Lakeland Bancorp Reports 27% Increase in First Quarter Earnings

OAK RIDGE, N.J., April 17 /PRNewswire-FirstCall/ -- Lakeland Bancorp, Inc.
(Nasdaq: LBAI) reported the following positive developments in the first
quarter of 2008:
-- Net Income totaled $5.5 million, as compared to $4.4 million for the
same period in 2007, an increase of 27%. Earnings Per Share of $0.24
compared to $0.19 for the first quarter of 2007, an increase of 26%.
-- Annualized Return on Average Assets was 0.88% and Annualized Return on
Average Equity was 10.47% for the first quarter of 2008, compared to
0.78% and 8.90%, respectively, for the same period last year.
Annualized Return on Tangible Equity was 18.24% for the first quarter
of 2008, compared to 16.54% for the first quarter of 2007.
-- Net interest margin in the first quarter of 2008 was 3.62%, a 16 basis
point increase from the first quarter of 2007, and a 24 basis point
improvement from the fourth quarter of 2007.
-- Total loans increased by $52.0 million, or 3%, to $1.93 billion in the
first quarter of 2008 from December 31, 2007.
-- The efficiency ratio in the first quarter of 2008 was 59% as compared
to 65% for the same period last year.

Lakeland Bancorp declared a quarterly cash dividend of $0.10 per common
share. The cash dividend will be paid on May 15, 2008 to holders of record as
of the close of business on April 30, 2008.
Thomas J. Shara, Lakeland Bancorp's President and CEO said, "We are very
pleased with the first quarter results which were driven by an improved net
interest margin. By being liability sensitive, we benefited from the decline
in short-term interest rates. We also took a proactive position by borrowing
on a long-term basis in this low rate environment."
Earnings
Net Interest Income
Net interest income for the first quarter of 2008 was $20.5 million, or
20% higher than the $17.1 million earned in the first quarter of 2007. Net
interest margin at 3.62% improved 16 basis points from the first quarter of
2007, and improved 24 basis points from fourth quarter 2007. The Company's
yield on interest-earning assets decreased six basis points to 6.35% in the
first quarter of 2008 from the same period last year. The cost of interest-
bearing liabilities decreased 32 basis points to 3.11% in the first quarter of
2008 from 3.43% for the first quarter of 2007. The decrease in yields on
interest-bearing liabilities reflects benefits received from our liability
sensitive position. Additionally, our asset mix improved, with average loans
and leases representing 82% of interest-earning assets, up from 78% from first
quarter 2007.
Noninterest income
Total noninterest income was $4.6 million in the first quarter of 2008,
which compared to $4.2 million in the first quarter of 2007, an increase of
10%. Additionally, noninterest income in the first quarter of 2007 included a
$319,000 gain on the sale of a branch office. Commissions and fees increased
by $173,000 to $952,000 in the first quarter of 2008 as compared to the same
period last year, due to increases in loan fees and investment services income
of $125,000 and $81,000, respectively, while non-interest lease income
increased by $470,000 to $611,000.
Noninterest expense
Noninterest expense for the first quarter of 2008 was $15.3 million, which
was $1.0 million or 7% higher than the same period last year. Salary and
employee benefit expenses increased by $247,000, or 3% to $8.4 million.
Savings realized from changes in our medical benefit plans were used to offset
normal salary and benefit increases. Occupancy, furniture and equipment
expenses increased by $244,000, or 9%, to $2.9 million, as the Company opened
two new branches during 2007. The remaining noninterest expense categories
increased by $513,000, primarily due to consulting costs and the FDIC
assessment. The bank's efficiency ratio was 59.2% in the first quarter of
2008, as compared to 64.5% for the same period last year.
Financial Condition
At March 31, 2008, total assets were $2.56 billion. Total loans were $1.93
billion, up $52.0 million, or 3% from $1.88 billion at year-end. Included in
this increase were leasing loans, commercial loans and residential mortgage
loans, which increased by $36.5 million, $9.2 million, and $6.8 million,
respectively. Total deposits were $1.94 billion, a decrease of $48.6 million
from December 31, 2007. This decrease was due to a $44.3 million decrease in
time deposits $100,000 and over, primarily in the municipal sector. As an
alternative to higher costing, short-term municipal CD's, we elected to borrow
long-term in this declining rate environment. The loan-to-deposit ratio on
March 31, 2008 was 99.7%, as compared to 88.2 % on March 31, 2007. Core
deposits, which are defined as noninterest bearing deposits and savings and
interest bearing transaction accounts, amounted to $1.39 billion and
represented 72% of total deposits at March 31, 2008.
Asset Quality
At March 31, 2008, non-performing assets totaled $11.0 million (0.43% of
total assets). The Allowance for Loan and Lease Losses totaled $15.5 million
at March 31, 2008 and represented 0.80% of total loans, as compared to 0.78%
at year-end 2007. During the first quarter of 2008, the Company had net
charge-offs of $496,000 (annualized 0.10% of total loans). The Allowance for
Loan and Lease Losses at March 31, 2008 was 142% of non-performing loans.
Capital
Stockholders' equity was $215.0 million and book value per common share
was $9.24 as of March 31, 2008. As of March 31, 2008, the Company's leverage
ratio was 8.10%. Tier I and total risk based capital ratios were 10.11% and
11.09%, respectively. These regulatory capital ratios exceed those necessary
to be considered a well-capitalized institution under Federal guidelines.
Forward-Looking Statements
The information disclosed in this document includes various forward-
looking statements (with respect to corporate objectives, and other financial
and business matters) 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. Lakeland cautions that
these forward-looking statements are necessarily speculative and speak only as
of the date made, and are subject to numerous assumptions, risks and
uncertainties, all of which may change over time. Actual results could differ
materially from such forward-looking statements. The following factors, among
others, could cause actual results to differ materially and adversely from
such forward-looking statements: operational factors relating to the
performance of Lakeland Bank, market conditions, competitive conditions and
general economic conditions. Any statements made by Lakeland that are not
historical facts should be considered to be forward-looking statements.
Lakeland is not obligated to update and does not undertake to update any of
its forward-looking statements made herein
Non-GAAP Financial Measures
The attached table refers to a performance measure, return on tangible
equity, which has been determined by methods other than in accordance with
GAAP. "Return on tangible equity" is defined as net income as a percentage of
average total equity reduced by recorded intangible assets. This measure may
be important to investors that are interested in analyzing our return on
equity exclusive of the effect of changes in intangible assets on equity. The
disclosure of return on tangible equity should not be viewed as a substitute
for results determined in accordance with GAAP, and is not necessarily
comparable to non-GAAP performance measures which may be presented by other
companies. The following reconciliation table provides a more detailed
analysis of this non-GAAP performance measure.

For the three months
ended March 31,

2008 2007

Annualized Return on average equity 10.47% 8.90%
Annualized Effect of intangible equity 7.77% 7.64%
Annualized Return on tangible equity 18.24% 16.54%

Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)

Three months ended March 31,
2008 2007
(Dollars in thousands except
per share amounts)
INCOME STATEMENT
Net Interest Income $20,450 $17,089
Provision for Loan and Lease Losses (1,267) (602)
Noninterest Income (excluding
investment securities gains) 4,634 4,221
Gains on investment securities 9 -
Noninterest Expense (15,331) (14,327)
Pretax Income 8,495 6,381
Tax Expense (2,955) (2,011)
Net Income $5,540 $4,370

Basic Earnings Per Share* $0.24 $0.19
Diluted Earnings Per Share* $0.24 $0.19
Dividends per share* $0.10 $0.095
Weighted Average Shares - Basic* 23,282 23,183
Weighted Average Shares - Diluted* 23,374 23,315

SELECTED OPERATING RATIOS
Annualized Return on Average Assets 0.88% 0.78%
Annualized Return on Average Equity 10.47% 8.90%
Annualized Return on Tangible Equity** 18.24% 16.54%
Annualized Return on Interest Earning
Assets 6.35% 6.41%
Annualized Cost of funds 3.11% 3.43%
Annualized Net interest spread 3.24% 2.98%
Annualized Net interest margin 3.62% 3.46%
Efficiency ratio*** 59.16% 64.54%
Stockholders' equity to total assets 8.42% 8.90%
Book value per share* $9.24 $8.76

ASSET QUALITY RATIOS
Ratio of net charge-offs to average
loans 0.10% 0.03%
Ratio of allowance to total loans 0.80% 0.84%
Non-performing loans to total loans 0.56% 0.38%
Non-performing assets to total assets 0.43% 0.27%
Allowance to non-performing loans 142.45% 223.37%

SELECTED BALANCE SHEET DATA AT PERIOD-END
3/31/2008 12/31/2007
Loans and Leases $1,933,098 $1,881,128
Allowance for Loan and Lease Losses (15,460) (14,689)
Investment Securities 379,745 402,607
Total Assets 2,555,427 2,513,771
Total Deposits 1,938,772 1,987,405
Short-Term Borrowings 96,439 49,294
Long-Term Debt 288,672 249,077
Stockholders' Equity 215,048 211,599

SELECTED AVERAGE BALANCE SHEET DATA
For the quarter ended
3/31/2008 3/31/2007
Loans and Leases, net $1,893,631 $1,602,689
Investment Securities 397,836 418,325
Interest-Earning Assets 2,311,194 2,053,227
Total Assets 2,531,123 2,266,520
Core Deposits 1,396,196 1,348,497
Time Deposits 579,877 513,383
Total Deposits 1,976,073 1,861,880
Short-Term Borrowings 57,987 49,036
Long-Term Debt 191,205 84,927
Subordinated Debentures 77,322 56,703
Total Interest-Bearing Liabilities 2,015,892 1,763,517
Stockholders' Equity 212,903 199,055

* Adjusted for a 5% stock dividend payable on November 16, 2007 to
shareholders of record October 31, 2007.
** This ratio is a Non-GAAP Financial Measure: an explanation and
reconciliation are presented elsewhere in this press release.
*** Represents non-interest expense, excluding other real estate expense
and core deposit amortization , as a percentage of total revenue
(calculated on a tax equivalent basis), excluding gains (losses) on
sales of securities. Total revenue represents net interest income
(calculated on a tax equivalent basis) plus non-interest income.

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS

ASSETS March 31, 2008 December 31, 2007
(dollars in thousands) (unaudited)
Cash and due from banks $46,309 $46,837
Federal funds sold and interest-bearing
deposits due from banks 25,600 10,351
Total cash and cash equivalents 71,909 57,188

Investment securities available for sale 266,161 273,247
Investment securities held to
maturity; fair value of $115,046
in 2008 and $129,207 in 2007 113,584 129,360
Loans:
Commercial 909,946 900,733
Leases 392,155 355,643
Residential mortgages 321,233 314,393
Consumer and home equity 309,764 310,359
Total loans 1,933,098 1,881,128
Deferred fees 5,374 5,407
Allowance for loan and lease losses (15,460) (14,689)
Net loans 1,923,012 1,871,846
Premises and equipment - net 29,701 30,093
Accrued interest receivable 8,304 8,579
Goodwill 87,111 87,111
Other identifiable intangible assets 3,497 3,763
Bank owned life insurance 38,416 38,112
Other assets 13,732 14,472
TOTAL ASSETS $2,555,427 $2,513,771

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest bearing $293,982 $292,029
Savings and interest-bearing
transaction accounts 1,094,147 1,091,205
Time deposits under $100,000 355,254 364,477
Time deposits $100,000 and over 195,389 239,694
Total deposits 1,938,772 1,987,405
Federal funds purchased and
securities sold under
agreements to repurchase 96,439 49,294
Long-term debt 211,350 171,755
Subordinated debentures 77,322 77,322
Other liabilities 16,496 16,396
TOTAL LIABILITIES 2,340,379 2,302,172

STOCKHOLDERS' EQUITY
Common stock, no par value;
authorized shares, 40,000,000;
issued shares, 24,740,564 at March 31,
2008 and December 31, 2007. 258,068 258,037
Accumulated Deficit (21,799) (24,465)
Treasury stock, at cost, 1,457,977
shares at March 31, 2008 and
1,459,549 at December 31, 2007 (20,106) (20,140)
Accumulated other comprehensive loss (1,115) (1,833)
TOTAL STOCKHOLDERS' EQUITY 215,048 211,599
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,555,427 $2,513,771

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
(Unaudited)

Three Months Ended March 31,
2008 2007
(In thousands,
except per share data)
INTEREST INCOME
Loans and fees $31,650 $27,276
Federal funds sold and interest
bearing deposits with banks 160 408
Taxable investment securities 3,597 3,637
Tax exempt investment securities 706 786
TOTAL INTEREST INCOME 36,113 32,107
INTEREST EXPENSE
Deposits 11,782 12,464
Federal funds purchased and
securities sold
under agreements to repurchase 392 524
Long-term debt 3,489 2,030
TOTAL INTEREST EXPENSE 15,663 15,018
NET INTEREST INCOME 20,450 17,089
Provision for loan and lease losses 1,267 602
NET INTEREST INCOME AFTER PROVISION
FOR LOAN AND LEASE LOSSES 19,183 16,487

NONINTEREST INCOME
Service charges on deposit accounts 2,583 2,517
Commissions and fees 952 779
Gains on investment securities 9 0
Income on bank owned life
insurance 333 317
Leasing income 611 141
Other income 155 467
TOTAL NONINTEREST INCOME 4,643 4,221
NONINTEREST EXPENSE
Salaries and employee benefits 8,404 8,157
Net occupancy expense 1,638 1,520
Furniture and equipment 1,291 1,165
Stationery, supplies and postage 464 400
Marketing expense 458 391
Amortization of core deposit intangibles 265 298
Other expenses 2,811 2,396
TOTAL NONINTEREST EXPENSE 15,331 14,327
INCOME BEFORE PROVISION FOR INCOME
TAXES 8,495 6,381
Provision for income taxes 2,955 2,011
NET INCOME $5,540 $4,370

EARNINGS PER COMMON SHARE
Basic $0.24 $0.19
Diluted $0.24 $0.19

DIVIDENDS PER SHARE $0.10 $0.095

SOURCE Lakeland Bancorp, Inc.

Thomas J. Shara, President & CEO or Joseph F. Hurley, EVP & CFO,
+1-973-697-2000