Lakeland Bancorp Announces Record Quarterly and Year-End 2022 Earnings

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OAK RIDGE, N.J., Jan. 26, 2023 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. LBAI (the "Company"), the parent company of Lakeland Bank ("Lakeland"), reported net income of $33.6 million and earnings per diluted share ("EPS") of $0.51 for the three months ended December 31, 2022, compared to net income of $22.2 million and diluted EPS of $0.43 for the fourth quarter of 2021. For the fourth quarter of 2022, annualized return on average assets was 1.26%, annualized return on average common equity was 12.19% and annualized return on average tangible common equity was 16.42%.

For the year ended December 31, 2022, the Company reported net income of $107.4 million, a 13% increase compared to $95.0 million for 2021, resulting in return on average assets of 1.04%, return on average common equity of 9.80%, and return on average tangible common equity of 13.17% for 2022. For 2022, the Company reported diluted EPS of $1.63 compared to diluted EPS of $1.85 for 2021.

Excluding $8.6 million of merger-related expenses, for our January 2022 acquisition of 1st Constitution Bancorp and our pending merger with Provident Financial Services, Inc. ("Provident Financial"), net income for the year ended December 31, 2022, was $114.3 million, resulting in $1.74 diluted EPS. Excluding merger-related expenses, return on average assets was 1.11%; return on average common equity was 10.43%; and return on average tangible common equity was 14.02%. See "Supplemental Information - Reconciliation of Net Income" for a reconciliation of these non-GAAP financial measures.

The current year results include a $77.8 million increase in net interest income, offset by increases in non-interest expenses and the provision for credit losses of $47.5 million and $19.4 million, respectively. Fourth quarter 2022 results were favorably impacted by a $22.6 million, or 38%, increase in net interest income and a $3.2 million reduction in the provision for credit losses offset by a $9.8 million increase in non-interest expenses compared to the fourth quarter of 2021.

Thomas Shara, Lakeland Bancorp's President and CEO commented, "2022 was an exceptional year for Lakeland Bancorp despite the economic uncertainty and rapidly changing interest rate conditions. Through the acquisition of 1st Constitution Bancorp in January 2022, we expanded Lakeland's presence into the fastest growing markets in New Jersey and eclipsed $10 billion in total assets. During the year we experienced strong organic loan growth of $790 million while continuing to improve upon our already excellent asset quality. We finished 2022 with record quarterly and annual earnings and total asset growth of 32%. All of these achievements are directly related to the hard work of our dedicated Lakeland associates and we are extremely proud of their accomplishments."

Regarding the announced merger with Provident Financial, Mr. Shara continued, "We are awaiting shareholder and regulatory approvals and continue to work to combine the companies into a preeminent super-community bank with an unwavering commitment to associates, customers and our communities."

Full Year 2022 Highlights

  • Total assets grew $2.59 billion or 32% to $10.78 billion at December 31, 2022, including $1.97 billion due to the acquisition of 1st Constitution.
  • Loan growth for 2022 was very robust at $1.89 billion or 32% resulting from acquired 1st Constitution loans totaling $1.10 billion and organic net loan growth of $794.6 million.
  • Net interest margin for 2022 increased 11 basis points to 3.24% compared to 2021 due primarily to increases in yields of interest-earning assets.
  • Net loan charge-offs for the year totaled $7.5 million, or 0.10% of average loans, of which $7.6 million were charge-offs of purchased credit deteriorated loans acquired from 1st Constitution.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2022 of 3.28% increased 30 basis points compared to the fourth quarter of 2021 and remained flat compared to the third quarter of 2022. The increase compared to the fourth quarter of 2021 was primarily a result of an increase in the yield on loans and securities as well as an increase in loan balances, offset by an increase in interest-bearing liability balances and rates paid on those balances. Net interest margin for the full year of 2022 of 3.24% increased 11 basis points compared to 3.13% for 2021 for the same reasons as the fourth quarter comparison.

The yield on interest-earning assets for the fourth quarter of 2022 was 4.31% compared to 3.22% for the fourth quarter of 2021 and 3.90% for the third quarter of 2022. Yields on all categories of interest-earning assets increased when compared to the fourth quarter 2021, due primarily to the increases in market interest rates during 2022. In addition, average balances of interest-earning loans and securities increased by $1.83 billion and $721.6 million, respectively, and average balances of federal funds sold decreased by $500.0 million when compared to the fourth quarter of 2021. The increase in yield on interest-earning assets when compared to the third quarter of 2022 was due primarily to an increase in the yield on loans and securities and increased loan balances. The yield on interest-earning assets for 2022 was 3.77% compared to 3.43% for 2021 resulting primarily from an increase in the yields on interest earning assets and increased balances of loans and securities.

The cost of interest-bearing liabilities increased in the fourth quarter of 2022 to 1.50% compared to 0.33% for the fourth quarter of 2021 and 0.94% for the third quarter of 2022. The cost of interest-bearing liabilities for 2022 was 0.80% compared to 0.42% during the same period in 2021. The increase in the cost of interest-bearing liabilities in 2022 compared to prior periods was largely driven by increases in market interest rates. Additionally, the Company's total average overnight borrowings increased during 2022 and the Company paid higher rates on those borrowings.

Net interest income increased to $81.6 million for the fourth quarter of 2022 compared to $59.0 million for the fourth quarter of 2021, due primarily to the growth of interest-earning assets at higher yields, partially offset by higher rates paid on interest-bearing liabilities. Net interest income for 2022 was $312.6 million, as compared to $234.8 million for 2021 due to the same reasons discussed in the quarterly comparison.

Noninterest Income

Noninterest income increased $1.2 million to $7.0 million for the fourth quarter of 2022 from $5.9 million for the fourth quarter of 2021. Commissions and fees in the fourth quarter of 2022 increased $266,000 compared to the same period in 2021 due primarily to increases in investment commission income and commercial loan fees. Gain on sales of loans in the fourth quarter of 2022 decreased $130,000 due primarily to the Company retaining more originated residential mortgage loans in the loan portfolio. The Company recorded $466,000 in swap income in the fourth quarter of 2022 compared to none during the same period in 2021 due primarily to changes in the yield curve which increased the demand for swap transactions during 2022.

For 2022, noninterest income increased $5.7 million to $28.1 million compared to 2021. Service charges on deposit accounts increased $1.1 million compared to 2021 due primarily to increases in debit card income. Commissions and fees in 2022 increased $2.2 million compared to 2021 due to increases in investment commission income and commercial loan fees. Income on bank owned life insurance increased $1.3 million due primarily to death benefits received during 2022. Gains on sales of loans and swap income increased $501,000 and $942,000, respectively, compared to 2021.

Noninterest Expense

Noninterest expense totaled $45.4 million for the fourth quarter of 2022, an increase of $9.8 million compared to the fourth quarter of 2021. Compensation and employee benefit expense in the fourth quarter of 2022 increased $6.7 million, or 33%, compared to the fourth quarter of 2021 due primarily to staff additions and normal merit increases, as well as $772,000 of additional expense to accelerate the vesting of executive equity awards. In the fourth quarter of 2022, premises and equipment expense increased $1.5 million due primarily to additional rent, property tax and maintenance expenses from 1st Constitution properties and data processing expense decreased $147,000 due primarily to credits received from service providers compared to the fourth quarter of 2021. In the fourth quarter of 2022, merger-related costs included $533,000 for the merger with Provident Financial, while the fourth quarter of 2021 included $710,000 in merger-related costs for the acquisition of 1st Constitution Bancorp.

For 2022, noninterest expense increased $47.5 million to $188.2 million compared to $140.8 million for 2021 due primarily to compensation and employee benefit expense which increased $25.6 million, or 31%. The increase in compensation and employee benefits expense was due primarily to the same reasons discussed in the quarterly comparison. Premises and equipment expense in 2022 increased $6.1 million due to the same reason discussed in the quarterly comparison. Noninterest expense in 2022 included merger-related expenses of $8.6 million compared to $1.8 million in 2021. Additionally, noninterest expense in 2021 included $831,000 in long-term debt extinguishment costs compared to none in 2022.

Income Tax Expense

The effective tax rate for the fourth quarter of 2022 was 27.1% compared to 23.4% for the fourth quarter of 2021. The effective tax rate for both 2022 and 2021 was 25.4%. The effective tax rate for the fourth quarter of 2022 was primarily a result of the tax implications of executive accelerated vesting awards as well as tax-advantaged items decreasing as a percentage of pretax income.

Financial Condition

At December 31, 2022, total assets were $10.78 billion, an increase of $2.59 billion, or 32%, compared to December 31, 2021. For the year ended December 31, 2022, total loans increased $1.89 billion, including $1.10 billion from 1st Constitution, to $7.87 billion, while investment securities increased $416.1 million, including $342.3 million from 1st Constitution, to $2.04 billion. On the funding side, total deposits increased $1.60 billion, while borrowings increased $637.6 million to $948.1 million for the year ended December 31, 2022. At December 31, 2022, total loans as a percent of total deposits was 91.8%.

Asset Quality

At December 31, 2022, non-performing assets remained low at $17.4 million, 0.16% of total assets, compared to $17.0 million, 0.21% of total assets, at December 31, 2021. Non-accrual loans as a percent of total loans decreased to 0.22% at December 31, 2022 compared to 0.28% at December 31, 2021. At December 31, 2022, the allowance for credit losses was $70.3 million, 0.89% of total loans compared to $58.0 million, 0.97% of total loans, at December 31, 2021. The increase in the allowance from 2021 was primarily due to the initial allowance for credit losses on PCD loans acquired from 1st Constitution. In the fourth quarter of 2022, the Company had net charge-offs of $79,000, or 0.00% of average loans, annualized, compared to net recoveries of $181,000, or 0.01% of average loans, annualized, for the same period in 2021. Provision for credit losses on loans for the fourth quarter of 2022 was a provision of $1.5 million compared to a benefit of $87,000 in the fourth quarter of 2021. Provision for credit losses on investments for the fourth quarter of 2022 was a benefit of $3.9 million compared to a provision of $31,000 for the same period in 2021.

Capital

At December 31, 2022, stockholders' equity increased 34% to $1.1 billion as compared to $827.0 million at December 31, 2021. Lakeland Bancorp remains above FDIC "well capitalized" standards, with a Tier 1 leverage ratio of 9.16% at December 31, 2022. Book value per common share and tangible book value per common share were $17.09 and $12.76, respectively, compared to $16.34 and $13.21 at December 31, 2021 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). On January 24, 2023, the Company declared a quarterly cash dividend of $0.145 per share to be paid on February 16, 2023, to shareholders of record as of February 6, 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, 2021, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, the following factors, among others, could cause actual results to differ materially and adversely from such forward-looking statements: changes in the financial services industry and the U.S. and global capital markets; 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; 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; 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; 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. LBAI, which had $10.78 billion in total assets at December 31, 2022. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, N.Y., the Bank offers business and retail banking products and services. Business services include commercial loans and lines of credit, commercial real estate loans, loans for healthcare services, asset-based lending, equipment financing, small business loans and lines and cash management services. Consumer services include online and mobile banking, home equity loans and lines, mortgage options and wealth management solutions. Lakeland is proud to be recognized as one of New Jersey's Best-In State Banks by Forbes and Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jersey's 50 Fastest Growing Companies by NJBIZ. Visit LakelandBank.com or 973-697-6140 for more information.

Thomas J. SharaThomas F. Splaine
President & CEOEVP & CFO
  


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

 Three Months Ended December 31, Years Ended December 31,
(dollars in thousands, except per share amounts) 2022   2021   2022   2021 
Income Statement       
Net interest income$81,640  $59,029  $312,615  $234,835 
(Provision) benefit for credit losses 2,760   (408)  (8,514)  10,896 
Gain on investment securities transactions, net          9 
Gain on sales of loans 269   399   2,765   2,264 
Gain (loss) on equity securities 11   (94)  (1,302)  (285)
Other noninterest income 6,743   5,559   26,636   20,373 
Long-term debt extinguishment costs          (831)
Merger-related expenses (533)  (710)  (8,606)  (1,782)
Other noninterest expense (44,837)  (34,840)  (179,602)  (138,144)
Pretax income 46,053   28,935   143,992   127,335 
Provision for income taxes (12,476)  (6,765)  (36,623)  (32,294)
Net income$33,577  $22,170  $107,369  $95,041 
        
Basic earnings per common share$0.51  $0.43  $1.64  $1.85 
Diluted earnings per common share$0.51  $0.43  $1.63  $1.85 
Dividends paid per common share$0.145  $0.135  $0.570  $0.530 
Weighted average shares - basic 64,854   50,647   64,624   50,624 
Weighted average shares - diluted 65,222   50,959   64,918   50,870 
        
Selected Operating Ratios       
Annualized return on average assets 1.26%  1.06%  1.04%  1.19%
Annualized return on average common equity 12.19%  10.70%  9.80%  11.95%
Annualized return on average tangible common equity (1) 16.42%  13.26%  13.17%  14.93%
Annualized yield on interest-earning assets 4.31%  3.22%  3.77%  3.43%
Annualized cost of interest-bearing liabilities 1.50%  0.33%  0.80%  0.42%
Annualized net interest spread 2.81%  2.89%  2.97%  3.01%
Annualized net interest margin 3.28%  2.98%  3.24%  3.13%
Efficiency ratio (1) 49.67%  53.19%  51.79%  53.23%
Stockholders' equity to total assets     10.28%  10.09%
Book value per common share    $17.09  $16.34 
Tangible book value per common share (1)    $12.76  $13.21 
Tangible common equity to tangible assets (1)     7.88%  8.31%
        
Asset Quality Ratios    December 31, 2022 December 31, 2021
Ratio of allowance for credit losses on loans to total loans     0.89%  0.97%
Non-performing loans to total loans     0.22%  0.28%
Non-performing assets to total assets     0.16%  0.21%
Net charge-offs to average loans     0.10%  0.04%
(1) See Supplemental Information - Non-GAAP Financial Measures      
        
Selected Balance Sheet Data at Period End     2022   2021 
Loans    $7,866,050  $5,976,148 
Allowance for credit losses on loans     70,264   58,047 
Investment securities     2,037,386   1,621,329 
Total assets     10,783,840   8,198,056 
Total deposits     8,567,471   6,965,823 
Short-term borrowings     728,797   106,453 
Other borrowings     219,264   204,043 
Stockholders' equity     1,108,587   827,014 


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

 Three Months Ended
December 31,
 Year Ended
December 31,
  2022   2021   2022   2021 
Selected Average Balance Sheet Data       
Loans$7,729,510  $5,902,152  $7,376,839  $6,003,325 
Investment securities 2,145,252   1,423,650   2,128,870   1,160,503 
Interest-earning assets 9,923,173   7,874,181   9,694,234   7,516,662 
Total assets 10,534,884   8,332,637   10,307,245   7,974,905 
Noninterest-bearing demand deposits 2,240,197   1,775,119   2,267,867   1,671,889 
Savings deposits 1,001,870   670,039   1,094,399   642,298 
Interest-bearing transaction accounts 4,389,672   3,862,443   4,373,830   3,613,484 
Time deposits 1,100,911   781,199   922,935   882,379 
Total deposits 8,732,650   7,088,800   8,659,031   6,810,050 
Short-term borrowings 311,875   112,533   197,557   95,111 
Other borrowings 219,202   204,266   218,811   162,643 
Total interest-bearing liabilities 7,023,530   5,630,480   6,807,532   5,395,915 
Stockholders' equity 1,092,720   822,001   1,095,861   795,554 


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

  Three Months Ended
December 31,
 Year Ended
December 31,
(in thousands, except per share amounts)  2022   2021   2022   2021 
Interest Income        
Loans and fees $95,295  $57,773  $325,001  $237,037 
Federal funds sold and interest-bearing deposits with banks  449   190   1,295   440 
Taxable investment securities and other  10,769   4,966   35,352   17,208 
Tax exempt investment securities  1,666   802   5,895   2,633 
Total Interest Income  108,179   63,731   367,543   257,318 
Interest Expense        
Deposits  21,767   3,444   44,253   16,793 
Federal funds purchased and securities sold under agreements to repurchase  2,771   20   3,658   78 
Other borrowings  2,001   1,238   7,017   5,612 
Total Interest Expense  26,539   4,702   54,928   22,483 
Net Interest Income  81,640   59,029   312,615   234,835 
(Benefit) provision for credit losses  (2,760)  408   8,514   (10,896)
Net Interest Income after (Benefit) Provision for Credit Losses  84,400   58,621   304,101   245,731 
Noninterest Income        
Service charges on deposit accounts  2,840   2,579   10,985   9,856 
Commissions and fees  2,243   1,977   9,116   6,939 
Income on bank owned life insurance  862   754   3,980   2,676 
Gain (loss) on equity securities  11   (94)  (1,302)  (285)
Gain on sales of loans  269   399   2,765   2,264 
Gain on investment securities transactions, net           9 
Swap income  466      1,576   634 
Other income  332   249   979   268 
Total Noninterest Income  7,023   5,864   28,099   22,361 
Noninterest Expense        
Compensation and employee benefits  26,914   20,186   108,167   82,589 
Premises and equipment  7,657   6,171   30,882   24,773 
FDIC insurance  690   548   2,724   2,341 
Data processing  1,258   1,405   6,238   5,454 
Merger-related expenses  533   710   8,606   1,782 
Other operating expenses  8,318   6,530   31,591   23,818 
Total Noninterest Expense  45,370   35,550   188,208   140,757 
Income before provision for income taxes  46,053   28,935   143,992   127,335 
Provision for income taxes  12,476   6,765   36,623   32,294 
Net Income $33,577  $22,170  $107,369  $95,041 
Per Share of Common Stock        
Basic earnings $0.51  $0.43  $1.64  $1.85 
Diluted earnings $0.51  $0.43  $1.63  $1.85 
Dividends $0.145  $0.135  $0.570  $0.530 


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Lakeland Bancorp, Inc.
Consolidated Balance Sheets

(dollars in thousands) December 31, 2022 December 31, 2021
  (Unaudited)  
Assets    
Cash $223,299  $199,158 
Interest-bearing deposits due from banks  12,651   29,372 
Total cash and cash equivalents  235,950   228,530 
Investment securities available for sale, at estimated fair value (allowance for credit losses of $310 at December 31, 2022 and $83 at December 31, 2021)  1,054,312   769,956 
Investment securities held to maturity (estimated fair value of $760,455 at December 31, 2022 and $815,211 at December 31, 2021, allowance for credit losses of $107 at December 31, 2022 and $181 at December 31, 2021)  923,308   824,956 
Equity securities, at fair value  17,283   17,368 
Federal Home Loan Bank and other membership stocks, at cost  42,483   9,049 
Loans held for sale  536   1,943 
Loans, net of deferred fees  7,866,050   5,976,148 
Less: Allowance for credit losses  70,264   58,047 
Net loans  7,795,786   5,918,101 
Premises and equipment, net  55,429   45,916 
Operating lease right-of-use assets  20,052   15,222 
Accrued interest receivable  33,374   19,209 
Goodwill  271,829   156,277 
Other identifiable intangible assets  9,088   2,420 
Bank owned life insurance  156,985   117,356 
Other assets  167,425   71,753 
Total Assets $10,783,840  $8,198,056 
Liabilities and Stockholders' Equity    
Liabilities    
Deposits:    
Noninterest-bearing $2,113,289  $1,732,452 
Savings and interest-bearing transaction accounts  5,246,005   4,474,144 
Time deposits $250 thousand and under  901,505   623,393 
Time deposits over $250 thousand  306,672   135,834 
Total deposits  8,567,471   6,965,823 
Federal funds purchased and securities sold under agreements to repurchase  728,797   106,453 
Other borrowings  25,000   25,000 
Subordinated debentures  194,264   179,043 
Operating lease liabilities  21,449   16,523 
Other liabilities  138,272   78,200 
Total Liabilities  9,675,253   7,371,042 
Stockholders' Equity    
Common stock, no par value; authorized 100,000,000 shares; issued 65,002,738 shares and outstanding 64,871,703 shares at December 31, 2022 and issued 50,737,400 shares and outstanding 50,606,365 shares at December 31, 2021  855,425   565,862 
Retained earnings  329,375   259,340 
Treasury shares, at cost, 131,035 shares at December 31, 2022 and December 31, 2021  (1,452)  (1,452)
Accumulated other comprehensive (loss) income  (74,761)  3,264 
Total Stockholders' Equity  1,108,587   827,014 
   Total Liabilities and Stockholders' Equity $10,783,840  $8,198,056 


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

  For the Quarter Ended
(dollars in thousands, except per share data) December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Income Statement          
Net interest income $81,640  $80,285  $80,302  $70,388  $59,029 
Benefit (provision) for credit losses  2,760   (1,358)  (3,644)  (6,272)  (408)
Gain on investment securities transactions, net               
Gain on sales of loans  269   355   715   1,426   399 
Gain (loss) on equity securities  11   (464)  (364)  (485)  (94)
Other noninterest income  6,743   7,342   6,712   5,839   5,559 
Merger-related expenses  (533)  (3,488)     (4,585)  (710)
Other noninterest expense  (44,837)  (44,323)  (45,068)  (45,374)  (34,840)
Pretax income  46,053   38,349   38,653   20,937   28,935 
Provision for income taxes  (12,476)  (9,603)  (9,536)  (5,008)  (6,765)
Net income $33,577  $28,746  $29,117  $15,929  $22,170 
           
Basic earnings per common share $0.51  $0.44  $0.44  $0.25  $0.43 
Diluted earnings per common share $0.51  $0.44  $0.44  $0.25  $0.43 
Dividends paid per common share $0.145  $0.145  $0.145  $0.135  $0.135 
Dividends paid $9,505  $9,506  $9,507  $8,809  $6,921 
Weighted average shares - basic  64,854   64,842   64,828   63,961   50,647 
Weighted average shares - diluted  65,222   65,061   64,989   64,238   50,959 
           
Selected Operating Ratios          
Annualized return on average assets  1.26%  1.10%  1.15%  0.64%  1.06%
Annualized return on average common equity  12.19%  10.33%  10.71%  5.89%  10.70%
Annualized return on average tangible common equity (1)  16.42%  13.87%  14.45%  7.88%  13.26%
Annualized net interest margin  3.28%  3.28%  3.38%  3.02%  2.98%
Efficiency ratio (1)  49.67%  49.76%  50.69%  57.77%  53.19%
Common stockholders' equity to total assets  10.28%  10.29%  10.51%  10.60%  10.09%
Tangible common equity to tangible assets (1)  7.88%  7.83%  8.01%  8.07%  8.31%
Tier 1 risk-based ratio  11.24%  11.16%  11.12%  11.34%  11.15%
Total risk-based ratio  13.83%  13.78%  13.74%  14.03%  14.48%
Tier 1 leverage ratio  9.16%  9.10%  9.05%  8.97%  8.51%
Common equity tier 1 capital ratio  10.71%  10.62%  10.57%  10.72%  10.67%
Book value per common share $17.09  $16.70  $16.82  $16.82  $16.34 
Tangible book value per common share (1) $12.76  $12.36  $12.47  $12.45  $13.21 

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


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

  For the Quarter Ended
(dollars in thousands) December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Selected Balance Sheet Data at Period End        
Loans $7,866,050  $7,568,826  $7,408,540  $7,137,793  $5,976,148 
Allowance for credit losses on loans  70,264   68,879   68,836   67,112   58,047 
Investment securities  2,037,386   2,047,186   2,124,213   2,139,054   1,621,329 
Total assets  10,783,840   10,515,599   10,374,178   10,275,233   8,198,056 
Total deposits  8,567,471   8,677,799   8,501,804   8,748,909   6,965,823 
Short-term borrowings  728,797   357,787   432,206   102,911   106,453 
Other borrowings  219,264   219,148   219,027   218,904   204,043 
Stockholders' equity  1,108,587   1,082,406   1,090,145   1,089,282   827,014 
           
Loans          
Non owner occupied commercial $2,906,014  $2,873,824  $2,777,003  $2,639,784  $2,316,284 
Owner occupied commercial  1,246,189   1,141,290   1,179,527   1,122,754   908,449 
Multifamily  1,260,814   1,186,036   1,134,938   1,104,206   972,233 
Non owner occupied residential  218,026   222,597   221,339   225,795   177,097 
Commercial, industrial and other  606,276   612,494   647,531   620,611   405,832 
Paycheck Protection Program  435   734   10,404   36,785   56,574 
Construction  380,100   381,109   370,777   404,186   302,228 
Equipment finance  151,575   137,999   134,136   123,943   123,212 
Residential mortgages  765,552   690,453   622,417   564,042   438,710 
Consumer and home equity  331,069   322,290   310,468   295,687   275,529 
Total loans $7,866,050  $7,568,826  $7,408,540  $7,137,793  $5,976,148 
           
Deposits          
Noninterest-bearing $2,113,289  $2,288,902  $2,330,550  $2,300,030  $1,732,452 
Savings and interest-bearing transaction accounts  5,246,005   5,354,716   5,407,212   5,602,674   4,474,144 
Time deposits  1,208,177   1,034,181   764,042   846,205   759,227 
Total deposits $8,567,471  $8,677,799  $8,501,804  $8,748,909  $6,965,823 
           
Total loans to total deposits ratio  91.8%  87.2%  87.1%  81.6%  85.8%
           
Selected Average Balance Sheet Data          
Loans $7,729,510  $7,517,878  $7,229,175  $7,021,462  $5,902,152 
Investment securities  2,145,252   2,160,719   2,188,199   2,019,578   1,423,650 
Interest-earning assets  9,923,173   9,755,797   9,588,396   9,504,287   7,874,181 
Total assets  10,534,884   10,358,600   10,192,140   10,138,437   8,332,637 
Noninterest-bearing demand deposits  2,240,197   2,325,391   2,310,702   2,194,038   1,775,119 
Savings deposits  1,001,870   1,092,222   1,153,591   1,131,359   670,039 
Interest-bearing transaction accounts  4,389,672   4,337,559   4,369,067   4,399,531   3,862,443 
Time deposits  1,100,911   905,735   803,421   879,427   781,199 
Total deposits  8,732,650   8,660,907   8,636,781   8,604,355   7,088,800 
Short-term borrowings  311,875   240,728   130,242   104,633   112,533 
Other borrowings  219,202   219,082   218,958   217,983   204,266 
Total interest-bearing liabilities  7,023,530   6,795,326   6,675,279   6,732,933   5,630,480 
Stockholders' equity  1,092,720   1,104,145   1,090,613   1,095,913   822,001 


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

  For the Quarter Ended
(dollars in thousands) December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Average Annualized Yields (Taxable Equivalent Basis) and Costs      
Assets          
Loans  4.84%  4.43%  4.22%  3.92%  3.88%
Taxable investment securities and other  2.41%  2.12%  1.81%  1.60%  1.60%
Tax-exempt securities  2.36%  2.12%  2.02%  1.91%  2.20%
Federal funds sold and interest-bearing cash accounts  3.68%  2.21%  0.55%  0.16%  0.14%
Total interest-earning assets  4.31%  3.90%  3.61%  3.25%  3.22%
Liabilities          
Savings accounts  0.29%  0.25%  0.18%  0.17%  0.05%
Interest-bearing transaction accounts  1.46%  0.97%  0.33%  0.25%  0.24%
Time deposits  1.77%  1.00%  0.39%  0.40%  0.51%
Borrowings  3.52%  2.15%  2.04%  1.95%  1.55%
Total interest-bearing liabilities  1.50%  0.94%  0.40%  0.34%  0.33%
Net interest spread (taxable equivalent basis)  2.81%  2.96%  3.22%  2.92%  2.89%
Annualized net interest margin (taxable equivalent basis)  3.28%  3.28%  3.38%  3.02%  2.98%
Annualized cost of deposits  0.99%  0.62%  0.22%  0.19%  0.19%
Asset Quality Data          
Allowance for Credit Losses on Loans          
Balance at beginning of period $68,879  $68,836  $67,112  $58,047  $57,953 
Initial allowance for credit losses on purchased credit deteriorated loans           12,077    
Charge-offs on purchased credit deteriorated loans           (7,634)   
Provision (benefit) for credit losses on loans  1,464   11   1,583   4,630   (87)
Charge-offs  (138)  (56)  (365)  (170)  (461)
Recoveries  59   88   506   162   642 
Balance at end of period $70,264  $68,879  $68,836  $67,112  $58,047 
Net Loan Charge-Offs (Recoveries)          
Non owner occupied commercial $  $  $(4) $4  $ 
Owner occupied commercial        (337)  24   (1)
Multifamily               
Non owner occupied residential           (14)  (136)
Commercial, industrial and other  (24)  (49)  272   778   (449)
Construction           6,804   (4)
Equipment finance  51   (23)  (40)  82   60 
Residential mortgages           (48)  49 
Consumer and home equity  52   40   (32)  12   300 
Net (recoveries) charge-offs $79  $(32) $(141) $7,642  $(181)


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)

  For the Quarter Ended
(dollars in thousands) December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Non-Performing Assets          
Non owner occupied commercial $618  $307  $324  $5,482  $3,009 
Owner occupied commercial  9,439   10,322   12,587   2,626   2,810 
Non owner occupied residential  441   868   839   2,430   2,852 
Construction  2,978   3,623   4,882   6,098   6,763 
Commercial, industrial and other  980         220    
Equipment financing  114   226   112   51   43 
Residential mortgages  2,011   2,226   2,249   1,935   817 
Consumer and home equity  781   798   1,168   898   687 
Total non-performing assets $17,362  $18,370  $22,161  $19,740  $16,981 
           
Loans past due 90 days or more and still accruing $  $31  $  $  $1 
Loans restructured and still accruing  2,640   3,113   3,189   3,290   3,342 
Ratio of allowance for credit losses on loans to total loans  0.89%  0.91%  0.93%  0.94%  0.97%
Total non-accrual loans to total loans  0.22%  0.24%  0.30%  0.28%  0.28%
Total non-performing assets to total assets  0.16%  0.17%  0.21%  0.19%  0.21%
Annualized net (recoveries) charge-offs to average loans  %  % (0.01)%  0.44% (0.01)%


Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)

  At or for the Quarter Ended
(dollars in thousands, except per share amounts) December 31,
2022
 September 30,
2022
 June 30,
2022
 March 31,
2022
 December 31,
2021
Calculation of Tangible Book Value Per Common Share        
Total common stockholders' equity at end of period - GAAP $1,108,587  $1,082,406  $1,090,145  $1,089,282  $827,014 
Less: Goodwill  271,829   271,829   271,829   271,829   156,277 
Less: Other identifiable intangible assets  9,088   9,669   10,250   10,842   2,420 
Total tangible common stockholders' equity at end of period - Non-GAAP $827,670  $800,908  $808,066  $806,611  $668,317 
Shares outstanding at end of period  64,872   64,804   64,794   64,780   50,606 
Book value per share - GAAP $17.09  $16.70  $16.82  $16.82  $16.34 
Tangible book value per share - Non-GAAP $12.76  $12.36  $12.47  $12.45  $13.21 
Calculation of Tangible Common Equity to Tangible Assets        
Total tangible common stockholders' equity at end of period - Non-GAAP $827,670  $800,908  $808,066  $806,611  $668,317 
Total assets at end of period - GAAP $10,783,840  $10,515,599  $10,374,178  $10,275,233  $8,198,056 
Less: Goodwill  271,829   271,829   271,829   271,829   156,277 
Less: Other identifiable intangible assets  9,088   9,669   10,250   10,842   2,420 
Total tangible assets at end of period - Non-GAAP $10,502,923  $10,234,101  $10,092,099  $9,992,562  $8,039,359 
Common equity to assets - GAAP  10.28%  10.29%  10.51%  10.60%  10.09%
Tangible common equity to tangible assets - Non-GAAP  7.88%  7.83%  8.01%  8.07%  8.31%
Calculation of Return on Average Tangible Common Equity        
Net income - GAAP $33,577  $28,746  $29,117  $15,929  $22,170 
Total average common stockholders' equity - GAAP $1,092,720  $1,104,145  $1,090,613  $1,095,913  $822,001 
Less: Average goodwill  271,829   271,829   271,829   265,409   156,277 
Less: Average other identifiable intangible assets  9,386   9,982   10,569   10,851   2,544 
Total average tangible common stockholders' equity - Non-GAAP $811,505  $822,334  $808,215  $819,653  $663,180 
Return on average common stockholders' equity - GAAP  12.19%  10.33%  10.71%  5.89%  10.70%
Return on average tangible common stockholders' equity - Non-GAAP  16.42%  13.87%  14.45%  7.88%  13.26%
Calculation of Efficiency Ratio          
Total noninterest expense $45,370  $47,811  $45,068  $49,959  $35,550 
Less:          
Amortization of core deposit intangibles  581   581   593   596   210 
Merger-related expenses  533   3,488      4,585   710 
Noninterest expense, as adjusted $44,256  $43,742  $44,475  $44,778  $34,630 
Net interest income $81,640  $80,285  $80,302  $70,388  $59,029 
Total noninterest income  7,023   7,233   7,063   6,780   5,864 
Total revenue $88,663  $87,518  $87,365  $77,168  $64,893 
Tax-equivalent adjustment on municipal securities  443   395   382   346   213 
Total revenue, as adjusted $89,106  $87,913  $87,747  $77,514  $65,106 
Efficiency ratio - Non-GAAP  49.67%  49.76%  50.69%  57.77%  53.19%


Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)

  For the Twelve Months Ended December 31,
(dollars in thousands)  2022   2021 
Calculation of Return on Average Tangible Common Equity    
Net income - GAAP $107,369  $95,041 
Total average common stockholders' equity - GAAP $1,095,861  $795,554 
Less: Average goodwill  270,246   156,277 
Less: Average other identifiable intangible assets  10,192   2,866 
Total average tangible common stockholders' equity - Non-GAAP $815,423  $636,411 
Return on average common stockholders' equity - GAAP  9.80%  11.95%
Return on average tangible common stockholders' equity - Non-GAAP  13.17%  14.93%
Calculation of Efficiency Ratio    
Total noninterest expense $188,208  $140,757 
Less:    
Amortization of core deposit intangibles  2,351   868 
Merger-related expenses  8,606   1,782 
Long-term debt extinguishment costs     831 
Noninterest expense, as adjusted $177,251  $137,276 
Net interest income $312,615  $234,835 
Noninterest income  28,099   22,361 
Total revenue $340,714  $257,196 
Tax-equivalent adjustment on municipal securities  1,567   700 
Less: Gain on sales and calls of investment securities     9 
Total revenue, as adjusted $342,281  $257,887 
Efficiency ratio - Non-GAAP  51.79%  53.23%


Lakeland Bancorp, Inc.
Supplemental Information - Reconciliation of Net Income
(Unaudited)

  For the Three Months Ended
December 31,
 For the Year Ended
December 31,
(Dollars in thousands, except per share amounts)  2022   2021   2022   2021 
Calculation of EPS excluding non-routine transactions        
Net income - GAAP $33,577  $22,170  $107,369  $95,041 
Non-Routine Transactions:        
Long-term debt extinguishment costs $  $  $  $831 
Tax deductible merger-related expenses  54   302   5,590   802 
Tax effect on tax deductible non-routine transactions  (16)  (91)  (1,682)  (491)
Non-tax deductible merger-related expenses  479   408   3,016   980 
Effect of non-routine transactions, net of tax $517  $619  $6,924  $2,122 
Net income available to common shareholders excluding non-routine transactions $34,094  $22,789  $114,293  $97,163 
Less: Earnings allocated to participating securities  390   303   1,236   1,142 
Net income, excluding non-routine transactions $33,704  $22,486  $113,057  $96,021 
         
Weighted average shares - Basic  64,854   50,647   64,624   50,624 
Weighted average shares - Diluted  65,222   50,959   64,918   50,870 
         
Basic earnings per share - GAAP $0.51  $0.43  $1.64  $1.85 
Diluted earnings per share - GAAP $0.51  $0.43  $1.63  $1.85 
         
Basic earnings per share, adjusted for non-routine transactions $0.52  $0.44  $1.75  $1.90 
Diluted earnings per share, adjusted for non-routine transactions $0.52  $0.44  $1.74  $1.89 
Calculation of return on average assets excluding non-routine transactions    
Net Income, excluding non-routine transactions $34,094  $22,789  $114,293  $97,163 
Average assets  10,534,884   8,332,637   10,307,245   7,974,905 
         
Return on average assets - GAAP  1.26%  1.06%  1.04%  1.19%
Return on average assets, adjusted for non-routine transactions  1.28%  1.09%  1.11%  1.22%
Calculation of return on average equity excluding non-routine transactions    
Net Income, excluding non-routine transactions $34,094  $22,789  $114,293  $97,163 
Total average common stockholders' equity  1,092,720   822,001   1,095,861   795,554 
         
Return on average common stockholders' equity - GAAP  12.19%  10.70%  9.80%  11.95%
Return on average common stockholders' equity, adjusted for non-routine transactions  12.38%  11%  10.43%  12.21%
Calculation of return on average tangible common equity excluding non-routine transactions  
Net Income, excluding non-routine transactions $34,094  $22,789  $114,293  $97,163 
Total average tangible common stockholders' equity - Non-GAAP  811,505   663,180   815,423   636,411 
         
Return on average tangible common stockholders' equity - Non-GAAP  16.42%  13.26%  13.17%  14.93%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions  16.67%  13.63%  14.02%  15.27%


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