LAKELAND BANCORP INC - 10-Q Quarterly Report

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS

	June 30, 2003	December 31 ,
ASSETS	(unaudited)	2002
	(dollars in thousands)
Cash and due from banks	$48,541	$32,775
Federal funds sold and interest-bearing deposits due from banks	24,166	2,690
Total cash and cash equivalents	72,707	35,465

Investment securities available for sale	420,871	361,760
Investment securities held to maturity; fair value of $52,393
in 2003 and $48,436 in 2002	50,255	46,083
Loans	736,794	718,676
Plus: deferred costs	146	982
Less: allowance for loan and lease losses	18,704	17,940
Net loans	718,236	701,718
Premises and equipment - net	25,014	25,167
Accrued interest receivable	5,272	5,495
Other assets	39,238	31,417
TOTAL ASSETS	$1,331,593	$1,207,105

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES:
Deposits:
Non-interest bearing	$236,334	$214,110
Savings and interest bearing transaction accounts	665,253	593,637
Time deposits under $100 thousand	182,805	179,423
Time deposits $100 thousand and over	63,573	71,922
Total deposits	1,147,965	1,059,092
Federal funds purchased and securities sold
under agreements to repurchase	19,539	19,974
Long-term debt	31,000	31,000
Other liabilities	7,400	6,272
Guaranteed preferred beneficial interests in Company’s
subordinated debentures	30,000	----
TOTAL LIABILITIES	1,235,904	1,116,338
Commitments and contingencies	----	----
Stockholders’ equity:
Common stock, no par value; authorized shares, 40,000,000;
issued shares, 14,671,097 at June 30, 2003 and
December 31, 2002; outstanding shares, 14,202,526 at
June 30, 2003 and 14,227,079 at December 31, 2002	101,505	101,664
Accumulated Deficit	(4,848)	(9,436)
Treasury stock, at cost, 468,571 at June 30, 2003 and
444,018 at December 31, 2002	(6,528)	(5,881)
Accumulated other comprehensive income	5,560	4,420
TOTAL STOCKHOLDERS' EQUITY	95,689	90,767
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$1,331,593	$1,207,105
See accompanying notes to consolidated financial statements

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED INCOME STATEMENTS
	For the three months ended			For the six months ended
		June 30,			June 30,
		2003	2002		2003	2002
		(unaudited)			(unaudited)
		(In thousands, except per share data)
INTEREST INCOME
Loans and fees		$11,725	$11,629		$23,578	$22,586
Federal funds sold		58	57		126	144
Taxable investment securities		3,507	4,124		7,139	8,104
Tax exempt investment securities		712	566		1,370	1,126
TOTAL INTEREST INCOME		16,002	16,376		32,213	31,960
INTEREST EXPENSE
Deposits		$3,030	$3,810		6,466	7,761
Short-term borrowings		47	70		110	145
Long-term debt		470	408		872	771
TOTAL INTEREST EXPENSE		3,547	4,288		7,448	8,677
NET INTEREST INCOME		12,455	12,088		24,765	23,283
Provision for loan and lease losses		750	750		1,500	1,500
NET INTEREST INCOME AFTER PROVISION FOR
LOAN AND LEASE LOSSES		11,705	11,338		23,265	21,783
NONINTEREST INCOME
Service charges on deposit accounts		1,706	1,471		3,217	2,884
Commissions and fees		717	537		1,256	993
Gains (losses) on the sales of securities		487	(11)		752	63
Other income		287	300		551	582
TOTAL NONINTEREST INCOME		3,197	2,297		5,776	4,522
NONINTEREST EXPENSE
Salaries and employee benefits		5,051	4,714		10,010	9,368
Net occupancy expense		851	864		1,776	1,653
Furniture and equipment		761	790		1,575	1,485
Stationery, supplies and postage		336	336		666	645
Other expenses		2,389	1,753		4,328	3,280
TOTAL NONINTEREST EXPENSE		,388	8,457		18,355	16,431
Income before provision for income taxes		5,514	5,178		10,686	9,874
Provision for income taxes		1,768	1,667		3,397	3,122
NET INCOME		$3,746	$3,511		$7,289	$6,752
EARNINGS PER COMMON SHARE
Basic		$0.26	$0.24		$0.51	$0.47
Diluted		$0.26	$0.24		$0.51	$0.46

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
	For the three months ended			For the six months ended
		June 30,			June 30,
		2003	2002		2003	2002
		(unaudited)			(unaudited)
		(in thousands)			(in thousands)
NET INCOME		$3,746	$3,511		$7,289	$6,752
OTHER COMPREHENSIVE INCOME NET OF TAX:

Unrealized securities gains arising during period		1,296	3,305		1,651	2,745
Less: reclassification for gains (losses) included in Net Income		333	(7)		511	42
Other: Comprehensive Income		963	3,312		1,140	2,703
TOTAL COMPREHENSIVE INCOME		$4,709	$6,823		$8,429	$9,455
See accompanying notes to consolidated financial statements

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


	Common stock
	Number of Shares	Amount	Accumulated deficit	Treasury Stock	Accumulated Other Comprehensive Income	Total
	(dollars in thousands)
BALANCE DECEMBER 31, 2001	13,972,473	$88,273	$(931)	$(3,175)	$1,400	$85,567
Net Income 2002	---	---	10,077	---	---	10,077
Other comprehensive income,
net of tax	---	---	---	---	3,020	3,020
Exercise of stock options	---	(126)	---	466	---	340
Stock dividends	698,624	13,517	(13,517)	---	---	---
Cash dividend	---	---	(5,065)	---	---	(5,065)
Purchase of treasury stock	---	---	---	(3,172)	---	(3,172)

BALANCE DECEMBER 31, 2002	14,671,097	101,664	(9,436)	(5,881)	4,420	90,767
Net Income, first six months 2003	---	---	7,289	---	---	7,289
Other comprehensive income,
net of tax	---	---	---	---	1,140	1,140
Exercise of stock options	---	(159)	---	491	---	332
Cash dividend	---	---	(2,701)	---	---	(2,701)
Purchase of treasury stock	---	---	---	(1,138)	---	(1,138)

BALANCE JUNE 30, 2003
(unaudited)	14,671,097	$101,505	$(4,848)	$(6,528)	$5,560	$95,689

See accompanying notes to consolidated financial statements

Lakeland Bancorp, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS-(UNAUDITED)

	For the six months ended
	June 30,
	2003		2002
CASH FLOWS FROM OPERATING ACTIVITIES	(in thousands)
Net income	$7,289		$6,752
Adjustments to reconcile net income to net cash
provided by operating activities:
Net amortization of premiums, discounts and deferred
loan fees and costs	2,715		237
Depreciation and amortization	1,269		1,257
Provision for loan and lease losses	1,500		1,500
Gain on sales and calls of securities	(752)		(63)
Gain on disposition of premises and equipment	(9)		(55)
Provision for income taxes	3,397		3,122
Increase in other assets	(2,274)		(4,006)
Decrease in other liabilities	(2,891)		(982)
NET CASH PROVIDED BY OPERATING ACTIVITIES	10,244	7,762
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from repayments on and maturity of securities:
Available for sale	96,582		44,668
Held for maturity	8,628		17,539
Proceeds from sales of securities available for sale	35,269		15,786
Purchase of securities:
Available for sale	(190,263)		(81,098)
Held for maturity	(12,864)		---
Net increase in loans	(18,854)		(74,803)
Purchase of Bank Owned Life Insurance	(5,000)

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(Mark one )

[X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

OR

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to _____________

Commission file number 33-27312

LAKELAND BANCORP, INC.
(Exact name of registrant as specified in its charter)

		New Jersey 22-2953275
		(State or other jurisdiction of (I.R.S. Employer
		incorporation or organization) Identification No.)

		250 Oak Ridge Road, Oak Ridge, New Jersey 07438
		(Address of principal executive offices) (Zip Code)

		(973) 697-2000
		(Registrant's telephone number, including area code)


		(Former name, former address and former fiscal year, if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of June 30, 2003 there were 14,202,526 outstanding shares of Common Stock, no par value.

		PAGE
	Part I Financial Information
Item 1.	Financial Statements:
	Consolidated Balance Sheets - June 30, 2003 (unaudited) and December 31, 2002	1
	Consolidated Income Statements - Unaudited Three Months Ended June 30, 2003 and 2002 and unaudited Six Months Ended June 30, 2003 and 2002	2
	Consolidated Statements of Changes in Stockholders' Equity - Six months ended June 30, 2003 (unaudited) and 12 months ended December 31, 2002	3
	Consolidated Statements of Cash Flows - Unaudited Six Months Ended June 30, 2003 and 2002	4
	Notes to Consolidated Financial Statements (unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
	Part II Other Information
Item 1.	Legal Proceedings	17
Item 2.	Changes in Securities and Use of Proceeds	17
Item 3.	Defaults Upon Senior Securities	17
Item 4.	Submission of Matters to a Vote of Security Holders	17
Item 5.	Other Information	17
Item 6.	Exhibits and Reports on Form 8-K	17