		12.98		%		13.16		%		13.78		%
Annualized yield on interest-earning assets	4.21		%		4.20		%		4.36		%		4.12		%
Annualized cost of interest-bearing liabilities	1.26		%		1.21		%		1.35		%		1.01		%
Annualized net interest spread	2.96		%		2.99		%		3.00		%		3.11		%
Annualized net interest margin	3.27		%		3.29		%		3.33		%		3.36		%
Efficiency ratio (1)	54.20		%		56.18		%		54.83		%		56.09		%
Stockholders' equity to total assets									10.81		%		10.74		%
Book value per common share									$	14.36			$	13.14
Tangible book value per common share (1)									$	11.18			$	10.22
Tangible common equity to tangible assets (1)									8.62		%		8.57		%
ASSET QUALITY RATIOS									December 31, 2019				December 31, 2018
Ratio of allowance for loan losses to total loans									0.78		%		0.84		%
Non-performing loans to total loans									0.41		%		0.27		%
Non-performing assets to total assets									0.32		%		0.22		%
Annualized net charge-offs (recoveries) to average loans									—		%		0.05		%
(1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
(Dollars in thousands)									December 31, 2019				December 31, 2018
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans									$	5,137,823			$	4,460,447
Allowance for loan losses									40,003				37,688
Investment securities									918,853				821,486
Total assets									6,711,236				5,806,093
Total deposits									5,293,779				4,620,670
Short-term borrowings									328,658				233,905
Other borrowings									284,036				286,145
Stockholders' equity									725,263				623,739
	Three Months Ended December 31,								Twelve Months Ended December 31,
	2019				2018				2019				2018
SELECTED AVERAGE BALANCE SHEET DATA
Loans	$	5,025,377			$	4,393,382			$	4,938,298			$	4,283,401
Investment securities	894,698				823,193				869,374				816,697
Interest-earning assets	6,022,525				5,346,934				5,895,669				5,182,194
Total assets	6,470,082				5,694,827				6,322,654				5,528,914
Noninterest-bearing demand deposits	1,130,192				1,003,508				1,092,827				984,445
Savings deposits	492,903				483,606				500,650				489,742
Interest-bearing transaction accounts	2,814,831				2,446,325				2,653,404				2,301,065
Time deposits	873,924				769,129				922,412				778,180
Total deposits	5,311,850				4,702,568				5,169,293				4,553,432
Short-term borrowings	67,097				50,196				95,035				53,775
Other borrowings	284,049				288,126				290,330				286,639
Total interest-bearing liabilities	4,532,804				4,037,382				4,461,831				3,909,401
Stockholders' equity	719,292				613,583				697,037				598,527

Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
	Three Months Ended December 31,							Twelve Months Ended December 31,
(Dollars in thousands, except per share amounts)	2019			2018				2019			2018
INTEREST INCOME
Loans and net deferred fees and costs	$	58,211		$	50,759			$	233,535		$	193,143
Federal funds sold and interest-bearing deposits with banks	423			715				1,720			1,559
Taxable investment securities and other	4,857			4,550				19,722			16,710
Tax exempt investment securities	345			410				1,510			1,709
TOTAL INTEREST INCOME	63,836			56,434				256,487			213,121
INTEREST EXPENSE
Deposits	11,722			9,935				49,248			30,620
Federal funds purchased and securities sold under agreements to repurchase	138			62				1,471			471
Other borrowings	2,428			2,231				9,734			8,471
TOTAL INTEREST EXPENSE	14,288			12,228				60,453			39,562
NET INTEREST INCOME	49,548			44,206				196,034			173,559
Provision for loan losses	1,086			591				2,130			4,413
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	48,462			43,615				193,904			169,146
NONINTEREST INCOME
Service charges on deposit accounts	3,026			2,814				11,205			10,584
Commissions and fees	1,548			1,446				6,230			5,542
Income on bank owned life insurance	676			699				2,740			3,256
Gain on equity securities	(29		)	(199		)		496			(583		)
Gains on sales of loans	375			299				1,660			1,329
Other income	2,388			569				4,465			2,182
TOTAL NONINTEREST INCOME	7,984			5,628				26,796			22,310
NONINTEREST EXPENSE
Salaries and employee benefit expense	19,615			17,674				77,287			68,595
Net occupancy expense	2,679			2,498				11,029			10,155
Furniture and equipment expense	2,316			2,010				8,681			8,297
FDIC insurance expense	—			383				431			1,608
Stationary, supplies and postage expense	385			395				1,599			1,625
Marketing expense	515			277				1,945			1,437
Data processing expense	1,113			1,084				4,913			3,609
Telecommunications expense	492			448				1,943			1,769
ATM and debit card expense	604			571				2,377			2,195
Core deposit intangible amortization	289			142				1,182			594
Other real estate owned and other repossessed assets expense	33			46				256			158
Merger-related expenses	—			464				3,178			464
Other expenses	3,482			2,671				11,935			10,661
TOTAL NONINTEREST EXPENSE	31,523			28,663				126,756			111,167
INCOME BEFORE PROVISION FOR INCOME TAXES	24,923			20,580				93,944			80,289
Provision for income taxes	6,208			5,030				23,272			16,888
NET INCOME	$	18,715		$	15,550			$	70,672		$	63,401
EARNINGS PER COMMON SHARE:
Basic	$	0.37		$	0.32			$	1.39		$	1.32
Diluted	$	0.37		$	0.32			$	1.38		$	1.32
DIVIDENDS PAID PER COMMON SHARE	$	0.125		$	0.115			$	0.490		$	0.445

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(Dollars in thousands)								December 31, 2019						December 31, 2018
								(Unaudited)
ASSETS
Cash								$			275,794			$			205,199
Interest-bearing deposits due from banks								6,577						3,400
Total cash and cash equivalents								282,371						208,599
Investment securities available for sale, at fair value								755,900						638,618
Equity securities, at fair value								16,473						15,921
Investment securities held to maturity; fair value of $124,904 at December 31, 2019 and $150,932 at December 31, 2018								123,975						153,646
Federal Home Loan Bank and other membership stocks, at cost								22,505						13,301
Loans held for sale								1,743						1,113
Loans, net of deferred fees								5,137,823						4,456,733
Allowance for loan losses								(40,003				)		(37,688				)
Net loans								5,097,820						4,419,045
Premises and equipment, net								47,608						49,175
Operating lease right-of-use assets								18,282						—
Accrued interest receivable								16,832						16,114
Goodwill								156,277						136,433
Other identifiable intangible assets								4,314						1,768
Bank owned life insurance								112,392						110,052
Other assets								54,744						42,308
TOTAL ASSETS								$			6,711,236			$			5,806,093
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing								$			1,124,121			$			950,218
Savings and interest-bearing transaction accounts								3,298,854						2,913,414
Time deposits $250 thousand and under								652,144						589,737
Time deposits over $250 thousand								218,660						167,301
Total deposits								5,293,779						4,620,670
Federal funds purchased and securities sold under agreements to repurchase								328,658						233,905
Other borrowings								165,816						181,118
Subordinated debentures								118,220						105,027
Operating lease liabilities								19,814						—
Other liabilities								59,686						41,634
TOTAL LIABILITIES								5,985,973						5,182,354
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 100,000,000 shares at December 31, 2019 and at December 31, 2018; issued shares 50,498,410 at December 31, 2019 and 47,486,250 shares at December 31, 2018								560,263						514,703
Retained earnings								162,752						116,874
Accumulated other comprehensive income (loss)								2,248						(7,838				)
TOTAL STOCKHOLDERS' EQUITY								725,263						623,739
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY								$			6,711,236			$			5,806,093

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
																For the Quarter Ended
																December 30,																	September 30,					June 30,					March 31,					December 31,
(Dollars in thousands, except per share data)																2019																	2019					2019					2019					2018
INCOME STATEMENT
Net interest income																$															49,548		$			48,682		$			49,198		$			48,606		$			44,206
Provision for loan losses																(1,086																)	(536				)	—					(508				)	(591				)
Gains on sales of loans																375																	486					428					371					299
Gain (loss) on equity securities																(29																)	72					100					353					(199				)
Other noninterest income																7,638																	6,142					5,861					4,999					5,528
Merger-related expenses																—																	—					(318				)	(2,860				)	(464				)
Other noninterest expense																(31,523																)	(29,563				)	(31,368				)	(31,124				)	(28,199				)
Pretax income																24,923																	25,283					23,901					19,837					20,580
Provision for income taxes																(6,208																)	(6,409				)	(6,444				)	(4,211				)	(5,030				)
Net income																$															18,715		$			18,874		$			17,457		$			15,626		$			15,550
Basic earnings per common share																$															0.37		$			0.37		$			0.34		$			0.31		$			0.32
Diluted earnings per common share																$															0.37		$			0.37		$			0.34		$			0.31		$			0.32
Dividends paid per common share																$															0.125		$			0.125		$			0.125		$			0.115		$			0.115
Dividends paid																$															6,363		$			6,362		$			6,357		$			5,838		$			5,510
Weighted average shares - basic																50,566																	50,553					50,509					50,275					47,605
Weighted average shares - diluted																50,748																	50,694					50,649					50,442					47,780
SELECTED OPERATING RATIOS
Annualized return on average assets																1.15																%	1.17				%	1.12				%	1.02				%	1.08				%
Annualized return on average common equity																10.32																%	10.61				%	10.16				%	9.41				%	10.05				%
Annualized return on average tangible common equity (1)																13.29																%	13.74				%	13.21				%	12.32				%	12.98				%
Annualized net interest margin																3.27																%	3.25				%	3.39				%	3.42				%	3.29				%
Efficiency ratio (1)																54.20																%	52.77				%	55.78				%	56.62				%	56.18				%
Common stockholders' equity to total assets																10.81																%	10.99				%	10.90				%	10.70				%	10.74				%
Tangible common equity to tangible assets (1)																8.62																%	8.72				%	8.61				%	8.41				%	8.57				%
Tier 1 risk-based ratio																11.02																%	11.24				%	11.11				%	10.98				%	11.27				%
Total risk-based ratio																13.40																%	13.70				%	13.60				%	13.48				%	13.71				%
Tier 1 leverage ratio																9.41																%	9.34				%	9.30				%	9.23				%	9.39				%
Common equity tier 1 capital ratio																10.46																%	10.66				%	10.52				%	10.38				%	10.62				%
Book value per common share																$															14.36		$			14.13		$			13.85		$			13.51		$			13.14
Tangible book value per common share (1)																$															11.18		$			10.94		$			10.66		$			10.35		$			10.22
(1) 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)																2019																	2019					2019					2019					2018
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans																$															5,140,940		$			4,925,998		$			4,925,300		$			4,924,671		$			4,460,447
Allowance for loan losses																40,003																	38,655					38,662					37,979					37,688
Investment securities																918,853																	905,078					863,474					850,729					821,486
Total assets																6,711,236																	6,492,474					6,407,195					6,365,063					5,806,093
Total deposits																5,293,779																	5,210,619					5,082,598					5,064,584					4,620,670
Short-term borrowings																328,658																	199,326					258,703					261,266					233,905
Other borrowings																284,036																	284,029					294,022					293,976					286,145
Stockholders' equity																725,263																	713,204					698,463					681,343					623,739
LOANS
Commercial, real estate																$															3,924,762		$			3,749,413		$			3,737,447		$			3,769,545		$			3,377,324
Commercial, industrial and other																431,934																	391,486					407,776					389,230					336,735
Equipment financing																111,076																	104,689					99,351					90,791					87,925
Residential mortgages																335,191																	337,482					336,810					335,290					329,854
Consumer and home equity																337,977																	342,928					343,916					339,815					328,609
Total loans																$															5,140,940		$			4,925,998		$			4,925,300		$			4,924,671		$			4,460,447
DEPOSITS
Noninterest-bearing																$															1,124,121		$			1,101,083		$			1,089,474		$			1,071,890		$			950,218
Savings and interest-bearing transaction accounts																3,298,854																	3,196,323					3,007,784					3,046,322					2,913,414
Time deposits																870,804																	913,213					985,340					946,372					757,038
Total deposits																$															5,293,779		$			5,210,619		$			5,082,598		$			5,064,584		$			4,620,670
Total loans to total deposits ratio																97.1																%	94.5				%	96.9				%	97.2				%	96.5				%
SELECTED AVERAGE BALANCE SHEET DATA
Loans																$															5,025,377		$			4,937,488		$			4,917,109		$			4,871,534		$			4,393,382
Investment securities																894,698																	869,734					854,608					858,046					823,193
Interest-earning assets																6,022,525																	5,947,645					5,836,333					5,772,853					5,346,934
Total assets																6,470,082																	6,379,675					6,256,523					6,183,224					5,694,827
Noninterest-bearing demand deposits																1,130,192																	1,100,413					1,083,745					1,056,060					1,003,508
Savings deposits																492,903																	494,377					502,340					513,270					483,606
Interest-bearing transaction accounts																2,814,831																	2,678,424					2,562,365					2,554,865					2,446,325
Time deposits																873,924																	964,159					961,212					890,070					769,129
Total deposits																5,311,850																	5,237,373					5,109,662					5,014,265					4,702,568
Short-term borrowings																67,097																	74,042					110,941					128,972					50,196
Other borrowings																284,049																	287,839					283,177					306,529					288,126
Total interest-bearing liabilities																4,532,804																	4,498,841					4,420,035					4,393,706					4,037,382
Stockholders' equity																719,292																	705,726					689,324					673,205					613,583

Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
																For the Quarter Ended
																December 31,																	September 30,					June 30,					March 31,					December 31,
(Dollars in thousands)																2019																	2019					2019					2019					2018
AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)
ASSETS
Loans																4.60																%	4.71				%	4.82				%	4.80				%	4.58				%
Taxable investment securities and other																2.34																%	2.50				%	2.55				%	2.49				%	2.44				%
Tax-exempt securities																2.69																%	2.70				%	2.74				%	2.74				%	2.74				%
Federal funds sold and interest-bearing cash accounts																1.65																%	1.98				%	2.15				%	2.35				%	2.19				%
Total interest-earning assets																4.21																%	4.32				%	4.46				%	4.44				%	4.20				%
LIABILITIES
Savings accounts																0.07																%	0.06				%	0.06				%	0.07				%	0.06				%
Interest-bearing transaction accounts																1.05																%	1.24				%	1.25				%	1.18				%	1.04				%
Time deposits																1.93																%	2.00				%	1.96				%	1.79				%	1.79				%
Borrowings																2.86																%	2.89				%	2.90				%	2.82				%	2.65				%
Total interest-bearing liabilities																1.26																%	1.41				%	1.42				%	1.34				%	1.21				%
Net interest spread (taxable equivalent basis)																2.96																%	2.91				%	3.04				%	3.10				%	2.99				%
Annualized net interest margin (taxable equivalent basis)																3.27																%	3.25				%	3.39				%	3.42				%	3.29				%
Annualized cost of deposits																0.88																%	1.00				%	1.00				%	0.93				%	0.84				%
ASSET QUALITY DATA
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period																$															38,655		$			38,662		$			37,979		$			37,688		$			37,293
Provision for loan losses																1,086																	536					—					508					591
Charge-offs																(198																)	(809				)	(413				)	(516				)	(381				)
Recoveries																460																	266					1,096					299					185
Balance at end of period																$															40,003		$			38,655		$			38,662		$			37,979		$			37,688
NET LOAN CHARGE-OFFS (RECOVERIES)
Commercial, real estate																$															(18	)	$			203		$			(85	)	$			67		$			132
Commercial, industrial and other																13																	393					(909				)	50					(44				)
Equipment financing																(297																)	—					293					85					28
Residential mortgages																—																	(55				)	(2				)	41					(2				)
Consumer and home equity																40																	2					20					(26				)	82
Net charge-offs (recoveries)																$															(262	)	$			543		$			(683	)	$			217		$			196
NON-PERFORMING ASSETS
Commercial, real estate																$															13,281		$			9,164		$			10,205		$			9,817		$			7,192
Commercial, industrial and other																1,539																	795					662					2,202					1,019
Equipment financing																284																	271					136					383					501
Residential mortgages																3,428																	3,250					1,548					1,740					1,986
Consumer and home equity																2,606																	2,437					1,873					1,581					1,432
Total non-accrual loans																21,138																	15,917					14,424					15,723					12,130
Property acquired through foreclosure or repossession																563																	944					532					715					830
Total non-performing assets																$															21,701		$			16,861		$			14,956		$			16,438		$			12,960
Loans past due 90 days or more and still accruing																$															—		$			—		$			—		$			78		$			—
Loans restructured and still accruing																$															5,650		$			5,029		$			5,139		$			6,352		$			9,293
Ratio of allowance for loan losses to total loans																0.78																%	0.78				%	0.78				%	0.77				%	0.84				%
Total non-accrual loans to total loans																0.41																%	0.32				%	0.29				%	0.32				%	0.27				%
Total non-performing assets to total assets																0.32																%	0.26				%	0.23				%	0.26				%	0.22				%
Annualized net charge-offs (recoveries) to average loans																(0.02																)%	0.04				%	(0.06				)%	0.02				%	0.02				%

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 ratios and per share amounts)																2019																	2019					2019					2019					2018
CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARE
Total common stockholders' equity at end of period - GAAP																$															725,263		$			713,204		$			698,463		$			681,343		$			623,739
Less:  Goodwill																156,277																	156,277					155,830					154,153					136,433
Less:  Other identifiable intangible assets																4,314																	4,602					4,891					5,192					1,768
Total tangible common stockholders' equity at end of period - Non-GAAP																$															564,672		$			552,325		$			537,742		$			521,998		$			485,538
Shares outstanding at end of period																50,498																	50,489					50,441					50,436					47,486
Book value per share - GAAP																$															14.36		$			14.13		$			13.85		$			13.51		$			13.14
Tangible book value per share - Non-GAAP																$															11.18		$			10.94		$			10.66		$			10.35		$			10.22
CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETS
Total tangible common stockholders' equity at end of period - Non-GAAP																$															564,672		$			552,325		$			537,742		$			521,998		$			485,538
Total assets at end of period - GAAP																$															6,711,236		$			6,492,474		$			6,407,195		$			6,365,063		$			5,806,093
Less:  Goodwill																156,277																	156,277					155,830					154,153					136,433
Less:  Other identifiable intangible assets																4,314																	4,602					4,891					5,192					1,768
Total tangible assets at end of period - Non-GAAP																$															6,550,645		$			6,331,595		$			6,246,474		$			6,205,718		$			5,667,892
Common equity to assets - GAAP																10.81																%	10.99				%	10.90				%	10.70				%	10.74				%
Tangible common equity to tangible assets - Non-GAAP																8.62																%	8.72				%	8.61				%	8.41				%	8.57				%
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP																$															18,715		$			18,874		$			17,457		$			15,626		$			15,550
Total average common stockholders' equity - GAAP																$															719,292		$			705,726		$			689,324		$			673,205		$			613,583
Less:  Average goodwill																156,277																	155,835					154,171					153,562					136,433
Less:  Average other identifiable intangible assets																4,468																	4,761					5,058					5,254					1,844
Total average tangible common stockholders' equity - Non-GAAP																$															558,547		$			545,130		$			530,095		$			514,389		$			475,306
Return on average common stockholders' equity - GAAP																10.32																%	10.61				%	10.16				%	9.41				%	10.05				%
Return on average tangible common stockholders' equity - Non-GAAP																13.29																%	13.74				%	13.21				%	12.32				%	12.98				%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense																$															31,523		$			29,563		$			31,686		$			33,984		$			28,663
Amortization of core deposit intangibles																(289																)	(288				)	(301				)	(304				)	(142				)
Merger-related expenses																—																	—					(318				)	(2,860				)	(464				)
Noninterest expense, as adjusted																$															31,234		$			29,275		$			31,067		$			30,820		$			28,057
Net interest income																$															49,548		$			48,682		$			49,198		$			48,606		$			44,206
Total noninterest income																7,984																	6,700					6,389					5,723					5,628
Total revenue																57,532																	55,382					55,587					54,329					49,834
Tax-equivalent adjustment on municipal securities																91																	97					105					108					109
Total revenue, as adjusted																$															57,623		$			55,479		$			55,692		$			54,437		$			49,943
Efficiency ratio - Non-GAAP																54.20																%	52.77				%	55.78				%	56.62				%	56.18				%

Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
							For the Twelve Months Ended December 31,
(Dollars in thousands)							2019								2018
CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY
Net income - GAAP							$						70,672		$			63,401
Total average common stockholders' equity - GAAP							$						697,037		$			598,527
Less:  Average goodwill							$						154,971		$			136,433
Less:  Average other identifiable intangible assets							$						4,883		$			2,064
Total average tangible common stockholders' equity - Non-GAAP							$						537,183		$			460,030
Return on average common stockholders' equity - GAAP							10.14							%	10.59				%
Return on average tangible common stockholders' equity - Non-GAAP							13.16							%	13.78				%
CALCULATION OF EFFICIENCY RATIO
Total noninterest expense							$						126,756		$			111,167
Amortization of core deposit intangibles							$						(1,182	)	$			(594	)
Merger-related expenses							$						(3,178	)	$			(464	)
Noninterest expense, as adjusted							$						122,396		$			110,109
Net interest income							$						196,034		$			173,559
Noninterest income							$						26,796		$			22,310
Total revenue							$						222,830		$			195,869
Tax-equivalent adjustment on municipal securities							$						401		$			454
Total revenue, as adjusted							$						223,231		$			196,323
Efficiency ratio - Non-GAAP							54.83							%	56.09				%

Lakeland Bancorp, Inc.
Supplemental Information - Reconciliation of Net Income
(Unaudited)
									For the Year Ended December 31,
(Dollars in thousands, except per share amounts)									2019								2018
Net income - GAAP									$						70,672		$			63,401
NON-ROUTINE TRANSACTIONS, NET OF TAX
Tax deductible merger-related expenses									1,878								84
Non-tax deductible merger-related expenses									491								345
Net effect of non-routine transactions									2,369								429
Net income available to common shareholders excluding non-routine transactions									$						73,041		$			63,830
Less:  Earnings allocated to participating securities									(596							)	(582				)
Net Income,  excluding non-routine transactions									$						72,445		$			63,248
Weighted average shares - Basic									50,477								$			47,578
Weighted average shares - Diluted									50,642								$			47,766
Basic earnings per share - GAAP									$						1.39		$			1.32
Diluted earnings per share - GAAP									$						1.38		$			1.32
Basic earnings per share, adjusted for non-routine transactions									$						1.44		$			1.33
Diluted earnings per share, adjusted for non-routine transactions (Core EPS)									$						1.43		$			1.32
Return on average assets - GAAP									1.12							%	1.15				%
Return on average assets, adjusted for non-routine transactions									1.16							%	1.15				%
Return on average common stockholders' equity - GAAP									10.14							%	10.59				%
Return on average common stockholders' equity, adjusted for non-routine transactions									10.48							%	10.66				%
Return on average tangible common stockholders' equity - Non-GAAP									13.16							%	13.78				%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions									13.60							%	13.88				%