Lakeland Bancorp Announces Quarterly and Year-End 2021 Earnings


OAK RIDGE, N.J., Jan. 26, 2022 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $22.2 million and earnings per diluted share ("EPS") of $0.43 for the three months ended December 31, 2021, compared to net income of $18.8 million and diluted EPS of $0.37 for the fourth quarter of 2020. For the fourth quarter of 2021, annualized return on average assets was 1.06%, annualized return on average common equity was 10.70% and annualized return on average tangible common equity was 13.26%.

For the year ended December 31, 2021, the Company reported net income of $95.0 million, a 65% increase compared to $57.5 million for the same period in 2020, resulting in return on average assets of 1.19%, return on average common equity of 11.95%, and return on average tangible common equity of 14.93%. For 2021, the Company reported diluted EPS of $1.85, compared to diluted EPS of $1.13 for 2020.

The current year results were favorably impacted by negative provisions for credit losses of $10.9 million compared to provisions of $27.2 million for 2020 as forecasted macroeconomic conditions have improved and Lakeland's asset quality continues to be strong. Fourth quarter 2021 results were favorably impacted by a $3.9 million increase in net interest income and a $1.4 million reduction in non-interest expenses compared to the fourth quarter of 2020.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "We ended 2021 with strong quarterly and annual earnings. We experienced total asset growth of 7%, deposit growth of 8% and non-performing assets declined by 60% during 2021. With the acquisition of 1st Constitution Bancorp on January 6, 2022, we expanded Lakeland's presence into central New Jersey and look forward to bringing our banking model into the desirable markets of Mercer, Middlesex and Monmouth counties. Full systems integration is progressing well and is expected to be completed in February 2021."

Full Year 2021 Highlights

  • Total asset growth of 7% to $8.20 billion at December 31, 2021.
  • Deposit generation of 8% or $510.0 million, including 15% growth in noninterest-bearing deposits.
  • In September 2021, the Company issued $150.0 million Fixed-to-Floating Rate Subordinated Notes at a fixed rate of 2.875% per annum until September 2026 when the interest rate will reset to the three-month Secured Overnight Financing Rate plus a spread of 220 basis points, and redeemed $75.0 million of its outstanding 5.125% Fixed-to-Floating Rate Subordinated Notes.
  • Net interest margin for 2021 increased four basis points to 3.13% compared to 2020 due primarily to a reduction in the cost of interest-bearing liabilities.
  • Non-performing assets declined to $17.0 million at December 31, 2021 compared to $42.8 million at December 31, 2020.
  • Paycheck Protection Program ("PPP") loans outstanding totaled $56.6 million at December 31, 2021 compared to $284.6 million at December 31, 2020. Unamortized net deferred fees on PPP loans totaled $1.6 million at December 31, 2021 compared to $5.8 million at December 31, 2020.
  • Net loan charge-offs for the year totaled $2.2 million, or 0.04% of average loans.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2021 of 2.98% decreased 10 basis points compared to the fourth quarter of 2020 and decreased 12 basis points compared to the third quarter of 2021. The decrease compared to the fourth quarter of 2020 was primarily a result of a decrease in the yield on loans and securities as well as an increase in lower yielding federal funds sold. The decrease in net interest margin compared to the third quarter of 2021 was due primarily to a decrease in the yield on loans and an increase in lower yielding average securities balances. Net interest margin for 2021 of 3.13% increased four basis points compared to 3.09% for 2020 due primarily to a reduction in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the fourth quarter of 2021 was 3.22% compared to 3.51% for the fourth quarter of 2020 and 3.40% for the third quarter of 2021. The decrease in yield on interest-earning assets when compared to the fourth quarter 2020 was due primarily to a reduction in the yield on loans and securities as well as increased balances in lower yielding average federal funds sold. The decrease in yield on interest-earning assets when compared to the third quarter of 2021 was due primarily to a reduction in the yield on loans and increased balances in lower yielding average securities. The yield on interest-earning assets for 2021 was 3.43% compared to 3.70% for 2020 resulting primarily from a reduction in the yield on interest earning assets and increased balances in lower yielding average federal funds sold as a result of maintaining excess liquidity during the pandemic.

The cost of interest-bearing liabilities decreased in the fourth quarter of 2021 to 0.33% compared to 0.59% for the fourth quarter of 2020 and 0.41% for the third quarter of 2021. The cost of interest-bearing liabilities for 2021 was 0.42% compared to 0.83% during the same period in 2020. The reduction in the cost of interest-bearing liabilities compared to prior periods was largely driven by reductions in market interest rates as well as a change in the mix of interest-bearing liabilities as balances of higher cost time deposits decreased while lower cost interest-bearing transaction account balances increased. Additionally, replacing the Company's existing subordinated debt with a new issuance at a lower interest rate during 2021 decreased the cost of borrowings.

Net interest income increased to $59.0 million for the fourth quarter of 2021 compared to $55.1 million for the fourth quarter of 2020, due primarily to lower interest rates on interest-bearing liabilities as well as the growth of interest-earning assets partially offset by lower yields on interest-earning assets. Net interest income for 2021 was $234.8 million, as compared to $207.7 million for 2020 due to the same reasons discussed in the quarterly comparison.

Noninterest Income

Noninterest income decreased $981,000 to $5.9 million for the fourth quarter of 2021 from $6.8 million for the fourth quarter of 2020. Commissions and fees in the fourth quarter of 2021 increased $612,000 compared to the same period in 2020 due primarily to increases in investment commission income and commercial loan fees. Gain on sales of loans in the fourth quarter of 2021 decreased $361,000 due primarily to the Company retaining more originated residential mortgage loans in the loan portfolio. Fourth quarter 2020 results included an $871,000 gain on sales of securities compared to no gain on sales of securities during the same period in 2021. There was no swap income recorded in the fourth quarter of 2021 compared to $485,000 during the same period in 2020 due primarily to changes in the yield curve which decreases the demand for swap transactions.

For 2021, noninterest income decreased $4.7 million to $22.4 million compared to 2020 due primarily to a reduction in swap income. Service charges on deposit accounts increased $708,000 compared to 2020 due primarily to increases in debit card income. Commissions and fees in 2021 increased $1.1 million compared to 2020 due to the same reasons discussed in the quarterly comparison. Gains on sales of loans and swap income decreased $1.1 million and $4.1 million, respectively, compared to 2020, both due primarily to the same reasons discussed in the quarterly comparison. Gain on sales and calls of investment securities totaled $9,000 in 2021 compared to $1.2 million in 2020.

Noninterest Expense

Noninterest expense totaled $35.6 million for the fourth quarter of 2021, a decrease of $1.4 million compared to the fourth quarter of 2020 due primarily to long-term debt prepayment fees of $3.8 million recorded in the fourth quarter of 2020 to deploy excess liquidity. Compensation and employee benefit expense in the fourth quarter of 2021 increased $1.0 million, or 5%, compared to the fourth quarter of 2020 due primarily to staff additions and normal merit increases. In the fourth quarter of 2021, premises and equipment expense increased $549,000 due primarily to an increase in IT service agreement expense, and data processing expense increased $341,000 due primarily to increased fees from service providers compared to the fourth quarter of 2020. The fourth quarter of 2021 included $710,000 in merger-related costs for the acquisition of 1st Constitution Bancorp.

For 2021, noninterest expense increased $8.0 million to $140.8 million compared to $132.8 million for 2020 due primarily to compensation and employee benefit expense which increased $6.1 million, or 8%. 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 2021 increased $2.9 million due to the same reason discussed in the quarterly comparison. Noninterest expense in 2021 included merger-related expenses of $1.8 million for the acquisition of 1st Constitution Bancorp. Additionally, noninterest expense in 2020 included $4.1 million in long-term debt prepayment fees compared to none in 2021.

Income Tax Expense

The effective tax rate for the fourth quarter of 2021 was 23.4% compared to 22.3% for the fourth quarter of 2020. The effective tax rate for 2021 was 25.4% compared to 23.1% for 2020. The increased effective tax rate for 2021 periods was primarily a result of tax advantaged items declining as a percentage of pretax income due to the increase in pretax income.

Financial Condition

At December 31, 2021, total assets were $8.20 billion, an increase of $533.8 million or 7% compared to December 31, 2020. For the year ended December 31, 2021, total loans declined $45.1 million to $5.98 billion due to a decline in PPP loans of $228.1 million, partially offset by an increase in other loan categories of $183.0 million, primarily in the multifamily and residential mortgage loan segments. Investment securities increased $648.1 million or 67% to $1.62 billion during 2021 as the Company deployed liquidity into the investment portfolio. On the funding side, total deposits increased $510.0 million or 8% to $6.97 billion primarily in the saving and interest bearing transaction accounts category, while borrowings decreased $2.3 million or 1% to $310.5 million for the year ended December 31, 2021. At December 31, 2021, total loans as a percent of total deposits was 85.8%.

Asset Quality

At December 31, 2021, non-performing assets decreased 60% to $17.0 million, 0.21% of total assets, compared to $42.8 million, 0.56% of total assets, at December 31, 2020. Non-accrual loans as a percent of total loans decreased to 0.28% at December 31, 2021 compared to 0.71% at December 31, 2020. At December 31, 2021, the allowance for credit losses decreased to $58.0 million, 0.97% of total loans compared to $71.1 million, 1.18% of total loans, at December 31, 2020. In the fourth quarter of 2021, the Company had net recoveries of $181,000, or 0.01% of average loans, annualized, compared to net charge-offs of $528,000, or 0.04% of average loans, annualized, for the same period in 2020. Provision for credit losses on loans for the fourth quarter of 2021 was a benefit of $87,000 compared to a benefit of $246,000 in the fourth quarter of 2020.

Capital

At December 31, 2021, stockholders' equity increased 8% to $827.0 million as compared to $763.8 million at December 31, 2020. Lakeland Bancorp remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 8.51% at December 31, 2021. The book value per common share and tangible book value per common share increased 8.0% and 10.4% to $16.34 and $13.21, respectively, compared to $15.13 and $11.97 at December 31, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). On January 24, 2022, the Company declared a quarterly cash dividend of $0.135 per share to be paid on February 17, 2022, to shareholders of record as of February 7, 2022.

Forward-Looking Statements

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

Explanation of Non-GAAP Financial Measures

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

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

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

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

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $8.20 billion in total assets at December 31, 2021. On January 6, 2022, the Company completed its acquisition of 1st Constitution Bancorp, which represents a significant addition to the Company's New Jersey franchise. 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 973-697-2000 for more information.

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


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
        
 Three Months Ended
December 31,
 Year Ended
December 31,
(dollars in thousands, except per share amounts) 2021   2020   2021   2020 
Income Statement       
Net interest income$59,029  $55,135  $234,835  $207,687 
(Provision) benefit for credit losses (408)  (789)  10,896   (27,222)
Gain on investment securities transactions, net    871   9   1,213 
Gain on sales of loans 399   760   2,264   3,322 
(Loss) gain on equity securities (94)  73   (285)  (552)
Other noninterest income 5,559   5,141   20,373   23,127 
Long-term debt prepayment fees    (3,777)     (4,133)
Long-term debt extinguishment costs       (831)   
Merger-related expenses (710)     (1,782)   
Other noninterest expense (34,840)  (33,168)  (138,144)  (128,665)
Pretax income 28,935   24,246   127,335   74,777 
Provision for income taxes (6,765)  (5,398)  (32,294)  (17,259)
Net income$22,170  $18,848  $95,041  $57,518 
        
Basic earnings per common share$0.43  $0.37  $1.85  $1.13 
Diluted earnings per common share$0.43  $0.37  $1.85  $1.13 
Dividends paid per common share$0.135  $0.125  $0.530  $0.500 
Weighted average shares - basic 50,647   50,527   50,624   50,540 
Weighted average shares - diluted 50,959   50,672   50,870   50,650 
        
Selected Operating Ratios       
Annualized return on average assets 1.06%  0.98%  1.19%  0.80%
Annualized return on average common equity 10.70%  9.96%  11.95%  7.74%
Annualized return on average tangible common equity (1) 13.26%  12.64%  14.93%  9.86%
Annualized yield on interest-earning assets 3.22%  3.51%  3.43%  3.70%
Annualized cost of interest-bearing liabilities 0.33%  0.59%  0.42%  0.83%
Annualized net interest spread 2.89%  2.92%  3.02%  2.87%
Annualized net interest margin 2.98%  3.08%  3.13%  3.09%
Efficiency ratio (1) 53.19%  53.74%  53.23%  54.54%
Stockholders' equity to total assets     10.09%  9.97%
Book value per common share    $16.34  $15.13 
Tangible book value per common share (1)    $13.21  $11.97 
Tangible common equity to tangible assets (1)     8.31%  8.05%
        
Asset Quality Ratios    December 31, 2021 December 31, 2020
Ratio of allowance for credit losses on loans to total loans     0.97%  1.18%
Non-performing loans to total loans     0.28%  0.71%
Non-performing assets to total assets     0.21%  0.47%
Net charge-offs to average loans     0.04%  0.03%
        
(1) See Supplemental Information - Non-GAAP Financial Measures      
        
        
Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
        
(dollars in thousands)    December 31, December 31,
Selected Balance Sheet Data at Period End     2021   2020 
Loans    $5,976,148  $6,021,232 
Allowance for credit losses on loans     58,047   71,124 
Investment securities     1,621,329   973,185 
Total assets     8,198,056   7,664,297 
Total deposits     6,965,823   6,455,783 
Short-term borrowings     106,453   169,560 
Other borrowings     204,043   143,257 
Stockholders' equity     827,014   763,784 
        
 Three Months Ended
December 31,
 Year Ended
December 31,
  2021   2020   2021   2020 
Selected Average Balance Sheet Data       
Loans$5,902,152  $5,939,904  $6,003,325  $5,626,273 
Investment securities 1,423,650   912,723   1,160,503   889,223 
Interest-earning assets 7,874,181   7,137,884   7,516,662   6,735,825 
Total assets 8,332,637   7,625,458   7,974,905   7,208,366 
Noninterest-bearing demand deposits 1,775,119   1,499,093   1,671,889   1,362,918 
Savings deposits 670,039   571,794   642,298   535,754 
Interest-bearing transaction accounts 3,862,443   3,313,556   3,613,484   3,035,626 
Time deposits 781,199   1,112,053   882,379   1,064,187 
Total deposits 7,088,800   6,496,496   6,810,050   5,998,485 
Short-term borrowings 112,533   68,962   95,111   92,425 
Other borrowings 204,266   155,943   162,643   244,000 
Total interest-bearing liabilities 5,630,479   5,222,308   5,395,915   4,971,992 
Stockholders' equity 822,001   753,059   795,554   743,225 
                


Lakeland Bancorp, Inc.
Consolidated Statements of Income
(Unaudited)
      
 Three Months Ended
December 31,
 Year Ended
December 31,
(in thousands, except per share amounts) 2021  2020  2021  2020 
      
Interest Income     
Loans and fees$57,773 $58,553 $237,037 $229,036 
Federal funds sold and interest-bearing deposits with banks 190  61  440  348 
Taxable investment securities and other 4,966  3,680  17,208  17,811 
Tax exempt investment securities 802  565  2,633  1,647 
Total Interest Income 63,731  62,859  257,318  248,842 
Interest Expense     
Deposits 3,444  6,090  16,793  32,059 
Federal funds purchased and securities sold under agreements to repurchase 20  25  78  556 
Other borrowings 1,238  1,609  5,612  8,540 
Total Interest Expense 4,702  7,724  22,483  41,155 
Net Interest Income 59,029  55,135  234,835  207,687 
Provision (benefit) for credit losses 408  789  (10,896) 27,222 
Net Interest Income after Provision for Credit Losses 58,621  54,346  245,731  180,465 
Noninterest Income     
Service charges on deposit accounts 2,579  2,485  9,856  9,148 
Commissions and fees 1,977  1,365  6,939  5,868 
Income on bank owned life insurance 754  657  2,676  2,657 
(Loss) gain on equity securities (94) 73  (285) (552)
Gain on sales of loans 399  760  2,264  3,322 
Gain on investment securities transactions, net   871  9  1,213 
Swap income   485  634  4,719 
Other income 249  149  268  735 
Total Noninterest Income 5,864  6,845  22,361  27,110 
Noninterest Expense     
Compensation and employee benefits 20,186  19,188  82,589  76,470 
Premises and equipment 6,171  5,622  24,773  21,871 
FDIC insurance 548  750  2,341  2,123 
Data processing 1,405  1,064  5,454  4,964 
Merger-related expenses 710    1,782   
Long-term debt prepayment fees   3,777    4,133 
Other operating expenses 6,530  6,544  23,818  23,237 
Total Noninterest Expense 35,550  36,945  140,757  132,798 
Income before provision for income taxes 28,935  24,246  127,335  74,777 
Provision for income taxes 6,765  5,398  32,294  17,259 
Net Income$22,170 $18,848 $95,041 $57,518 
Per Share of Common Stock     
Basic earnings$0.43 $0.37 $1.85 $1.13 
Basic earnings$0.43 $0.37 $1.85 $1.13 
Dividends$0.135 $0.125 $0.530 $0.500 
             


Lakeland Bancorp, Inc.
Consolidated Balance Sheets
    
(dollars in thousands)December 31, 2021 December 31, 2020
 (Unaudited)  
Assets   
Cash$199,158  $262,327 
Interest-bearing deposits due from banks 29,372   7,763 
Total cash and cash equivalents 228,530   270,090 
Investment securities available for sale, at estimated fair value (allowance for credit losses of $83 at December 31, 2021 and $2 at December 31, 2020 ) 769,956   855,746 
Investment securities held to maturity (estimated fair value of $815,211 at December 31, 2021 and $93,868 at December 31, 2020, allowance for credit losses of $181 at December 31, 2021 and none at December 31, 2020) 824,956   90,766 
Equity securities, at fair value 17,368   14,694 
Federal Home Loan Bank and other membership stocks, at cost 9,049   11,979 
Loans held for sale 1,943   1,335 
Loans, net of deferred fees 5,976,148   6,021,232 
Less: Allowance for credit losses 58,047   71,124 
Net loans 5,918,101   5,950,108 
Premises and equipment, net 45,916   48,495 
Operating lease right-of-use assets 15,222   16,772 
Accrued interest receivable 19,209   19,339 
Goodwill 156,277   156,277 
Other identifiable intangible assets 2,420   3,288 
Bank owned life insurance 117,356   115,115 
Other assets 71,753   110,293 
Total Assets$8,198,056  $7,664,297 
Liabilities and Stockholders' Equity   
Liabilities   
Deposits:   
Noninterest-bearing$1,732,452  $1,510,224 
Savings and interest-bearing transaction accounts 4,474,144   3,867,303 
Time deposits $250 thousand and under 623,393   895,056 
Time deposits over $250 thousand 135,834   183,200 
Total deposits 6,965,823   6,455,783 
Federal funds purchased and securities sold under agreements to repurchase 106,453   169,560 
Other borrowings 25,000   25,000 
Subordinated debentures 179,043   118,257 
Operating lease liabilities 16,523   18,183 
Other liabilities 78,200   113,730 
Total Liabilities 7,371,042   6,900,513 
Stockholders' Equity   
Common stock, no par value; authorized 100,000,000 shares; issued 50,737,400 shares and outstanding 50,606,365 shares at December 31, 2021 and issued 50,610,681 shares and outstanding 50,479,646 shares at December 31, 2020 565,862   562,421 
Retained earnings 259,340   191,418 
Treasury shares, at cost, 131,035 shares at December 31, 2021 and December 31, 2020 (1,452)  (1,452)
Accumulated other comprehensive income 3,264   11,397 
Total Stockholders' Equity 827,014   763,784 
Total Liabilities and Stockholders' Equity$8,198,056  $7,664,297 
        


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
      
 For the Quarter Ended
 December 31,September 30,June 30,March 31,December 31,
(dollars in thousands, except per share data) 2021  2021  2021  2021  2020 
      
Income Statement     
Net interest income$59,029 $59,338 $59,740 $56,728 $55,135 
(Provision) benefit for credit losses (1) (408) 2,703  5,959  2,642  (789)
Gain on investment securities transactions, net     9    871 
Gain on sales of loans 399  550  607  708  760 
(Loss) gain on equity securities (94) (58) 11  (144) 73 
Other noninterest income 5,559  4,977  4,642  5,195  5,141 
Long-term debt extinguishment costs   (831)      
Long-term debt prepayment fees         (3,777)
Merger-related expenses (710) (1,072)      
Other noninterest expense (34,840) (35,304) (34,097) (33,903) (33,168)
Pretax income 28,935  30,303  36,871  31,226  24,246 
Provision for income taxes (6,765) (8,014) (9,464) (8,051) (5,398)
Net income$22,170 $22,289 $27,407 $23,175 $18,848 
      
Basic earnings per common share$0.43 $0.43 $0.53 $0.45 $0.37 
Diluted earnings per common share$0.43 $0.43 $0.53 $0.45 $0.37 
Dividends paid per common share$0.135 $0.135 $0.135 $0.125 $0.125 
Dividends paid$6,921 $7,001 $6,828 $6,369 $6,364 
Weighted average shares - basic 50,647  50,637  50,636  50,576  50,527 
Weighted average shares - diluted 50,959  50,875  50,858  50,780  50,672 
      
Selected Operating Ratios     
Annualized return on average assets 1.06% 1.10% 1.41% 1.22% 0.98%
Annualized return on average common equity 10.70% 10.94% 14.07% 12.20% 9.96%
Annualized return on average tangible common equity (2) 13.26% 13.63% 17.67% 15.39% 12.64%
Annualized net interest margin 2.98% 3.10% 3.27% 3.19% 3.08%
Efficiency ratio (2) 53.19% 54.02% 51.98% 53.75% 53.74%
Common stockholders' equity to total assets 10.09% 9.96% 10.14% 9.88% 9.97%
Tangible common equity to tangible assets (2) 8.31% 8.18% 8.29% 8.00% 8.05%
Tier 1 risk-based ratio 11.15% 11.19% 10.78% 10.47% 10.22%
Total risk-based ratio 14.48% 14.73% 13.11% 13.02% 12.85%
Tier 1 leverage ratio 8.51% 8.60% 8.70% 8.51% 8.37%
Common equity tier 1 capital ratio 10.67% 10.70% 10.29% 9.98% 9.73%
Book value per common share$16.34 $16.09 $15.74 $15.18 $15.13 
Tangible book value per common share (2)$13.21 $12.95 $12.60 $12.03 $11.97 

(1) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on December 31, 2020, with a transition adjustment retroactive to January 1, 2020.

(2) 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) 2021  2021  2021  2021  2020 
      
Selected Balance Sheet Data at Period End       
Loans$5,976,148 $5,880,802 $5,988,832 $6,108,946 $6,021,232 
Allowance for credit losses on loans (3) 58,047  57,953  60,389  67,252  71,124 
Investment securities 1,621,329  1,248,705  1,107,601  1,078,750  973,185 
Total assets 8,198,056  8,172,479  7,854,238  7,771,761  7,664,297 
Total deposits 6,965,823  6,930,912  6,715,035  6,635,226  6,455,783 
Short-term borrowings 106,453  111,907  100,190  111,999  169,560 
Other borrowings 204,043  212,107  138,045  143,267  143,257 
Stockholders' equity 827,014  814,128  796,676  768,065  763,784 
      
Loans     
Non owner occupied commercial$2,316,284 $2,300,637 $2,330,376 $2,375,024 $2,398,946 
Owner occupied commercial 908,449  884,144  870,535  857,506  827,092 
Multifamily 972,233  907,903  902,394  858,168  813,225 
Non owner occupied residential 177,097  177,592  189,765  195,534  200,229 
Commercial, industrial and other 405,832  363,976  358,659  394,416  433,553 
Construction 302,228  332,868  335,167  291,252  266,883 
Paycheck Protection Program 56,574  109,348  207,045  346,150  284,636 
Equipment financing 123,212  119,709  121,096  119,428  116,690 
Residential mortgages 438,710  407,021  391,589  385,778  377,380 
Consumer and home equity 275,529  277,604  282,206  285,690  302,598 
Total loans$5,976,148 $5,880,802 $5,988,832 $6,108,946 $6,021,232 
      
Deposits     
Noninterest-bearing$1,732,452 $1,724,646 $1,683,887 $1,631,942 $1,510,224 
Savings and interest-bearing transaction accounts 4,474,144  4,401,367  4,198,709  4,049,914  3,867,303 
Time deposits 759,227  804,899  832,439  953,370  1,078,256 
Total deposits$6,965,823 $6,930,912 $6,715,035 $6,635,226 $6,455,783 
      
Total loans to total deposits ratio 85.8% 84.8% 89.2% 92.1% 93.3%
      
Selected Average Balance Sheet Data     
Loans$5,902,152 $5,943,698 $6,080,408 $6,089,757 $5,939,904 
Investment securities 1,423,650  1,144,356  1,066,086  1,003,479  912,723 
Interest-earning assets 7,874,181  7,611,259  7,342,952  7,230,136  7,137,884 
Total assets 8,332,637  8,070,050  7,784,385  7,704,603  7,625,458 
Noninterest-bearing demand deposits 1,775,119  1,702,788  1,660,825  1,545,968  1,499,093 
Savings deposits 670,039  653,840  639,540  604,931  571,794 
Interest-bearing transaction accounts 3,862,443  3,701,676  3,495,610  3,388,027  3,313,556 
Time deposits 781,199  826,831  880,079  1,044,915  1,112,053 
Total deposits 7,088,800  6,885,135  6,676,054  6,583,841  6,496,496 
Short-term borrowings 112,533  108,519  85,325  73,492  68,962 
Other borrowings 204,266  162,216  140,162  143,261  155,943 
Total interest-bearing liabilities 5,630,479  5,453,082  5,240,716  5,254,626  5,222,308 
Stockholders' equity 822,001  807,956  781,299  770,255  753,059 

(3) The Company adopted CECL on December 31, 2020, with a transition adjustment retroactive to January 1, 2020.


Lakeland Bancorp, Inc.
Financial Highlights
(Unaudited)
 For the Quarter Ended
 December 31,September 30,June 30,March 31,December 31,
(dollars in thousands) 2021  2021  2021  2021  2020 
Average Annualized Yields (Taxable Equivalent Basis) and Costs         
Assets     
Loans 3.88% 4.00% 3.99% 3.91% 3.92%
Taxable investment securities and other 1.60% 1.68% 1.72% 1.81% 1.84%
Tax-exempt securities 2.20% 2.15% 2.50% 2.54% 2.51%
Federal funds sold and interest-bearing cash accounts 0.14% 0.12% 0.11% 0.11% 0.09%
Total interest-earning assets 3.22% 3.40% 3.57% 3.56% 3.51%
Liabilities     
Savings accounts 0.05% 0.05% 0.05% 0.05% 0.05%
Interest-bearing transaction accounts 0.24% 0.30% 0.32% 0.34% 0.38%
Time deposits 0.51% 0.55% 0.61% 0.83% 1.01%
Borrowings 1.55% 2.33% 2.22% 2.87% 2.84%
Total interest-bearing liabilities 0.33% 0.41% 0.42% 0.51% 0.59%
Net interest spread (taxable equivalent basis) 2.89% 2.99% 3.15% 3.05% 2.92%
Annualized net interest margin (taxable equivalent basis) 2.98% 3.10% 3.27% 3.19% 3.08%
Annualized cost of deposits 0.19% 0.23% 0.25% 0.32% 0.37%
Asset Quality Data     
Allowance for Credit Losses on Loans     
Balance at beginning of period$57,953 $60,389 $67,252 $71,124 $65,242 
Impact of adopting ASU 2016-13 (4)         6,656 
Benefit for credit losses on loans (87) (2,705) (5,314) (2,808) (246)
Charge-offs (461) (969) (1,862) (1,270) (746)
Recoveries 642  1,238  313  206  218 
Balance at end of period$58,047 $57,953 $60,389 $67,252 $71,124 
Net Loan Charge-Offs (Recoveries)     
Non owner occupied commercial$ $6 $1,649 $592  
Owner occupied commercial (1) (80) (9) 70  
Multifamily   28      
Non owner occupied residential (136) (5) (8) 206  
Total commercial, secured by real estate (4)$(137)$(51)$1,632 $868 $(45)
Commercial, industrial and other (449) (265) 5  221  477 
Construction (4) 50  (42) (25) 
Equipment financing 60  139  4  83  64 
Residential mortgages 49  27  (82) (58)  
Consumer and home equity 300  (169) 32  (25) 32 
Net (recoveries) charge-offs$(181)$(269)$1,549 $1,064 $528 
(4) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13   
      
Non-Performing Assets     
Non owner occupied commercial$3,009 $4,748 $11,427 $12,835 $16,537 
Owner occupied commercial 2,810  4,656  7,152  8,797  14,271 
Multifamily     195  201  626 
Non owner occupied residential 2,852  922  1,305  1,417  2,217 
Construction     515  718  1,440 
Commercial, industrial and other 6,763  1,108  1,449  2,252  2,633 
Equipment financing 43  238  264  300  327 
Residential mortgages 817  123    2,328  2,469 
Consumer and home equity 687  453  308  2,277  2,243 
Total non-accrual loans 16,981  12,248  22,615  31,125  42,763 
Property acquired through foreclosure or repossession          
Total non-performing assets$16,981 $12,248 $22,615 $31,125 $42,763 
Loans past due 90 days or more and still accruing$1 $ $ $ $1 
Loans restructured and still accruing$3,342 $3,414 $3,595 $3,799 $3,856 
Ratio of allowance for credit losses to total loans 0.97% 0.99% 1.01% 1.10% 1.18%
Total non-accrual loans to total loans 0.28% 0.21% 0.38% 0.51% 0.71%
Total non-performing assets to total assets 0.21% 0.15% 0.29% 0.40% 0.56%
Annualized net (recoveries) charge-offs to average loans (0.01)% (0.02)% 0.10% 0.07% 0.04%
                


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 per share amounts) 2021  2021  2021  2021  2020 
      
Calculation of Tangible Book Value Per Common Share       
Total common stockholders' equity at end of period - GAAP$827,014 $814,128 $796,676 $768,065 $763,784 
Less: Goodwill 156,277  156,277  156,277  156,277  156,277 
Less: Other identifiable intangible assets 2,420  2,631  2,841  3,063  3,288 
Total tangible common stockholders' equity at end of period - Non-GAAP$668,317 $655,220 $637,558 $608,725 $604,219 
Shares outstanding at end of period 50,606  50,602  50,601  50,598  50,480 
Book value per share - GAAP$16.34 $16.09 $15.74 $15.18 $15.13 
Tangible book value per share - Non-GAAP$13.21 $12.95 $12.60 $12.03 $11.97 
Calculation of Tangible Common Equity to Tangible Assets       
Total tangible common stockholders' equity at end of period - Non-GAAP$668,317 $655,220 $637,558 $608,725 $604,219 
Total assets at end of period - GAAP$8,198,056 $8,172,479 $7,854,238 $7,771,761 $7,664,297 
Less: Goodwill 156,277  156,277  156,277  156,277  156,277 
Less: Other identifiable intangible assets 2,420  2,631  2,841  3,063  3,288 
Total tangible assets at end of period - Non-GAAP$8,039,359 $8,013,571 $7,695,120 $7,612,421 $7,504,732 
Common equity to assets - GAAP 10.09% 9.96% 10.14% 9.88% 9.97%
Tangible common equity to tangible assets - Non-GAAP 8.31% 8.18% 8.29% 8.00% 8.05%
Calculation of Return on Average Tangible Common Equity       
Net income - GAAP$22,170 $22,289 $27,407 $23,175 $18,848 
Total average common stockholders' equity - GAAP$822,001 $807,956 $781,299 $770,255 $753,059 
Less: Average goodwill 156,277  156,277  156,277  156,277  156,277 
Less: Average other identifiable intangible assets 2,544  2,758  2,979  3,192  3,433 
Total average tangible common stockholders' equity - Non-GAAP$663,180 $648,921 $622,043 $610,786 $593,349 
Return on average common stockholders' equity - GAAP 10.70% 10.94% 14.07% 12.20% 9.96%
Return on average tangible common stockholders' equity - Non-GAAP 13.26% 13.63% 17.67% 15.39% 12.64%
Calculation of Efficiency Ratio     
Total noninterest expense$35,550 $37,207 $34,097 $33,903 $36,945 
Amortization of core deposit intangibles (210) (211) (221) (226) (249)
Merger-related expenses (710) (1,072)      
Long-term debt extinguishment costs   (831)      
Long-term debt prepayment fee         (3,777)
Noninterest expense, as adjusted$34,630 $35,093 $33,876 $33,677 $32,919 
Net interest income$59,029 $59,338 $59,740 $56,728 $55,135 
Total noninterest income 5,864  5,469  5,269  5,759  6,845 
Total revenue$64,893 $64,807 $65,009 $62,487 $61,980 
Tax-equivalent adjustment on municipal securities 213  157  167  163  149 
Gain on sales of investment securities     (9)   (871)
Total revenue, as adjusted$65,106 $64,964 $65,167 $62,650 $61,258 
Efficiency ratio - Non-GAAP 53.19% 54.02% 51.98% 53.75% 53.74%
                


Lakeland Bancorp, Inc.
Supplemental Information - Non-GAAP Financial Measures
(Unaudited)
 For the Twelve Months Ended December 31,
(dollars in thousands) 2021   2020 
Calculation of Return on Average Tangible Common Equity    
Net income - GAAP$95,040  $57,518 
Total average common stockholders' equity - GAAP$795,554  $743,225 
Less: Average goodwill 156,277   156,277 
Less: Average other identifiable intangible assets 2,866   3,816 
Total average tangible common stockholders' equity - Non-GAAP$636,411  $583,132 
Return on average common stockholders' equity - GAAP 11.95%  7.74%
Return on average tangible common stockholders' equity - Non-GAAP 14.93%  9.86%
Calculation of Efficiency Ratio  
Total noninterest expense$140,756  $132,798 
Amortization of core deposit intangibles (868)  (1,025)
Long-term debt prepayment fees    (4,133)
Long-term debt extinguishment costs (831)   
Merger-related expenses (1,782)   
Noninterest expense, as adjusted$137,275  $127,640 
Net interest income$234,834  $207,687 
Noninterest income 22,361   27,110 
Total revenue$257,195  $234,797 
Tax-equivalent adjustment on municipal securities 700   438 
Gain on sales and calls of investment securities (9)  (1,213)
Total revenue, as adjusted$257,886  $234,022 
Efficiency ratio - Non-GAAP 53.23%  54.54%