Lakeland Bancorp (LBAI) 8-K Lakeland Bancorp Reports 14% Increase in EPS in Fourth Quarter

Exhibit 99.1

Thursday, January 19, 2006	Roger Bosma
	President & CEO
	Joseph F. Hurley
	EVP & CFO
	973-697-2000

Lakeland Bancorp Reports 14% Increase in EPS in Fourth Quarter

Oak Ridge, NJ – January 19, 2006 — Lakeland Bancorp, Inc. (Nasdaq:LBAI) is pleased to report several positive developments in the fourth quarter of 2005:

• Earnings per share at $0.24, an increase of 14% over the $0.21 reported in the fourth quarter of 2004 (restated to reflect the 5% stock dividend paid August 16, 2005).

• Net Income at $5.2 million, an increase of $502,000, or 11%, as compared to the same period last year.

• The consolidation of three branch locations and the merger of Newton Trust Company into Lakeland Bank, which resulted in a one-time charge of $225,000.

• The reversal of $750,000 in previously accrued expense due to changes in the Company’s Post Retirement Benefit Plan.

• The sale of $20 million of lower yielding investment securities resulting in a loss of $715,000. The proceeds were reinvested in higher yielding bonds.

• The announcement of a $0.10 cash dividend per share payable on February 15, 2006 to shareholders of record as of the close of business January 31, 2006.

Roger Bosma, Lakeland Bancorp’s President and CEO said, “2005 was significant in many ways. Besides achieving record earnings, we completed the merger of our two bank subsidiaries, consolidated three branch locations, and opened two new branch offices. In addition, we finalized a settlement agreement with the last surety company regarding the commercial lease pool obligations.”

-continued-

Earnings

Net Income for the year of 2005 was $20.2 million, an increase of 23% from the $16.5 million in Net Income for 2004. Diluted earnings per share was $0.94 compared to $0.84 per share last year, an increase of 12%. Return on Average Assets was 0.94% and Return on Average Equity was 10.55%.

Net Interest Income

Net interest income for the fourth quarter of 2005 was $17.4 million, as compared to the $17.3 million earned in the fourth quarter of 2004. Net interest margin decreased to 3.59% for the fourth quarter of 2005 from 3.76% in the fourth quarter of 2004. While the Company’s yield on interest earning assets increased 53 basis points to 5.64% in the fourth quarter of 2005 as compared to 5.11% in the fourth quarter of 2004, the average cost of interest bearing liabilities increased 80 basis points to 2.42% in the fourth quarter of 2005 from 1.62% for the same period last year. This increase was primarily due to an increase in average time deposits and short-term borrowings which overall have a higher yield, as well as an overall increase in the interest rate environment.

For 2005, net interest income was $70.2 million, or 14% higher than the $61.5 million reported for the year ended 2004. Net interest margin decreased to 3.73% for 2005 from 3.82% for the same period last year, while average earning assets increased 17%. The Company’s yield on average interest earning assets increased from 5.13% in 2004 to 5.46% for 2005, while the cost of interest bearing liabilities increased from 1.58% in 2004 to 2.04% in 2005.

Noninterest Income

Noninterest income, excluding gains/losses on investment securities sold, totaled $4.0 million or 13% higher than the fourth quarter of 2004. Losses on sales of investment securities were $715,000 in fourth quarter 2005 compared to gains of $18,000 for the same period last year. Including the gains/losses on sales of securities, noninterest income totaled $3.3 million, as compared to $3.6 million in the fourth quarter of 2004. Service charges on deposit accounts increased 30% to $2.7 million primarily due to the overdraft privilege checking program which was implemented in May 2005. Commissions and fees increased 11% to $810,000 due to increased loan fees collected, while other income decreased $59,000 to $140,000.

Noninterest income, excluding gains/losses on investment securities sold, totaled $15.1 million for 2005, or 19% higher than in 2004. Losses on sales of investment securities were $583,000 for 2005 as compared to $638,000 in gains in 2004. Including the gains/losses on sales of securities, non-interest income totaled $14.5 million and was $1.1 million higher than in 2004. Service charges on deposit accounts increased by $1.8 million or 23% to $9.6 million primarily due to the overdraft privilege checking program; commissions and fees remained unchanged at $3.1 million; leasing income increased by $455,000 to $780,000; while other income decreased $47,000 to $431,000.

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Noninterest Expense

Noninterest expense for the fourth quarter of 2005 was $13.1 million, which was $214,000 lower than the $13.3 million reported in the fourth quarter of 2004. Salary and benefit expense decreased by $198,000 to $6.8 million, as the aforementioned $750,000 reversal of the post-retirement plan was partially offset by normal salary and benefit increases. Occupancy, furniture and equipment expenses remained unchanged at $2.5 million, while other noninterest expenses remained unchanged at $3.4 million in the fourth quarter of 2005.

For the year of 2005, noninterest expense was $53.4 million compared to $47.2 million in 2004, an increase of $6.2 million or 13%.Of this overall increase, salary and benefit costs increased by $3.4 million or 13%. In 2004, Newton salaries and benefits were included for only six months as compared to the entire year in 2005. Occupancy, furniture and equipment expenses increased by $1.4 million or 17%, reflecting costs incurred at the Newton branches, as well as two new offices opened in 2005. Amortization of core deposit intangibles increased by $402,000 due to the Newton acquisition. All other operating expenses increased $1.0 million or 8%, primarily due to increased marketing expenses and Newton related costs.

Financial Condition

At December 31, 2005, total assets were $2.206 billion. Total loans were $1.318 billion, up $139.6 million or 12% from $1.179 billion at year-end 2004. Total deposits were $1.798 billion, an increase of $71.4 million or 4% from December 31, 2004. Core deposits, which are defined as noninterest bearing deposits and savings and interest bearing transaction accounts, amounted to $1.351 billion and represented 75% of total deposits at December 31, 2005.

Asset Quality

At December 31, 2005, non-performing assets totaled $3.9 million (0.18% of total assets), a reduction of $9.8 million from $13.7 million (0.64% of total assets) at December 31, 2004. The Allowance for Loan and Lease Losses totaled $13.2 million at December 31, 2005 and represented 1.00% of total loans. During 2005, the Company had net charge-offs of $5.0 million, including $3.0 million in charge-offs relating to the settled lease pool litigation. The ratio of net charged-off loans to average loans in 2005 was 0.41% (0.16% excluding the charged-off lease pool loans). The Allowance for Loan and Lease Losses at December 31, 2005 was 339% of non-performing loans, as compared to 128% at the previous year-end.

Capital

Stockholders’ equity was $191.8 million and book value per common share was $9.08. As of December 31, 2005, the Company’s leverage ratio was 7.49%. Tier I and total risk based capital ratios were 11.51% and 12.47%, respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines. The Company repurchased 81,250 shares during the fourth quarter of 2005 at an average price of $15.49 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 and The Newton Trust Company into Lakeland Bank,

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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, 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 December 31,						Year ended December 31,
	2005			2004			2005			2004
	(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income	$	17,445		$	17,326		$	70,206		$	61,502
Provision for Loan Losses		(141	)		(926	)		(1,555	)		(3,602	)
Noninterest Income excluding gains on sales of investment securities		4,025			3,552			15,128			12,761
Gain (loss) on sales of investment securities		(715	)		18			(583	)		638
Noninterest Expense		(13,076	)		(13,290	)		(53,390	)		(47,185	)
Pretax Income		7,538			6,680			29,806			24,114
Tax Expense		(2,380	)		(2,024	)		(9,585	)		(7,619	)
Net Income	$	5,158		$	4,656		$	20,221		$	16,495
Memo: Tax equivalent adjustment	$	533		$	475		$	1,971		$	1,748
Basic Earnings Per Share*	$	0.24		$	0.21		$	0.94		$	0.85
Diluted Earnings Per Share*	$	0.24		$	0.21		$	0.94		$	0.84
Dividends Per share*	$	0.10		$	0.095		$	0.39		$	0.381
Weighted Average Shares - Basic*		21,161,552			21,856,919			21,439,465			19,329,400
Weighted Average Shares - Diluted*		21,322,696			22,124,827			21,601,153			19,567,139
SELECTED OPERATING RATIOS
Return on Average Assets		0.93	%		0.88	%		0.94	%		0.90	%
Return on Average Equity		10.80	%		9.46	%		10.55	%		10.79	%
Yield on Interest Earning Assets		5.64	%		5.11	%		5.46	%		5.13	%
Cost of funds		2.42	%		1.62	%		2.04	%		1.58	%
Net interest spread		3.22	%		3.49	%		3.42	%		3.55	%
Net interest margin		3.59	%		3.76	%		3.73	%		3.82	%
Efficiency ratio		59.40	%		59.70	%		59.70	%		60.70	%
Stockholders’equity to total assets								8.69	%		9.09	%
Book value per share*							$	9.08		$	8.96
ASSET QUALITY RATIOS
Ratio of net charge-offs to average loans								0.41	%		0.62	%
Ratio of allowance to total loans								1.00	%		1.41	%
Non-performing loans to total loans								0.29	%		1.10	%
Non-performing assets to total assets								0.18	%		0.64	%
Allowance to non-performing loans								339	%		128	%
							12/31/2005			12/31/2004
SELECTED DATA AT PERIOD-END
Loans							$	1,318,236		$	1,178,606
Allowance for Loan Losses								13,173			16,638
Investment Securities								670,472			745,028
Total Assets								2,206,033			2,141,021
Core Deposits								1,350,567			1,360,980
Deposits								1,798,160			1,726,804
Borrowings								204,963			209,821
Stockholders’ Equity								191,781			194,548
SELECTED AVERAGE BALANCE SHEET DATA
	For the three months ended						For the year ended
	12/31/2005			12/31/2004			12/31/2005			12/31/2004
Loans, net	$	1,281,785		$	1,157,156		$	1,222,084		$	999,865
Investment securities		683,109			685,777			692,899			634,617
Interest-Earning Assets		1,990,483			1,887,563			1,936,781			1,657,516
Total Assets		2,201,371			2,108,052			2,153,723			1,830,466
Core Deposits		1,366,517			1,365,812			1,346,659			1,215,178
Time Deposits		446,052			374,635			411,704			319,808
Deposits		1,812,569			1,740,447			1,758,363			1,534,986
Total Interest Bearing Liabilities		1,689,097			1,580,301			1,642,145			1,384,430
Short-Term Borrowings		85,513			62,360			95,440			38,939
Long-Term Debt		43,156			42,310			39,664			38,440
Subordinated Debentures		56,703			56,703			56,703			56,703
Stockholders’ Equity		189,557			195,876			191,609			152,895

* 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

(dollars in thousands)	December 31, 2005			December 31, 2004
	(unaudited)
ASSETS
Cash and due from banks	$	42,639		$	47,981
Federal funds sold and interest-bearing deposits due from banks		10,176			7,365
Total cash and cash equivalents		52,815			55,346
Investment securities available for sale		515,903			582,106
Investment securities held to maturity; fair value of $151,637 in 2005 and $162,926 in 2004		154,569			162,922
Loans:
Commercial		746,539			654,085
Residential mortgages		269,461			234,600
Consumer and home equity		302,236			289,921
Total loans		1,318,236			1,178,606
Plus: deferred fees		(5,469	)		(2,601	)
Less: Allowance for loan and lease losses		13,173			16,638
Net loans		1,299,594			1,159,367
Premises and equipment - net		32,428			31,749
Accrued interest receivable		8,851			8,002
Goodwill and Identifiable Intangible Assets		93,395			94,119
Bank owned life insurance		35,479			34,240
Other assets		12,999			13,170
TOTAL ASSETS	$	2,206,033		$	2,141,021
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest bearing	$	312,529		$	319,359
Savings and interest-bearing transaction accounts		1,038,038			1,041,621
Time deposits under $100 thousand		293,293			269,820
Time deposits $100 thousand and over		154,300			96,004
Total deposits		1,798,160			1,726,804
Federal funds purchased and securities sold under agreements to repurchase		103,199			110,830
Long-term debt		45,061			42,288
Subordinated debentures		56,703			56,703
Other liabilities		11,129			9,848
TOTAL LIABILITIES		2,014,252			1,946,473
STOCKHOLDERS’ EQUITY
Common stock, no par value; authorized shares, 40,000,000; issued shares, 22,442,337 at December 31, 2005 and 22,443,298 December 31, 2004		226,322			208,933
Accumulated deficit		(9,514	)		(3,847	)
Treasury stock, at cost, 1,320,414 shares at December 31, 2005 and 728,330 at December 31, 2004		(20,176	)		(10,878	)
Accumulated other comprehensive income (loss)		(4,851	)		340
TOTAL STOCKHOLDERS’ EQUITY		191,781			194,548
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,206,033		$	2,141,021

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

	Three months Ended December 31,					Year Ended December 31,
	2005			2004		2005			2004
	(In thousands, except per share data)
INTEREST INCOME
Loans and fees	$	20,765		$	17,046	$	76,388		$	58,952
Federal funds sold and interest bearing deposits with banks		260			193		763			286
Taxable investment securities		5,634			5,651		23,028			20,835
Tax exempt investment securities		990			882		3,660			3,246
TOTAL INTEREST INCOME		27,649			23,772		103,839			83,319
INTEREST EXPENSE
Deposits		7,874			4,681		24,833			15,527
Federal funds purchased and securities sold under agreements to repurchase		882			312		3,026			589
Long-term debt		1,448			1,453		5,774			5,701
TOTAL INTEREST EXPENSE		10,204			6,446		33,633			21,817
NET INTEREST INCOME		17,445			17,326		70,206			61,502
Provision for loan and lease losses		141			926		1,555			3,602
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		17,304			16,400		68,651			57,900
NONINTEREST INCOME
Service charges on deposit accounts		2,694			2,066		9,633			7,823
Commissions and fees		810			732		3,074			3,001
Gain (loss) on the sales of investment securities		(715	)		18		(583	)		638
Income on bank owned life insurance		305			301		1,210			1,134
Leasing income		76			254		780			325
Other income		140			199		431			478
TOTAL NONINTEREST INCOME		3,310			3,570		14,545			13,399
NONINTEREST EXPENSE
Salaries and employee benefits		6,856			7,054		28,511			25,128
Net occupancy expense		1,367			1,205		5,415			4,365
Furniture and equipment		1,121			1,252		4,453			4,080
Stationery, supplies and postage		433			463		1,806			1,552
Legal fees		186			249		811			1,655
Marketing expenses		360			332		1,625			1,473
Core deposit intangible amortization		303			303		1,212			810
Other expenses		2,450			2,432		9,557			8,122
TOTAL NONINTEREST EXPENSE		13,076			13,290		53,390			47,185
INCOME BEFORE PROVISION FOR INCOME TAXES		7,538			6,680		29,806			24,114
Provision for income taxes		2,380			2,024		9,585			7,619
NET INCOME	$	5,158		$	4,656	$	20,221		$	16,495
EARNINGS PER COMMON SHARE
Basic	$	0.24		$	0.21	$	0.94		$	0.85
Diluted	$	0.24		$	0.21	$	0.94		$	0.84
DIVIDENDS PER SHARE	$	0.10		$	0.095	$	0.39		$	0.381