Lakeland Bancorp Reports Record Third Quarter Earnings and Declares Dividend

OAK RIDGE, N.J., Oct. 23 /PRNewswire-FirstCall/ -- Lakeland Bancorp, Inc.
(Nasdaq: LBAI) reported the following positive developments in the third
quarter of 2008:

-- Net Income totaled $5.9 million, as compared to $4.8 million for the
same period in 2007, an increase of 22%. Earnings Per Share of $0.25
compared to $0.21 for the third quarter of 2007, an increase of 20%.
-- Annualized Return on Average Assets was 0.90%, Annualized Return on
Average Equity was 10.70%, and Annualized Return on Tangible Equity
was
18.26% for the third quarter of 2008.
-- Net interest margin in the third quarter of 2008 was 3.92%, a 56 basis
point increase from the third quarter of 2007.
-- Non-performing assets approximated prior quarter levels.
-- No impairment write-downs have been required in our securities
portfolio
to date.

Lakeland Bancorp declared a quarterly cash dividend of $0.10 per common share.
The cash dividend will be paid on November 14, 2008 to holders of record as of
the close of business on October 31, 2008.

Thomas J. Shara, Lakeland Bancorp's President and CEO said, "We are very
pleased with the third quarter earnings results which are a quarterly record
for the Company. In addition, we continue to improve our capital ratios and
redeploy our loan mix. Overall, our leasing portfolio decreased by $37.4
million in the third quarter, which is a 10% decrease from June 30, 2008. In
June, we also discussed that we provided for one leasing originator that could
no longer fulfill all of its obligations under contractual recourse
provisions. With respect to this originator, the total outstanding balances
were $36.6 million at September 30, 2008, as compared to $46.4 million at June
30, 2008."
Earnings

Net Interest Income
Net interest income for the third quarter of 2008 was $23.1 million, or 27%
higher than the $18.2 million earned in the third quarter of 2007, while
average interest-earning assets increased by 8%. Net interest margin at 3.92%
improved 56 basis points from the third quarter of 2007. The Company's yield
on interest-earning assets decreased 34 basis points from the same period last
year to 6.12% in the third quarter of 2008. The cost of interest-bearing
liabilities decreased 106 basis points to 2.57% in the third quarter of 2008
from 3.63% for the third quarter of 2007. The decrease in yields on
interest-bearing liabilities reflects benefits received from our liability
sensitive position and the shifting of deposits from time deposits to lower
cost core deposits. Additionally, our asset mix improved, with average loans
and leases representing 84% of interest-earning assets, up from 79% for the
third quarter of 2007.

Year-to-date, net interest income was $66.1 million, or 25% higher than the
$52.8 million reported for the first nine months of 2007. Net interest margin
for the nine months of 2008 at 3.82% compared to 3.42% for the same period
last year, while average interest-earning assets rose 11%. The Company's
yield on earning assets decreased from 6.43% for the first nine months of
2007, to 6.22% for the first nine months of 2008. The Company's cost of
interest bearing liabilities decreased from 3.51% for the first nine months of
2007, to 2.78% for the first nine months of 2008, a decrease of 73 basis
points.

Noninterest income
Total noninterest income was $4.2 million in the third quarter of 2008, which
compared to $4.0 million in the third quarter of 2007, an increase of 4%.
Service charges on deposit accounts increased by $160,000, or 6% to $2.9
million, as compared to the same period last year, due to increased demand
deposit and ATM fees. Commissions and fees increased by $76,000, or 10% to
$847,000 in the third quarter of 2008 as compared to the same period last
year, due to increased investment services income.

Noninterest income, exclusive of gains on investment securities, totaled $13.2
million for the first nine months of 2008, as compared to $12.4 million for
the same period last year, an increase of 7%. Noninterest income, including
gains on investment securities, totaled $13.3 million for the first nine
months of 2008, as compared to $14.1 million for the same period last year.
Gains on investment securities were $53,000 for the first nine months of 2008,
as compared to $1.8 million for the first nine months of 2007. For the same
period, service charges on deposit accounts increased $415,000 to $8.3
million; commissions and fees increased by $337,000 to $2.7 million, primarily
due to increased loan fees and investment commission income; leasing income
increased $498,000 to $921,000; while other income decreased $453,000 to
$329,000. Results in other income for first nine months of 2007 were higher
than in 2008 as this category last year included a $319,000 gain on the sale
of a branch office.

Noninterest expense
Noninterest expense for the third quarter of 2008 was $14.9 million, which was
$588,000 or 4% higher than the same period last year. Salary and employee
benefit expenses increased by $159,000, or 2% to $8.3 million. Savings
realized from changes in our medical benefit plans were used to offset normal
salary and benefit increases. Occupancy, furniture and equipment expenses
remained unchanged at $2.7 million. The remaining noninterest expense
categories increased by $468,000, primarily due to increased legal and
marketing expenses, and the FDIC assessment. The bank's efficiency ratio was
53.0% in the third quarter of 2008, as compared to 62.0% for the same period
last year.

For the first nine months of 2008, noninterest expense was $44.7 million,
compared to $43.1 million in 2007, an increase of 4%. Salary and benefit costs
remained unchanged at $24.4 million. Occupancy, furniture and equipment
expenses increased by $322,000, or 4% to $8.3 million as the Company opened
two new branches during 2007. The remaining expense categories increased by
$1.3 million, to $12.0 million, primarily due to the increased FDIC
assessment, as well as an increase in marketing, consulting, and legal costs.

Financial Condition
At September 30, 2008, total assets were $2.58 billion. Total loans were $2.01
billion, up $129.8 million, or 7% from $1.88 billion at year-end. Included in
this increase were commercial loans and residential mortgage loans, which
increased by $110.6 million and $20.7 million, respectively. Total deposits
were $1.95 billion, a decrease of $35.9 million from December 31, 2007. This
decrease was due to a $76.2 million decrease in higher yielding time deposits,
of which $24.6 million was a decrease in municipal certificates of deposit.
Noninterest bearing demand deposits and savings and interest-bearing
transaction accounts, or core deposits, have increased this year by $40.3
million. The loan-to-deposit ratio on September 30, 2008 was 103%, as compared
to 91% on September 30, 2007. Core deposits amounted to $1.42 billion and
represented 73% of total deposits at September 30, 2008, as compared to 70% at
year-end 2007.

Asset Quality
At September 30, 2008, non-performing assets totaled $13.5 million (0.52% of
total assets) compared to $13.2 million at June 30, 2008. The Allowance for
Loan and Lease Losses totaled $20.2 million at September 30, 2008 and
represented 1.00% of total loans. The Allowance for Loan and Lease Losses at
September 30, 2008 was 176% of non-performing loans. During the first nine
months of 2008, the Company had net charge-offs of $7.2 million (0.49% of
average loans), which includes $4.9 million relating to the aforementioned
leasing originator.

Capital
Stockholders' equity was $219.7 million and book value per common share was
$9.30 as of September 30, 2008. As of September 30, 2008, the Company's
leverage ratio was 8.38%. Tier I and total risk based capital ratios were
10.43% and 11.49%, 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 For the nine months ended
September 30, September 30,
2008 2007 2008 2007
------------------- --------------------

Anualized Return on
average equity 10.70% 9.30% 8.83% 9.71%
Annualized Effect of
intangible equity 7.56% 7.49% 6.36% 8.02%
Annualized Return on
tangible equity 18.26% 16.79% 15.19% 17.73%

Lakeland Bancorp, Inc.
Financial Highlights
(unaudited)

Three months Nine months
ended September 30, ended September 30,
------------------- -------------------

2008 2007 2008 2007
---- ---- ---- ----
(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income $23,140 $18,193 $66,126 $52,827
Provision for Loan and
Lease Losses (3,273) (789) (12,698) (2,062)
Noninterest Income
(excluding
investment securities
gains) 4,217 4,046 13,198 12,359
Gains on investment
securities 1 - 53 1,769
Noninterest Expense (14,920) (14,332) (44,675) (43,094)
------- ------- ------- -------
Pretax Income 9,165 7,118 22,004 21,799
Tax Expense (3,309) (2,319) (7,728) (7,106)
------ ------ ------ ------
Net Income $5,856 $4,799 $14,276 $14,693
====== ====== ======= =======

Basic Earnings Per
Share* $0.25 $0.21 $0.61 $0.63
Diluted Earnings Per
Share* $0.25 $0.21 $0.61 $0.63
Dividends per share* $0.10 $0.10 $0.30 $0.29
Weighted Average Shares -
Basic* 23,541 23,205 23,423 23,177
Weighted Average Shares -
Diluted* 23,623 23,295 23,518 23,275

SELECTED OPERATING RATIOS
Annualized Return on
Average Assets 0.90% 0.79% 0.75% 0.85%
Annualized Return on
Average Equity 10.70% 9.30% 8.83% 9.71%
Annualized Return on
Tangible Equity** 18.26% 16.79% 15.19% 17.73%
Annualized Return on
Interest Earning Assets 6.12% 6.46% 6.22% 6.43%
Annualized Cost of funds 2.57% 3.63% 2.78% 3.51%
Annualized Net interest
spread 3.55% 2.83% 3.44% 2.92%
Annualized Net interest
margin 3.92% 3.36% 3.82% 3.42%
Efficiency ratio*** 53.02% 61.98% 54.58% 63.53%
Stockholders' equity to
Total assets 8.51% 8.52%
Book value per share* $9.30 $8.97

ASSET QUALITY RATIOS
Ratio of net charge-offs to average loans 0.49% 0.07%
Ratio of allowance to total loans 1.00% 0.83%
Non-performing loans to total loans 0.57% 0.49%
Non-performing assets to total assets 0.52% 0.36%
Allowance to non-performing loans 176% 167%

SELECTED BALANCE SHEET DATA AT PERIOD-END 9/30/2008 12/31/2007
--------- ----------
Loans and Leases $2,010,881 $1,881,128
Allowance for Loan and Lease Losses (20,182) (14,689)
Investment Securities 340,744 402,607
Total Assets 2,580,728 2,513,771
Total Deposits 1,951,541 1,987,405
Short-Term Borrowings 53,049 49,294
Long-Term Debt 343,325 249,077
Stockholders' Equity 219,667 211,599

SELECTED AVERAGE BALANCE SHEET DATA

For the three For the nine
months ended months ended
9/30/2008 9/30/2007 9/30/2008 9/30/2007
--------- --------- --------- ---------
Loans and Leases, net 2,002,869 1,741,187 1,952,680 1,670,292
Investment Securities 359,888 407,702 379,012 409,524
Interest-Earning
Assets 2,377,475 2,193,509 2,346,546 2,112,353
Total Assets 2,574,783 2,404,215 2,555,648 2,322,728
Core Deposits 1,431,794 1,385,659 1,407,042 1,364,968
Time Deposits 519,949 544,471 546,503 523,212
Total Deposits 1,951,743 1,930,130 1,953,545 1,888,810
Short-Term Borrowings 92,607 60,593 85,240 56,069
Long-Term Debt 221,638 115,649 208,126 93,573
Subordinated Debentures 77,322 77,322 77,322 67,126
Total Interest-Bearing
Liabilities 2,036,830 1,875,444 2,025,025 1,805,648
Stockholders' Equity 217,768 204,734 216,059 202,405

* 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

September 30, December 31,
ASSETS 2008 2007
------ ---- ----
(dollars in thousands) (unaudited)
Cash and due from banks $43,443 $46,837
Federal funds sold and interest-bearing
deposits due from banks 15,297 10,351
--------------------------------------- ------ ------
Total cash and cash equivalents 58,740 57,188

Investment securities available for sale 235,562 273,247
Investment securities held to maturity;
fair value of $105,102 in 2008 and
$129,207 in 2007 105,182 129,360
Loans:
Commercial 1,011,382 900,733
Leases 348,928 355,643
Residential mortgages 335,043 314,393
Consumer and home equity 315,528 310,359
-------------------------- ------- -------
Total loans 2,010,881 1,881,128
Deferred fees 4,857 5,407
Allowance for loan and lease losses (20,182) (14,689)
-------------------------------------- ------- -------
Net loans 1,995,556 1,871,846
Premises and equipment - net 29,353 30,093
Accrued interest receivable 8,139 8,579
Goodwill 87,111 87,111
Other identifiable intangible assets 2,967 3,763
Bank owned life insurance 39,066 38,112
Other assets 19,052 14,472
------------- ------ ------
TOTAL ASSETS $2,580,728 $2,513,771
================== ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits:
Noninterest bearing $307,682 $292,029
Savings and interest-bearing
transaction accounts 1,115,841 1,091,205
Time deposits under $100,000 348,992 364,477
Time deposits $100,000 and over 179,026 239,694
------------------------------------ ------- -------
Total deposits 1,951,541 1,987,405
Federal funds purchased and securities
sold under agreements to repurchase 53,049 49,294
Long-term debt 266,003 171,755
Subordinated debentures 77,322 77,322
Other liabilities 13,146 16,396
------------------ ------ ------
TOTAL LIABILITIES 2,361,061 2,302,172
------------------------- --------- ---------

STOCKHOLDERS' EQUITY
Common stock, no par value; authorized
shares, 40,000,000; issued shares,
24,740,564 at September 30, 2008 and
December 31, 2007 257,270 258,037
Accumulated Deficit (17,771) (24,465)
Treasury stock, at cost, 1,110,025
shares at September 30, 2008 and
1,459,549 at December 31, 2007 (15,282) (20,140)
Accumulated other comprehensive loss (4,550) (1,833)
-------------------------------------- ------ ------
TOTAL STOCKHOLDERS' EQUITY 219,667 211,599
----------------------------------- ------- -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,580,728 $2,513,771
========================== ========== ==========

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

Three months Nine Months
Ended Ended
September 30, September 30,
2008 2007 2008 2007
---- ---- ---- ----
(In thousands, except per
share data)
INTEREST INCOME
Loans and fees $32,336 $30,219 $95,725 $85,896
Federal funds sold and interest
bearing deposits with banks 68 571 293 1,251
Taxable investment securities 3,331 3,756 10,369 10,924
Tax exempt investment securities 527 742 1,864 2,284
---------------------------------- --- --- ----- -----
TOTAL INTEREST INCOME 36,262 35,288 108,251 100,355
----------------------- ------ ------ ------- -------
INTEREST EXPENSE
Deposits 8,973 13,589 29,924 38,649
Federal funds purchased and
securities sold under agreements
to repurchase 437 665 1,356 1,834
Long-term debt 3,712 2,841 10,845 7,045
---------------- ----- ----- ------ -----
TOTAL INTEREST EXPENSE 13,122 17,095 42,125 47,528
------------------------ ------ ------ ------ ------
NET INTEREST INCOME 23,140 18,193 66,126 52,827
Provision for loan and lease
losses 3,273 789 12,698 2,062
---------------------------- ----- --- ------ -----
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE
LOSSES 19,867 17,404 53,428 50,765

NONINTEREST INCOME
Service charges on deposit
accounts 2,856 2,696 8,261 7,846
Commissions and fees 847 771 2,672 2,335
Gain on investment securities 1 0 53 1,769
Income on bank owned life insurance 344 331 1,015 973
Leasing income 109 125 921 423
Other income 61 123 329 782
-------------- -- --- --- ---
TOTAL NONINTEREST INCOME 4,218 4,046 13,251 14,128
-------------------------- ----- ----- ------ ------
NONINTEREST EXPENSE
Salaries and employee benefits 8,282 8,123 24,379 24,378
Net occupancy expense 1,511 1,493 4,574 4,369
Furniture and equipment 1,165 1,222 3,697 3,580
Stationery, supplies and postage 370 383 1,243 1,232
Marketing expense 648 456 1,650 1,411
Amortization of core deposit
intangibles 265 298 796 893
Other expenses 2,679 2,357 8,336 7,231
---------------- ----- ----- ----- -----
TOTAL NONINTEREST EXPENSE 14,920 14,332 44,675 43,094
--------------------------- ------ ------ ------ ------
INCOME BEFORE PROVISION FOR
INCOME TAXES 9,165 7,118 22,004 21,799
Provision for income taxes 3,309 2,319 7,728 7,106
-------------------------- ----- ----- ----- -----
NET INCOME $5,856 $4,799 $14,276 $14,693
=========== ====== ====== ======= =======

EARNINGS PER COMMON SHARE
Basic $0.25 $0.21 $0.61 $0.63
------- ----- ----- ----- -----
Diluted $0.25 $0.21 $0.61 $0.63
--------- ----- ----- ----- -----

DIVIDENDS PER SHARE $0.10 $0.095 $0.30 $0.29
------------------- ----- ------ ----- -----

SOURCE Lakeland Bancorp, Inc.

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