 OAK RIDGE, N.J., July 23, 2020 GLOBE NEWSWIRE -- Lakeland Bancorp, Inc. NASDAQ: LBAI the Company, the parent company of Lakeland Bank Lakeland, reported net income of 11.9 million and earnings per diluted share EPS of 0.23 for the three months ended June 30, 2020 compared to net income of 17.5 million and diluted EPS of 0.34 for the second quarter of 2019. For the second quarter of 2020, annualized return on average assets was 0.67, annualized return on average common equity was 6.42 and annualized return on average tangible common equity was 8.19. For the six months ended June 30, 2020, the Company reported net income of 24.2 million and earnings per diluted share EPS of 0.47 compared to net income of 33.1 million and diluted EPS of 0.65 for the first six months of 2019. For the first six months of 2020, annualized return on average assets was 0.71, annualized return on average common equity was 6.59 and annualized return on average tangible common equity was 8.42.The second quarter and year-to-date results were adversely impacted by a 9.0 million and 18.2 million provision for loan losses, respectively, compared to no provision and a 508,000 provision for the same periods last year. The increased provision for the first half of 2020 was primarily due to the impact of COVID-19 on certain qualitative factors and loans on payment deferment resulting in approximately 15.0 million of the provision. The remaining 3.2 million of the provision is attributable to loan growth, a change in the loan portfolio composition and a change in loss rates. As of June 30, 2020, the ratio of the allowance for loan loss to total loans was 1.00 compared to 0.78 as of December 31, 2019. The allowance for loan losses to total loans less Paycheck Protection Program PPP loans of 326.0 million, was 1.06 as of June 30, 2020.Thomas Shara, Lakeland Bancorps President and CEO commented, While the pandemic has continued to impact our markets, Lakeland remains focused on expanding our customer relationships and carefully growing our franchise. Lakelands commitment to our communities is evident in our active participation in the PPP loan program, the recently launched Main Street Lending Program and numerous other charitable initiatives during this crisis. As conditions improved, the number of loan deferral requests has decreased dramatically and we are encouraged by the large volume of loans on payment deferment indicating a return to full or partial paying status. Although the pandemic has lessened in our markets and loan charge-offs continue to be negligible, we remain prudent with our elevated loan loss provision of 9.0 million which is consistent with last quarter.Mr. Shara continued, Despite these conditions, Lakelands Q2 balance sheet growth has been robust as loans increased 111 million or 8 annualized, excluding originating 326.0 million in PPP loans, while deposits surged by 670 million. The additional liquidity combined with lower market interest rates and the impact of low yielding PPP loans reduced the net interest margin to 3.06 for the quarter. We will look to leverage this liquidity during the second half of the year as the economic forecast becomes clearer.COVID-19As part of Lakelands response to COVID-19, we initiated remote working plans and encouraged the use of our mobile and online banking alternatives. To assist COVID-19 impacted borrowers, we are offering temporary payment deferrals on commercial, mortgage and consumer loans. As of June 30, 2020, we have deferred approximately 927.0 million of commercial loans, 40.0 million of equipment finance and 53.0 million of residential mortgage and consumer loans. We are also participating in the Small Business Administration Paycheck Protection Program PPP to help strengthen local businesses and preserve jobs in our communities and as of June 30, 2020 have funded 2,066 loans totaling 326.0 million with 11.1 million in related fees, as well as 1.1 million in deferred costs. Additionally, to further support our customers, the Company is participating in the Main Street Lending Program established by the Federal Reserve to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.Net Interest Margin and Net Interest IncomeNet interest margin for the second quarter of 2020 of 3.06 decreased 33 and 22 basis points, respectively, from the second quarter of 2019 and the first quarter of 2020. Net interest margin for the first six months of 2020 of 3.16 compared to 3.41 for the same period in 2019. The decrease in net interest margin was due primarily to a decrease in the yield on interest-earning assets partially offset by a decrease in the cost of interest bearing liabilities.The yield on interest-earning assets for the second quarter of 2020 was 3.69 compared to 4.46 for the second quarter of 2019 and 4.17 for the first quarter of 2020. The yield on interest-earning assets for the first six months of 2020 was 3.92 compared to 4.45 during the same period in 2019. The current quarter and year-to-date decrease in yield on interest-earning assets, when compared to the prior periods, was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2019 and 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during the second quarter of 2020, which earn an effective yield of 2.50 including amortization of fees and costs.The cost of interest-bearing liabilities for the second quarter of 2020 was 0.86 compared to 1.42 for the second quarter of 2019 and 1.18 for the first quarter of 2020. The cost of interest-bearing liabilities for the first six months of 2020 was 1.02 compared to 1.38 during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings have decreased since 2019 largely driven by reductions in the federal funds rate.Net interest income for the second quarter of 2020 of 50.5 million increased 1.3 million and 620,000, respectively, compared to the second quarter of 2019 and the first quarter of 2020. Net interest income for the first six months of 2020 of 100.4 million compared to 97.8 million for the first six months of 2019. The increase in net interest income compared to prior periods was due primarily to the growth in the volume of interest-earning assets and a decrease in interest rates on interest-bearing liabilities partially offset by a decrease in the yield on interest-earning assets.Noninterest IncomeNoninterest income decreased 908,000 to 5.5 million for the second quarter of 2020 from 6.4 million for the second quarter of 2019. Service charges on deposit accounts for the second quarter of 2020 decreased 880,000 compared to the second quarter of 2019 due primarily to changes in customer behavior resulting from the pandemic and New Jerseys Stay in Place Order. Commissions and fees for the second quarter of 2020 decreased 529,000 compared to the second quarter of 2019 due primarily to decreases in commercial loan fees and investment commission income. Partially offsetting these unfavorable variances was gains on sales of loans and swap income which increased 282,000 and 111,000, respectively, due primarily to increased volume driven by lower interest rates.For the first six months of 2020, noninterest income increased 1.4 million to 13.5 million compared to the first six months of 2019 primarily due to a 2.8 million increase in swap income. The first half of 2020 included gains on sales of investment securities of 342,000 compared to none for the same period last year. Gains on sales of loans for the first six months of 2020 totaling 1.1 million increased 326,000 compared to the first six months of 2019 due to the same reason discussed above. Service charges on deposit accounts and commissions and fees decreased 953,000 and 301,000, respectively, compared to the same period in 2019 due to the same reasons discussed in the quarterly comparison. The first half of 2020 also included a 455,000 loss on equity securities compared to a gain of 453,000 for the first half of 2019.Noninterest Expense Noninterest expense totaled 31.5 million for the second quarter of 2020 and decreased 224,000 compared to the second quarter of 2019. Salary and employee benefit expense for the second quarter of 2020 increased 890,000, or 5, when compared to the same quarter of 2019 as a result of staff additions and normal merit increases. Furniture and equipment expense increased 618,000 compared to the second quarter of 2019 due primarily to an increase in costs associated with the Companys digital strategy initiative, while marketing expense decreased 306,000 due partially to the delay of marketing campaigns resulting from the pandemic. The second quarter of 2019 also included 318,000 in merger related expenses from the Highlands Bancorp acquisition.Noninterest expense for the first half of 2020 of 64.0 million decreased 1.7 million due primarily to merger related expenses in the first half of 2019 of 3.2 million. Salary and employee benefit expense and furniture and equipment expense increased 1.9 million and 1.1 million, respectively, compared to the first half of 2019 due to the same reasons discussed in the quarterly comparison. Marketing expenses for the first half of 2020 decreased 548,000 due to the same reason discussed in the quarterly comparison. First half of 2020 results included a long-term debt prepayment fee of 356,000 resulting from the payoff of 10.0 million in Federal Home Loan Bank debt yielding 2.89. Income Tax ExpenseThe effective tax rate for the second quarter of 2020 was 23.7 compared to 27.0 for the second quarter of 2019. 