GlobeNewswire Inc | Apr 27, 2021 08:00AM EDT

April 27, 2021

OAK RIDGE, N.J., April 27, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $23.2 million and earnings per diluted share ("EPS") of $0.45 for the three months ended March 31, 2021 compared to net income of $12.4 million and diluted EPS of $0.24 for the three months ended March 31, 2020. For the first quarter of 2021, annualized return on average assets was 1.22%, annualized return on average common equity was 12.20% and annualized return on average tangible common equity was 15.39%.

First quarter 2021 results were favorably impacted by a negative provision for credit losses of $2.6 million compared to a provision of $9.2 million for the same period last year. The negative provision for credit losses was due primarily to an improvement in forecasted macroeconomic conditions and continued strength in asset quality.

Thomas Shara, Lakeland Bancorps President and CEO commented, I want to thank all of our Lakeland associates who unselfishly continue to deliver banking services to our customers and businesses while ensuring the safety and well-being of their fellow associates and our customers. Their commitment has been outstanding. Despite the ongoing pandemic, we are encouraged that our customers and local economy are faring well as evidenced by the continued improvements in asset quality with non-accrual loans and non-performing asset levels dropping below pre-COVID levels. As a result, we released a small portion of our loan reserves and will continue to monitor economic conditions closely as we progress into 2021.

Regarding the Companys financial results, Mr. Shara continued, The quarterly results were record earnings for Lakeland which were bolstered by an 11 basis point increase in our net interest margin and an increase in pre-tax income. Considering our continued success, the Board authorized an annualized 8% increase in our cash dividend.

First Quarter 2021 Highlights

-- Net interest margin increased to 3.19% compared to 3.08% in the fourth quarter of 2020. -- Deposit growth was strong increasing $179.4 million or 3%, including $121.7 million in noninterest-bearing deposits. -- Due to an improvement in forecasted macroeconomic conditions and continued strength in asset quality, a $2.6 million negative provision for credit losses was recorded in the first quarter of 2021. -- At March 31, 2021, there were no loans on payment deferral compared to $9.7 million, or 0.2% of total loans at December 31, 2020. -- Paycheck Protection Program ("PPP") loans totaled $346.2 million at March 31, 2021, with $133.2 million in new PPP loans booked during the first quarter of 2021. Unamortized net deferred fees on PPP loans totaled $8.1 million at March 31, 2021.

Net Interest Margin and Net Interest Income

Net interest margin for the first quarter of 2021 of 3.19% decreased 9 basis points compared to the first quarter of 2020 and increased 11 basis points compared to the fourth quarter of 2020. The decrease in net interest margin compared to the first quarter of 2020 was due primarily to a decrease in the yield on interest-earning assets partially offset by a significant decrease in the cost of interest-bearing liabilities, while the increase in net interest margin compared to the fourth quarter of 2020 was due primarily to a decrease in the cost of interest-bearing deposits.

The yield on interest-earning assets for the first quarter of 2021 was 3.56% compared to 4.17% for the first quarter of 2020 and 3.51% for the fourth quarter of 2020. The current quarter decrease in yield on interest-earning assets, when compared to the first quarter of 2020, was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during 2020, which earn an effective yield of 2.50% including amortization of fees and costs. The increase in yield on interest-earning assets, when compared to the fourth quarter of 2020 was due primarily to an increase in higher yielding average loans and securities as well as a reduction in lower yielding average federal funds sold.

The cost of interest-bearing liabilities for the first quarter of 2021 was 0.51% compared to 1.18% for the first quarter of 2020 and 0.59% for the fourth quarter of 2020. The cost of interest-bearing transaction accounts and time deposits has decreased since 2020 largely driven by reductions in market interest rates.

Net interest income for the first quarter of 2021 of $56.7 million increased $6.8 million and $1.6 million, respectively, compared to the first quarter of 2020 and the fourth quarter of 2020. The increase in net interest income compared to prior periods was due primarily to a reduction in the cost of interest-bearing deposits as well as growth in the volume of interest-earning assets.

Noninterest Income

Noninterest income decreased $2.3 million to $5.8 million for the first quarter of 2021 from $8.0 million for the first quarter of 2020 due primarily to a $2.3 million decrease in swap income. Service charges on deposit accounts for the first quarter of 2021 decreased $204,000 compared to the first quarter of 2020 due primarily to changes in customer behavior resulting from the pandemic. Losses on equity securities of $144,000 in the first quarter of 2021 compared to losses of $653,000 during the same period in 2020. Gains on sales of loans for the first quarter of 2021 increased $293,000 compared to the first quarter of 2020 due primarily to increased loan sale volume driven by lower interest rates. Additionally, first quarter 2020 results included $342,000 in gains on sales of investment securities compared to none in the first quarter of 2021.

Noninterest Expense

Noninterest expense totaled $33.9 million for the first quarter of 2021 and increased $1.4 million compared to the first quarter of 2020. Salary and employee benefit expense for the first quarter of 2021 increased $791,000, or 4%, when compared to the same quarter of 2020 as a result of staff additions and normal merit increases. Net occupancy expense increased $183,000 compared to the first quarter of 2020 primarily resulting from an increase in cleaning and snow removal expenses. Furniture and equipment expense increased $739,000 compared to the first quarter of 2020 predominately driven by an increase in costs associated with the Company's digital strategy initiative. FDIC insurance expense totaled $711,000 for the first quarter of 2021 and increased $413,000 compared to the same period in 2020 due primarily to deposit growth and assessment credits recorded in the first quarter of 2020. Other expenses in the first quarter of 2021 were $487,000 less than the first quarter of 2020 primarily resulting from a decrease in appraisal fees, consulting, travel and entertainment expenses. Additionally, first quarter 2020 results included $356,000 in long-term debt prepayment fees compared to none in the first quarter of 2021.

Income Tax Expense

The effective tax rate for the first quarter of 2021 was 25.8% compared to 23.4% for the first quarter of 2020. The increased effective tax rate for the first quarter of 2021 was primarily a result of tax advantaged items declining as a percentage of pretax income.

Financial Condition

At March31, 2021, total assets were $7.77 billion, an increase of $107.5 million compared to December31, 2020. For the three months ended March31, 2021, total loans grew $87.7 million to $6.11 billion and investment securities increased $105.6 million to $1.08 billion. On the funding side, total deposits increased $179.4 million to $6.64 billion, while borrowings decreased $57.6 million to $255.3 million. At March31, 2021, total loans as a percent of total deposits was 92.1%.

Asset Quality

At March31, 2021, non-performing assets decreased to $31.1 million, 0.40% of total assets, compared to $42.8 million, 0.56% of total assets, at December31, 2020. Non-accrual loans as a percent of total loans decreased 28% to 0.51% at March31, 2021 compared to 0.71% at December31, 2020. The allowance for credit losses decreased to $67.3 million, 1.10% of total loans, at March31, 2021, compared to $71.1 million, 1.18% of total loans, at December31, 2020. As of March 31, 2021, the allowance for credit losses to total loans less PPP loans of $346.2 million, was 1.17%. In the first quarter of 2021, the Company had net charge-offs of $1.1 million, or 0.07% of average loans, annualized, compared to $342,000, or 0.03%, for the same period in 2020. The provision for credit losses for the first quarter of 2021 was a benefit of $2.6 million compared to provision of $9.2 million in the first quarter of 2020. At March 31, 2021 Cares Act modifications totaled $43.2 million compared to $40.0 million at December 31, 2020.

Capital

At March31, 2021, stockholders' equity was $768.1 million compared to $763.8 million at December31, 2020, a 1% increase. Lakeland Bank remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.51% at March31, 2021. The book value per common share and tangible book value per common share increased 4% and 5% to $15.18 and $12.03, respectively, compared to $14.60 and $11.43 at March31, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At March31, 2021, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio was 9.88% and 8.00%, respectively, compared to 9.97% and 8.05% at December 31, 2020. Excluding the impact of the PPP loans of $346.2 million, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio was 10.34% and 8.38%, respectively, at March 31, 2021. On April23, 2021, the Company declared a quarterly cash dividend of $0.135 per share to be paid on May18, 2021, to shareholders of record as of May7, 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. Accordingly, you should not place undue reliance on forward-looking statements. In addition to the specific risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2020, 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 the continuing effects that 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, 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.

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.

Specifically, 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 "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures.

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which had $7.77 billion in total assets at March31, 2021. 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.Consolidated Statements of Income(Unaudited) Three Months Ended March 31,(Dollars in thousands, except per share amounts) 2021 2020Interest Income Loans and fees $ 58,778 $ 57,857 Federal funds sold and interest-bearing deposits with 37 159 banksTaxable investment securities and other 3,981 5,229 Tax exempt investment securities 612 332 Total Interest Income 63,408 63,577 Interest Expense Deposits 5,124 10,863 Federal funds purchased and securities sold under 23 429 agreements to repurchaseOther borrowings 1,533 2,386 Total Interest Expense 6,680 13,678 Net Interest Income 56,728 49,899 Provision for credit losses (2,642 ) 9,223 Net Interest Income after Provision for Credit Losses 59,370 40,676 Noninterest Income Service charges on deposit accounts 2,296 2,500 Commissions and fees 1,598 1,640 Income on bank owned life insurance 634 665 Loss on equity securities (144 ) (653 )Gains on sales of loans 708 415 Gains on sales and calls of investment securities,net ? 342 Swap income 562 2,843 Other income 105 259 Total Noninterest Income 5,759 8,011 Noninterest Expense Salaries and employee benefit expense 20,518 19,727 Net occupancy expense 3,019 2,836 Furniture and equipment expense 3,299 2,560 FDIC insurance expense 711 298 Stationary, supplies and postage expense 378 399 Marketing expense 318 227 Data processing expense 1,255 1,253 Telecommunications expense 522 444 ATM and debit card expense 604 587 Core deposit intangible amortization 226 265 Other real estate owned and other repossessed assets ? 12 expenseLong-term debt prepayment fee ? 356 Other expenses 3,053 3,540 Total Noninterest Expense 33,903 32,504 Income before Provision for Income Taxes 31,226 16,183 Provision for income taxes 8,051 3,791 Net Income $ 23,175 $ 12,392 Earnings Per Common Share Basic $ 0.45 $ 0.24 Diluted $ 0.45 $ 0.24 Dividends Per Common Share $ 0.125 $ 0.125

Lakeland Bancorp, Inc.Consolidated Balance Sheets(Dollars in thousands) March 31, 2021 December 31, 2020 (Unaudited) Assets Cash $ 189,506 $ 262,327 Interest-bearing deposits due from banks 12,612 7,763 Total cash and cash equivalents 202,118 270,090 Investment securities available for sale, atestimated fair value (allowance for credit 968,394 855,746 losses of $144 at March31, 2021 and $2 atDecember 31, 2020 )Investment securities held to maturity(estimated fair value of $87,215 at March31,2021 and $93,868 at December 31, 2020, no 84,994 90,766 allowance for credit losses at March 31, 2021and December 31, 2020 )Equity securities, at fair value 14,590 14,694 Federal Home Loan Bank and other membership 10,772 11,979 stocks, at costLoans held for sale 1,230 1,335 Loans, net of deferred fees 6,108,946 6,021,232 Less: Allowance for credit losses 67,252 71,124 Net loans 6,041,694 5,950,108 Premises and equipment, net 48,539 48,495 Operating lease right-of-use assets 16,199 16,772 Accrued interest receivable 19,840 19,339 Goodwill 156,277 156,277 Other identifiable intangible assets 3,063 3,288 Bank owned life insurance 115,756 115,115 Other assets 88,295 110,293 Total Assets $ 7,771,761 $ 7,664,297 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing $ 1,631,942 $ 1,510,224 Savings and interest-bearing transaction 4,049,914 3,867,303 accountsTime deposits $250 thousand and under 794,283 895,056 Time deposits over $250 thousand 159,087 183,200 Total deposits 6,635,226 6,455,783 Federal funds purchased and securities sold 111,999 169,560 under agreements to repurchaseOther borrowings 25,000 25,000 Subordinated debentures 118,267 118,257 Operating lease liabilities 17,574 18,183 Other liabilities 95,630 113,730 Total Liabilities 7,003,696 6,900,513 Stockholders' Equity Common stock, no par value; authorized100,000,000 shares; issued 50,729,527 sharesand outstanding 50,598,492 shares 562,984 562,421 atMarch31, 2021 and issued 50,610,681shares and outstanding 50,479,646 shares atDecember31, 2020Retained earnings 208,224 191,418 Treasury shares, at cost, 131,035 shares at (1,452 ) (1,452 )March31, 2021 and December 31, 2020Accumulated other comprehensive (loss) income (1,691 ) 11,397 Total Stockholders' Equity 768,065 763,784 Total Liabilities and Stockholders' Equity $ 7,771,761 $ 7,664,297

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended March 31, December 31, September June 30, March 31, 30,(Dollars inthousands, 2021 2020 2020 2020 2020except per sharedata)Income Statement Net interest $ 56,728 $ 55,135 $ 52,134 $ 50,519 $ 49,899 incomeProvision forcredit losses 2,642 (789) (8,000) (9,000) (9,223) (1)Gains on salesof investment ? 871 ? ? 342 securitiesGains on sales 708 760 1,437 710 415 of loans(Loss) gain onequity (144) 73 (170) 198 (653) securitiesOthernoninterest 5,195 5,141 5,506 4,573 7,907 incomeLong-term debt ? (3,777) ? ? (356) prepayment feeOthernoninterest (33,903) (33,168) (32,097) (31,462) (32,148) expensePretax income 31,226 24,246 18,810 15,538 16,183 Provision for (8,051) (5,398) (4,383) (3,687) (3,791) income taxesNet income $ 23,175 $ 18,848 $ 14,427 $ 11,851 $ 12,392 Basic earnings $ 0.45 $ 0.37 $ 0.28 $ 0.23 $ 0.24 per common shareDiluted earnings $ 0.45 $ 0.37 $ 0.28 $ 0.23 $ 0.24 per common shareDividends paid $ 0.125 $ 0.125 $ 0.125 $ 0.125 $ 0.125 per common shareDividends paid $ 6,369 $ 6,364 $ 6,365 $ 6,365 $ 6,364 Weighted average 50,576 50,527 50,526 50,522 50,586 shares - basicWeighted average 50,780 50,672 50,620 50,593 50,728 shares - diluted Selected Operating RatiosAnnualizedreturn on 1.22 % 0.98 % 0.76 % 0.67 % 0.76 %average assetsAnnualizedreturn on 12.20 % 9.96 % 7.64 % 6.42 % 6.77 %average commonequityAnnualizedreturn onaverage tangible 15.39 % 12.64 % 9.71 % 8.19 % 8.65 %common equity(2)Annualized net 3.19 % 3.08 % 2.96 % 3.06 % 3.28 %interest marginEfficiency ratio 53.75 % 53.74 % 53.96 % 55.62 % 55.30 %(2)Commonstockholders' 9.88 % 9.97 % 10.02 % 9.96 % 10.51 %equity to totalassetsTangible commonequity to 8.00 % 8.05 % 8.06 % 7.99 % 8.41 %tangible assets(2)Tier 1 10.47 % 10.22 % 10.34 % 10.45 % 10.61 %risk-based ratioTotal risk-based 13.02 % 12.85 % 12.93 % 12.98 % 13.04 %ratioTier 1 leverage 8.51 % 8.37 % 8.36 % 8.69 % 9.38 %ratioCommon equitytier 1 capital 9.98 % 9.73 % 9.83 % 9.93 % 10.08 %ratioBook value per $ 15.18 $ 15.13 $ 14.93 $ 14.77 $ 14.60 common shareTangible bookvalue per common $ 12.03 $ 11.97 $ 11.77 $ 11.60 $ 11.43 share (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 March 31, December 31, September 30, June 30, March 31,(Dollars in 2021 2020 2020 2020 2020thousands)Selected BalanceSheet Data at Period EndLoans $ 6,108,946 $ 6,021,232 $ 5,843,591 $ 5,756,155 $ 5,328,623 Allowance forcredit losses on 67,252 71,124 65,242 57,839 48,884 loans (3)Investment 1,078,750 973,185 909,535 957,985 974,319 securitiesTotal assets 7,771,761 7,664,297 7,522,184 7,488,516 7,013,908 Total deposits 6,635,226 6,455,783 6,266,516 6,125,502 5,455,138 Short-term 111,999 169,560 97,874 183,116 419,085 borrowingsOther borrowings 143,267 143,257 253,359 273,954 258,944 Stockholders' 768,065 763,784 753,572 745,489 736,922 equity Loans Non-owner occupied $ 2,375,024 $ 2,398,946 commercialOwner occupied 857,506 827,092 commercialMultifamily 858,168 813,225 Non-owner occupied 195,534 200,229 residentialTotal commercial,secured by real $ 4,286,232 $ 4,239,492 $ 4,042,946 $ 3,955,045 $ 3,734,565 estate (3)Commercial,industrial and 394,416 433,553 418,813 393,017 467,286 otherConstruction 291,252 266,883 275,716 298,180 332,228 Paycheck Protection 346,150 284,636 325,115 325,999 ? ProgramEquipment financing 119,428 116,690 118,320 117,569 118,396 Residential 385,778 377,380 343,317 335,135 334,786 mortgagesConsumer and home 285,690 302,598 319,364 331,210 341,362 equityTotal loans $ 6,108,946 $ 6,021,232 $ 5,843,591 $ 5,756,155 $ 5,328,623 Deposits Noninterest-bearing $ 1,631,942 $ 1,510,224 $ 1,474,847 $ 1,486,273 $ 1,129,695 Savings andinterest-bearing 4,049,914 3,867,303 3,647,328 3,510,723 3,241,397 transactionaccountsTime deposits 953,370 1,078,256 1,144,341 1,128,506 1,084,046 Total deposits $ 6,635,226 $ 6,455,783 $ 6,266,516 $ 6,125,502 $ 5,455,138 Total loans tototal deposits 92.1 % 93.3 % 93.3 % 94.0 % 97.7 %ratio Selected Average Balance Sheet DataLoans $ 6,089,757 $ 5,939,904 $ 5,775,093 $ 5,572,865 $ 5,208,097 Investment 1,003,479 912,723 873,066 891,037 879,987 securitiesInterest-earning 7,230,136 7,137,884 7,009,939 6,650,993 6,133,003 assetsTotal assets 7,704,603 7,625,458 7,516,069 7,137,529 6,565,302 Noninterest-bearing 1,545,968 1,499,093 1,475,422 1,364,785 1,109,638 demand depositsSavings deposits 604,931 571,794 548,662 525,224 496,798 Interest-bearingtransaction 3,388,027 3,313,556 3,086,260 2,908,299 2,830,778 accountsTime deposits 1,044,915 1,112,053 1,176,181 1,093,760 872,998 Total deposits 6,583,841 6,496,496 6,286,525 5,892,068 5,310,212 Short-term 73,492 68,962 58,845 82,694 159,825 borrowingsOther borrowings 143,261 155,943 269,093 273,904 277,753 Totalinterest-bearing 5,254,626 5,222,308 5,139,042 4,883,881 4,638,152 liabilitiesStockholders' 770,255 753,059 751,099 742,050 736,719 equity

(3) The Company adopted ASU 2016-13 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 ASU 2016-13.

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended March 31, December 31, September June 30, March 31, 30,(Dollars in 2021 2020 2020 2020 2020thousands)AverageAnnualizedYields (Taxable EquivalentBasis) and CostsAssets Loans 3.91 % 3.92 % 3.91 % 4.03 % 4.47 %Taxableinvestment 1.81 % 1.84 % 2.09 % 2.31 % 2.56 %securities andotherTax-exempt 2.54 % 2.51 % 2.55 % 2.70 % 2.67 %securitiesFederal fundssold and 0.11 % 0.09 % 0.10 % 0.08 % 1.42 %interest-bearingcash accountsTotalinterest-earning 3.56 % 3.51 % 3.49 % 3.69 % 4.17 %assetsLiabilities Savings accounts 0.05 % 0.05 % 0.06 % 0.07 % 0.07 %Interest-bearingtransaction 0.34 % 0.38 % 0.44 % 0.55 % 0.97 %accountsTime deposits 0.83 % 1.01 % 1.19 % 1.48 % 1.81 %Borrowings 2.87 % 2.84 % 2.73 % 2.62 % 2.54 %Totalinterest-bearing 0.51 % 0.59 % 0.72 % 0.86 % 1.18 %liabilitiesNet interestspread (taxable 3.05 % 2.92 % 2.77 % 2.83 % 2.99 %equivalentbasis)Annualized netinterest margin(taxable 3.19 % 3.08 % 2.96 % 3.06 % 3.28 %equivalentbasis)Annualized cost 0.32 % 0.37 % 0.44 % 0.55 % 0.82 %of depositsAsset Quality DataAllowance forCredit Losses on LoansBalance atbeginning of $ 71,124 $ 65,242 $ 57,839 $ 48,884 $ 40,003 periodImpact ofadopting ASU ? 6,656 ? ? ? 2016-13 (4)Provision forcredit losses on (2,808) (246) 8,000 9,000 9,223 loansCharge-offs (1,270) (746) (682) (142) (483) Recoveries 206 218 85 97 141 Balance at end $ 67,252 $ 71,124 $ 65,242 $ 57,839 $ 48,884 of period Net LoanCharge-Offs (Recoveries)Commercial, real $ 843 $ (47) $ 298 $ (36) $ 111 estateCommercial,industrial and 221 478 173 (13) (31) otherEquipment 83 64 95 (11) 71 financingResidential (58) ? (1) ? 96 mortgagesConsumer and (25) 33 32 105 95 home equityNet charge-offs $ 1,064 $ 528 $ 597 $ 45 $ 342 (recoveries)Non-Performing Assets (5)Commercial, real $ 23,984 $ 35,091 $ 26,145 $ 25,615 $ 24,770 estateCommercial,industrial and 2,252 2,633 1,484 1,546 1,909 otherEquipment 293 327 444 400 199 financingResidential 2,323 2,469 2,695 2,860 2,837 mortgagesConsumer and 2,274 2,243 2,322 2,432 2,689 home equityTotalnon-accrual 31,126 42,763 33,090 32,853 32,404 loansPropertyacquired through ? ? ? 354 393 foreclosure orrepossessionTotalnon-performing $ 31,126 $ 42,763 $ 33,090 $ 33,207 $ 32,797 assets Loans past due90 days or more $ ? $ 1 $ 165 $ 58 $ 99 and stillaccruingLoansrestructured and $ 3,799 $ 3,856 $ 4,299 $ 4,667 $ 4,719 still accruingRatio ofallowance for 1.10 % 1.18 % 1.11 % 1.00 % 0.92 %loan losses tototal loansTotalnon-accrual 0.51 % 0.71 % 0.57 % 0.57 % 0.61 %loans to totalloansTotalnon-performing 0.40 % 0.56 % 0.44 % 0.44 % 0.47 %assets to totalassetsAnnualized netcharge-offs to 0.07 % 0.04 % 0.04 % ? % 0.03 %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

(5) Includes non-accrual purchased credit deteriorated loans from December 31, 2020 forward

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) At or for the Quarter Ended March 31, December 31, September 30, June 30, March 31,(Dollars inthousands,except ratios 2021 2020 2020 2020 2020and per shareamounts)Calculation ofTangible Book Value PerCommon ShareTotal commonstockholders'equity at end $ 768,065 $ 763,784 $ 753,572 $ 745,489 $ 736,922 of period -GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,063 3,288 3,538 3,788 4,049 intangibleassetsTotal tangiblecommonstockholders' $ 608,725 $ 604,219 $ 593,757 $ 585,424 $ 576,596 equity at endof period -Non-GAAP Sharesoutstanding at 50,598 50,480 50,468 50,463 50,462 end of period Book value per $ 15.18 $ 15.13 $ 14.93 $ 14.77 $ 14.60 share - GAAP Tangible bookvalue per $ 12.03 $ 11.97 $ 11.77 $ 11.60 $ 11.43 share -Non-GAAP Calculation ofTangibleCommon Equity to TangibleAssetsTotal tangiblecommonstockholders' $ 608,725 $ 604,219 $ 593,757 $ 585,424 $ 576,596 equity at endof period -Non-GAAP Total assetsat end of $ 7,771,761 $ 7,664,297 $ 7,522,184 $ 7,488,516 $ 7,013,908 period - GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,063 3,288 3,538 3,788 4,049 intangibleassetsTotal tangibleassets at end $ 7,612,421 $ 7,504,732 $ 7,362,369 $ 7,328,451 $ 6,853,582 of period -Non-GAAPPaycheckProtection 346,150 284,636 325,115 325,999 ? Program loans("PPP")Total assetsat end ofperiod $ 7,425,611 $ 7,379,661 $ 7,197,069 $ 7,162,517 $ 7,013,908 excluding PPP-Non-GAAPTotal tangibleassets at endof period $ 7,266,271 $ 7,220,096 $ 7,037,254 $ 7,002,452 $ 6,853,582 excluding PPP- Non-GAAP Common equityto assets - 9.88 % 9.97 % 10.02 % 9.96 % 10.51 %GAAPCommon equityto assets 10.34 % 10.35 % 10.47 % 10.41 % 10.51 %excluding PPP- Non-GAAP Tangiblecommon equityto tangible 8.00 % 8.05 % 8.06 % 7.99 % 8.41 %assets -Non-GAAPTangiblecommon equityto tangible 8.38 % 8.37 % 8.44 % 8.36 % 8.41 %assetsexcluding PPP- Non-GAAP Calculation ofReturn onAverage TangibleCommon EquityNet income - $ 23,175 $ 18,848 $ 14,427 $ 11,851 $ 12,392 GAAP Total averagecommon $ 770,255 $ 753,059 $ 751,099 $ 742,050 $ 736,719 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 156,277 156,277 goodwillLess: Averageotheridentifiable 3,192 3,433 3,689 3,942 4,205 intangibleassetsTotal averagetangiblecommon $ 610,786 $ 593,349 $ 591,133 $ 581,831 $ 576,237 stockholders'equity -Non-GAAP Return onaverage common 12.20 % 9.96 % 7.64 % 6.42 % 6.77 %stockholders'equity - GAAP Return onaveragetangiblecommon 15.39 % 12.64 % 9.71 % 8.19 % 8.65 %stockholders'equity -Non-GAAP Calculation ofEfficiency RatioTotalnoninterest $ 33,903 $ 36,945 $ 32,097 $ 31,462 $ 32,504 expenseAmortizationof core (226) (249) (250) (261) (265) depositintangiblesLong term debtprepayment ? (3,777) ? ? (356) feesNoninterestexpense, as $ 33,677 $ 32,919 $ 31,847 $ 31,201 $ 31,883 adjusted Net interest $ 56,728 $ 55,135 $ 52,134 $ 50,519 $ 49,899 incomeTotalnoninterest 5,759 6,845 6,773 5,481 8,011 incomeTotal revenue 62,487 61,980 58,907 56,000 57,910 Tax-equivalentadjustment on 163 149 108 93 88 municipalsecuritiesGains on salesof investment ? (871) ? ? (342) securitiesTotal revenue, $ 62,650 $ 61,258 $ 59,015 $ 56,093 $ 57,656 as adjustedEfficiencyratio - 53.75 % 53.74 % 53.96 % 55.62 % 55.30 %Non-GAAP