GlobeNewswire Inc | Jan 28, 2021 08:00AM EST

January 28, 2021

OAK RIDGE, N.J. , Jan. 28, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $18.8 million and earnings per diluted share ("EPS") of $0.37 for the three months ended December31, 2020, compared to net income of $14.4 million and diluted earnings per share of $0.28 for the third quarter of 2020 and net income of $18.7 million and diluted EPS of $0.37 for the fourth quarter of 2019. For the fourth quarter of 2020, annualized return on average assets was 0.98%, annualized return on average common equity was 9.96% and annualized return on average tangible common equity was 12.64%.

For the year ended December31, 2020, the Company reported net income of $57.5 million, a 19% decrease compared to $70.7 million for the same period in 2019 resulting in annualized return on average assets of 0.80%, annualized return on average common equity of 7.74%, and annualized return on average tangible common equity of 9.86%. For 2020, the Company reported diluted EPS of $1.13, compared to diluted EPS of $1.38 for 2019.

The 2020 financial results were adversely impacted by an elevated provision for credit losses of $27.2 million, compared to a provision for loan losses of $2.1 million for 2019. The increased provision for 2020 was primarily due to COVID-19's negative impact on forecasted economic conditions and credit loss projections with the remainder of the provision attributable to loan growth. As of December 31, 2020, the ratio of the allowance for credit loss for loans to total loans was 1.18% compared to 0.78% as of December 31, 2019. The allowance for credit losses on loans to total loans excluding Paycheck Protection Program ("PPP") loans of $284.6 million was 1.24% as of December 31, 2020.

Thomas Shara, Lakeland Bancorps President and CEO commented, "2020 turned out to be a year that no one could have anticipated. We have all been directly or indirectly impacted by the events of the past year and, while it has presented many challenges, I could not be prouder of our Lakeland team for going above and beyond to support our customers and communities. Our team worked tirelessly to ensure the needs of our customers were addressed by increasing our lending, extending PPP loans, granting loan payment deferrals to borrowers, keeping our branches open and increasing donations to the communities we serve. The ongoing pandemic has impacted every sector of our society and dramatically changed the financial services industry. Yet, Lakeland maintained its position as one of New Jerseys leading banks and developed even closer relationships with our customers in the last year. We will continue to prudently navigate the current environment with the safety of our customers and associates at the forefront.

Mr. Shara continued, Our financial performance in this environment was strong and directly related to our focus on addressing our customers' needs. In 2020, we experienced substantial balance sheet growth in both our loan and deposit portfolios. Our provision for projected credit losses increased significantly due to the pandemic; however, our loan charge-offs remained very low for the year. Due to our strong capital position, we will be recommencing our share repurchase plan in the first quarter of 2021.

Q4 2020 Highlights

-- Loans on payment deferral at December 31, 2020 totaled $9.7 million, or 0.2% of total loans. -- Balance sheet restructure in October involving the payoff of $99.9 million in FHLB borrowings, resulted in a prepayment fee of $3.8 million, partially offset by gain on securities sales of $871,000. -- Net interest margin increased 12 basis points to 3.08% compared to the linked quarter. -- The Company adopted CECL at December 31, 2020, and recorded a Q4 provision for credit losses of $789,000 compared to $8 million in Q3 2020. -- Loan and deposit portfolios continued their steady growth, each increasing 3% compared to the linked quarter.

Full Year 2020 Highlights

-- Total asset growth of 14% to $7.66 billion at December 31, 2020. -- Strong organic loan growth of 12% or $605.6 million, which excludes PPP loans. -- Deposit generation of 22% or $1.16 billion, including 34% growth in noninterest-bearing deposits. -- Net loan charge-offs for the year totaled $1.5 million, or 0.03% of average loans.

COVID-19

As 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 offered temporary payment deferrals on commercial, mortgage and consumer loans. At December 31, 2020, loans on payment deferral totaled $9.7 million, or 0.2% of total loans compared to $154 million, or 2.6% of total loans at September 30, 2020. The reduction in payment deferrals since September 30, 2020, was due primarily to borrowers resuming their regular payment schedule. In addition, during the fourth quarter of 2020, we modified $39.0 million in loans on payment deferment in accordance with the provisions of the CARES Act. We are also a participant in the Small Business Administration PPP to help strengthen local businesses and preserve jobs in our communities and had originally funded $326.6 million with $11.1 million in related fees, as well as $1.1 million in deferred costs. The Company is currently accepting online applications for PPP First Draw Loans to first-time borrowers as well as PPP Second Draw Loans for previous PPP borrowers under the Economic Aid Act.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2020 of 3.08% increased 12 basis points from the linked quarter and decreased 19 basis points compared to the fourth quarter of 2019. The increase in net interest margin compared to the third quarter was due in part to the impact of the reduction of FHLB borrowings as a result of the balance sheet restructure in the fourth quarter of 2020 as well as an increase in prepayment fees, a decrease in cash balances and a decrease in the cost of interest-bearing liabilities. The decrease compared to the fourth quarter of 2019 was primarily a result of the current low interest rate environment resulting in lower yields on interest-earning assets as well as higher cash levels. Net interest margin for 2020 was 3.09% compared to 3.33% for the same period in 2019.

The yield on interest-earning assets for the fourth quarter of 2020 was 3.51% compared to 3.49% for the linked quarter and 4.21% for the fourth quarter of 2019. The yield on interest-earning assets for 2020 was 3.70% compared to 4.36% for 2019. The decrease in yield on interest-earning assets, when compared to 2019 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, increased balance of lower-yielding federal funds sold, as well as the origination of lower-yielding PPP loans during 2020.

The cost of interest-bearing liabilities decreased in the fourth quarter of 2020 to 0.59% compared to 0.72% for the linked quarter and 1.26% for the fourth quarter of 2019. The cost of interest-bearing liabilities for 2020 was 0.83% compared to 1.35% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings continue to decrease since 2019 largely driven by reductions in market interest rates.

Net interest income increased to $55.1 million for the fourth quarter of 2020 compared to $49.5 million for the fourth quarter of 2019, due primarily to the growth of interest-earning assets as well as lower interest rates on interest-bearing liabilities partially offset by an increase in interest-bearing liabilities and lower yields on interest-earning assets. Net interest income for 2020 was $207.7 million, as compared to $196.0 million for the same period in 2019 due to the same reason as the quarterly comparison.

Noninterest Income

Noninterest income decreased $1.1 million to $6.8 million for the fourth quarter of 2020 from $8.0 million for the fourth quarter of 2019 due primarily to a reduction of $1.2 million in loan swap income. Service charges on deposit accounts decreased $541,000 due to changes in customer behavior resulting from the pandemic. Gain on sales of loans in the fourth quarter of 2020 increased $385,000 due primarily to the low interest rate environment. Fourth quarter 2020 results also included an $871,000 gain on sales of securities compared to no gain on sales of securities during the same period in 2019. Other income decreased $593,000 compared to the fourth quarter of 2019 due primarily to gains resulting from payoffs of purchased credit impaired loans during the fourth quarter of 2019.

For 2020, noninterest income totaled $27.1 million compared to $26.8 million for the same period in 2019. Gains on sales of loans and swap income increased $1.7 million and $1.5 million, respectively, compared to 2019, both due primarily to the low interest rate environment. Gain on sales of securities totaled $1.2 million in 2020 compared to no such gains in 2019. These variances were partially offset by a decrease in service charges on deposit accounts of $2.1 million, a reduction in equity securities valuation by $1.0 million and a decrease in other income of $499,000 compared to 2019.

Noninterest Expense

Noninterest expense totaled $36.9 million for the fourth quarter of 2020 and increased $5.4 million compared to the fourth quarter of 2019 due primarily to prepayment fees of $3.8 million resulting from the prepayment of $99.9 million in FHLB debt at a weighted average rate of 2.34%. Salary and employee benefit expense increased $586,000, or 3%, due primarily to normal merit increases. Furniture and equipment in the fourth quarter of 2020 increased $726,000 due primarily to an increase in IT service agreement expense compared to the fourth quarter of 2019. FDIC expense was $750,000 in the fourth quarter of 2020 compared to zero in the fourth quarter of 2019 as the FDIC insurance fund reserve ratio exceeded the required level and the Company received credits to offset its fourth quarter 2019 assessment.

For 2020, noninterest expense totaled $132.8 million compared to $126.8 million for the same period in 2019. The primary increase was $4.1 million in FHLB loan prepayment fees on balance sheet restructurings during 2020. Salary and employee benefit expense increased $3.1 million, or 4%, due primarily to an increase in staffing levels as well as normal merit increases. Furniture and equipment in 2020 increased $2.6 million due to the same reason mentioned in the quarterly comparison. FDIC insurance expense increased $1.7 million in 2020 primarily due to an increase in deposit balances and the application of FDIC assessment credits in 2019 as mentioned in the previous paragraph. Noninterest expense in 2019 included merger-related expenses of $3.2 million resulting from the merger with Highlands Bancorp.

Income Tax Expense

The effective tax rate for the fourth quarter of 2020 was 22.3% compared to 24.9% for the fourth quarter of 2019. The effective tax rate for 2020 was 23.1% compared to 24.8% for 2019.

Financial Condition

At December 31, 2020, total assets were $7.66 billion, an increase of $953.1 million, including $284.6 million in PPP loans, compared to December31, 2019. For the twelve months ended December 31, 2020, total loans grew $883.4 million, or 17% to $6.02 billion and investment securities increased $54.3 million or 6% to $973.2 million. On the funding side, total deposits increased $1.16 billion or 22% to $6.46 billion, while borrowings decreased $299.9 million or 49% to $312.8 million. At December 31, 2020, total loans as a percent of total deposits was 93.4%.

Asset Quality

At December 31, 2020, non-performing assets increased to $36.1 million, 0.47% of total assets, compared to $21.7 million, 0.32% of total assets, at December31, 2019. Non-accrual loans as a percent of total loans increased to 0.60% at December 31, 2020 compared to 0.41% at December31, 2019. The allowance for credit losses increased to $71.1 million, 1.18% of total loans, at December 31, 2020, compared to $40.0 million, 0.78% of total loans, at December31, 2019. Excluding PPP loans, the ratio of allowance for loan losses to total loans was 1.24%. The increase from December 31, 2019, was primarily due to the adoption of CECL and the impact of COVID-19. The Company adopted CECL at December 31, 2020, and recorded an increase in the allowance for credit losses on loans of $6.7 million effective January 1, 2020. In the fourth quarter of 2020, the Company had net charge-offs of $528,000, or 0.04% of average loans, annualized, compared to net recoveries of $262,000, or 0.02% of average loans, annualized, for the same period in 2019. Provision for credit losses for the fourth quarter of 2020 was $789,000 compared to $1.1 million in the fourth quarter of 2019.

Capital

At December 31, 2020, stockholders' equity was $763.8 million compared to $725.3 million at December31, 2019, a 5% increase. Lakeland Bancorp remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.37% at December31, 2020. At December 31, 2020, the book value per common share increased 5% to $15.13 and tangible book value per common share increased 7% to $11.97. On January26, 2021, the Company declared a quarterly cash dividend of $0.125 per share to be paid on February17, 2021, to shareholders of record as of February8, 2021. The Company will recommence its existing share repurchase plan, which has 2.4 million shares remaining under the current plan, in the first quarter of 2021.

Forward-Looking Statements

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. 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. The Company 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: changes in the financial services industry and the U.S. and global capital markets, changes in economic conditions nationally, regionally and in the Companys markets, the nature and timing of actions of the Federal Reserve Board and other regulators, the nature and timing of legislation and regulation affecting the financial services industry, government intervention in the U.S. financial system, changes in federal and state tax laws, changes in levels of market interest rates, pricing pressures on loan and deposit products, credit risks of the Companys lending and leasing activities, successful implementation, deployment and upgrades of new and existing technology, systems, services and products, customers acceptance of the Companys products and services, and competition. Further, given its ongoing and dynamic nature, it is difficult to predict what the continuing effects of the COVID-19 pandemic will have on our business and results of operations. The pandemic and related local and national economic disruption may, among other effects, continue to result in a material adverse change for the demand for our products and services; increased levels of loan delinquencies, problem assets and foreclosures; branch disruptions, unavailability of personnel and increased cybersecurity risks as employees work remotely. Any statements made by the Company that are not historical facts should be considered to be forward-looking statements. The Company is not obligated to update and does not undertake to update any of its forward-looking statements made herein.

Explanation of Non-GAAP Financial Measures

Reported amounts are presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").This press release also contains certain supplemental non-GAAP information that the Companys management uses in its analysis of the Companys financial results. Specifically, the Company provides measures based on what it believes are its operating earnings on a consistent basis, and excludes material non-routine operating items which affect the GAAP reporting of results of operations. The Companys management believes that providing this information to analysts and investors allows them to better understand and evaluate the Companys core financial results for the periods in question.

The Company also provides measurements and ratios based on tangible equity and tangible assets. These measures are utilized by regulators and market analysts to evaluate a companys financial condition and, therefore, the Companys management believes that such information is useful to investors.

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, and, where applicable, long-term debt prepayment fees and merger-related expenses. Income for the non-GAAP ratio is increased by the favorable effect of tax-exempt income and excludes gains and losses from the sale of investment securities, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period.

These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. See accompanying non-GAAP tables.

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $7.66 billion in total assets at December 31, 2020. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, N.Y., the Bank offers business and retail banking products and services. Business services include commercial loans and lines of credit, commercial real estate loans, loans for healthcare services, asset-based lending, equipment financing, small business loans and lines and cash management services. Consumer services include online and mobile banking, home equity loans and lines, mortgage options and wealth management solutions. Lakeland is proud to be recognized as one of New Jersey's Best-In State Banks by Forbes and Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jersey's 50 Fastest Growing Companies by NJBIZ. Visit LakelandBank.com or 973-697-2000 for more information.

Thomas J. Shara Thomas F. SplainePresident & CEO EVP & CFO

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) Three Months Ended Twelve Months Ended December 31, December 31,(Dollars in thousands,except per share 2020 2019 2020 2019amounts)INCOME STATEMENT Net interest income $ 55,135 $ 49,548 $ 207,687 $ 196,034 Provision for credit (789 ) (1,086 ) (27,222 ) (2,130 )lossesGain on sales of 871 ? 1,213 ? investment securitiesGain on sales of loans 760 375 3,322 1,660 Gain (loss) on equity 73 (29 ) (552 ) 496 securitiesOther noninterest 5,141 7,638 23,127 24,640 incomeLong-term debt (3,777 ) ? (4,133 ) ? prepayment feeMerger-related expenses ? ? ? (3,178 )Other noninterest (33,168 ) (31,523 ) (128,665 ) (123,578 )expensePretax income 24,246 24,923 74,777 93,944 Provision for income (5,398 ) (6,208 ) (17,259 ) (23,272 )taxesNet income $ 18,848 $ 18,715 $ 57,518 $ 70,672 Basic earnings per $ 0.37 $ 0.37 $ 1.13 $ 1.39 common shareDiluted earnings per $ 0.37 $ 0.37 $ 1.13 $ 1.38 common shareDividends paid per $ 0.125 $ 0.125 $ 0.500 $ 0.490 common shareWeighted average shares 50,527 50,566 50,540 50,477 - basicWeighted average shares 50,672 50,748 50,650 50,642 - diluted SELECTED OPERATING RATIOSAnnualized return on 0.98 % 1.15 % 0.80 % 1.12 %average assetsAnnualized return on 9.96 % 10.32 % 7.74 % 10.14 %average common equityAnnualized return onaverage tangible common 12.64 % 13.29 % 9.86 % 13.16 %equity (1)Annualized yield on 3.51 % 4.21 % 3.70 % 4.36 %interest-earning assetsAnnualized cost ofinterest-bearing 0.59 % 1.26 % 0.83 % 1.35 %liabilitiesAnnualized net interest 2.92 % 2.96 % 2.87 % 3.00 %spreadAnnualized net interest 3.08 % 3.27 % 3.09 % 3.33 %marginEfficiency ratio (1) 53.74 % 54.20 % 54.54 % 54.83 %Stockholders' equity to 9.97 % 10.81 %total assetsBook value per common $ 15.13 $ 14.36 shareTangible book value per $ 11.97 $ 11.18 common share (1)Tangible common equity 8.05 % 8.62 %to tangible assets (1) ASSET QUALITY RATIOS December 31, December 31, 2020 2019Ratio of allowance forcredit losses on loans 1.18 % 0.78 %to total loansNon-performing loans to 0.60 % 0.41 %total loansNon-performing assets 0.47 % 0.32 %to total assetsAnnualized netcharge-offs 0.03 % ? %(recoveries) to averageloans (1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) (Dollars in December 31, December 31,thousands) 2020 2019SELECTED BALANCESHEET DATA AT PERIOD-ENDLoans $ 6,021,232 $ 5,137,823 Allowance forcredit losses on 71,124 40,003 loansInvestment 973,185 918,853 securitiesTotal assets 7,664,297 6,711,236 Total deposits 6,455,783 5,293,779 Short-term 169,560 328,658 borrowingsOther borrowings 143,257 284,036 Stockholders' 763,784 725,263 equity Three Months Ended Twelve Months Ended December 31, December 31, 2020 2019 2020 2019SELECTED AVERAGE BALANCE SHEET DATALoans $ 5,939,904 $ 5,025,377 $ 5,626,273 $ 4,938,298 Investment 912,723 894,698 889,223 869,374 securitiesInterest-earning 7,137,884 6,022,525 6,735,825 5,895,669 assetsTotal assets 7,625,458 6,470,082 7,208,366 6,322,654 Noninterest-bearing 1,499,093 1,130,192 1,362,918 1,092,827 demand depositsSavings deposits 571,794 492,903 535,754 500,650 Interest-bearingtransaction 3,313,556 2,814,831 3,035,626 2,653,404 accountsTime deposits 1,112,053 873,924 1,064,187 922,412 Total deposits 6,496,496 5,311,850 5,998,485 5,169,293 Short-term 68,962 67,097 92,425 95,035 borrowingsOther borrowings 155,943 284,049 244,000 290,330 Totalinterest-bearing 5,222,308 4,532,804 4,971,992 4,461,831 liabilitiesStockholders' 753,059 719,292 743,225 697,037 equity

Lakeland Bancorp, Inc.Consolidated Statements of Income(Unaudited) Three Months Ended Twelve Months Ended December 31, December 31,(Dollars in thousands,except per share 2020 2019 2020 2019amounts) INTEREST INCOME Loans and fees $ 58,553 $ 58,211 $ 229,036 $ 233,535 Federal funds sold andinterest-bearing 61 423 348 1,720 deposits with banksTaxable investment 3,680 4,857 17,811 19,722 securities and otherTax exempt investment 565 345 1,647 1,510 securities TOTAL INTEREST INCOME 62,859 63,836 248,842 256,487 INTEREST EXPENSE Deposits 6,090 11,722 32,059 49,248 Federal funds purchasedand securities sold 25 138 556 1,471 under agreements torepurchaseOther borrowings 1,609 2,428 8,540 9,734 TOTAL INTEREST 7,724 14,288 41,155 60,453 EXPENSENET INTEREST INCOME 55,135 49,548 207,687 196,034 Provision for credit 789 1,086 27,222 2,130 losses NET INTEREST INCOME AFTER PROVISION FOR 54,346 48,462 180,465 193,904 CREDIT LOSSESNONINTEREST INCOME Service charges on 2,485 3,026 9,148 11,205 deposit accountsCommissions and fees 1,365 1,548 5,868 6,230 Income on bank owned 657 676 2,657 2,740 life insuranceGain (loss) on equity 73 (29 ) (552 ) 496 securitiesGain on sales of loans 760 375 3,322 1,660 Gain on sales and callsof investment 871 ? 1,213 ? securities,netSwap income 485 1,646 4,719 3,231 Other income 149 742 735 1,234 TOTAL NONINTEREST 6,845 7,984 27,110 26,796 INCOMENONINTEREST EXPENSE Salaries and employee 20,201 19,615 80,399 77,287 benefit expenseNet occupancy expense 2,580 2,679 10,596 11,029 Furniture and equipment 3,042 2,316 11,275 8,681 expenseFDIC insurance expense 750 ? 2,123 431 Stationary, supplies 409 385 1,677 1,599 and postage expenseMarketing expense 413 515 1,253 1,945 Data processing expense 1,064 1,113 4,964 4,913 Telecommunications 476 492 1,875 1,943 expenseATM and debit card 593 604 2,331 2,377 expenseCore deposit intangible 249 289 1,025 1,182 amortizationOther real estate ownedand other repossessed ? 33 53 256 assets expenseLong-term debt 3,777 ? 4,133 ? prepayment feeMerger-related expenses ? ? ? 3,178 Other expenses 3,391 3,482 11,094 11,935 TOTAL NONINTEREST 36,945 31,523 132,798 126,756 EXPENSEINCOME BEFORE PROVISION 24,246 24,923 74,777 93,944 FOR INCOME TAXESProvision for income 5,398 6,208 17,259 23,272 taxesNET INCOME $ 18,848 $ 18,715 $ 57,518 $ 70,672 EARNINGS PER COMMON SHARE: Basic $ 0.37 $ 0.37 $ 1.13 $ 1.39 Diluted $ 0.37 $ 0.37 $ 1.13 $ 1.38 DIVIDENDS PAID PER $ 0.125 $ 0.125 $ 0.500 $ 0.490 COMMON SHARE

Lakeland Bancorp, Inc.Consolidated Balance Sheets (Dollars in thousands) December 31, December 31, 2020 2019 (Unaudited) ASSETS Cash $ 262,327 $ 275,794 Interest-bearing deposits due from banks 7,763 6,577 Total cash and cash equivalents 270,090 282,371 Investment securities available for sale, atestimated fair value (allowance for credit 855,746 755,900 losses of $2at December 31, 2020)Investment securities, held to maturity(estimated fair value of $93,868 at December31, 2020 and $124,904 at December 31, 2019 and 90,766 123,975 no allowance for credit losses at December 31,2020)Equity securities, at fair value 14,694 16,473 Federal Home Loan Bank and other membership 11,979 22,505 stocks, at costLoans held for sale 1,335 1,743 Loans, net of deferred fees 6,021,232 5,137,823 Less: Allowance for credit losses 71,124 40,003 Net loans 5,950,108 5,097,820 Premises and equipment, net 48,495 47,608 Operating lease right-of-use assets 16,772 18,282 Accrued interest receivable 19,339 16,832 Goodwill 156,277 156,277 Other identifiable intangible assets 3,288 4,314 Bank owned life insurance 115,115 112,392 Other assets 110,293 54,744 TOTAL ASSETS $ 7,664,297 $ 6,711,236 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest-bearing $ 1,510,224 $ 1,124,121 Savings and interest-bearing transaction 3,867,303 3,298,854 accountsTime deposits $250 thousand and under 895,056 652,144 Time deposits over $250 thousand 183,200 218,660 Total deposits 6,455,783 5,293,779 Federal funds purchased and securities sold 169,560 328,658 under agreements to repurchaseOther borrowings 25,000 165,816 Subordinated debentures 118,257 118,220 Operating lease liabilities 18,183 19,814 Other liabilities 113,730 59,686 TOTAL LIABILITIES 6,900,513 5,985,973 STOCKHOLDERS' EQUITY Common stock, no par value; authorized100,000,000 shares; issued 50,610,681 sharesand outstanding 50,479,646 shares at 562,421 560,263 December31, 2020 and issued and outstanding50,489,410 shares at December31, 2019Treasury shares, at cost, 131,035 shares atDecember 31, 2020 and no shares at December 31, (1,452 ) ? 2019Retained earnings 191,418 162,752 Accumulated other comprehensive income (loss) 11,397 2,248 TOTAL STOCKHOLDERS' EQUITY 763,784 725,263 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,664,297 $ 6,711,236

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended December September June 30, March 31, December 31, 30, 31,(Dollars inthousands, except 2020 2020 2020 2020 2019per share data) INCOME STATEMENT Net interest income $ 55,135 $ 52,134 $ 50,519 $ 49,899 $ 49,548 Provision for (789 ) (8,000 ) (9,000 ) (9,223 ) (1,086 )credit losses (1)Gain on sales ofinvestment 871 ? ? 342 ? securitiesGain on sales of 760 1,437 710 415 375 loansGain (loss) on 73 (170 ) 198 (653 ) (29 )equity securitiesOther noninterest 5,141 5,506 4,573 7,907 7,638 incomeLong-term debt (3,777 ) ? ? (356 ) ? prepayment feeOther noninterest (33,168 ) (32,097 ) (31,462 ) (32,148 ) (31,523 )expensePretax income 24,246 18,810 15,538 16,183 24,923 Provision for (5,398 ) (4,383 ) (3,687 ) (3,791 ) (6,208 )income taxesNet income $ 18,848 $ 14,427 $ 11,851 $ 12,392 $ 18,715 Basic earnings per $ 0.37 $ 0.28 $ 0.23 $ 0.24 $ 0.37 common shareDiluted earnings $ 0.37 $ 0.28 $ 0.23 $ 0.24 $ 0.37 per common shareDividends paid per $ 0.125 $ 0.125 $ 0.125 $ 0.125 $ 0.125 common shareDividends paid $ 6,364 $ 6,365 $ 6,365 $ 6,364 $ 6,363 Weighted average 50,527 50,526 50,522 50,586 50,566 shares - basicWeighted average 50,672 50,620 50,593 50,728 50,748 shares - diluted SELECTED OPERATING RATIOSAnnualized return 0.98 % 0.76 % 0.67 % 0.76 % 1.15 %on average assetsAnnualized returnon average common 9.96 % 7.64 % 6.42 % 6.77 % 10.32 %equityAnnualized returnon average tangible 12.64 % 9.71 % 8.19 % 8.65 % 13.29 %common equity (2)Annualized net 3.08 % 2.96 % 3.06 % 3.28 % 3.27 %interest marginEfficiency ratio 53.40 % 53.96 % 55.62 % 55.30 % 54.20 %(2)Commonstockholders' 9.97 % 10.02 % 9.96 % 10.51 % 10.81 %equity to totalassetsTangible commonequity to tangible 8.05 % 8.06 % 7.99 % 8.41 % 8.62 %assets (2)Tier 1 risk-based 10.22 % 10.34 % 10.45 % 10.61 % 11.02 %ratioTotal risk-based 12.85 % 12.93 % 12.98 % 13.04 % 13.40 %ratioTier 1 leverage 8.37 % 8.36 % 8.69 % 9.38 % 9.41 %ratioCommon equity tier 9.73 % 9.83 % 9.93 % 10.08 % 10.46 %1 capital ratioBook value per $ 15.13 $ 14.93 $ 14.77 $ 14.60 $ 14.36 common shareTangible book valueper common share $ 11.97 $ 11.77 $ 11.60 $ 11.43 $ 11.18 (2)

(1) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL") on December 31, 2020, with a transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.(2) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended December 31, September 30, June 30, March 31, December 31,(Dollars in 2020 2020 2020 2020 2019thousands) SELECTED BALANCE SHEET DATA AT PERIOD-ENDLoans $ 6,031,220 $ 5,855,024 $ 5,769,127 $ 5,331,863 $ 5,140,940 Allowance forcredit losses on 71,124 65,242 57,839 48,884 40,003 loans (3)Investment 973,185 909,535 957,985 974,319 918,853 securitiesTotal assets 7,664,297 7,522,184 7,488,516 7,013,908 6,711,236 Total deposits 6,455,783 6,266,516 6,125,502 5,455,138 5,293,779 Short-term 169,560 97,874 183,116 419,085 328,658 borrowingsOther borrowings 143,257 253,359 273,954 258,944 284,036 Stockholders' 763,784 753,572 745,489 736,922 725,263 equity LOANS Commercial, secured $ 4,514,649 $ 4,326,074 $ 4,260,917 $ 4,073,911 $ 3,924,762 by real estateCommercial,industrial and 439,503 426,821 402,239 467,346 431,934 otherPaycheck Protection 284,636 325,115 325,999 ? ? ProgramEquipment financing 114,737 116,410 115,651 116,421 111,076 Residential 376,416 342,583 334,455 334,114 335,191 mortgagesConsumer and home 301,279 318,021 329,866 340,071 337,977 equityTotal loans $ 6,031,220 $ 5,855,024 $ 5,769,127 $ 5,331,863 $ 5,140,940 DEPOSITS Noninterest-bearing $ 1,510,224 $ 1,474,847 $ 1,486,273 $ 1,129,695 $ 1,124,121 Savings andinterest-bearing 3,867,303 3,647,328 3,510,723 3,241,397 3,298,854 transactionaccountsTime deposits 1,078,256 1,144,341 1,128,506 1,084,046 870,804 Total deposits $ 6,455,783 $ 6,266,516 $ 6,125,502 $ 5,455,138 $ 5,293,779 Total loans tototal deposits 93.4 % 93.4 % 94.2 % 97.7 % 97.1 %ratio SELECTED AVERAGE BALANCE SHEET DATA Loans $ 5,939,904 $ 5,775,093 $ 5,572,865 $ 5,208,097 $ 5,025,377 Investment 912,723 873,066 891,037 879,987 894,698 securitiesInterest-earning 7,137,884 7,009,939 6,650,993 6,133,003 6,022,525 assetsTotal assets 7,625,458 7,516,069 7,137,529 6,565,302 6,470,082 Noninterest-bearing 1,499,093 1,475,422 1,364,785 1,109,638 1,130,192 demand depositsSavings deposits 571,794 548,662 525,224 496,798 492,903 Interest-bearingtransaction 3,313,556 3,086,260 2,908,299 2,830,778 2,814,831 accountsTime deposits 1,112,053 1,176,181 1,093,760 872,998 873,924 Total deposits 6,496,496 6,286,525 5,892,068 5,310,212 5,311,850 Short-term 68,962 58,845 82,694 159,825 67,097 borrowingsOther borrowings 155,943 269,093 273,904 277,753 284,049 Totalinterest-bearing 5,222,308 5,139,042 4,883,881 4,638,152 4,532,804 liabilitiesStockholders' 753,059 751,099 742,050 736,719 719,292 equity

(3) The Company adopted CECL on December 31, 2020, with a transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended December September June 30, March 31, December 31, 30, 31,(Dollars in 2020 2020 2020 2020 2019thousands)AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS)ASSETS Loans 3.92 % 3.91 % 4.03 % 4.47 % 4.60 %Taxable investmentsecurities and 1.84 % 2.09 % 2.31 % 2.56 % 2.34 %otherTax-exempt 2.51 % 2.55 % 2.70 % 2.67 % 2.69 %securitiesFederal funds soldand 0.09 % 0.10 % 0.08 % 1.42 % 1.65 %interest-bearingcash accountsTotalinterest-earning 3.51 % 3.49 % 3.69 % 4.17 % 4.21 %assetsLIABILITIES Savings accounts 0.05 % 0.06 % 0.07 % 0.07 % 0.07 %Interest-bearingtransaction 0.38 % 0.44 % 0.55 % 0.97 % 1.05 %accountsTime deposits 1.01 % 1.19 % 1.48 % 1.81 % 1.93 %Borrowings 2.84 % 2.73 % 2.62 % 2.54 % 2.86 %Totalinterest-bearing 0.59 % 0.72 % 0.86 % 1.18 % 1.26 %liabilitiesNet interest spread(taxable equivalent 2.92 % 2.77 % 2.83 % 2.99 % 2.96 %basis)Annualized netinterest margin 3.08 % 2.96 % 3.06 % 3.28 % 3.27 %(taxable equivalentbasis)Annualized cost of 0.37 % 0.44 % 0.55 % 0.82 % 0.88 %depositsASSET QUALITY DATA ALLOWANCE FORCREDIT LOSSES ON LOANSBalance at $ 65,242 $ 57,839 $ 48,884 $ 40,003 $ 38,655 beginning of periodProvision forcredit losses on (246 ) 8,000 9,000 9,223 1,086 loansCharge-offs (746 ) (682 ) (142 ) (483 ) (198 ) Recoveries 218 85 97 141 460 Balance at end of $ 64,468 $ 65,242 $ 57,839 $ 48,884 $ 40,003 periodImpact of adopting 6,656 CECL (4) $ 71,124 NET LOANCHARGE-OFFS (RECOVERIES)Commercial, secured $ (47 ) $ 298 $ (36 ) $ 111 $ (18 )by real estateCommercial,industrial and 478 173 (13 ) (31 ) 13 otherEquipment financing 64 95 (11 ) 71 (297 )Residential ? (1 ) ? 96 ? mortgages Consumer and home 33 32 105 95 40 equityNet charge-offs $ 528 $ 597 $ 45 $ 342 $ (262 )(recoveries)NON-PERFORMING ASSETSCommercial, secured $ 30,085 $ 26,145 $ 25,615 $ 24,770 $ 13,281 by real estateCommercial,industrial and 1,286 1,484 1,546 1,909 1,539 otherEquipment financing 320 444 400 199 284 Residential 2,190 2,695 2,860 2,837 3,428 mortgagesConsumer and home 2,241 2,322 2,432 2,689 2,606 equityTotal non-accrual 36,122 33,090 32,853 32,404 21,138 loansProperty acquiredthrough foreclosure ? ? 354 393 563 or repossessionTotalnon-performing $ 36,122 $ 33,090 $ 33,207 $ 32,797 $ 21,701 assetsLoans past due 90days or more and $ 1 $ 165 $ 58 $ 99 $ ? still accruingLoans restructured $ 3,856 $ 4,299 $ 4,667 $ 4,719 $ 5,650 and still accruingRatio of allowancefor credit losses 1.18 % 1.11 % 1.00 % 0.92 % 0.78 %to total loans (2)Total non-accrualloans to total 0.60 % 0.57 % 0.57 % 0.61 % 0.41 %loansTotalnon-performing 0.47 % 0.44 % 0.44 % 0.47 % 0.32 %assets to totalassetsAnnualized netcharge-offs 0.04 % 0.04 % ? % 0.03 % (0.02 )(recoveries) to %average loans

(4) The Company adopted CECL on December 31, 2020 with a $6.7 million transition adjustment retroactive to January 1, 2020. Quarterly amounts for the first, second and third quarters of 2020 do not reflect the adoption of CECL.

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) At or for the Quarter Ended(Dollars inthousands, December 31, September 30, June 30, March 31, December 31,except ratios 2020 2020 2020 2020 2019and per shareamounts) CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARETotal commonstockholders'equity at end $ 763,784 $ 753,572 $ 745,489 $ 736,922 $ 725,263 of period -GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,288 3,538 3,788 4,049 4,314 intangibleassetsTotal tangiblecommonstockholders' $ 604,219 $ 593,757 $ 585,424 $ 576,596 $ 564,672 equity at endof period -Non-GAAPSharesoutstanding at 50,480 50,468 50,463 50,462 50,498 end of periodBook value per $ 15.13 $ 14.93 $ 14.77 $ 14.60 $ 14.36 share - GAAPTangible bookvalue per $ 11.97 $ 11.77 $ 11.60 $ 11.43 $ 11.18 share -Non-GAAPCALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETSTotal tangiblecommonstockholders' $ 604,219 $ 593,757 $ 585,424 $ 576,596 $ 564,672 equity at endof period -Non-GAAPTotal assetsat end of $ 7,664,297 $ 7,522,184 $ 7,488,516 $ 7,013,908 $ 6,711,236 period - GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,288 3,538 3,788 4,049 4,314 intangibleassetsTotal tangibleassets at end $ 7,504,732 $ 7,362,369 $ 7,328,451 $ 6,853,582 $ 6,550,645 of period -Non-GAAPCommon equityto assets - 9.97 % 10.02 % 9.96 % 10.51 % 10.81 %GAAPTangiblecommon equityto tangible 8.05 % 8.06 % 7.99 % 8.41 % 8.62 %assets -Non-GAAPCALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITYNet income - $ 18,848 $ 14,427 $ 11,851 $ 12,392 $ 18,715 GAAPTotal averagecommon $ 753,059 $ 751,099 $ 742,050 $ 736,719 $ 719,292 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 156,277 156,277 goodwillLess: Averageotheridentifiable 3,433 3,689 3,942 4,205 4,468 intangibleassetsTotal averagetangiblecommon $ 593,349 $ 591,133 $ 581,831 $ 576,237 $ 558,547 stockholders'equity -Non-GAAPReturn onaverage common 9.96 % 7.64 % 6.42 % 6.77 % 10.32 %stockholders'equity - GAAPReturn onaveragetangiblecommon 12.64 % 9.71 % 8.19 % 8.65 % 13.29 %stockholders'equity -Non-GAAPCALCULATION OF EFFICIENCY RATIOTotalnoninterest $ 36,945 $ 32,097 $ 31,462 $ 32,504 $ 31,523 expenseAmortizationof core (249 ) (250 ) (261 ) (265 ) (289 )depositintangiblesMerger-related ? ? ? ? ? expensesLong-term debt (3,777 ) ? ? (356 ) prepayment feeNoninterestexpense, as $ 32,919 $ 31,847 $ 31,201 $ 31,883 $ 31,234 adjustedNet interest $ 55,135 $ 52,134 $ 50,519 $ 49,899 $ 49,548 incomeTotalnoninterest 6,845 6,773 5,481 8,011 7,984 incomeTotal revenue 61,980 58,907 56,000 57,910 57,532 Tax-equivalentadjustment on 149 108 93 88 91 municipalsecuritiesGain on salesof investment (871 ) ? ? (342 ) ? securitiesTotal revenue, $ 61,258 $ 59,015 $ 56,093 $ 57,656 $ 57,623 as adjustedEfficiencyratio - 53.74 % 53.96 % 55.62 % 55.30 % 54.20 %Non-GAAP

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) For the Twelve Months Ended December 31,(Dollars in thousands) 2020 2019CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITY Net income - GAAP $ 57,518 $ 70,672 Total average common stockholders' equity - $ 743,225 $ 697,037 GAAPLess: Average goodwill 156,277 154,971 Less: Average other identifiable intangible 3,816 4,883 assetsTotal average tangible common stockholders' $ 583,132 $ 537,183 equity - Non-GAAPReturn on average common stockholders' equity - 7.74 % 10.14 %GAAPReturn on average tangible common stockholders' 9.86 % 13.16 %equity - Non-GAAPCALCULATION OF EFFICIENCY RATIO Total noninterest expense $ 132,798 $ 126,756 Amortization of core deposit intangibles (1,025 ) (1,182 )Long-term debt prepayment fee (4,133 ) ? Merger-related expenses ? (3,178 )Noninterest expense, as adjusted $ 127,640 $ 122,396 Net interest income $ 207,687 $ 196,034 Noninterest income $ 27,110 $ 26,796 Total revenue $ 234,797 $ 222,830 Tax-equivalent adjustment on municipal $ 438 $ 401 securitiesGain on sales of investment securities (1,213 ) ? Total revenue, as adjusted $ 234,022 $ 223,231 Efficiency ratio - Non-GAAP 54.54 % 54.83 %