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Lakeland Bancorp Announces Second Quarter Results
Source: Nasdaq GlobeNewswire / 27 Jul 2023 08:00:45 America/New_York
OAK RIDGE, N.J., July 27, 2023 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $22.6 million and earnings per diluted share ("EPS") of $0.34 for the three months ended June 30, 2023 compared to net income of $29.1 million and diluted EPS of $0.44 for the three months ended June 30, 2022.
For the second quarter of 2023, annualized return on average assets was 0.84%, annualized return on average common equity was 8.03% and annualized return on average tangible common equity was 10.67%.
Thomas Shara, Lakeland Bancorp’s President and CEO, commented on the quarterly financial results, “We are quite pleased with our continued steady loan growth of 3% year-to-date. Overall, deposit balances remain fairly stable while customers shift funds toward time deposits and higher yielding accounts. Asset quality remains stellar and continues to improve with lower nonperforming assets year-over-year which reduces our concern over any significant near term credit degradation in our loan portfolio. Management elected to maintain higher on-balance sheet liquidity balances in response to the volatility in the banking industry this quarter which had a slight negative impact on the net interest margin.”
Regarding the Company’s pending merger with Provident Financial Services, Inc., Mr. Shara added, “We continue our interaction with the regulators and have been providing additional information in order to further support our applications for approval of the merger. The companies have made significant progress in various integration initiatives through outstanding teamwork from both banks. We look forward to receiving regulatory approval and combining our two great franchises into the best bank in New Jersey.”
Second Quarter 2023 Highlights
- Loan growth for the second quarter of $148.7 million, or 1.9%, compared to the linked first quarter of 2023 was attributable to expansion primarily in the commercial loan portfolios and in the residential mortgage portfolio.
- Second quarter 2023 results continue to be impacted by the increasing market rate environment. Net interest margin for the second quarter of 2023 decreased 24 basis points to 2.83% from 3.07% in the prior quarter and decreased 55 basis points from 3.38% in the second quarter of 2022. For more information, please see "Net Interest Margin and Net Interest Income" below.
- Nonperforming assets decreased 27% to $16.1 million for the second quarter of 2023 compared to $22.2 million in the second quarter of 2022 and $16.9 million in the linked quarter.
- In response to the volatility in the banking industry beginning in the first quarter of 2023 caused by high-profile bank failures, the Company instituted measures to maintain its liquidity including proactively reaching out to clients and maximizing our funding sources. These measures included increasing our usage of our insured cash sweep ("ICS") product as a method to increase the level of customers' deposit insurance. As of June 30 2023, the Bank had on-balance sheet liquidity and funding capacity that represented 127% of adjusted uninsured deposits.
Net Interest Margin and Net Interest Income
Net interest margin for the second quarter and the six months ended June 30, 2023 declined from previous periods as a result of an increase in the cost of interest-bearing liabilities partially offset by an increase in the yields on interest-earning assets driven by the increase in market interest rates. The increasing rate environment also caused a change in customers' banking behaviors causing them to move funds from lower yielding interest-bearing transaction and savings accounts to higher yielding time deposits.
Net interest income for the second quarter of 2023 of $71.5 million decreased $8.8 million compared to the second quarter of 2022. Net interest income for the six months ended June 30, 2023 of $147.5 million decreased $3.2 million from the six months ended June 30, 2022.
Net interest margin for the second quarter of 2023 of 2.83% decreased 55 basis points compared to the second quarter of 2022 and decreased 24 basis points compared to the first quarter of 2023. Net interest margin for the six months ended June 30, 2023 decreased 25 basis points to 2.95% from the same period last year.
The yield on interest-earning assets for the second quarter of 2023 increased 110 basis points to 4.71% as compared to 3.61% for the second quarter of 2022 and increased 15 basis points as compared to 4.56% for the first quarter of 2023. For the six months ended June 30, 2023, the yield on average assets was 4.63% compared to 3.42% for the same period last year.
The cost of interest-bearing liabilities for the second quarter of 2023 was 2.59% compared to 0.40% for the second quarter of 2022 and 2.11% for the first quarter of 2023. For the six months ended June 30, 2023, the cost of interest-bearing liabilities was 2.35% compared to 0.37% for the same period last year.
Noninterest Income
For the second quarter of 2023, noninterest income totaled $6.7 million, a decrease of $394,000 as compared to the second quarter of 2022. Gains on sales of loans decreased $486,000 compared to the second quarter of 2022 due primarily to lower sale volume resulting from the higher interest rate environment. Commissions and fees decreased $692,000 driven primarily by a decrease in investment services income. Partially offsetting these unfavorable variances was a decline in losses on equity securities which totaled $135,000 in the second quarter of 2023 compared to losses of $364,000 in the second quarter of 2022. Additionally, service charges on deposit accounts increased $133,000 from the second quarter of 2022.
For the six months ended June 30, 2023, noninterest income totaled $12.9 million, a decrease of $909,000 as compared to the six months ended June 30, 2022. Gains on sales of loans decreased $1.5 million compared to the six months ended June 30, 2022 due primarily to lower sale volume. Commissions and fees decreased $873,000 driven primarily by a decrease in loan fees and investment services income. Partially offsetting these unfavorable variances were gains on equity securities of $13,000 in the six months ended June 30, 2023 compared to losses of $849,000 in the six months ended June 30, 2022. Service charges on deposit accounts increased $296,000 from the six months ended June 30, 2022.
Noninterest Expense
Noninterest expense for the second quarter of 2023 of $47.0 million increased $1.9 million compared to the second quarter of 2022. FDIC insurance expense increased $955,000 due to an increase in the 2023 assessment rate related to Lakeland's asset size exceeding $10 billion. Other operating expenses in the second quarter of 2023 decreased $351,000 compared to the same period in 2022 due primarily to decreased marketing expense.
Noninterest expense for the six months ended June 30, 2023 of $95.6 million increased $586,000 compared to the six months ended June 30, 2022. The increase in noninterest expense was primarily due to increases in compensation and employee benefits which increased $3.0 million resulting primarily from increased commissions, bonus expense, share based compensation expense and normal merit increases. FDIC expense increased from the first half of 2022 to the first half of 2023 for the same reasons referred to above in the quarterly comparison. Offsetting these increases was a decrease in merger-related expenses which totaled $537,000 in the six months ended June 30, 2023 compared to $4.6 million during the six months ended June 20, 2022. Merger-related expense during the current year was a result of the anticipated merger with Provident Financial, while merger-related expense for the first half of 2022 was due to the acquisition of 1st Constitution Bancorp.
Income Tax Expense
The effective tax rate for the second quarter of 2023 was 22.7% compared to 24.7% for the second quarter of 2022. The decreased effective tax rate for the second quarter of 2023 was primarily a result of tax advantaged items increasing as a percentage of pretax income. The effective tax rate for the six months ended June 30, 2023 was 22.8% compared to 24.4% for the six months ended June 30, 2022. The decreased effective tax rate for the first half of 2023 was primarily for the same reasons discussed in the quarterly comparison.
Financial Condition
At June 30, 2023, total assets were $10.90 billion, an increase of $114.1 million, compared to December 31, 2022. As of June 30, 2023, total loans increased $235.2 million to $8.10 billion while investment securities decreased $98.8 million to $1.94 billion from December 31, 2022. On the funding side, total deposits decreased $122.8 million from December 31, 2022, to $8.44 billion at June 30, 2023, During the first six months of 2023, transaction and savings accounts decreased $717.9 million while time deposits increased $595.1 million, including an increase in brokered deposits of $116.9 million. At June 30, 2023, total loans as a percent of total deposits was 95.93%. As of June 30 2023, the Bank had on-balance sheet liquidity and funding capacity that represented 127% of adjusted uninsured deposits. Federal funds and securities sold under agreements to repurchase increased $209.9 million from December 31, 2022 to June 30, 2023, to fund deposit runoff and to fund loan growth.
Asset Quality
At June 30, 2023, non-performing assets totaled $16.1 million or 0.15% of total assets compared to $22.2 million, or 0.21% of total assets at June 30, 2022. Non-accrual loans as a percent of total loans was 0.20% at June 30, 2023, compared to 0.30% at June 30, 2022. The decrease in non-accrual loans resulted primarily from an improvement in asset quality. The allowance for credit losses on loans totaled $74.0 million, 0.91% of total loans, at June 30, 2023, compared to $68.8 million, 0.93% of total loans, at June 30, 2022. In the second quarter of 2023, the Company had net recoveries of $140,000 or 0% of average loans compared to $141,000 or 0.01% of average loans on an annualized basis for the same period in 2022.
The provision for credit losses for the second quarter of 2023 was $1.9 million compared to $3.6 million in the second quarter of 2022. The provision in the 2023 period is comprised of a provision for credit losses on loans of $2.4 million, a benefit for credit losses on investment securities of $171,000 and a benefit for off-balance-sheet exposures of $304,000.
Capital
At June 30, 2023, stockholders' equity was $1.13 billion compared to $1.11 billion at December 31, 2022, a 2% increase, resulting primarily from net income, partially offset by the payment of dividends. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 9.17% at June 30, 2023. The book value per common share increased 3% to $17.40 at June 30, 2023 compared to $16.82 at June 30, 2022. Tangible book value per common share was $13.10 and $12.47 at June 30, 2023 and 2022, respectively (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At June 30, 2023, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio were 10.38% and 8.02%, respectively, compared to 10.51% and 8.01% at June 30, 2022. On July 25, 2023, the Company declared a quarterly cash dividend of $0.145 per share to be paid on August 16, 2023, to shareholders of record as of August 7, 2023.
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, 2022, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, the following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in levels of market interest rates, which may affect demand for our products and the value of our financial instruments; pricing pressures on loan and deposit products; changes in the financial services industry and the U.S. and global capital markets; inflation and other 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; credit risks of the Company’s lending and leasing activities; the effects of the recent turmoil in the banking industry (including the failures of three financial institutions); successful implementation, deployment and upgrades of new and existing technology, systems, services and products; customers’ acceptance of the Company’s products and services; competition; 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; and expenses related to our proposed merger with Provident Financial, unexpected delays related to the merger, inability to obtain regulatory approvals or satisfy other closing conditions required to complete the merger, and failure to realize anticipated efficiencies and synergies from the merger. 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. 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" and "Supplemental Information – Reconciliation of Net Income" 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 $10.90 billion in total assets at June 30, 2023. 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 New Jersey's Best-In-State Bank by Forbes and Statista for the fifth consecutive year, Best Banks to Work For by American Banker, 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 call 973-697-6140 for more information.
Thomas J. Shara Thomas F. Splaine President & CEO EVP & CFO Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)Three Months Ended
June 30,Six Months Ended
June 30,(dollars in thousands, except per share amounts) 2023 2022 2023 2022 Income Statement Net interest income $ 71,542 $ 80,302 $ 147,467 $ 150,690 Provision for credit losses (1,947 ) (3,644 ) (9,840 ) (9,916 ) Gains on sales of loans 229 715 659 2,141 (Loss) gain on equity securities (135 ) (364 ) 13 (849 ) Other noninterest income 6,575 6,712 12,262 12,551 Merger-related expenses (242 ) — (537 ) (4,585 ) Other noninterest expense (46,766 ) (45,068 ) (95,076 ) (90,442 ) Pretax income 29,256 38,653 54,948 59,590 Provision for income taxes (6,628 ) (9,536 ) (12,515 ) (14,544 ) Net income $ 22,628 $ 29,117 $ 42,433 $ 45,046 Basic earnings per common share $ 0.34 $ 0.44 $ 0.65 $ 0.69 Diluted earnings per common share $ 0.34 $ 0.44 $ 0.64 $ 0.69 Dividends paid per common share $ 0.145 $ 0.145 $ 0.290 $ 0.280 Weighted average shares - basic 65,059 64,828 65,013 64,397 Weighted average shares - diluted 65,172 64,989 65,200 64,615 Selected Operating Ratios Annualized return on average assets 0.84 % 1.15 % 0.80 % 0.89 % Annualized return on average common equity 8.03 % 10.71 % 7.60 % 8.31 % Annualized return on average tangible common equity (1) 10.67 % 14.45 % 10.13 % 11.16 % Annualized yield on interest-earning assets 4.71 % 3.61 % 4.63 % 3.42 % Annualized cost of interest-bearing liabilities 2.59 % 0.40 % 2.35 % 0.37 % Annualized net interest spread 2.12 % 3.22 % 2.28 % 3.05 % Annualized net interest margin 2.83 % 3.38 % 2.95 % 3.20 % Efficiency ratio (1) 58.82 % 50.69 % 58.32 % 54.01 % Stockholders' equity to total assets 10.38 % 10.51 % Book value per common share $ 17.40 $ 16.82 Tangible book value per common share (1) $ 13.10 $ 12.47 Tangible common equity to tangible assets (1) 8.02 % 8.01 % Asset Quality Ratios June 30, 2023 June 30, 2022 Ratio of allowance for credit losses to total loans 0.91 % 0.93 % Non-performing loans to total loans 0.20 % 0.30 % Non-performing assets to total assets 0.15 % 0.21 % Annualized net charge-offs to average loans — % 0.21 % (1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)(dollars in thousands) June 30, 2023 June 30, 2022 Selected Balance Sheet Data at Period End Loans $ 8,101,287 $ 7,408,540 Allowance for credit losses 73,965 68,836 Investment securities 1,938,611 2,124,213 Total assets 10,897,966 10,374,178 Total deposits 8,444,681 8,501,804 Short-term borrowings 938,718 432,206 Other borrowings 219,486 219,027 Stockholders' equity 1,131,702 1,090,145 Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Selected Average Balance Sheet Data Loans $ 7,999,285 $ 7,229,175 $ 7,950,129 $ 7,125,893 Investment securities 2,068,073 2,188,199 2,092,439 2,104,355 Interest-earning assets 10,214,142 9,588,396 10,153,081 9,546,575 Total assets 10,808,261 10,192,140 10,753,835 10,165,437 Noninterest-bearing demand deposits 1,935,776 2,310,702 1,987,635 2,252,693 Savings deposits 830,836 1,153,591 879,545 1,142,536 Interest-bearing transaction accounts 4,007,867 4,369,067 4,115,349 4,384,215 Time deposits 1,722,935 803,421 1,555,230 841,214 Total deposits 8,497,414 8,636,781 8,537,759 8,620,658 Short-term borrowings 813,471 130,242 716,082 117,508 Other borrowings 219,425 218,958 219,366 218,474 Total interest-bearing liabilities 7,594,534 6,675,279 7,485,572 6,703,947 Stockholders' equity 1,130,563 1,090,613 1,125,488 1,093,248 Lakeland Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)For the For the Three Months Ended
June 30,For the Six Months Ended
June 30,(in thousands, except per share data) 2023 2022 2023 2022 Interest Income Loans and fees $ 105,261 $ 76,973 $ 205,742 $ 144,782 Federal funds sold and interest-bearing deposits with banks 1,981 235 2,709 417 Taxable investment securities and other 11,939 8,285 23,493 14,994 Tax-exempt investment securities 1,587 1,442 3,229 2,744 Total Interest Income 120,768 86,935 235,173 162,937 Interest Expense Deposits 36,704 4,829 65,862 8,868 Federal funds purchased and securities sold under agreements to repurchase 10,365 150 17,587 170 Other borrowings 2,157 1,654 4,257 3,209 Total Interest Expense 49,226 6,633 87,706 12,247 Net Interest Income 71,542 80,302 147,467 150,690 Provision for credit losses 1,947 3,644 9,840 9,916 Net Interest Income after Provision for Credit Losses 69,595 76,658 137,627 140,774 Noninterest Income Service charges on deposit accounts 2,844 2,711 5,633 5,337 Commissions and fees 1,863 2,555 3,788 4,661 Income on bank owned life insurance 1,021 820 1,797 1,650 Gain (loss) on equity securities (135 ) (364 ) 13 (849 ) Gains on sales of loans 229 715 659 2,141 Swap income 361 399 417 399 Other income 486 227 627 504 Total Noninterest Income 6,669 7,063 12,934 13,843 Noninterest Expense Compensation and employee benefits 27,585 26,938 57,581 54,617 Premises and equipment 7,992 7,679 15,969 15,651 FDIC insurance 1,627 672 2,590 1,344 Data processing 2,025 1,891 3,887 3,561 Merger-related expenses 242 — 537 4,585 Other operating expenses 7,537 7,888 15,049 15,269 Total Noninterest Expense 47,008 45,068 95,613 95,027 Income before provision for income taxes 29,256 38,653 54,948 59,590 Provision for income taxes 6,628 9,536 12,515 14,544 Net Income $ 22,628 $ 29,117 $ 42,433 $ 45,046 Per Share of Common Stock Basic earnings $ 0.34 $ 0.44 $ 0.65 $ 0.69 Diluted earnings $ 0.34 $ 0.44 $ 0.64 $ 0.69 Dividends $ 0.145 $ 0.145 $ 0.290 $ 0.280 Lakeland Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets(dollars in thousands) June 30, 2023 December 31, 2022 (Unaudited) Assets Cash $ 194,256 $ 223,299 Interest-bearing deposits due from banks 25,286 12,651 Total cash and cash equivalents 219,542 235,950 Investment securities available for sale, at estimated fair value (allowance for credit losses of $0 at June 30, 2023 and $310 at December 31, 2022) 988,973 1,054,312 Investment securities held to maturity (estimated fair value of $730,805 at June 30, 2023 and $760,455 at December 31, 2022, allowance for credit losses of $146 at June 30, 2023 and $107 at December 31, 2022) 879,106 923,308 Equity securities, at fair value 17,429 17,283 Federal Home Loan Bank and other membership stocks, at cost 53,103 42,483 Loans held for sale 563 536 Loans, net of deferred fees 8,101,287 7,866,050 Less: Allowance for credit losses 73,965 70,264 Net loans 8,027,322 7,795,786 Premises and equipment, net 55,114 55,429 Operating lease right-of-use assets 18,478 20,052 Accrued interest receivable 34,232 33,374 Goodwill 271,829 271,829 Other identifiable intangible assets 8,060 9,088 Bank owned life insurance 158,193 156,985 Other assets 166,022 167,425 Total Assets $ 10,897,966 $ 10,783,840 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing $ 1,866,252 $ 2,113,289 Savings and interest-bearing transaction accounts 4,775,184 5,246,005 Time deposits $250 thousand and under 1,330,090 901,505 Time deposits over $250 thousand 473,155 306,672 Total deposits 8,444,681 8,567,471 Federal funds purchased and securities sold under agreements to repurchase 938,718 728,797 Other borrowings 25,000 25,000 Subordinated debentures 194,486 194,264 Operating lease liabilities 19,710 21,449 Other liabilities 143,669 138,272 Total Liabilities 9,766,264 9,675,253 Stockholders' Equity Common stock, no par value; authorized 100,000,000 shares; issued 65,159,220 shares and outstanding 65,028,185 shares at June 30, 2023 and issued 65,002,738 shares and outstanding 64,871,703 shares at December 31, 2022 856,807 855,425 Retained earnings 352,779 329,375 Treasury shares, at cost, 131,035 shares at June 30, 2023 and December 31, 2022 (1,452 ) (1,452 ) Accumulated other comprehensive loss (76,432 ) (74,761 ) Total Stockholders' Equity 1,131,702 1,108,587 Total Liabilities and Stockholders' Equity $ 10,897,966 $ 10,783,840 Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)For the Quarter Ended (dollars in thousands, except per share data) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Income Statement Net interest income $ 71,542 $ 75,925 $ 81,640 $ 80,285 $ 80,302 (Provision) benefit for credit losses (1,947 ) (7,893 ) 2,760 (1,358 ) (3,644 ) Gains on sales of loans 229 430 269 355 715 Gains (loss) on equity securities (135 ) 148 11 (464 ) (364 ) Other noninterest income 6,575 5,687 6,743 7,342 6,712 Merger-related expenses (242 ) (295 ) (533 ) (3,488 ) — Other noninterest expense (46,766 ) (48,310 ) (44,837 ) (44,323 ) (45,068 ) Pretax income 29,256 25,692 46,053 38,349 38,653 Provision for income taxes (6,628 ) (5,887 ) (12,476 ) (9,603 ) (9,536 ) Net income $ 22,628 $ 19,805 $ 33,577 $ 28,746 $ 29,117 Basic earnings per common share $ 0.34 $ 0.30 $ 0.51 $ 0.44 $ 0.44 Diluted earnings per common share $ 0.34 $ 0.30 $ 0.51 $ 0.44 $ 0.44 Dividends paid per common share $ 0.145 $ 0.145 $ 0.145 $ 0.145 $ 0.145 Dividends paid $ 9,529 $ 9,500 $ 9,505 $ 9,506 $ 9,507 Weighted average shares - basic 65,059 64,966 64,854 64,842 64,828 Weighted average shares - diluted 65,173 65,228 65,222 65,061 64,989 Selected Operating Ratios Annualized return on average assets 0.84 % 0.75 % 1.26 % 1.10 % 1.15 % Annualized return on average common equity 8.03 % 7.17 % 12.19 % 10.33 % 10.71 % Annualized return on average tangible common equity (1) 10.67 % 9.57 % 16.42 % 13.87 % 14.45 % Annualized net interest margin 2.83 % 3.07 % 3.28 % 3.28 % 3.38 % Efficiency ratio (1) 58.82 % 57.84 % 49.67 % 49.76 % 50.69 % Common stockholders' equity to total assets 10.38 % 10.40 % 10.28 % 10.29 % 10.51 % Tangible common equity to tangible assets (1) 8.02 % 8.02 % 7.88 % 7.83 % 8.01 % Tier 1 risk-based ratio 11.43 % 11.33 % 11.24 % 11.16 % 11.12 % Total risk-based ratio 14.03 % 13.93 % 13.83 % 13.78 % 13.74 % Tier 1 leverage ratio 9.17 % 9.13 % 9.16 % 9.10 % 9.05 % Common equity tier 1 capital ratio 10.90 % 10.81 % 10.71 % 10.62 % 10.57 % Book value per common share $ 17.40 $ 17.33 $ 17.09 $ 16.70 $ 16.82 Tangible book value per common share (1) $ 13.10 $ 13.01 $ 12.76 $ 12.36 $ 12.47 (1) See Supplemental Information - Non-GAAP Financial Measures
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)For the Quarter Ended (dollars in thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Selected Balance Sheet Data at Period End Loans $ 8,101,287 $ 7,952,553 $ 7,866,050 $ 7,568,826 $ 7,408,540 Allowance for credit losses on loans 73,965 71,403 70,264 68,879 68,836 Investment securities 1,938,611 1,994,927 2,037,386 2,047,186 2,124,213 Total assets 10,897,966 10,837,241 10,783,840 10,515,599 10,374,178 Total deposits 8,444,681 8,536,943 8,567,471 8,677,799 8,501,804 Short-term borrowings 938,718 813,328 728,797 357,787 432,206 Other borrowings 219,486 219,376 219,264 219,148 219,027 Stockholders' equity 1,131,702 1,126,580 1,108,587 1,082,406 1,090,145 Loans Non-owner occupied commercial $ 2,991,124 $ 2,943,897 $ 2,906,014 $ 2,873,824 $ 2,777,003 Owner occupied commercial 1,201,049 1,205,635 1,246,189 1,141,290 1,179,527 Multifamily 1,314,255 1,275,771 1,260,814 1,186,036 1,134,938 Non-owner occupied residential 205,818 210,203 218,026 222,597 221,339 Commercial, industrial and other 594,401 562,287 606,276 612,494 647,531 Paycheck Protection Program 389 390 435 734 10,404 Construction 354,918 404,994 380,100 381,109 370,777 Equipment financing 173,469 161,889 151,575 137,999 134,136 Residential mortgages 922,109 857,427 765,552 690,453 622,417 Consumer and home equity 343,755 330,060 331,069 322,290 310,468 Total loans $ 8,101,287 $ 7,952,553 $ 7,866,050 $ 7,568,826 $ 7,408,540 Deposits Noninterest-bearing $ 1,866,252 $ 1,998,590 $ 2,113,289 $ 2,288,902 $ 2,330,550 Savings and interest-bearing transaction accounts 4,775,184 4,918,041 5,246,005 5,354,716 5,407,212 Time deposits 1,803,245 1,620,312 1,208,177 1,034,181 764,042 Total deposits $ 8,444,681 $ 8,536,943 $ 8,567,471 $ 8,677,799 $ 8,501,804 Total loans to total deposits ratio 95.9 % 93.2 % 91.8 % 87.2 % 87.1 % Selected Average Balance Sheet Data Loans $ 7,999,285 $ 7,900.426 $ 7,729,510 $ 7,517,878 $ 7,229,175 Investment securities 2,068,073 2,117.076 2,145,252 2,160,719 2,188,199 Interest-earning assets 10,214,142 10,091.341 9,923,173 9,755,797 9,588,396 Total assets 10,808,261 10,698.807 10,534,884 10,358,600 10,192,140 Noninterest-bearing demand deposits 1,935,776 2,040,070 2,240,197 2,325,391 2,310,702 Savings deposits 830,836 928.796 1,001,870 1,092,222 1,153,591 Interest-bearing transaction accounts 4,007,867 4,224.024 4,389,672 4,337,559 4,369,067 Time deposits 1,722,935 1,385.661 1,100,911 905,735 803,421 Total deposits 8,497,414 8,578.551 8,732,650 8,660,907 8,636,781 Short-term borrowings 813,471 617.611 311,875 240,728 130,242 Other borrowings 219,425 219.308 219,202 219,082 218,958 Total interest-bearing liabilities 7,594,534 7,375,400 7,023,530 6,795,326 6,675,279 Stockholders' equity 1,130,563 1,120.356 1,092,720 1,104,145 1,090,613 Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)For the Quarter Ended (dollars in thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Average Annualized Yields (Taxable Equivalent Basis) and Costs Assets Loans 5.22 % 5.10 % 4.84 % 4.43 % 4.22 % Taxable investment securities and other 2.74 % 2.61 % 2.41 % 2.12 % 1.81 % Tax-exempt securities 2.45 % 2.41 % 2.36 % 2.12 % 2.02 % Federal funds sold and interest-bearing cash accounts 5.41 % 4.00 % 3.68 % 2.21 % 0.55 % Total interest-earning assets 4.71 % 4.56 % 4.31 % 3.90 % 3.61 % Liabilities Savings accounts 0.26 % 0.28 % 0.29 % 0.25 % 0.18 % Interest-bearing transaction accounts 2.16 % 1.85 % 1.46 % 0.97 % 0.33 % Time deposits 3.39 % 2.71 % 1.77 % 1.00 % 0.39 % Borrowings 4.80 % 4.46 % 3.52 % 2.15 % 2.04 % Total interest-bearing liabilities 2.59 % 2.11 % 1.50 % 0.94 % 0.40 % Net interest spread (taxable equivalent basis) 2.12 % 2.45 % 2.81 % 2.96 % 3.22 % Annualized net interest margin (taxable equivalent basis) 2.83 % 3.07 % 3.28 % 3.28 % 3.38 % Annualized cost of deposits 1.73 % 1.38 % 0.99 % 0.62 % 0.22 % Loan Quality Data Allowance for Credit Losses on Loans Balance at beginning of period $ 71,403 $ 70,264 $ 68,879 $ 68,836 $ 67,112 Provision for credit losses on loans 2,422 1,213 1,464 11 1,583 Charge-offs (148 ) (139 ) (138 ) (56 ) (365 ) Recoveries 288 65 59 88 506 Balance at end of period $ 73,965 $ 71,403 $ 70,264 $ 68,879 $ 68,836 Net Loan Charge-Offs (Recoveries) Non owner occupied commercial $ — $ — $ — $ — $ (4 ) Owner occupied commercial (6 ) — — — (337 ) Non owner occupied residential — — — — — Commercial, industrial and other (163 ) (35 ) (24 ) (49 ) 272 Construction 13 — — — — Equipment finance 12 46 51 (23 ) (40 ) Residential mortgages — — — — — Consumer and home equity 4 63 52 40 (32 ) Net charge-offs (recoveries) $ (140 ) $ 74 $ 79 $ (32 ) $ (141 ) Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)For the Quarter Ended (dollars in thousands) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Non-Performing Assets (1) Non owner occupied commercial $ 864 $ 908 $ 618 $ 307 $ 324 Owner occupied commercial 8,076 8,757 9,439 10,322 12,587 Multifamily 266 584 — — — Non owner occupied residential 41 — 441 868 839 Commercial, industrial and other 1,737 2,221 2,978 3,623 4,882 Construction — 980 980 — — Equipment finance 644 379 114 226 112 Residential mortgages 1,954 1,918 2,011 2,226 2,249 Consumer and home equity 2,486 1,131 781 798 1,168 Total non-accrual loans 16,068 16,878 17,362 18,370 22,161 Total non-performing assets $ 16,068 $ 16,878 $ 17,362 $ 18,370 $ 22,161 Loans past due 90 days or more and still accruing $ — $ — $ — $ 31 $ — Loans restructured and still accruing $ — $ — $ 2,640 $ 3,113 $ 3,189 Ratio of allowance for loan losses to total loans 0.91 % 0.90 % 0.89 % 0.91 % 0.93 % Total non-accrual loans to total loans 0.20 % 0.21 % 0.22 % 0.24 % 0.30 % Total non-performing assets to total assets 0.15 % 0.16 % 0.16 % 0.17 % 0.21 % Annualized net (recoveries) charge-offs to average loans — % — % — % — % (0.01 )% (1) Includes non-accrual purchased credit deteriorated loans.
Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)At or for the Quarter Ended (dollars in thousands, except per share amounts) June 30,
2023March 31,
2023December 31,
2022September 30,
2022June 30,
2022Calculation of Tangible Book Value Per Common Share Total common stockholders' equity at end of period - GAAP $ 1,131,702 $ 1,126,580 $ 1,108,587 $ 1,082,406 $ 1,090,145 Less: Goodwill 271,829 271,829 271,829 271,829 271,829 Less: Other identifiable intangible assets 8,060 8,572 9,088 9,669 10,250 Total tangible common stockholders' equity at end of period - Non-GAAP $ 851,813 $ 846,179 $ 827,670 $ 800,908 $ 808,066 Shares outstanding at end of period 65,028 65,017 64,872 64,804 64,794 Book value per share - GAAP $ 17.40 $ 17.33 $ 17.09 $ 16.70 $ 16.82 Tangible book value per share - Non-GAAP $ 13.10 $ 13.01 $ 12.76 $ 12.36 $ 12.47 Calculation of Tangible Common Equity to Tangible Assets Total tangible common stockholders' equity at end of period - Non-GAAP $ 851,813 $ 846,179 $ 827,670 $ 800,908 $ 808,066 Total assets at end of period - GAAP $ 10,897,966 $ 10,837,241 $ 10,783,840 $ 10,515,599 $ 10,374,178 Less: Goodwill 271,829 271,829 271,829 271,829 271,829 Less: Other identifiable intangible assets 8,060 8,572 9,088 9,669 10,250 Total tangible assets at end of period - Non-GAAP $ 10,618,077 $ 10,556,840 $ 10,502,923 $ 10,234,101 $ 10,092,099 Common equity to assets - GAAP 10.38 % 10.40 % 10.28 % 10.29 % 10.51 % Tangible common equity to tangible assets - Non-GAAP 8.02 % 8.02 % 7.88 % 7.83 % 8.01 % Calculation of Return on Average Tangible Common Equity Net income - GAAP $ 22,628 $ 19,805 $ 33,577 $ 28,746 $ 29,117 Total average common stockholders' equity - GAAP $ 1,130,563 $ 1,120,356 $ 1,092,720 $ 1,104,145 $ 1,090,613 Less: Average goodwill 271,829 271,829 271,829 271,829 271,829 Less: Average other identifiable intangible assets 8,353 8,904 9,386 9,982 10,569 Total average tangible common stockholders' equity - Non-GAAP $ 850,381 $ 839,623 $ 811,505 $ 822,334 $ 808,215 Return on average common stockholders' equity - GAAP 8.03 % 7.17 % 12.19 % 10.33 % 10.71 % Return on average tangible common stockholders' equity - Non-GAAP 10.67 % 9.57 % 16.42 % 13.87 % 14.45 % Calculation of Efficiency Ratio Total noninterest expense $ 47,008 $ 48,605 $ 45,370 $ 47,811 $ 45,068 Less: Amortization of core deposit intangibles 512 516 581 581 593 Merger-related expenses 242 295 533 3,488 — Noninterest expense, as adjusted $ 46,254 $ 47,794 $ 44,256 $ 43,742 $ 44,475 Net interest income $ 71,542 $ 75,925 $ 81,640 $ 80,285 $ 80,302 Total noninterest income 6,669 6,265 7,023 7,233 7,063 Total revenue 78,211 82,190 88,663 87,518 87,365 Tax-equivalent adjustment on municipal securities 422 436 443 395 382 Total revenue, as adjusted $ 78,633 $ 82,626 $ 89,106 $ 87,913 $ 87,747 Efficiency ratio - Non-GAAP 58.82 % 57.84 % 49.67 % 49.76 % 50.69 % Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)For the Six Months Ended June 30, (dollars in thousands) 2023 2022 Calculation of Return on Average Tangible Common Equity Net income - GAAP $ 42,433 $ 45,046 Total average common stockholders' equity - GAAP $ 1,125,488 $ 1,093,249 Less: Average goodwill 271,829 268,637 Less: Average other identifiable intangible assets 8,627 10,709 Total average tangible common stockholders' equity - Non-GAAP $ 845,032 $ 813,903 Return on average common stockholders' equity - GAAP 7.60 % 8.31 % Return on average tangible common stockholders' equity - Non-GAAP 10.13 % 11.16 % Calculation of Efficiency Ratio Total noninterest expense $ 95,613 $ 95,027 Less: Amortization of core deposit intangibles 1,028 1,189 Merger-related expenses 537 4,585 Long term debt extinguishment costs — — Noninterest expense, as adjusted $ 94,048 $ 89,253 Net interest income $ 147,467 $ 150,690 Noninterest income 12,934 13,843 Total revenue $ 160,401 $ 164,533 Tax-equivalent adjustment on municipal securities 858 729 Less: Gains on sales of investment securities — — Total revenue, as adjusted $ 161,259 $ 165,262 Efficiency ratio - Non-GAAP 58.32 % 54.01 %