Lakeland Bancorp (LBAI) 8-K Lakeland Bancorp Reports Second Quarter Results and Declares 5% Stock Dividend

Exhibit 99.1

Thursday, July 13, 2006	Roger Bosma
	President & CEO
	Joseph F. Hurley
	EVP & CFO
	973-697-2000

Lakeland Bancorp Reports Second Quarter Results and Declares 5% Stock Dividend

Oak Ridge, NJ – July 13, 2006 — Lakeland Bancorp, Inc. (Nasdaq:LBAI) reported second quarter Net Income of $5.1 million and Diluted Earnings Per Share of $0.23, which were both equivalent to the results for the same period in 2005. (All share and per share information have been adjusted for a 5% stock dividend declared on July 12, 2006, unless otherwise noted.) Annualized Return on Average Assets was 0.93% and Annualized Return on Average Equity was 10.74% for the second quarter of 2006.

Net Income for the first six months of 2006 was $9.7 million, which was equivalent to Net Income for the same period last year. Diluted Earnings Per Share was $0.44 as compared to a $0.42 EPS for the first six months of 2005. Return on Average Assets was 0.89% and Return on Average Equity was 10.37% for the six month period.

Lakeland Bancorp announced that it has declared a quarterly cash dividend of $0.10 per common share. The cash dividend will be paid on August 15, 2006 to holders of record as of the close of business on July 31, 2006. In addition, the Company has authorized a 5% stock dividend, which will be paid on August 16, 2006 to holders of record as of the close of business July 31, 2006.

Lakeland Bancorp also announced a stock buyback program for the purchase of up to 500,000 shares of the Company’s outstanding shares over the next twelve months. Purchases may be made in management’s discretion in open market or privately negotiated transactions. The Company purchased a total of 611,252 shares under a similar program to purchase up to 787,500 shares which expired in June 2006 (share totals are unadjusted for the 5% stock dividend declared on July 12, 2006).

-continued-

Roger Bosma, Lakeland Bancorp’s President and CEO said, “Although the interest rate environment has been challenging to our industry over the past year, Net Income in the second quarter of 2006 was comparable to the same period last year. In this quarter, we have improved our asset mix with strong loan growth, which has helped to make interest margins equivalent from the first to the second quarter of 2006. Additionally, we have continued to employ strategies to increase fee income, as well as reduce various operating expenses.”

Earnings

Net Interest Income

Net interest income for the second quarter of 2006 was $16.7 million compared to the $17.4 million earned in the second quarter of 2005. Net interest margin for the second quarter of 2006 was 3.48% as compared to 3.77% reported in the second quarter of 2005, while average earning assets rose 5%. The Company’s yield on interest-earning assets increased by 56 basis points to 5.94% in the second quarter of 2006, from 5.38% for the same period last year. The cost of interest bearing liabilities increased 99 basis points from 1.90% in the second quarter of 2005 to 2.89% in the second quarter of 2006. The yields for both interest-earning assets and interest bearing liabilities reflect the rising interest rate environment. The increased liability cost was also due to an increase in higher yielding time deposits.

Year-to-date, net interest income was $33.3 million, or 5% lower than the $35.0 million reported for the first six months of 2005. Net interest margin was 3.47% for the first half of 2006 compared to 3.81% for the same period last year, while average earning assets rose 5%. The Company’s yield on earning assets increased from 5.35% for the first six months of 2005, to 5.85% for the first six months of 2006. The Company’s cost of interest bearing liabilities increased from 1.82% for the first six months of 2005, to 2.78% for the first six months of 2006.

Noninterest income

Noninterest income totaled $4.3 million, or 16% higher than the $3.7 million reported in the second quarter of 2005. Gains on sales of investment securities were $100,000 in second quarter 2005 compared to $0 gains in the second quarter of 2006. Service charges on deposit accounts totaling $2.7 million increased by $364,000 or 15% in the second quarter of 2006, as compared to the same period last year. In May 2005, the Company introduced an overdraft privilege checking program, which contributed fee income to this category. Commissions and fees at $920,000 increased by $189,000, or 26% primarily due to an increase in investment commission income, while leasing income increased by $123,000, or 77% to $282,000.

Noninterest income totaled $8.8 million for the first six months of 2006, or 21% higher than the same period last year. Gains on sales of investment securities were $78,000 for the first six months of 2006, as compared to $128,000 for the first six months of 2005. Service charges on deposit accounts increased 24% to $5.3 million, primarily due to the overdraft privilege checking program; commissions and fees increased 24% to $1.8 million due to increased investment commission income; leasing income decreased $197,000 to $463,000; while other income increased $419,000 to $575,000, primarily due to a $362,000 gain on the sale of a branch office in the first quarter of 2006.

Noninterest expense

Noninterest expense for the second quarter of 2006 was $13.4 million, as compared to $13.2 million in the second quarter of 2005. Salary and benefit expense at $7.7 million increased 7%,

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-continued-

reflecting new hires as well as normal salary and benefit increases. Occupancy, furniture and equipment expenses at $2.4 million increased 4%. The remaining noninterest expense categories decreased by $443,000, or 12% to $3.3 million in the second quarter of 2006. This decrease was primarily due to lower legal fees, marketing expenses and stationery, supplies and postage expenses in the second quarter of 2006 as compared to the same period last year. The bank’s efficiency ratio was 61.0% in the second quarter of 2006.

For the first six months of 2006, noninterest expense was $27.2 million, compared to $26.9 million in 2005. Salary and benefit costs increased by $1.1 million or 7%, to $15.3 million. Occupancy, furniture and equipment expenses remained unchanged at $5.0 million. The remaining expense categories decreased by $792,000 or 10%, primarily due to decreased legal fees and a decline in the provision for unfunded lending commitments.

Financial Condition

At June 30, 2006, total assets were $2.243 billion. Total loans were $1.420 billion, up $113.2 million or 9% from $1.307 billion at year-end 2005. Actual loan growth in the second quarter of 2006 totaled $85.6 million, or 6%. Total deposits at $1.794 billion were unchanged from year-end 2005. Core deposits, which are defined as noninterest bearing deposits and savings and interest bearing transaction accounts, amounted to $1.34 billion and represented 74% of total deposits at June 30, 2006.

Asset Quality

At June 30, 2006, non-performing assets totaled $4.0 million (0.18% of total assets). The Allowance for Loan and Lease Losses totaled $13.1 million at June 30, 2006 and represented 0.92% of total loans. During the first half of 2006, the Company had net charge-offs of $758,000 (0.11% of total loans) as compared to $1.2 million (0.20% of total loans) during the first half of 2005. The Allowance for Loan and Lease Losses at June 30, 2006 was 326% of non-performing loans, as compared to 142% at June 30, 2005.

Capital

Stockholders’ equity was $189.6 million and book value per common share was $8.61. As of June 30, 2006, the Company’s leverage ratio was 7.66%. Tier I and total risk based capital ratios were 10.87% and 11.74%, respectively. These regulatory capital ratios exceed those necessary to be considered a well-capitalized institution under Federal guidelines. Under the stock buy-back program which expired in June, the Company repurchased 52,300 shares during the second quarter of 2006 at an average price of $14.12 per share (unadjusted for 5% stock dividend declared on July 12, 2006).

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 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 June 30,						Six months ended June 30,
	2006			2005			2006			2005
	(Dollars in thousands except per share amounts)
INCOME STATEMENT
Net Interest Income	$	16,721		$	17,427		$	33,269		$	35,034
Provision for Loan Losses		(319	)		(327	)		(651	)		(1,110	)
Noninterest Income (excluding investment securities gains)		4,324			3,624			8,723			7,125
Gain on sales of investment securities		—			100			78			128
Noninterest Expense		(13,417	)		(13,233	)		(27,210	)		(26,904	)
Pretax Income		7,309			7,591			14,209			14,273
Tax Expense		(2,254	)		(2,454	)		(4,462	)		(4,568	)
Net Income	$	5,055		$	5,137		$	9,747		$	9,705
Memo: Tax equivalent adjustment	$	536		$	465		$	1,081		$	956
Basic Earnings Per Share *	$	0.23		$	0.23		$	0.44		$	0.43
Diluted Earnings Per Share *	$	0.23		$	0.23		$	0.44		$	0.42
Dividends per share *	$	0.095		$	0.09		$	0.19		$	0.18
Weighted Average Shares - Basic *		22,018			22,651			22,062			22,718
Weighted Average Shares - Diluted *		22,155			22,812			22,212			22,891
SELECTED OPERATING RATIOS
Return on Average Assets		0.93	%		0.97	%		0.89	%		0.92	%
Return on Average Equity		10.74	%		10.73	%		10.37	%		10.15	%
Yield on Interest Earning Assets		5.94	%		5.38	%		5.85	%		5.35	%
Cost of funds		2.89	%		1.90	%		2.78	%		1.82	%
Net interest spread		3.05	%		3.48	%		3.07	%		3.53	%
Net interest margin		3.48	%		3.77	%		3.47	%		3.81	%
Efficiency ratio		60.94	%		60.28	%		61.82	%		60.83	%
Stockholders’ equity to total assets								8.45	%		9.23	%
Book value per share *							$	8.61		$	8.62
ASSET QUALITY RATIOS
Ratio of net charge-offs to average loans								0.11	%		0.20	%
Ratio of allowance to total loans								0.92	%		1.36	%
Non-performing loans to total loans								0.28	%		0.96	%
Non-performing assets to total assets								0.18	%		0.59	%
Allowance to non-performing loans								326	%		142	%
SELECTED BALANCE SHEET DATA AT PERIOD-END
							6/30/2006			12/31/2005
Loans							$	1,420,240		$	1,307,023
Allowance for Loan Losses								(13,067	)		(13,173	)
Investment Securities								588,481			670,472
Total Assets								2,242,660			2,206,033
Core Deposits								1,335,870			1,350,567
Deposits								1,793,621			1,798,160
Borrowings								248,972			204,963
Stockholders’ Equity								189,591			191,781
SELECTED AVERAGE BALANCE SHEET DATA
	For the three months ended						For the six months ended
	6/30/2006			6/30/2005			6/30/2006			6/30/2005
Investment Securities		604,928			689,288			638,800			705,062
Loans, net		1,375,278			1,200,439			1,346,613			1,186,434
Interest-Earning Assets		1,989,469			1,903,363			1,995,342			1,904,696
Total Assets		2,191,416			2,115,234			2,199,513			2,124,846
Core Deposits		1,334,869			1,313,219			1,331,962			1,334,435
Time Deposits		449,246			393,751			451,661			390,752
Deposits		1,784,115			1,706,970			1,783,623			1,725,187
Total Interest-Bearing Liabilities		1,692,680			1,607,801			1,703,886			1,616,261
Short-Term Borrowings		87,605			106,631			104,917			99,129
Long-Term Debt		62,003			41,802			52,720			40,266
Subordinated Debentures		56,703			56,703			56,703			56,703
Stockholders’ Equity		188,815			192,107			189,566			192,807

* Adjusted for 5% stock dividend payable on August 16, 2006 to shareholders of record July 31, 2006.

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

	June 30, 2006			December 31, 2005
(dollars in thousands)	(unaudited)
ASSETS
Cash and due from banks	$	48,578		$	42,639
Federal funds sold and interest-bearing deposits due from banks		7,937			10,176
Total cash and cash equivalents		56,515			52,815
Investment securities available for sale		436,493			515,903
Investment securities held to maturity; fair value of $147,358 in 2006 and $151,637 in 2005		151,988			154,569
Loans:
Commercial		833,432			735,326
Residential mortgages		274,941			269,461
Consumer and home equity		311,867			302,236
Total loans		1,420,240			1,307,023
Deferred fees		5,778			5,744
Allowance for loan and lease losses		(13,067	)		(13,173	)
Net loans		1,412,951			1,299,594
Premises and equipment - net		32,459			32,428
Accrued interest receivable		8,542			8,851
Goodwill and other identifiable intangible assets		92,648			93,395
Bank owned life insurance		36,077			35,479
Other assets		14,987			12,999
TOTAL ASSETS	$	2,242,660		$	2,206,033
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Noninterest bearing	$	308,567		$	312,529
Savings and interest-bearing transaction accounts		1,027,303			1,038,038
Time deposits under $100,000		281,010			293,293
Time deposits $100,000 and over		176,741			154,300
Total deposits		1,793,621			1,798,160
Federal funds purchased and securities sold under agreements to repurchase		130,378			103,199
Long-term debt		61,711			45,061
Subordinated debentures		56,703			56,703
Other liabilities		10,656			11,129
TOTAL LIABILITIES		2,053,069			2,014,252
STOCKHOLDERS’ EQUITY
Common stock, no par value; authorized shares, 40,000,000; issued shares, 23,564,453 at June 30, 2006 and December 31, 2005		242,672			226,322
Accumulated Deficit		(20,444	)		(9,514	)
Treasury stock, at cost, 1,555,321 shares at June 30, 2006 and 1,386,434 at December 31, 2005		(22,779	)		(20,176	)
Accumulated other comprehensive loss		(9,858	)		(4,851	)
TOTAL STOCKHOLDERS’ EQUITY		189,591			191,781
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,242,660		$	2,206,033

Lakeland Bancorp, Inc. and Subsidiaries

CONSOLIDATED INCOME STATEMENTS

(Unaudited)

	Three months Ended June 30,				Six Months Ended June 30,
	2006		2005		2006		2005
	(In thousands, except per share data)
INTEREST INCOME
Loans and fees	$	22,750	$	18,424	$	43,848	$	35,973
Federal funds sold and interest bearing deposits with banks		133		89		234		220
Taxable investment securities		5,053		5,686		10,795		11,735
Tax exempt investment securities		996		865		2,008		1,776
TOTAL INTEREST INCOME		28,932		25,064		56,885		49,704
INTEREST EXPENSE
Deposits		9,491		5,368		18,130		10,449
Federal funds purchased and securities sold under agreements to repurchase		1,023		851		2,284		1,386
Long-term debt		1,697		1,418		3,202		2,835
TOTAL INTEREST EXPENSE		12,211		7,637		23,616		14,670
NET INTEREST INCOME		16,721		17,427		33,269		35,034
Provision for loan losses		319		327		651		1,110
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		16,402		17,100		32,618		33,924
NONINTEREST INCOME
Service charges on deposit accounts		2,721		2,357		5,264		4,241
Commissions and fees		920		731		1,814		1,466
Gain on the sales of investment securities		0		100		78		128
Income on bank owned life insurance		308		305		607		602
Leasing income		282		159		463		660
Other income		93		72		575		156
TOTAL NONINTEREST INCOME		4,324		3,724		8,801		7,253
NONINTEREST EXPENSE
Salaries and employee benefits		7,672		7,142		15,305		14,247
Net occupancy expense		1,291		1,212		2,724		2,759
Furniture and equipment		1,133		1,115		2,285		2,210
Stationery, supplies and postage		403		476		815		906
Legal fees		68		224		242		447
Marketing expense		423		534		834		875
Core deposit intangible amortization		298		303		601		606
Other expenses		2,129		2,227		4,404		4,854
TOTAL NONINTEREST EXPENSE		13,417		13,233		27,210		26,904
INCOME BEFORE PROVISION FOR INCOME TAXES		7,309		7,591		14,209		14,273
Provision for income taxes		2,254		2,454		4,462		4,568
NET INCOME	$	5,055	$	5,137	$	9,747	$	9,705
EARNINGS PER COMMON SHARE
Basic	$	0.23	$	0.23	$	0.44	$	0.43
Diluted	$	0.23	$	0.23	$	0.44	$	0.42
DIVIDENDS PER SHARE	$	0.095	$	0.09	$	0.19	$	0.18