Lakeland Bancorp (LBAI) 8-K Lakeland Bancorp Reports 9% Increase in Earnings Per Share in Second Quarter

Exhibit 99.1

Thursday, July 14, 2005	Roger Bosma
	President & CEO
	Joseph F. Hurley
	EVP & CFO
	973-697-2000

Lakeland Bancorp Reports 9% Increase in Earnings Per Share in Second Quarter

Oak Ridge, NJ – July 14, 2005 —Lakeland Bancorp, Inc. (NASDAQ:LBAI) is pleased to report several positive developments in the second quarter of 2005, including:

• Earnings per share at $0.24, an increase of 9% over the $0.22 reported in the second quarter of 2004 (restated to reflect 5% stock dividend declared June 15, 2005).

• Net Income at $5.1 million, an increase of $1.4 million or 38% as compared to the same period last year.

• The announcement of a 5% stock dividend payable August 16, 2005 to shareholders of record as of the close of business on July 29, 2005.

• A $0.10 cash dividend per share payable August 15, 2005 to shareholders of record as of the close of business on July 29, 2005.

• The completion of the 500,000 share stock buyback program in June 2005, and the announcement of a new program to purchase 750,000 shares over the next year.

• The decision to merge the Newton Trust Company into Lakeland Bank in the fourth quarter of 2005.

• The decision to consolidate three branch locations by the end of the year.

Roger Bosma, Lakeland Bancorp’s President and CEO, said: “Net income for the second quarter of 2005 was $1.4 million higher than last year, and at $5.1 million, was the highest quarterly

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total in the bank’s history. The decision to consolidate branches and merge Newton will help to reduce our operating costs in the future. In addition, we have implemented a new “Overdraft Protection” program, which is already making a significant impact on fee income.”

Earnings

Net Income for the second quarter of 2005 was $5.1 million, compared to $3.7 million for the same period in 2004. Diluted Earnings Per Share at $0.24 increased 9% from the $0.22 EPS for the second quarter last year. All share and per share amounts have been adjusted for the five percent stock dividend declared on June 15, 2005 and payable on August 16, 2005. Annualized Return on Average Assets was 0.97% and Annualized Return on Average Equity was 10.73% for the second quarter of 2005.

Net Income for the first six months of 2005 was $9.7 million, an increase of $2.4 million from the $7.3 million reported for the same period last year. Diluted earnings per share was $0.45, which increased from $0.43 per share in the first six months of 2004. Return on Average Assets was 0.92% and Return on Average Equity was 10.15%.

Net Interest Income

Net interest income for the second quarter of 2005 was $17.4 million or 28% higher than the $13.6 million earned in the second quarter of 2004. Net interest margin at 3.77% compared to 3.80% in the second quarter of 2004, while average earning assets increased 28%. The Company’s yield on interest-earning assets increased by 31 basis points to 5.38% in the second quarter of 2005, from 5.07% for the same period last year. The cost of interest bearing liabilities increased 37 basis points from 1.53% in the second quarter of 2004 to 1.90% in the second quarter of 2005. These changes reflect the overall increase in interest rates over the last year.

Year-to-date, net interest income was $35.0 million, or 29% higher than the $27.2 million reported for the first six months of 2004. Net interest margin was 3.81% for the first half of 2005 compared to 3.83% for the same period last year, while average earning assets rose 30%. The Company’s yield on earning assets increased from 5.14% in 2004 to 5.35% for the first six months of 2005. The Company’s cost of interest bearing liabilities increased from 1.57% in 2004 to 1.82% for the first six months of 2005.

Noninterest Income

Noninterest income, excluding the gains on sales of securities, totaled $3.6 million and was $709,000, or 24% higher than the second quarter of 2004. Gains on sales of investment securities were $100,000 in second quarter 2005 compared to gains of $413,000 for the same period last year. Noninterest income, including gains on investment securities sold, totaled $3.7 million, or 12% higher than the second quarter of 2004. Service charges on deposit accounts totaling $2.4 million increased by $518,000 or 28% over the second quarter of 2004, primarily due to the introduction of a new “Overdraft Protection” program, which increased fee income.

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Non-interest income, excluding the gains on sales of securities, totaled $7.1 million and was $1.3 million, or 23% higher than the first six months of 2004. Gains on sales of investment securities were $128,000 for the first six months of 2005, as compared to $416,000 last year. Noninterest income, including gains on investment securities sold, totaled $7.3 million for the first six months of 2005, or 17% higher than the same period last year. Service charges on deposit accounts increased 15% to $4.2 million, partially due to the “Overdraft Protection” program; commissions and fees increased 8% to $1.5 million due to increases in loan fees collected; lease income increased $474,000 to $519,000; while other income increased $145,000 to $297,000, primarily due to an increase in gains on sales of leased equipment.

Noninterest Expense

Noninterest expense for the second quarter of 2005 was $13.2 million, an increase of 25% compared to the second quarter of 2004. Salary and benefit expense increased 28% to $7.1 million, reflecting the inclusion of Newton, as well as normal salary and benefit increases. Occupancy, furniture and equipment expenses increased by 22% primarily due to costs incurred at the ten new branches acquired from Newton. Amortization of core deposit intangibles increased by $201,000 to $303,000 due to the Newton acquisition. Other noninterest expenses increased by 15% in the second quarter of 2005, primarily due to increased marketing and Newton related costs. The overall increase in other noninterest expenses was partially offset by a $285,000 decrease in legal expenses, as litigation with the second of the three surety companies was resolved in the fourth quarter of 2004. The bank’s efficiency ratio was 61.1% in the second quarter of 2005 as compared to 62.0% last year.

For the first six months of 2005, noninterest expense was $26.9 million compared to $20.9 million in 2004, an increase of $6.0 million or 29%.Of this overall increase, salary and benefit costs increased by $3.1 million or 28%. Occupancy, furniture and equipment expenses increased by $1.2 million, or 32%, reflecting the costs incurred at the ten new Newton branches. Amortization of core deposit intangibles increased by $402,000 due to the Newton acquisition. Other expenses increased $1.3 million or 22%, primarily due to increased marketing and Newton related expenses.

Financial Condition

At June 30, 2005, total assets were $2.099 billion. Total loans were $1.219 billion, up $40.7 million or 3% from $1.179 billion at year-end 2004.

Asset Quality

At June 30, 2005, non-performing assets totaled $12.3 million (0.59% of total assets). This compares to $13.7 million (0.64% of total assets) at year-end 2004. Included in non-performing assets are $6.4 million related to commercial lease pools (0.30% of total assets) and $5.9 million of other non-performing assets (0.29% of total assets). The Allowance for Loan and Lease Losses totaled $16.5 million at June 30, 2005 and represented 1.36% of total loans. During the second quarter of 2005, the Company had net charge-offs of $255,000, or 0.08% of average loans, as compared to net charge-offs of $744,000, or 0.34% of average loans for the same period

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last year. Based on management’s analysis, the provision for loan losses for the second quarter was $327,000, compared to $875,000 during the second quarter of 2004. This reflects lower net charge-offs and an improvement in asset quality.

Deposits

At June 30, 2005, total deposits were $1.690 billion, a decrease of $36.8 million or 2% from December 31, 2004. Core deposits, which are defined as noninterest bearing deposits and savings and interest bearing transaction accounts, amounted to $1.30 billion and represented 77% of total deposits.

Capital

Stockholders’ equity was $193.9 million and book value per common share was $9.05. As of June 30, 2005, the Company’s leverage ratio was 7.70%. Tier I and total risk based capital ratios were 12.12% and 13.37%, respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines. The Company repurchased 251,906 shares during the second quarter of 2005 at an average price of $14.40 per share.

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 with respect to the integration of Newton Financial Corp. into Lakeland, corporate objectives, and other financial and business matters. 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 and Newton Trust Company, 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.

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Lakeland Bancorp, Inc.

Financial Highlights

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2005			2004			2005			2004
	(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income	$	17,427		$	13,596		$	35,034		$	27,154
Provision for Loan Losses		(327	)		(875	)		(1,110	)		(1,750	)
Noninterest Income (excluding investment securities gains)		3,624			2,915			7,125			5,788
Gain on sales of investment securities		100			413			128			416
Noninterest Expense		(13,233	)		(10,578	)		(26,904	)		(20,889	)
Pretax Income		7,591			5,471			14,273			10,719
Tax Expense		(2,454	)		(1,753	)		(4,568	)		(3,432	)
Net Income	$	5,137		$	3,718		$	9,705		$	7,287
Memo: Tax equivalent adjustment	$	465		$	396		$	956		$	808
Basic Earnings Per Share *	$	0.24		$	0.22		$	0.45		$	0.43
Diluted Earnings Per Share *	$	0.24		$	0.22		$	0.45		$	0.43
Dividends per share *	$	0.095		$	0.095		$	0.19		$	0.19
Weighted Average Shares - Basic *		21,572			16,804			21,636			16,779
Weighted Average Shares - Diluted *		21,726			16,989			21,801			16,977
SELECTED OPERATING RATIOS
Return on Average Assets		0.97	%		0.93	%		0.92	%		0.92	%
Return on Average Equity		10.73	%		13.28	%		10.15	%		13.00	%
Yield on Interest Earning Assets		5.38	%		5.07	%		5.35	%		5.14	%
Cost of funds		1.90	%		1.53	%		1.82	%		1.57	%
Net interest spread		3.48	%		3.54	%		3.53	%		3.57	%
Net interest margin		3.77	%		3.80	%		3.81	%		3.83	%
Efficiency ratio		61.12	%		62.00	%		60.83	%		61.30	%
Stockholders’ equity to total assets								9.23	%		6.72	%
Book value per share *							$	9.05		$	6.56
ASSET QUALITY RATIOS
Ratio of net charge-offs to average loans								0.20	%		0.31	%
Ratio of allowance to total loans								1.36	%		1.94	%
Non-performing loans to total loans								0.96	%		1.76	%
Non-performing assets to total assets								0.59	%		0.96	%
Allowance to non-performing loans								142	%		110	%
							6/30/2005			12/31/2004
SELECTED BALANCE SHEET DATA AT PERIOD-END
Loans							$	1,219,312		$	1,178,606
Allowance for Loan Losses								16,542			16,638
Investment Securities								638,397			745,028
Total Assets								2,099,244			2,141,021
Deposits								1,689,980			1,726,804
Short-Term Borrowings								103,083			110,830
Long-Term Debt								101,759			98,991
Stockholders’ Equity								193,856			194,548
SELECTED AVERAGE BALANCE SHEET DATA
	For the three months ended						For the six months ended
	6/30/2005			6/30/2004			6/30/2005			6/30/2004
Investment Securities		689,288			590,709			705,062			591,916
Loans, net		1,200,439			872,408			1,186,434			861,393
Interest-Earning Assets		1,903,363			1,482,743			1,904,696			1,468,265
Total Assets		2,115,234			1,609,643			2,124,850			1,595,654
Core Deposits		1,313,219			1,099,396			1,334,435			1,071,754
Time Deposits		393,751			278,248			390,752			281,783
Deposits		1,706,970			1,377,652			1,725,187			1,353,540
Total Interest-Bearing Liabilities		1,607,801			1,233,848			1,616,261			1,226,020
Short-Term Borrowings		106,631			22,289			99,129			31,140
Long-Term Debt		41,802			33,662			40,266			34,096
Subordinated Debentures		56,703			56,703			56,703			56,703
Stockholders’ Equity		192,097			112,614			192,807			112,685

* Retroactively adjusted for 5% stock dividend payable on August 16, 2005 to shareholders of record July 29, 2005.

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

ASSETS	June 30, 2005			December 31, 2004
(dollars in thousands)	(unaudited)
Cash and due from banks	$	51,972		$	47,981
Federal funds sold and interest-bearing deposits due from banks		27,818			7,365
Total cash and cash equivalents		79,790			55,346
Investment securities available for sale		490,913			582,106
Investment securities held to maturity; fair value of $146,958 in 2005 and $162,926 in 2004		147,484			162,922
Loans:
Commercial		668,446			654,085
Residential mortgages		249,786			234,600
Consumer and home equity		301,080			289,921
Total loans		1,219,312			1,178,606
Plus: deferred fees		(2,917	)		(2,601	)
Less: Allowance for loan and lease losses		16,542			16,638
Net loans		1,199,853			1,159,367
Premises and equipment - net		31,626			31,749
Accrued interest receivable		7,525			8,002
Goodwill and other identifiable intangible assets		93,973			94,119
Bank owned life insurance		34,836			34,240
Other assets		13,244			13,170
TOTAL ASSETS	$	2,099,244		$	2,141,021
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest bearing	$	313,648		$	319,359
Savings and interest-bearing transaction accounts		986,384			1,041,621
Time deposits under $100,000		281,661			269,820
Time deposits $100,000 and over		108,287			96,004
Total deposits		1,689,980			1,726,804
Federal funds purchased and securities sold under agreements to repurchase		103,083			110,830
Long-term debt		45,056			42,288
Subordinated debentures		56,703			56,703
Other liabilities		10,566			9,848
TOTAL LIABILITIES		1,905,388			1,946,473
STOCKHOLDERS’ EQUITY
Common stock, no par value; authorized shares, 40,000,000; issued shares, 22,443,298 at June 30, 2005 and December 31, 2004		226,188			208,933
Accumulated Deficit		(15,855	)		(3,847	)
Treasury stock, at cost, 1,012,674 shares at June 30, 2005 and 728,330 at December 31, 2004		(15,307	)		(10,878	)
Accumulated other comprehensive income		(1,170	)		340
TOTAL STOCKHOLDERS’ EQUITY		193,856			194,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,099,244		$	2,141,021

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

	Three months Ended June 30,				Six Months Ended June 30,
	2005		2004		2005		2004
	(In thousands, except per share data)
INTEREST INCOME
Loans and fees	$	18,424	$	12,812	$	35,973	$	25,481
Federal funds sold and interest bearing deposits with banks		89		38		220		48
Taxable investment securities		5,686		4,728		11,735		9,741
Tax exempt investment securities		865		735		1,776		1,499
TOTAL INTEREST INCOME		25,064		18,313		49,704		36,769
INTEREST EXPENSE
Deposits		5,368		3,274		10,449		6,661
Securities sold under agreements to repurchase		851		56		1,348		167
Long-term debt		1,418		1,387		2,873		2,787
TOTAL INTEREST EXPENSE		7,637		4,717		14,670		9,615
NET INTEREST INCOME		17,427		13,596		35,034		27,154
Provision for loan losses		327		875		1,110		1,750
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		17,100		12,721		33,924		25,404
NONINTEREST INCOME
Service charges on deposit accounts		2,357		1,839		4,241		3,703
Commissions and fees		731		729		1,466		1,358
Gain on the sales of securities		100		413		128		416
Income on bank owned life insurance		305		251		602		530
Lease Income		117		19		519		45
Other income		114		77		297		152
TOTAL NONINTEREST INCOME		3,724		3,328		7,253		6,204
NONINTEREST EXPENSE
Salaries and employee benefits		7,142		5,562		14,247		11,109
Net occupancy expense		1,212		1,004		2,759		2,025
Furniture and equipment		1,114		908		2,210		1,752
Stationery, supplies and postage		477		341		906		689
Legal fees		222		507		447		989
Marketing expense		534		376		875		691
Amortization of core deposit intangibles		303		102		606		204
Other expenses		2,229		1,779		4,854		3,430
TOTAL NONINTEREST EXPENSE		13,233		10,579		26,904		20,889
INCOME BEFORE PROVISION FOR INCOME TAXES		7,591		5,470		14,273		10,719
Provision for income taxes		2,454		1,752		4,568		3,432
NET INCOME	$	5,137	$	3,718	$	9,705	$	7,287
EARNINGS PER COMMON SHARE
Basic	$	0.24	$	0.22	$	0.45	$	0.43
Diluted	$	0.24	$	0.22	$	0.45	$	0.43
DIVIDENDS PER SHARE	$	0.095	$	0.095	$	0.19	$	0.19