OAK RIDGE, N.J., April 19, 2024 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the "Company"), the parent company of Lakeland Bank ("Lakeland"), reported net income of $19.8 million and earnings per diluted share ("EPS") of $0.30 for the three months ended March 31, 2024 compared to net income of $19.8 million and diluted EPS of $0.30 for the three months ended March 31, 2023. For the first quarter of 2024, annualized return on average assets was 0.73%, annualized return on average common equity was 6.79% and annualized return on average tangible common equity (non-GAAP) was 8.91%. Thomas Shara, Lakeland Bancorp's President and CEO commented on the quarterly financial results, "Despite the uncertain economic environment, we are pleased with our results and our continued outstanding asset quality. I want to thank all of the Lakeland associates for their continued incredible contributions and unwavering customer support." Regarding the announced merger with Provident Financial Services, Inc. ("Provident"), Mr. Shara continued, "We are delighted that all regulatory approvals required for the merger have been obtained and Provident is diligently moving forward with its subordinated debt offering which is a required closing condition of the merger. Both companies are excited to complete the merger quickly and create New Jersey's super community bank that focuses on serving our customers." First Quarter 2024 Highlights In the first quarter of 2024 a benefit for credit losses of $2.7 million was recorded resulting primarily from a $2.9 million recovery on Signature Bank subordinated debt previously charged off partially offset by a $239,000 provision for credit losses on loans. First quarter 2024 results continue to be impacted by the increased market rate environment. Net interest margin for the first quarter of 2024 decreased six basis points to 2.46% from 2.52% in the prior quarter and decreased 61 basis points from 3.07% in the first quarter of 2023. For more information, please see "Net Interest Margin and Net Interest Income" below. Nonperforming assets decreased 12% to $14.9 million, or 0.14% of total assets, for the first quarter of 2024 compared to $16.9 million, or 0.16% of total assets, in the first quarter of 2023 and decreased 43% compared to $26.0 million, or 0.23% of total assets in the linked fourth quarter. Net Interest Margin and Net Interest Income Net interest margin for the three months ended March 31, 2024 declined from previous periods as a result of an increase in the cost of interest-bearing liabilities partially offset by an increase in the yields on interest-earning assets driven by the increase in market interest rates. The increased rate environment also has resulted in a change in customers' banking behaviors causing them to move funds from noninterest-bearing and lower yielding interest-bearing transaction and savings accounts to higher yielding time deposits. Net interest income for the first quarter of 2024 of $62.6 million decreased $13.4 million compared to the first quarter of 2023. Net interest margin for the first quarter of 2024 of 2.46% decreased 61 basis points compared to the first quarter of 2023 and decreased 6 basis points compared to the fourth quarter of 2023. The yield on interest-earning assets for the first quarter of 2024 increased 42 basis points to 4.98% as compared to 4.56% for the first quarter of 2023 and increased 5 basis points as compared to 4.93% for the fourth quarter of 2023. The cost of interest-bearing liabilities for the first quarter of 2024 was 3.39% compared to 2.11% for the first quarter of 2023 and 3.25% for the fourth quarter of 2023. Noninterest Income For the first quarter of 2024, noninterest income totaled $5.1 million, a decrease of $1.2 million as compared to the first quarter of 2023. Service charges on deposit accounts declined $830,000 from the first quarter of 2023 to the same period in 2024 resulting from a decline in interchange income due to the impact of the Durbin Amendment which became effective for Lakeland in the third quarter of 2023. One of the provisions of the Durbin Amendment is reduced interchange income for banks over $10 billion in assets. Commissions and fees decreased $235,000 driven primarily by decreases in loan fee income and investment services income. Losses on equity securities totaled $129,000 in the first quarter of 2024 compared to gains of $148,000 in the first quarter of 2023. Gains on sales of loans decreased $125,000 compared to the first quarter of 2023, while swap income increased $233,000. Additionally, income on bank owned life insurance increased $101,000 from the first quarter of 2023 to the same period in 2024 due primarily to a claim received in the first quarter of 2024. Noninterest Expense Noninterest expense for the first quarter of 2024 of $44.6 million decreased $4.0 million compared to the first quarter of 2023 due primarily to compensation and employee benefits which decreased $3.1 million primarily as a result of a decline in headcount related to the anticipated merger with Provident Financial Services, Inc. Merger-related expenses declined from $295,000 in the first quarter of 2023 to $68,000 for the first quarter of 2024 due to the timing of expenses incurred. Other operating expenses in the first quarter of 2024 decreased $865,000 compared to the same period in 2023 due primarily to decreased consulting fees, telecommunications expense, appraisal fees and other expenses. FDIC insurance expense increased $430,000 due to an increase in the assessment rate starting in second quarter of 2023 related to Lakeland's asset size exceeding $10 billion. Income Tax Expense The effective tax rate for the first quarter of 2024 was 23.0% compared to 22.9% for the first quarter of 2023. Financial Condition At March 31, 2024, total assets were $10.96 billion, a decrease of $173.7 million, compared to December 31, 2023. As of March 31, 2024, total loans decreased $23.4 million to $8.32 billion and investment securities decreased $41.9 million to $1.81 billion from December 31, 2023. On the funding side, total deposits decreased $80.8 million from December 31, 2023, to $8.50 billion at March 31, 2024. During the first three months of 2024, noninterest-bearing accounts and transaction and savings accounts decreased $102.6 million and $41.5 million, respectively, while time deposits increased $63.3 million. Borrowings decreased $111.1 million from December 31, 2023 to March 31, 2024. At March 31, 2024, total loans as a percent of total deposits was 97.9%. Asset Quality At March 31, 2024, non-performing assets totaled $14.9 million or 0.14% of total assets compared to $16.9 million, or 0.16% of total assets at March 31, 2023 and $26.0 million, or 0.23% of total assets at December 31, 2023. Non-performing assets decreased $11.1 million compared to the fourth quarter of 2023 primarily as a result of the full payoff of one construction loan totaling $12.7 million that was in non-accrual status. Non-accrual loans as a percent of total loans was 0.18% at March 31, 2024, compared to 0.21% at March 31, 2023 and 0.31% at December 31, 2023. The allowance for credit losses on loans totaled $76.8 million, 0.92% of total loans, at March 31, 2024, compared to $71.4 million, 0.90% of total loans, at March 31, 2023. In the first quarter of 2024, the Company had net charge-offs of $579,000 or 0.03% of average loans compared to $74,000 or 0.00% of average loans on an annualized basis for the same period in 2023. In the first quarter of 2024 a $2.7 million benefit for credit losses was recorded compared to a provision of $7.9 million in the first quarter of 2023. The benefit for credit losses for the first quarter of 2024 is comprised of a benefit for credit losses on investment securities of $2.9 million, a provision for credit losses on loans of $239,000 and a benefit for off-balance-sheet exposures of $72,000. Capital At March 31, 2024, stockholders' equity was $1.18 billion compared to $1.17 billion at December 31, 2023, a 1% increase, resulting primarily from net income, partially offset by the payment of dividends. Lakeland Bank remains above FDIC "well capitalized" standards, with a Tier 1 leverage ratio of 9.46% at March 31, 2024. The book value per common share increased 4% to $18.10 at March 31, 2024 compared to $17.33 at March 31, 2023. Tangible book value per common share was $13.83 and $13.01 at March 31, 2024 and 2023, respectively (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At March 31, 2024, the Company's common equity to assets ratio and tangible common equity to tangible assets ratio (non-GAAP) were 10.76% and 8.43%, respectively, compared to 10.40% and 8.02% at March 31, 2023. On April 17, 2024, the Company declared a quarterly cash dividend of $0.145 per share to be paid on May 8, 2024, to shareholders of record as of April 29, 2024. 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, 2023, 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 and expenses related to our announced merger with Provident Financial, unexpected delays related to the merger, inability to satisfy other closing conditions required to complete the merger, and failure to realize anticipated efficiencies and synergies from the merger. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein. Explanation of Non-GAAP Financial Measures Reported amounts are presented in accordance with U.S. generally accepted accounting principles ("GAAP"). This press release also contains certain supplemental non-GAAP information that the Company's management uses in its analysis of the Company's financial results. The Company also provides measurements and ratios based on tangible equity and tangible assets. These measures are utilized by regulators and market analysts to evaluate a company's financial condition and, therefore, the Company's management believes that such information is useful to investors. Specifically, the Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, and, where applicable, long-term debt prepayment fees and merger-related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes gains and losses from the sale of investment securities, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying "Supplemental Information - Non-GAAP Financial Measures" and "Supplemental Information – Reconciliation of Net Income" for a reconciliation of non-GAAP financial measures. About Lakeland Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $10.96 billion in total assets at March 31, 2024. 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. Shara  Thomas F. Splaine President & CEO EVP & CFO Lakeland Bancorp, Inc. and SubsidiariesConsolidated Statements of Income (Unaudited)     For the Three Months Ended March 31, (in thousands, except per share data)     2024       2023 Interest Income         Loans and fees   $ 114,680     $ 100,481 Federal funds sold and interest-bearing deposits with banks     1,102       728 Taxable investment securities and other     11,631       11,554 Tax-exempt investment securities     1,448       1,642 Total Interest Income     128,861       114,405 Interest Expense         Deposits     54,763       29,158 Federal funds purchased and securities sold under agreements to repurchase     5,560       7,222 Other borrowings     5,980       2,100 Total Interest Expense     66,303       38,480 Net Interest Income     62,558       75,925 (Benefit) provision for credit losses     (2,692 )     7,893 Net Interest Income after Provision for Credit Losses     65,250       68,032 Noninterest Income         Service charges on deposit accounts     1,959       2,789 Commissions and fees     1,690       1,925 Income on bank owned life insurance     877       776 (Loss) gain on equity securities     (129 )     148 Gains on sales of loans     305       430 Swap income     289       56 Other income     103       141 Total Noninterest Income     5,094       6,265 Noninterest Expense         Compensation and employee benefits     26,874       29,996 Premises and equipment     7,886       7,977 FDIC insurance     1,393       963 Data processing     1,781       1,862 Merger-related expenses     68       295 Other operating expenses     6,647       7,512 Total Noninterest Expense     44,649       48,605 Income before provision for income taxes     25,695       25,692 Provision for income taxes     5,900       5,887 Net Income   $ 19,795     $ 19,805 Per Share of Common Stock       Basic earnings   $ 0.30     $ 0.30 Diluted earnings   $ 0.30     $ 0.30 Dividends   $ 0.145     $ 0.145 Lakeland Bancorp, Inc. and SubsidiariesConsolidated Balance Sheets (dollars in thousands) March 31, 2024   December 31, 2023   (Unaudited)     Assets       Cash $ 203,186     $ 293,366   Interest-bearing deposits due from banks   4,433       27,289   Total cash and cash equivalents   207,619       320,655   Investment securities available for sale, at estimated fair value (allowance for credit losses of $0 at March 31, 2024 and December 31, 2023)   914,029       946,282   Investment securities held to maturity (estimated fair value of $681,857 at March 31, 2024 and $702,563 at December 31, 2023, allowance for credit losses of $146 at March 31, 2024 and December 31, 2023)   827,107       836,377   Equity securities, at fair value   17,646       17,697   Federal Home Loan Bank and other membership stocks, at cost   52,205       52,517   Loans held for sale   564       664   Loans, net of deferred fees   8,320,424       8,343,861   Less: Allowance for credit losses   76,823       77,163   Net loans   8,243,601       8,266,698   Premises and equipment, net   51,783       52,846   Operating lease right-of-use assets   15,009       16,008   Accrued interest receivable   37,968       37,508   Goodwill   271,829       271,829   Other identifiable intangible assets   6,623       7,058   Bank owned life insurance   160,587       159,862   Other assets   158,314       152,566   Total Assets $ 10,964,884     $ 11,138,567   Liabilities and Stockholders' Equity       Liabilities       Deposits:       Noninterest-bearing $ 1,679,033     $ 1,781,619   Savings and interest-bearing transaction accounts   4,790,634       4,832,171   Time deposits $250 thousand and under   1,518,991       1,458,640   Time deposits over $250 thousand   511,780       508,808   Total deposits   8,500,438       8,581,238   Federal funds purchased and securities sold under agreements to repurchase   602,956       714,152   Other borrowings   325,000       325,000   Subordinated debentures   194,814       194,705   Operating lease liabilities   15,820       16,891   Other liabilities   146,426       137,212   Total Liabilities   9,785,454       9,969,198   Stockholders' Equity       Common stock, no par value; authorized 100,000,000 shares; issued 65,285,261 shares and outstanding 65,154,226 shares at March 31, 2024 and issued 65,161,310 shares and outstanding 65,030,275 shares at December 31, 2023   859,712       858,857   Retained earnings   386,319       376,044   Treasury shares, at cost, 131,035 shares at March 31, 2024 and December 31, 2023   (1,452 )     (1,452 ) Accumulated other comprehensive loss   (65,149 )     (64,080 ) Total Stockholders' Equity   1,179,430       1,169,369   Total Liabilities and Stockholders' Equity $ 10,964,884     $ 11,138,567   Lakeland Bancorp, Inc.Financial Highlights(Unaudited)     For the Quarter Ended (dollars in thousands, except per share data)   March 31,2024   December 31,2023   September 30,2023   June 30,2023   March 31,2023 Income Statement                     Net interest income   $ 62,558     $ 65,308     $ 68,906     $ 71,542     $ 75,925   Benefit (provision) for credit losses     2,692       (1,950 )     (1,262 )     (1,947 )     (7,893 ) Gains on sales of loans     305       505       349       229       430   (Loss) gain on equity securities     (129 )     391       (294 )     (135 )     148   Other noninterest income     4,918       5,890       5,363       6,575       5,687   Merger-related expenses     (68 )     (129 )     (198 )     (242 )     (295 ) Other noninterest expense     (44,581 )     (42,864 )     (44,170 )     (46,766 )     (48,310 ) Pretax income     25,695       27,151       28,694       29,256       25,692   Provision for income taxes     (5,900 )     (7,083 )     (6,455 )     (6,628 )     (5,887 ) Net income   $ 19,795     $ 20,068     $ 22,239     $ 22,628     $ 19,805                         Basic earnings per common share   $ 0.30     $ 0.31     $ 0.34     $ 0.34     $ 0.30   Diluted earnings per common share   $ 0.30     $ 0.30     $ 0.34     $ 0.34     $ 0.30   Dividends paid per common share   $ 0.145     $ 0.145     $ 0.145     $ 0.145     $ 0.145   Dividends paid   $ 9,520     $ 9,521     $ 9,521     $ 9,529     $ 9,500   Weighted average shares - basic     65,135       65,064       65,064       65,059       64,966   Weighted average shares - diluted     65,324       65,258       65,222       65,173       65,228                         Selected Operating Ratios                     Annualized return on average assets     0.73 %     0.73 %     0.81 %     0.84 %     0.75 % Annualized return on average common equity     6.79 %