Lakeland Bancorp, Inc. (NASDAQ:LBAI) Q2 2022 Results Conference Call July 28, 2022 10:00 AM ET

Company Participants

Mary Russell - Assistant Controller and Director, Financial Reporting

Thomas Shara - President, CEO & Director

Thomas Splaine - EVP & CFO

Conference Call Participants

Frank Schiraldi - Piper Sandler

Christopher O'Connell - KBW

Manuel Navas - D.A. Davidson

Operator

Good morning and welcome to the Lakeland Bancorp, Inc., Second Quarter Earnings Conference Call. My name is Tamia and I'll be coordinating today's call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mary Russell, Assistant Controller and Director of Financial Reporting. Please go ahead, ma'am.

Mary Russell

Thank you, Tamia. Good morning, ladies and gentlemen and thank you for joining us for our second quarter earnings call. Today's presenters are President and CEO, Thomas Shara; and Executive Vice President and Chief Financial Officer, Thomas Splaine. Before beginning a review of our financial results, we ask that you please take note of our standard caution as to any forward-looking statements which may be made during the course of today's call. Our full disclaimer is contained in this morning's earnings release which has been posted to the Investor Relations page on our website, lakelandbank.com.

Now it is my pleasure to introduce Thomas Shara, who will offer his perspective on our second quarter.

Thomas Shara

Thank you, Mary. Good morning, everyone, and welcome to our second quarter earnings call. I will start off the call with a high-level summary of the quarter, followed by Tom Splaine, our CFO, who will walk you through our earnings in detail. We're delighted by our financial results for the quarter, which represents a clean quarter absent merger-related items for the 1st Constitution acquisition earlier this year. For the quarter, our ROA, ROE and ROTCE were $1.15, $10.71 and $14.45, respectively.

We posted record net income of $29 million driven by net interest income of $80 million, representing a 14% increase from the prior quarter. The increase in net interest income is attributable to our meaningful margin expansion plus our organic loan generation during the quarter, which totaled $270 million, representing a 16% annualized growth rate, while we're able to keep deposit betas low during the quarter.

The loan growth was across all categories in commercial and consumer portfolios, except for construction and PPP loans. Construction loans decreased $33 million, as several loans converted to permanent loans during the quarter, and PPP was reduced by $26 million and now stands at only $10 million at the end of the quarter. I'm happy to report that our commercial closings for the second quarter were a record and eclipsed the first quarter total, which were also a record. The pipeline going into the second half of the year is still very strong. Our healthcare lending team and Hudson Valley lending teams had a tremendous quarter and we expect them to have a strong balance of the year as well.