GlobeNewswire Inc | Jul 22, 2021 08:00AM EDT

July 22, 2021

OAK RIDGE, N.J., July 22, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $27.4 million and earnings per diluted share ("EPS") of $0.53 for the three months ended June 30, 2021 compared to net income of $11.9 million and diluted EPS of $0.23 for the three months ended June 30, 2020. For the second quarter of 2021, annualized return on average assets was 1.41%, annualized return on average common equity was 14.07% and annualized return on average tangible common equity was 17.67%.

For the six months ended June30, 2021, the Company reported net income of $50.6 million and earnings per diluted share ("EPS") of $0.98 compared to net income of $24.2 million and diluted EPS of $0.47 for the first six months of 2020. Annualized return on average assets was 1.32%, annualized return on average common equity was 13.15% and annualized return on average tangible common equity was 16.55% for the first six months of 2021.

The second quarter and year-to-date 2021 results were favorably impacted by negative provisions for credit losses of $6.0 million and $8.6 million, respectively, compared to provisions of $9.0 million and $18.2 million for the same periods last year as forecasted macroeconomic conditions have improved and Lakeland's asset quality continues to be strong.

Thomas Shara, Lakeland Bancorps President and CEO commented, We are pleased with the Companys record earnings for the quarter and our continued improvement in asset quality with non-performing assets to total assets dropping to 29 basis points. Notwithstanding the negative provision for credit losses for the quarter, Lakeland continues to effectively navigate the current economic environment with increased net interest margin, prudent expense management and excellent credit metrics.

Regarding last weeks announced merger agreement to acquire 1st Constitution Bancorp, Mr. Shara continued, We are extremely excited to bring together two high performing banks who each were recently recognized by national news media outlets as the best banks in New Jersey. Lakeland was named Best In-State Bank in New Jersey by Forbes and 1st Constitution was awarded Best Small Bank in New Jersey by Newsweek. This transaction is expected to close in the fourth quarter of 2021 or early first quarter 2022.

Second Quarter 2021 Highlights

-- Net interest margin increased to 3.27% compared to 3.19% in the first quarter of 2021 and 3.06% in the second quarter of 2020. -- Nonperforming assets decreased $8.5 million or 27% to $22.6 million at June 30, 2021 compared to $31.1 million at March 31, 2021. -- Deposit growth was strong as saving and interest-bearing transaction accounts increased $148.8 million during the second quarter, while higher priced time deposits were allowed to run off. Noninterest-bearing deposits increased $51.9 million to $1.68 billion at June 30, 2021. -- Paycheck Protection Program ("PPP") loans totaled $207.0 million at June 30, 2021 compared to $346.2 million at March 31, 2021. New PPP loans booked during the second quarter totaled $14.2 million while $153.3 million in previously booked PPP loans were forgiven resulting in a net decrease of $139.1 million. Unamortized net deferred fees on PPP loans totaled $6.1 million at June 30, 2021 compared to $8.1 million at March 31, 2021.

Net Interest Margin and Net Interest Income

Net interest margin for the second quarter of 2021 of 3.27% increased 21 basis points compared to the second quarter of 2020 and increased 8 basis points compared to the first quarter of 2021. Net interest margin for the first six months of 2021 was 3.23% as compared to 3.16% for the same period in 2020. The increase in net interest margin compared to the second quarter 2020 and year-to-date 2020 was due primarily to a decrease in the cost of interest-bearing liabilities, while the increase in net interest margin compared to the linked quarter was due primarily to an increase in the yield on interest-earning assets as well as a reduction in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the second quarter of 2021 was 3.57% as compared to 3.69% for the second quarter of 2020 and 3.56% for the first quarter of 2021. The yield on interest-earning assets for the first six months of 2021 was 3.57% as compared to 3.92% during the same period in 2020. The current quarter decrease in yield on interest-earning assets, when compared to the second quarter of 2020 was due primarily to a reduction in the yield on securities as well as an increase in average securities balances. The current quarter increase in yield on interest-earning assets compared to the first quarter of 2021 was due primarily to an increase in yield on loans resulting from an increase in prepayment fees and interest recoveries on non-performing assets. The 35 basis point reduction in yield on interest-earning assets for the first six months of 2021 compared to the same period in 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 cost of interest-bearing liabilities for the second quarter of 2021 was 0.42% compared to 0.86% for the second quarter of 2020 and 0.51% for the first quarter of 2021. The cost of interest-bearing liabilities for the first six months of 2021 was 0.47% compared to 1.02% during the same period in 2020. The reduction in the cost of interest-bearing liabilities compared to prior periods was largely driven by reductions in market interest rates as well as a change in the mix of interest-bearing liabilities. Higher cost time deposit and borrowings balances have decreased while lower cost interest-bearing transaction account balances have increased.

Net interest income for the second quarter of 2021 of $59.7 million increased $9.2 million and $3.0 million, respectively, compared to the second quarter of 2020 and the first quarter of 2021. Net interest income for the first six months of 2021 was $116.5 million as compared to $100.4 million for the first six months 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 $212,000 to $5.3 million for the second quarter of 2021 from $5.5 million for the second quarter of 2020. Service charges on deposit accounts for the second quarter of 2021 increased $570,000 compared to the second quarter of 2020 due primarily to changes in customer behavior relating to the pandemic. Commissions and fees for the second quarter of 2021 increased $559,000 compared to the second quarter of 2020 due primarily to increases in commercial loan fees and investment commission income. Swap income decreased $695,000 compared to the second quarter of 2020 due primarily to the steepness of the yield curve which makes new swap agreements less attractive. Other income decreased $343,000 due primarily to a $400,000 write-down on a branch location held for sale.

For the first six months of 2021, noninterest income decreased $2.5 million to $11.0 million compared to the first six months of 2020 primarily due to a $3.0 million decrease in swap income resulting from the changes to the yield curve discussed above. Service charges on deposit accounts and commissions and fees increased $366,000 and $517,000, respectively, compared to the first half of 2020 due to the same reasons discussed in the quarterly comparison. Losses on equity securities totaled $133,000 in the first six months of 2021 compared to losses of $455,000 in the first six months of 2020. Other income decreased $497,000 due primarily to the same reason discussed in the quarterly comparison. Additionally, the first half of 2020 included gains on sales of investment securities of $342,000 compared to $9,000 for the same period in 2021.

Noninterest Expense

Noninterest expense totaled $34.1 million for the second quarter of 2021 and increased $2.6 million compared to the second quarter of 2020. Compensation and employee benefit expense for the second quarter of 2021 increased $1.9 million or 10% compared to the same quarter of 2020 as a result of staff additions and normal merit increases. Premises and equipment increased $807,000 compared to the second quarter of 2020 predominately driven by an increase in costs associated with the Company's digital strategy initiative. Other operating expenses in the second quarter of 2021 were $123,000 less than the second quarter of 2020 due primarily to decreased consulting and professional fees.

Noninterest expense for the first half of 2021 of $68.0 million increased $4.0 million compared to the first half of 2020. Compensation and employee benefit expense and premises and equipment expense increased $2.7 million and $1.7 million, respectively, compared to the first half of 2020 due to the same reasons discussed in the quarterly comparison. FDIC insurance expense in the first six months of 2021 increased $584,000 due primarily to deposit growth and assessment credits recorded in the first half of 2020. Other operating expenses decreased $852,000 in the first half of 2021 compared to the same period in 2020 due primarily to a decrease in consulting and professional fees. Additionally, other operating expenses in the first half of 2020 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 Expense

The effective tax rate for the second quarter of 2021 was 25.7% compared to 23.7% for the second quarter of 2020. The increased effective tax rate for the second quarter of 2021 was primarily a result of tax advantaged items declining as a percentage of pretax income due to the increase in pretax income.

Financial Condition

At June30, 2021, total assets were $7.85 billion, an increase of $189.9 million compared to December31, 2020. For the six months ended June30, 2021, total loans decreased $32.4 million to $5.99 billion and investment securities increased $134.4 million to $1.11 billion. On the funding side, total deposits increased $259.3 million to $6.72 billion, while borrowings decreased $74.6 million to $238.2 million. At June30, 2021, total loans as a percent of total deposits was 89.2%.

Asset Quality

At June30, 2021, non-performing assets decreased 47% to $22.6 million or 0.29% of total assets compared to $42.8 million or 0.56% of total assets at December31, 2020. Non-accrual loans as a percent of total loans decreased to 0.38% at June30, 2021 compared to 0.71% at December31, 2020. The allowance for credit losses decreased to $60.4 million, 1.01% of total loans, at June30, 2021, compared to $71.1 million, 1.18% of total loans, at December31, 2020. In the second quarter of 2021, the Company had net charge-offs of $1.5 million or 0.10% of average loans, on an annualized basis, compared to $45,000 or 0% for the same period in 2020. The provision for credit losses for the second quarter of 2021 was a benefit of $6.0 million compared to a provision of $9.0 million in the second quarter of 2020. In addition, the second quarter of 2021 included a sale of nonperforming residential mortgages and consumer loans totaling $5.0 million and resulted in an improvement of asset quality ratios.

Capital

At June30, 2021, stockholders' equity was $796.7 million compared to $763.8 million at December31, 2020, a 4% increase. Lakeland Bank remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.70% at June30, 2021. The book value per common share and tangible book value per common share increased 7% and 9% to $15.74 and $12.60, respectively, compared to $14.77 and $11.60 at June30, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At June30, 2021, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio was 10.14% and 8.29%, respectively, compared to 9.97% and 8.05% at December 31, 2020. On July21, 2021, the Company declared a quarterly cash dividend of $0.135 per share to be paid on August13, 2021, to shareholders of record as of August2, 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, competition, and failure to realize anticipated efficiencies and synergies from the merger of 1st Constitution Bancorp into Lakeland Bancorp and the merger of 1st Constitution Bank into Lakeland Bank. 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 U.S. generally accepted accounting principles ("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 $7.85 billion in total assets at June30, 2021. With an extensive branch network and commercial lending centers throughout New Jersey and Highland Mills, New York, 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 Six Months Ended June 30, June 30,(dollars inthousands, except 2021 2020 2021 2020per share amounts)Income Statement Net interest income $ 59,740 $ 50,519 $ 116,468 $ 100,418 Provision for credit 5,959 (9,000 ) 8,601 (18,223 ) losses (2)Gains on sales ofinvestment 9 ? 9 342 securitiesGains on sales of 607 710 1,315 1,125 loansGain (loss) on 11 198 (133 ) (455 ) equity securitiesOther noninterest 4,642 4,573 9,837 12,480 incomeLong-term debt ? ? ? (356 ) prepayment feeOther noninterest (34,097 ) (31,462 ) (68,000 ) (63,610 ) expensePretax income 36,871 15,538 68,097 31,721 Provision for income (9,464 ) (3,687 ) (17,515 ) (7,478 ) taxesNet income $ 27,407 $ 11,851 $ 50,582 $ 24,243 Basic earnings per $ 0.53 $ 0.23 $ 0.99 $ 0.48 common shareDiluted earnings per $ 0.53 $ 0.23 $ 0.98 $ 0.47 common shareDividends paid per $ 0.135 $ 0.125 $ 0.260 $ 0.250 common shareWeighted average 50,636 50,522 50,606 50,554 shares - basicWeighted average 50,858 50,593 50,821 50,660 shares - diluted Selected Operating RatiosAnnualized return on 1.41 % 0.67 % 1.32 % 0.71 %average assetsAnnualized return onaverage common 14.07 % 6.42 % 13.15 % 6.59 %equityAnnualized return onaverage tangible 17.67 % 8.19 % 16.55 % 8.42 %common equity (1)Annualized yield oninterest-earning 3.57 % 3.69 % 3.57 % 3.92 %assetsAnnualized cost ofinterest-bearing 0.42 % 0.86 % 0.47 % 1.02 %liabilitiesAnnualized net 3.15 % 2.83 % 3.10 % 2.91 %interest spreadAnnualized net 3.27 % 3.06 % 3.23 % 3.16 %interest marginEfficiency ratio (1) 51.98 % 55.62 % 52.85 % 55.46 %Stockholders' equity 10.14 % 9.96 %to total assetsBook value per $ 15.74 $ 14.77 common shareTangible book value $ 12.60 $ 11.60 per common share (1)Tangible commonequity to tangible 8.29 % 7.99 %assets (1) Asset Quality Ratios June 30, 2021 June 30, 2020Ratio of allowancefor credit losses to 1.01 % 1.00 %total loans (2)Non-performing loans 0.38 % 0.57 %to total loansNon-performingassets to total 0.29 % 0.44 %assetsAnnualized netcharge-offs to 0.09 % 0.01 %average loans (1) See Supplemental Information - Non-GAAP Financial Measures(2) The Company adopted ASU 2016-13, Financial Instruments - Credit Losses(Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU2016-13") on December 31, 2020, with a $6.7 million transition adjustmentretroactive to January 1, 2020. Periods prior to December 31, 2020 do notreflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) (dollars in June 30, 2021 June 30, 2020thousands)Selected Balance Sheet Data at Period EndLoans $ 5,988,832 $ 5,756,155 Allowance for credit 60,389 57,839 losses (1)Investment 1,107,601 957,985 securitiesTotal assets 7,854,238 7,488,516 Total deposits 6,715,035 6,125,502 Short-term 100,190 183,116 borrowingsOther borrowings 138,045 273,954 Stockholders' equity 796,676 745,489 Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020Selected Average Balance Sheet DataLoans $ 6,080,408 $ 5,572,865 $ 6,085,057 $ 5,390,481 Investment 1,066,086 891,037 1,034,956 885,512 securitiesInterest-earning 7,342,952 6,650,993 7,286,856 6,391,998 assetsTotal assets 7,784,385 7,137,529 7,744,714 6,851,415 Noninterest-bearing 1,660,825 1,364,785 1,603,714 1,237,212 demand depositsSavings deposits 639,540 525,224 622,331 511,011 Interest-bearing 3,495,610 2,908,299 3,442,116 2,869,539 transaction accountsTime deposits 880,079 1,093,760 962,042 983,379 Total deposits 6,676,054 5,892,068 6,630,203 5,601,141 Short-term 85,325 82,694 79,441 121,260 borrowingsOther borrowings 140,162 273,904 141,703 275,828 Totalinterest-bearing 5,240,716 4,883,881 5,247,633 4,761,017 liabilitiesStockholders' equity 781,299 742,050 775,808 739,385

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc. and SubsidiariesConsolidated Statements of Income (Unaudited)

For the Three Months For the Six Months Ended Ended June 30, June 30,(in thousands, except per 2021 2020 2021 2020share data)Interest Income Loans and fees $ 60,529 $ 55,825 $ 119,307 $ 113,682 Federal funds sold andinterest-bearing deposits 52 36 89 195 with banksTaxable investment 4,029 4,763 8,010 9,992 securities and otherTax-exempt investment 631 349 1,243 681 securitiesTotal Interest Income 65,241 60,973 128,649 124,550 Interest Expense Deposits 4,238 8,094 9,362 18,957 Federal funds purchasedand securities sold under 16 75 39 504 agreements to repurchaseOther borrowings 1,247 2,285 2,780 4,671 Total Interest Expense 5,501 10,454 12,181 24,132 Net Interest Income 59,740 50,519 116,468 100,418 Provision for credit (5,959 ) 9,000 (8,601 ) 18,223 losses (1)Net Interest Income afterProvision for Credit 65,699 41,519 125,069 82,195 LossesNoninterest Income Service charges on 2,445 1,875 4,741 4,375 deposit accountsCommissions and fees 1,755 1,196 3,353 2,836 Income on bank owned life 643 665 1,277 1,330 insuranceGain (loss) on equity 11 198 (133 ) (455 )securitiesGains on sales of loans 607 710 1,315 1,125 Gains on sales ofinvestment securities, 9 ? 9 342 netSwap income 72 767 634 3,610 Other income (273 ) 70 (168 ) 329 Total Noninterest Income 5,269 5,481 11,028 13,492 Noninterest Expense Compensation and employee 20,407 18,490 40,925 38,217 benefitsPremises and equipment 6,078 5,271 12,396 10,667 FDIC insurance 621 450 1,332 748 Data processing 1,299 1,436 2,554 2,689 Other operating expenses 5,692 5,815 10,793 11,645 Total Noninterest Expense 34,097 31,462 68,000 63,966 Income before provision 36,871 15,538 68,097 31,721 for income taxesProvision for income 9,464 3,687 17,515 7,478 taxesNet Income $ 27,407 $ 11,851 $ 50,582 $ 24,243 Per Share of Common Stock Basic earnings $ 0.53 $ 0.23 $ 0.99 $ 0.47 Diluted earnings $ 0.53 $ 0.23 $ 0.98 $ 0.47 Dividends $ 0.135 $ 0.125 $ 0.260 $ 0.250

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.Consolidated Balance Sheets(dollars in thousands) June 30, 2021 December 31, 2020 (Unaudited) Assets Cash $ 358,052 $ 262,327 Interest-bearing deposits due from banks 17,348 7,763 Total cash and cash equivalents 375,400 270,090 Investment securities available for sale, atestimated fair value (allowance for credit 988,673 855,746 losses of $21 at June30, 2021 and $2 atDecember 31, 2020 )Investment securities held to maturity(estimated fair value of $96,311 at June30,2021 and $93,868 at December 31, 2020, 94,278 90,766 allowance for credit losses of $137 at June30, 2021 and none at December 31, 2020)Equity securities, at fair value 15,440 14,694 Federal Home Loan Bank and other membership 9,210 11,979 stocks, at costLoans held for sale 816 1,335 Loans, net of deferred fees 5,988,832 6,021,232 Less: Allowance for credit losses 60,389 71,124 Net loans 5,928,443 5,950,108 Premises and equipment, net 47,641 48,495 Operating lease right-of-use assets 15,513 16,772 Accrued interest receivable 18,309 19,339 Goodwill 156,277 156,277 Other identifiable intangible assets 2,841 3,288 Bank owned life insurance 116,398 115,115 Other assets 84,999 110,293 Total Assets $ 7,854,238 $ 7,664,297 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing $ 1,683,887 $ 1,510,224 Savings and interest-bearing transaction 4,198,709 3,867,303 accountsTime deposits $250 thousand and under 685,583 895,056 Time deposits over $250 thousand 146,856 183,200 Total deposits 6,715,035 6,455,783 Federal funds purchased and securities sold 100,190 169,560 under agreements to repurchaseOther borrowings 25,000 25,000 Subordinated debentures 113,045 118,257 Operating lease liabilities 16,847 18,183 Other liabilities 87,445 113,730 Total Liabilities 7,057,562 6,900,513 Stockholders' Equity Common stock, no par value; authorized100,000,000 shares; issued 50,732,384 sharesand outstanding 50,601,349 shares 563,980 562,421 atJune30, 2021 and issued 50,610,681shares and outstanding 50,479,646 shares atDecember31, 2020Retained earnings 228,803 191,418 Treasury shares, at cost, 131,035 shares at (1,452 ) (1,452 )June30, 2021 and December 31, 2020Accumulated other comprehensive income 5,345 11,397 Total Stockholders' Equity 796,676 763,784 Total Liabilities and Stockholders' Equity $ 7,854,238 $ 7,664,297

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December 31, September June 30, 30,(dollars inthousands, 2021 2021 2020 2020 2020except pershare data)Income StatementNet interest $ 59,740 $ 56,728 $ 55,135 $ 52,134 $ 50,519 incomeProvision forcredit losses 5,959 2,642 (789 ) (8,000 ) (9,000 ) (1)Gains on salesof investment 9 ? 871 ? ? securitiesGains on sales 607 708 760 1,437 710 of loansGain (loss) onequity 11 (144 ) 73 (170 ) 198 securitiesOthernoninterest 4,642 5,195 5,141 5,506 4,573 incomeLong-term debt ? ? (3,777 ) ? ? prepayment feeOthernoninterest (34,097 ) (33,903 ) (33,168 ) (32,097 ) (31,462 ) expensePretax income 36,871 31,226 24,246 18,810 15,538 Provision for (9,464 ) (8,051 ) (5,398 ) (4,383 ) (3,687 ) income taxesNet income $ 27,407 $ 23,175 $ 18,848 $ 14,427 $ 11,851 Basic earningsper common $ 0.53 $ 0.45 $ 0.37 $ 0.28 $ 0.23 shareDilutedearnings per $ 0.53 $ 0.45 $ 0.37 $ 0.28 $ 0.23 common shareDividends paidper common $ 0.135 $ 0.125 $ 0.125 $ 0.125 $ 0.125 shareDividends paid $ 6,828 $ 6,369 $ 6,364 $ 6,365 $ 6,365 Weightedaverage shares 50,636 50,576 50,527 50,526 50,522 - basicWeightedaverage shares 50,858 50,780 50,672 50,620 50,593 - diluted SelectedOperating RatiosAnnualizedreturn on 1.41 % 1.22 % 0.98 % 0.76 % 0.67 %average assetsAnnualizedreturn on 14.07 % 12.20 % 9.96 % 7.64 % 6.42 %average commonequityAnnualizedreturn onaverage 17.67 % 15.39 % 12.64 % 9.71 % 8.19 %tangiblecommon equity(2)Annualized netinterest 3.27 % 3.19 % 3.08 % 2.96 % 3.06 %marginEfficiency 51.98 % 53.75 % 53.74 % 53.96 % 55.62 %ratio (2)Commonstockholders' 10.14 % 9.88 % 9.97 % 10.02 % 9.96 %equity tototal assetsTangiblecommon equity 8.29 % 8.00 % 8.05 % 8.06 % 7.99 %to tangibleassets (2)Tier 1risk-based 10.78 % 10.47 % 10.22 % 10.34 % 10.45 %ratioTotalrisk-based 13.11 % 13.02 % 12.85 % 12.93 % 12.98 %ratioTier 1 8.70 % 8.51 % 8.37 % 8.36 % 8.69 %leverage ratioCommon equitytier 1 capital 10.29 % 9.98 % 9.73 % 9.83 % 9.93 %ratioBook value per $ 15.74 $ 15.18 $ 15.13 $ 14.93 $ 14.77 common shareTangible bookvalue per $ 12.60 $ 12.03 $ 11.97 $ 11.77 $ 11.60 common share(2)

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13. (2) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December 31, September 30, June 30,(dollars in 2021 2021 2020 2020 2020thousands)Selected Balance Sheet Data at Period EndLoans $ 5,988,832 $ 6,108,946 $ 6,021,232 $ 5,843,591 $ 5,756,155 Allowance forcredit losses on 60,389 67,252 71,124 65,242 57,839 loans (1)Investment 1,107,601 1,078,750 973,185 909,535 957,985 securitiesTotal assets 7,854,238 7,771,761 7,664,297 7,522,184 7,488,516 Total deposits 6,715,035 6,635,226 6,455,783 6,266,516 6,125,502 Short-term 100,190 111,999 169,560 97,874 183,116 borrowingsOther borrowings 138,045 143,267 143,257 253,359 273,954 Stockholders' 796,676 768,065 763,784 753,572 745,489 equity Loans Non-owner occupied $ 2,330,376 $ 2,375,024 $ 2,398,946 commercialOwner occupied 870,535 857,506 827,092 commercialMultifamily 902,394 858,168 813,225 Non-owner occupied 189,765 195,534 200,229 residentialTotal commercial,secured by real $ 4,293,070 $ 4,286,232 $ 4,239,492 $ 4,042,946 $ 3,955,045 estate (1)Commercial,industrial and 358,659 394,416 433,553 418,813 393,017 otherConstruction 335,167 291,252 266,883 275,716 298,180 Paycheck Protection 207,045 346,150 284,636 325,115 325,999 ProgramEquipment financing 121,096 119,428 116,690 118,320 117,569 Residential 391,589 385,778 377,380 343,317 335,135 mortgagesConsumer and home 282,206 285,690 302,598 319,364 331,210 equityTotal loans $ 5,988,832 $ 6,108,946 $ 6,021,232 $ 5,843,591 $ 5,756,155 Deposits Noninterest-bearing $ 1,683,887 $ 1,631,942 $ 1,510,224 $ 1,474,847 $ 1,486,273 Savings andinterest-bearing 4,198,709 4,049,914 3,867,303 3,647,328 3,510,723 transactionaccountsTime deposits 832,439 953,370 1,078,256 1,144,341 1,128,506 Total deposits $ 6,715,035 $ 6,635,226 $ 6,455,783 $ 6,266,516 $ 6,125,502 Total loans tototal deposits 89.2 % 92.1 % 93.3 % 93.3 % 94 %ratio Selected Average Balance Sheet DataLoans $ 6,080,408 $ 6,089,757 $ 5,939,904 $ 5,775,093 $ 5,572,865 Investment 1,066,086 1,003,479 912,723 873,066 891,037 securitiesInterest-earning 7,342,952 7,230,136 7,137,884 7,009,939 6,650,993 assetsTotal assets 7,784,385 7,704,603 7,625,458 7,516,069 7,137,529 Noninterest-bearing 1,660,825 1,545,968 1,499,093 1,475,422 1,364,785 demand depositsSavings deposits 639,540 604,931 571,794 548,662 525,224 Interest-bearingtransaction 3,495,610 3,388,027 3,313,556 3,086,260 2,908,299 accountsTime deposits 880,079 1,044,915 1,112,053 1,176,181 1,093,760 Total deposits 6,676,054 6,583,841 6,496,496 6,286,525 5,892,068 Short-term 85,325 73,492 68,962 58,845 82,694 borrowingsOther borrowings 140,162 143,261 155,943 269,093 273,904 Totalinterest-bearing 5,240,716 5,254,626 5,222,308 5,139,042 4,883,881 liabilitiesStockholders' 781,299 770,255 753,059 751,099 742,050 equity

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13.

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December 31, September June 30, 30,(dollars in 2021 2021 2020 2020 2020thousands)Average Annualized Yields (Taxable Equivalent Basis) and CostsAssets Loans 3.99 % 3.91 % 3.92 % 3.91 % 4.03 %Taxableinvestment 1.72 % 1.81 % 1.84 % 2.09 % 2.31 %securities andotherTax-exempt 2.50 % 2.54 % 2.51 % 2.55 % 2.70 %securitiesFederal fundssold and 0.11 % 0.11 % 0.09 % 0.10 % 0.08 %interest-bearingcash accountsTotalinterest-earning 3.57 % 3.56 % 3.51 % 3.49 % 3.69 %assetsLiabilities Savings accounts 0.05 % 0.05 % 0.05 % 0.06 % 0.07 %Interest-bearingtransaction 0.32 % 0.34 % 0.38 % 0.44 % 0.55 %accountsTime deposits 0.61 % 0.83 % 1.01 % 1.19 % 1.48 %Borrowings 2.22 % 2.87 % 2.84 % 2.73 % 2.62 %Totalinterest-bearing 0.42 % 0.51 % 0.59 % 0.72 % 0.86 %liabilitiesNet interestspread (taxable 3.15 % 3.05 % 2.92 % 2.77 % 2.83 %equivalentbasis)Annualized netinterest margin(taxable 3.27 % 3.19 % 3.08 % 2.96 % 3.06 %equivalentbasis)Annualized cost 0.25 % 0.32 % 0.37 % 0.44 % 0.55 %of depositsAsset Quality DataAllowance forCredit Losses on LoansBalance atbeginning of $ 67,252 $ 71,124 $ 65,242 $ 57,839 $ 48,884 periodImpact ofadopting ASU ? ? 6,656 ? ? 2016-13 (1)Provision forcredit losses on (5,314 ) (2,808 ) (246 ) 8,000 9,000 loansCharge-offs (1,862 ) (1,270 ) (746 ) (682 ) (142 ) Recoveries 313 206 218 85 97 Balance at end $ 60,389 $ 67,252 $ 71,124 $ 65,242 $ 57,839 of period Net LoanCharge-Offs (Recoveries)Commercial, real $ 1,590 $ 843 $ (47 ) $ 298 $ (36 ) estateCommercial,industrial and 5 221 478 173 (13 ) otherEquipment 4 83 64 95 (11 ) financingResidential (82 ) (58 ) ? (1 ) ? mortgagesConsumer and 32 (25 ) 33 32 105 home equityNet charge-offs $ 1,549 $ 1,064 $ 528 $ 597 $ 45 (recoveries)Non-Performing Assets (2)Commercial, real $ 20,594 $ 23,984 $ 35,091 $ 26,145 $ 25,615 estateCommercial,industrial and 1,449 2,252 2,633 1,484 1,546 otherEquipment 264 293 327 444 400 financingResidential ? 2,323 2,469 2,695 2,860 mortgagesConsumer and 308 2,274 2,243 2,322 2,432 home equityTotalnon-accrual 22,615 31,126 42,763 33,090 32,853 loansPropertyacquired through ? ? ? ? 354 foreclosure orrepossessionTotalnon-performing $ 22,615 $ 31,126 $ 42,763 $ 33,090 $ 33,207 assetsLoans past due90 days or more $ ? $ ? $ 1 $ 165 $ 58 and stillaccruingLoansrestructured and $ 3,595 $ 3,799 $ 3,856 $ 4,299 $ 4,667 still accruingRatio ofallowance for 1.01 % 1.10 % 1.18 % 1.11 % 1.00 %loan losses tototal loansTotalnon-accrual 0.38 % 0.51 % 0.71 % 0.57 % 0.57 %loans to totalloansTotalnon-performing 0.29 % 0.40 % 0.56 % 0.44 % 0.44 %assets to totalassetsAnnualized netcharge-offs to 0.10 % 0.07 % 0.04 % 0.04 % ? %average loans

(1) Periods prior to December 31, 2020 do not reflect the adoption of ASU 2016-13(2) 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 June 30, March 31, December 31, September 30, June 30,(dollars inthousands, 2021 2021 2020 2020 2020except pershare amounts)Calculation of Tangible Book Value Per Common ShareTotal commonstockholders'equity at end $ 796,676 $ 768,065 $ 763,784 $ 753,572 $ 745,489 of period -GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 2,841 3,063 3,288 3,538 3,788 intangibleassetsTotal tangiblecommonstockholders' $ 637,558 $ 608,725 $ 604,219 $ 593,757 $ 585,424 equity at endof period -Non-GAAPSharesoutstanding at 50,601 50,598 50,480 50,468 50,463 end of periodBook value per $ 15.74 $ 15.18 $ 15.13 $ 14.93 $ 14.77 share - GAAPTangible bookvalue per $ 12.60 $ 12.03 $ 11.97 $ 11.77 $ 11.60 share -Non-GAAPCalculation of Tangible Common Equity to Tangible AssetsTotal tangiblecommonstockholders' $ 637,558 $ 608,725 $ 604,219 $ 593,757 $ 585,424 equity at endof period -Non-GAAPTotal assetsat end of $ 7,854,238 $ 7,771,761 $ 7,664,297 $ 7,522,184 $ 7,488,516 period - GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 2,841 3,063 3,288 3,538 3,788 intangibleassetsTotal tangibleassets at end $ 7,695,120 $ 7,612,421 $ 7,504,732 $ 7,362,369 $ 7,328,451 of period -Non-GAAPCommon equityto assets - 10.14 % 9.88 % 9.97 % 10.02 % 9.96 %GAAPTangiblecommon equityto tangible 8.29 % 8.00 % 8.05 % 8.06 % 7.99 %assets -Non-GAAPCalculation of Return on Average Tangible Common EquityNet income - $ 27,407 $ 23,175 $ 18,848 $ 14,427 $ 11,851 GAAPTotal averagecommon $ 781,299 $ 770,255 $ 753,059 $ 751,099 $ 742,050 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 156,277 156,277 goodwillLess: Averageotheridentifiable 2,979 3,192 3,433 3,689 3,942 intangibleassetsTotal averagetangiblecommon $ 622,043 $ 610,786 $ 593,349 $ 591,133 $ 581,831 stockholders'equity -Non-GAAPReturn onaverage common 14.07 % 12.20 % 9.96 % 7.64 % 6.42 %stockholders'equity - GAAPReturn onaveragetangiblecommon 17.67 % 15.39 % 12.64 % 9.71 % 8.19 %stockholders'equity -Non-GAAPCalculation ofEfficiency RatioTotalnoninterest $ 34,097 $ 33,903 $ 36,945 $ 32,097 $ 31,462 expenseAmortizationof core (221 ) (226 ) (249 ) (250 ) (261 ) depositintangiblesLong term debtprepayment ? ? (3,777 ) ? ? feesNoninterestexpense, as $ 33,876 $ 33,677 $ 32,919 $ 31,847 $ 31,201 adjustedNet interest $ 59,740 $ 56,728 $ 55,135 $ 52,134 $ 50,519 incomeTotalnoninterest 5,269 5,759 6,845 6,773 5,481 incomeTotal revenue 65,009 62,487 61,980 58,907 56,000 Tax-equivalentadjustment on 167 163 149 108 93 municipalsecuritiesGains on salesof investment (9 ) ? (871 ) ? ? securitiesTotal revenue, $ 65,167 $ 62,650 $ 61,258 $ 59,015 $ 56,093 as adjustedEfficiencyratio - 51.98 % 53.75 % 53.74 % 53.96 % 55.62 %Non-GAAP

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) For the Six Months Ended June 30,(dollars in thousands) 2021 2020Calculation of Return on Average Tangible Common EquityNet income - GAAP $ 50,582 $ 24,243 Total average common stockholders' equity - GAAP $ 775,808 $ 739,385 Less: Average goodwill 156,277 156,277 Less: Average other identifiable intangible assets 3,085 4,073 Total average tangible common stockholders' equity $ 616,446 $ 579,035 - Non-GAAPReturn on average common stockholders' equity - 13.15 % 6.59 %GAAPReturn on average tangible common stockholders' 16.55 % 8.42 %equity - Non-GAAP Calculation of Efficiency Ratio Total noninterest expense $ 68,000 $ 63,966 Amortization of core deposit intangibles (447 ) (526 ) Long-term debt prepayment fee ? (356 ) Noninterest expense, as adjusted $ 67,553 $ 63,084 Net interest income $ 116,468 $ 100,418 Noninterest income 11,028 13,492 Total revenue $ 127,496 $ 113,910 Tax-equivalent adjustment on municipal securities 330 181 Gains on sales of investment securities (9 ) (342 ) Total revenue, as adjusted $ 127,817 $ 113,749 Efficiency ratio - Non-GAAP 52.85 % 55.46 %