GlobeNewswire Inc | Oct 26, 2021 08:00AM EDT

October 26, 2021

OAK RIDGE, N.J., Oct. 26, 2021 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $22.3 million and earnings per diluted share ("EPS") of $0.43 for the three months ended September 30, 2021 compared to net income of $14.4 million and EPS of $0.28 for the three months ended September 30, 2020. For the third quarter of 2021, annualized return on average assets was 1.10%, annualized return on average common equity was 10.94% and annualized return on average tangible common equity was 13.63%.

For the nine months ended September30, 2021, the Company reported net income of $72.9 million and EPS of $1.42 compared to net income of $38.7 million and EPS of $0.76 for the same period of 2020. Annualized return on average assets was 1.24%, annualized return on average common equity was 12.39% and annualized return on average tangible common equity was 15.53% for the first nine months of 2021 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value).

The third quarter and year-to-date 2021 results were favorably impacted by negative provisions for credit losses of $2.7 million and $11.3 million, respectively, compared to provisions of $8.0 million and $26.2 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 on the financial results, We are pleased with our results for the quarter marked by strong core earnings and continued improvement in asset quality. Our subordinated debt offering during the quarter was very successful, affording us the opportunity to increase the offering size to $150 million with an interest rate of 2.875% fixed for 5 years. We believe the overwhelming success of the offering further illustrates the strength of the Lakeland brand in the market.

Regarding Lakeland Bancorp's recently announced acquisition of 1st Constitution Bancorp, Mr. Shara continued, We remain very excited regarding our opportunity to partner with 1st Constitution and expanding our product offerings and services to the customers of the combined company. The merger integration meetings are progressing very well and we anticipate closing the merger in January 2022.

Third Quarter 2021 Highlights

-- Non-performing assets decreased $10.3 million or 46% to $12.3 million at September 30, 2021 compared to $22.6 million at June 30, 2021. -- During the third quarter, the Company sold $6.2 million in non-performing loans primarily in the commercial secured by real estate loan category. The sale resulted in net recoveries to the allowance for credit losses of $502,000 as well as recovered interest on non-accrual loans of $755,000, which favorably impacted third quarter 2021 net interest margin by four basis points. -- On September 15, 2021, the Company closed the offering of $150 million of its Fixed-to-Floating Rate Subordinated Notes (the Notes) due 2031. The Notes bear interest at a rate of 2.875% per annum until September 2026 and the interest rate will then reset quarterly to the three-month Secured Overnight Financing Rate ("SOFR") plus a spread of 220 basis points. -- During the third quarter, the Company redeemed $75 million of its 5.125% Fixed-to-Floating Rate Subordinated Notes due September 30, 2026, which were scheduled to reset quarterly to the current three-month LIBOR rate plus 397 basis points in September 2021. The Company expensed $831,000 in unamortized debt issuance costs on the $75 million redemption. -- Deposit growth continues to be strong as saving and interest-bearing transaction accounts increased $202.7 million during the third quarter, while higher priced time deposits were allowed to run off. Noninterest-bearing deposits increased $40.8 million to $1.72 billion at September 30, 2021. -- Paycheck Protection Program ("PPP") loans totaled $109.3 million at September 30, 2021 compared to $207.0 million at June 30, 2021. Unamortized net deferred fees on PPP loans totaled $3.4 million at September 30, 2021 compared to $6.1 million at June 30, 2021. PPP loans contributed approximately $3.1 million to interest income during the third quarter of 2021.

Net Interest Margin and Net Interest Income

Net interest margin for the third quarter of 2021 of 3.10% increased 14 basis points compared to the third quarter of 2020 and decreased 17 basis points compared to the second quarter of 2021. Net interest margin for the first nine months of 2021 was 3.19% as compared to 3.09% for the same period in 2020. The increase in net interest margin compared to the third quarter 2020 and year-to-date 2020 was due primarily to a decrease in the cost of interest-bearing liabilities, while the decrease in net interest margin compared to the linked quarter was due primarily to a $326.7 million increase in lower yielding average federal funds sold.

The yield on interest-earning assets for the third quarter of 2021 was 3.40% as compared to 3.49% for the third quarter of 2020 and 3.57% for the second quarter of 2021. The yield on interest-earning assets for the first nine months of 2021 was 3.51% as compared to 3.77% during the same period in 2020. The current quarter decrease in yield on interest-earning assets, when compared to the third quarter of 2020 and the second quarter of 2021, was due primarily to a reduction in the yield on securities as well as an increase in lower yielding average securities and federal funds sold balances. The 26 basis point reduction in yield on interest-earning assets for the first nine months of 2021 compared to the same period in 2020 was due primarily to a reduction in the yield on loans and securities resulting from decreases in market interest rates during 2020.

The cost of interest-bearing liabilities for the third quarter of 2021 was 0.41% compared to 0.72% for the third quarter of 2020 and 0.42% for the second quarter of 2021. The cost of interest-bearing liabilities for the first nine months of 2021 was 0.45% compared to 0.91% 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 deposits and borrowings balances have decreased while lower cost interest-bearing transaction account balances have increased.

Net interest income for the third quarter of 2021 of $59.3 million increased $7.2 million compared to the third quarter of 2020. Net interest income for the first nine months of 2021 was $175.8 million as compared to $152.6 million for the first nine 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 $1.3 million to $5.5 million for the third quarter of 2021 from $6.8 million for the third quarter of 2020. Service charges on deposit accounts for the third quarter of 2021 increased $248,000 compared to the third quarter of 2020 due primarily to changes in customer behavior relating to the pandemic. Gains on sales of loans decreased $887,000 due primarily to retaining a greater percentage of originated residential mortgages. Swap income decreased $624,000 compared to the third quarter of 2020 due primarily to the steepness of the yield curve which makes new swap agreements less attractive.

For the first nine months of 2021, noninterest income decreased $3.8 million to $16.5 million compared to the first nine months of 2020 primarily due to a $3.6 million decrease in swap income resulting from the changes to the yield curve discussed above. Service charges on deposit accounts increased $614,000 compared to the first nine months of 2020 due to the same reasons discussed in the quarterly comparison, while commissions and fees increased $459,000 due primarily to an increase in commercial loan fees. Losses on equity securities totaled $191,000 in the first nine months of 2021 compared to losses of $625,000 in the first nine months of 2020. Gains on sales of loans decreased $697,000 due to the same reason discussed above. Other income decreased $567,000 due primarily to a $400,000 write-down on a branch location held for sale. Additionally, the first nine months 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 $37.2 million for the third quarter of 2021 and increased $5.1 million compared to the third quarter of 2020. Compensation and employee benefit expense for the third quarter of 2021 increased $2.4 million or 13% compared to the same quarter of 2020 as a result of staff additions and normal merit increases. Premises and equipment increased $624,000 compared to the third quarter of 2020 predominately driven by an increase in costs associated with the Company's digital strategy initiative. The third quarter of 2021 included $1.1 million in merger related costs for the upcoming merger with 1st Constitution Bancorp. Other operating expenses in the third quarter of 2021 were $881,000 greater than the third quarter of 2020 due primarily to $831,000 in long-term debt extinguishment costs resulting from the redemption of the $75 million in subordinated notes mentioned in the quarterly highlights.

Noninterest expense for the first nine months of 2021 of $105.2 million increased $9.1 million compared to the first nine months of 2020. Compensation and employee benefit expense and premises and equipment expense increased $5.1 million and $2.4 million, respectively, compared to the first nine months of 2020 due to the same reasons discussed in the quarterly comparison. FDIC insurance expense in the first nine months of 2021 increased $420,000 due primarily to deposit growth and assessment credits recorded in the first nine months of 2020. The first nine months of 2021 included $1.1 million in merger related costs for the upcoming merger with 1st Constitution Bancorp.

Income Tax Expense

The effective tax rate for the third quarter of 2021 was 26.4% compared to 23.3% for the third quarter of 2020. The increased effective tax rate for the third 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 September30, 2021, total assets were $8.17 billion, an increase of $508.2 million compared to December31, 2020. For the nine months ended September30, 2021, total loans decreased $140.4 million to $5.88 billion and investment securities increased $275.5 million to $1.25 billion. On the funding side, total deposits increased $475.1 million to $6.93 billion, while borrowings increased $11.2 million to $324.0 million. At September30, 2021, total loans as a percent of total deposits was 84.8%.

Asset Quality

At September30, 2021, non-performing assets decreased 71% to $12.3 million or 0.15% 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 0.21% at September30, 2021 compared to 0.71% at December31, 2020. The allowance for credit losses decreased to $58.0 million, 0.99% of total loans, at September30, 2021, compared to $71.1 million, 1.18% of total loans, at December31, 2020. In the third quarter of 2021, the Company had net recoveries of $269,000 or 0.02% of average loans, on an annualized basis, compared to net charge-offs of $597,000 or 0.04% for the same period in 2020. The provision for credit losses for the third quarter of 2021 was a benefit of $2.7 million compared to a provision of $8.0 million in the third quarter of 2020. In addition, the third quarter of 2021 included a sale of non-performing loans totaling $6.2 million and resulted in an improvement of asset quality ratios.

Capital

At September30, 2021, stockholders' equity was $814.1 million compared to $763.8 million at December31, 2020, a 7% increase. Lakeland Bank remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.60% at September30, 2021. The book value per common share and tangible book value per common share increased 8% and 10% to $16.09 and $12.95, respectively, compared to $14.93 and $11.77 at September30, 2020 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At September30, 2021, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio were 9.96% and 8.18%, respectively, compared to 9.97% and 8.05% at December 31, 2020. On October22, 2021, the Company declared a quarterly cash dividend of $0.135 per share to be paid on November15, 2021, to shareholders of record as of November5, 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 $8.17 billion in total assets at September30, 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. Thomas F.Shara SplainePresident & EVP & CFOCEO

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) Three Months Ended Nine Months Ended September 30, September 30,(dollars inthousands, except 2021 2020 2021 2020per share amounts)Income Statement Net interest income $ 59,338 $ 52,134 $ 175,806 $ 152,552 Benefit (provision)for credit losses 2,703 (8,000 ) 11,304 (26,223 )(2)Gains on sales ofinvestment ? ? 9 342 securitiesGains on sales of 550 1,437 1,865 2,562 loansLoss on equity (58 ) (170 ) (191 ) (625 )securitiesOther noninterest 4,977 5,506 14,814 17,986 incomeLong-term debtextinguishment (831 ) ? (831 ) (356 )costsMerger-related (1,072 ) ? (1,072 ) ? expensesOther noninterest (35,304 ) (32,097 ) (103,304 ) (95,707 )expensePretax income 30,303 18,810 98,400 50,531 Provision for (8,014 ) (4,383 ) (25,529 ) (11,861 )income taxesNet income $ 22,289 $ 14,427 $ 72,871 $ 38,670 Basic earnings per $ 0.43 $ 0.28 $ 1.42 $ 0.76 common shareDiluted earnings $ 0.43 $ 0.28 $ 1.42 $ 0.76 per common shareDividends paid per $ 0.135 $ 0.125 $ 0.395 $ 0.375 common shareWeighted average 50,637 50,526 50,616 50,544 shares - basicWeighted average 50,875 50,620 50,837 50,645 shares - diluted Selected Operating RatiosAnnualized return 1.10 % 0.76 % 1.24 % 0.73 %on average assetsAnnualized returnon average common 10.94 % 7.64 % 12.39 % 6.95 %equityAnnualized returnon average tangible 13.63 % 9.71 % 15.53 % 8.86 %common equity (1)Annualized yield oninterest-earning 3.40 % 3.49 % 3.51 % 3.77 %assetsAnnualized cost ofinterest-bearing 0.41 % 0.72 % 0.45 % 0.91 %liabilitiesAnnualized net 2.99 % 2.77 % 3.06 % 2.86 %interest spreadAnnualized net 3.10 % 2.96 % 3.19 % 3.09 %interest marginEfficiency ratio 54.02 % 53.96 % 53.24 % 54.95 %(1)Stockholders'equity to total 9.96 % 10.02 %assetsBook value per $ 16.09 $ 14.93 common shareTangible book valueper common share $ 12.95 $ 11.77 (1)Tangible commonequity to tangible 8.18 % 8.06 %assets (1) Asset Quality September 30, September 30,Ratios 2021 2020Ratio of allowancefor credit losses 0.99 % 1.11 %to total loans (2)Non-performingloans to total 0.21 % 0.57 %loansNon-performingassets to total 0.15 % 0.44 %assetsAnnualized netcharge-offs to 0.05 % 0.02 %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 September 30, September 30,thousands) 2021 2020Selected Balance Sheet Data at Period EndLoans $ 5,880,802 $ 5,843,591 Allowance for 57,953 65,242 credit losses (1)Investment 1,248,705 909,535 securitiesTotal assets 8,172,479 7,522,184 Total deposits 6,930,912 6,266,516 Short-term 111,907 97,874 borrowingsOther borrowings 212,107 253,359 Stockholders' 814,128 753,572 equity Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020Selected Average Balance Sheet DataLoans $ 5,943,698 $ 5,775,093 $ 6,037,419 $ 5,519,621 Investment 1,144,356 873,066 1,071,823 881,332 securitiesInterest-earning 7,611,259 7,009,939 7,396,178 6,599,481 assetsTotal assets 8,070,050 7,516,069 7,854,351 7,073,438 Noninterest-bearing 1,702,788 1,475,422 1,637,101 1,317,195 demand depositsSavings deposits 653,840 548,662 632,950 523,653 Interest-bearingtransaction 3,701,676 3,086,260 3,529,586 2,942,307 accountsTime deposits 826,831 1,176,181 916,476 1,048,115 Total deposits 6,885,135 6,286,525 6,716,113 5,831,270 Short-term 108,519 58,845 89,240 100,303 borrowingsOther borrowings 162,216 269,093 148,616 273,567 Totalinterest-bearing 5,453,082 5,139,042 5,316,868 4,887,945 liabilitiesStockholders' 807,956 751,099 786,642 743,318 equity

(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 Nine Months Ended Ended September 30, September 30,(in thousands, except per 2021 2020 2021 2020share data)Interest Income Loans and fees $ 59,957 $ 56,801 $ 179,264 $ 170,483 Federal funds sold andinterest-bearing deposits 161 92 250 287 with banksTaxable investment 4,232 4,139 12,242 14,131 securities and otherTax-exempt investment 588 401 1,831 1,082 securitiesTotal Interest Income 64,938 61,433 193,587 185,983 Interest Expense Deposits 3,987 7,012 13,349 25,969 Federal funds purchasedand securities sold under 19 27 58 531 agreements to repurchaseOther borrowings 1,594 2,260 4,374 6,931 Total Interest Expense 5,600 9,299 17,781 33,431 Net Interest Income 59,338 52,134 175,806 152,552 (Benefit) provision for (2,703 ) 8,000 (11,304 ) 26,223 credit losses (1)Net Interest Income afterProvision for Credit 62,041 44,134 187,110 126,329 LossesNoninterest Income Service charges on 2,536 2,288 7,277 6,663 deposit accountsCommissions and fees 1,609 1,667 4,962 4,503 Income on bank owned life 645 670 1,922 2,000 insuranceLoss on equity securities (58 ) (170 ) (191 ) (625 )Gains on sales of loans 550 1,437 1,865 2,562 Gains on sales ofinvestment securities, ? ? 9 342 netSwap income ? 624 634 4,234 Other income 187 257 19 586 Total Noninterest Income 5,469 6,773 16,497 20,265 Noninterest Expense Compensation and employee 21,478 19,065 62,403 57,282 benefitsPremises and equipment 6,206 5,582 18,602 16,249 FDIC insurance 461 625 1,793 1,373 Data processing 1,495 1,211 4,049 3,900 Merger related expenses 1,072 ? 1,072 ? Other operating expenses 6,495 5,614 17,288 17,259 Total Noninterest Expense 37,207 32,097 105,207 96,063 Income before provision 30,303 18,810 98,400 50,531 for income taxesProvision for income 8,014 4,383 25,529 11,861 taxesNet Income $ 22,289 $ 14,427 $ 72,871 $ 38,670 Per Share of Common Stock Basic earnings $ 0.43 $ 0.28 $ 1.42 $ 0.76 Diluted earnings $ 0.43 $ 0.28 $ 1.42 $ 0.76 Dividends $ 0.135 $ 0.125 $ 0.395 $ 0.375

(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) September 30, December 31, 2021 2020 (Unaudited) Assets Cash $ 641,861 $ 262,327 Interest-bearing deposits due from banks 20,774 7,763 Total cash and cash equivalents 662,635 270,090 Investment securities available for sale, atestimated fair value (allowance for credit 529,381 855,746 losses of $50 at September30, 2021 and $2at December 31, 2020 )Investment securities held to maturity(estimated fair value of $686,728 atSeptember30, 2021 and $93,868 at December 693,562 90,766 31, 2020, allowance for credit losses of$183 at September 30, 2021 and none atDecember 31, 2020)Equity securities, at fair value 16,422 14,694 Federal Home Loan Bank and other membership 9,340 11,979 stocks, at costLoans held for sale 851 1,335 Loans, net of deferred fees 5,880,802 6,021,232 Less: Allowance for credit losses 57,953 71,124 Net loans 5,822,849 5,950,108 Premises and equipment, net 46,163 48,495 Operating lease right-of-use assets 14,809 16,772 Accrued interest receivable 18,182 19,339 Goodwill 156,277 156,277 Other identifiable intangible assets 2,631 3,288 Bank owned life insurance 117,073 115,115 Other assets 82,304 110,293 Total Assets $ 8,172,479 $ 7,664,297 Liabilities and Stockholders' Equity Liabilities Deposits: Noninterest-bearing $ 1,724,646 $ 1,510,224 Savings and interest-bearing transaction 4,401,367 3,867,303 accountsTime deposits $250 thousand and under 667,297 895,056 Time deposits over $250 thousand 137,602 183,200 Total deposits 6,930,912 6,455,783 Federal funds purchased and securities sold 111,907 169,560 under agreements to repurchaseOther borrowings 25,000 25,000 Subordinated debentures 187,107 118,257 Operating lease liabilities 16,105 18,183 Other liabilities 87,320 113,730 Total Liabilities 7,358,351 6,900,513 Stockholders' Equity Common stock, no par value; authorized100,000,000 shares; issued 50,733,113 sharesand outstanding 50,602,078 shares 564,974 562,421 atSeptember30, 2021 and issued50,610,681 shares and outstanding 50,479,646shares at December31, 2020Retained earnings 244,092 191,418 Treasury shares, at cost, 131,035 shares at (1,452 ) (1,452 )September30, 2021 and December 31, 2020Accumulated other comprehensive income 6,514 11,397 Total Stockholders' Equity 814,128 763,784 Total Liabilities and Stockholders' Equity $ 8,172,479 $ 7,664,297

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended September June 30, March 31, December 31, September 30, 30,(dollars inthousands, 2021 2021 2021 2020 2020except per sharedata)Income Statement Net interest $ 59,338 $ 59,740 $ 56,728 $ 55,135 $ 52,134 incomeBenefit(provision) for 2,703 5,959 2,642 (789 ) (8,000 )credit losses(1)Gains on salesof investment ? 9 ? 871 ? securitiesGains on sales 550 607 708 760 1,437 of loans(Loss) gain onequity (58 ) 11 (144 ) 73 (170 )securitiesOthernoninterest 4,977 4,642 5,195 5,141 5,506 incomeLong-term debtextinguishment (831 ) ? ? (3,777 ) ? costsMerger-related (1,072 ) ? ? ? ? expensesOthernoninterest (35,304 ) (34,097 ) (33,903 ) (33,168 ) (32,097 )expensePretax income 30,303 36,871 31,226 24,246 18,810 Provision for (8,014 ) (9,464 ) (8,051 ) (5,398 ) (4,383 )income taxesNet income $ 22,289 $ 27,407 $ 23,175 $ 18,848 $ 14,427 Basic earnings $ 0.43 $ 0.53 $ 0.45 $ 0.37 $ 0.28 per common shareDiluted earnings $ 0.43 $ 0.53 $ 0.45 $ 0.37 $ 0.28 per common shareDividends paid $ 0.135 $ 0.135 $ 0.125 $ 0.125 $ 0.125 per common shareDividends paid $ 7,001 $ 6,828 $ 6,369 $ 6,364 $ 6,365 Weighted average 50,637 50,636 50,576 50,527 50,526 shares - basicWeighted average 50,875 50,858 50,780 50,672 50,620 shares - diluted Selected Operating RatiosAnnualizedreturn on 1.10 % 1.41 % 1.22 % 0.98 % 0.76 %average assetsAnnualizedreturn on 10.94 % 14.07 % 12.20 % 9.96 % 7.64 %average commonequityAnnualizedreturn onaverage tangible 13.63 % 17.67 % 15.39 % 12.64 % 9.71 %common equity(2)Annualized net 3.10 % 3.27 % 3.19 % 3.08 % 2.96 %interest marginEfficiency ratio 54.02 % 51.98 % 53.75 % 53.74 % 53.96 %(2)Commonstockholders' 9.96 % 10.14 % 9.88 % 9.97 % 10.02 %equity to totalassetsTangible commonequity to 8.18 % 8.29 % 8.00 % 8.05 % 8.06 %tangible assets(2)Tier 1 11.19 % 10.78 % 10.47 % 10.22 % 10.34 %risk-based ratioTotal risk-based 14.73 % 13.11 % 13.02 % 12.85 % 12.93 %ratioTier 1 leverage 8.60 % 8.70 % 8.51 % 8.37 % 8.36 %ratioCommon equitytier 1 capital 10.70 % 10.29 % 9.98 % 9.73 % 9.83 %ratioBook value per $ 16.09 $ 15.74 $ 15.18 $ 15.13 $ 14.93 common shareTangible bookvalue per common $ 12.95 $ 12.60 $ 12.03 $ 11.97 $ 11.77 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 September 30, June 30, March 31, December 31, September 30,(dollars in 2021 2021 2021 2020 2020thousands)Selected Balance Sheet Data at Period EndLoans $ 5,880,802 $ 5,988,832 $ 6,108,946 $ 6,021,232 $ 5,843,591 Allowance forcredit losses on 57,953 60,389 67,252 71,124 65,242 loans (1)Investment 1,248,705 1,107,601 1,078,750 973,185 909,535 securitiesTotal assets 8,172,479 7,854,238 7,771,761 7,664,297 7,522,184 Total deposits 6,930,912 6,715,035 6,635,226 6,455,783 6,266,516 Short-term 111,907 100,190 111,999 169,560 97,874 borrowingsOther borrowings 212,107 138,045 143,267 143,257 253,359 Stockholders' 814,128 796,676 768,065 763,784 753,572 equity Loans Non-owner occupied $ 2,300,637 $ 2,330,376 $ 2,375,024 $ 2,398,946 commercialOwner occupied 884,144 870,535 857,506 827,092 commercialMultifamily 907,903 902,394 858,168 813,225 Non-owner occupied 177,592 189,765 195,534 200,229 residentialTotal commercial,secured by real $ 4,270,276 $ 4,293,070 $ 4,286,232 $ 4,239,492 $ 4,042,946 estate (1)Commercial,industrial and 363,976 358,659 394,416 433,553 418,813 otherConstruction 332,868 335,167 291,252 266,883 275,716 Paycheck Protection 109,348 207,045 346,150 284,636 325,115 ProgramEquipment financing 119,709 121,096 119,428 116,690 118,320 Residential 407,021 391,589 385,778 377,380 343,317 mortgagesConsumer and home 277,604 282,206 285,690 302,598 319,364 equityTotal loans $ 5,880,802 $ 5,988,832 $ 6,108,946 $ 6,021,232 $ 5,843,591 Deposits Noninterest-bearing $ 1,724,646 $ 1,683,887 $ 1,631,942 $ 1,510,224 $ 1,474,847 Savings andinterest-bearing 4,401,367 4,198,709 4,049,914 3,867,303 3,647,328 transactionaccountsTime deposits 804,899 832,439 953,370 1,078,256 1,144,341 Total deposits $ 6,930,912 $ 6,715,035 $ 6,635,226 $ 6,455,783 $ 6,266,516 Total loans tototal deposits 84.8 % 89.2 % 92.1 % 93.3 % 93.3 %ratio Selected Average Balance Sheet DataLoans $ 5,943,698 $ 6,080,408 $ 6,089,757 $ 5,939,904 $ 5,775,093 Investment 1,144,356 1,066,086 1,003,479 912,723 873,066 securitiesInterest-earning 7,611,259 7,342,952 7,230,136 7,137,884 7,009,939 assetsTotal assets 8,070,050 7,784,385 7,704,603 7,625,458 7,516,069 Noninterest-bearing 1,702,788 1,660,825 1,545,968 1,499,093 1,475,422 demand depositsSavings deposits 653,840 639,540 604,931 571,794 548,662 Interest-bearingtransaction 3,701,676 3,495,610 3,388,027 3,313,556 3,086,260 accountsTime deposits 826,831 880,079 1,044,915 1,112,053 1,176,181 Total deposits 6,885,135 6,676,054 6,583,841 6,496,496 6,286,525 Short-term 108,519 85,325 73,492 68,962 58,845 borrowingsOther borrowings 162,216 140,162 143,261 155,943 269,093 Totalinterest-bearing 5,453,082 5,240,716 5,254,626 5,222,308 5,139,042 liabilitiesStockholders' 807,956 781,299 770,255 753,059 751,099 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 September June 30, March 31, December 31, September 30, 30,(dollars in 2021 2021 2021 2020 2020thousands)Average Annualized Yields (Taxable Equivalent Basis) and CostsAssets Loans 4.00 % 3.99 % 3.91 % 3.92 % 3.91 %Taxableinvestment 1.68 % 1.72 % 1.81 % 1.84 % 2.09 %securities andotherTax-exempt 2.15 % 2.50 % 2.54 % 2.51 % 2.55 %securitiesFederal fundssold and 0.12 % 0.11 % 0.11 % 0.09 % 0.10 %interest-bearingcash accountsTotalinterest-earning 3.40 % 3.57 % 3.56 % 3.51 % 3.49 %assetsLiabilities Savings accounts 0.05 % 0.05 % 0.05 % 0.05 % 0.06 %Interest-bearingtransaction 0.30 % 0.32 % 0.34 % 0.38 % 0.44 %accountsTime deposits 0.55 % 0.61 % 0.83 % 1.01 % 1.19 %Borrowings 2.33 % 2.22 % 2.87 % 2.84 % 2.73 %Totalinterest-bearing 0.41 % 0.42 % 0.51 % 0.59 % 0.72 %liabilitiesNet interestspread (taxable 2.99 % 3.15 % 3.05 % 2.92 % 2.77 %equivalentbasis)Annualized netinterest margin(taxable 3.10 % 3.27 % 3.19 % 3.08 % 2.96 %equivalentbasis)Annualized cost 0.23 % 0.25 % 0.32 % 0.37 % 0.44 %of depositsAsset Quality DataAllowance forCredit Losses on LoansBalance atbeginning of $ 60,389 $ 67,252 $ 71,124 $ 65,242 $ 57,839 periodImpact ofadopting ASU ? ? 6,656 ? 2016-13 (1)(Benefit)provision for (2,705 ) (5,314 ) (2,808 ) (246 ) 8,000 credit losses onloansCharge-offs (969 ) (1,862 ) (1,270 ) (746 ) (682 )Recoveries 1,238 313 206 218 85 Balance at end $ 57,953 $ 60,389 $ 67,252 $ 71,124 $ 65,242 of period Net LoanCharge-Offs (Recoveries)Commercial, real $ (1 ) $ 1,590 $ 843 $ (47 ) $ 298 estateCommercial,industrial and (265 ) 5 221 478 173 otherEquipment 139 4 83 64 95 financingResidential 27 (82 ) (58 ) ? (1 )mortgagesConsumer and (169 ) 32 (25 ) 33 32 home equityNet (recoveries) $ (269 ) $ 1,549 $ 1,064 $ 528 $ 597 charge-offsNon-Performing Assets (2)Commercial, real $ 10,343 $ 20,594 $ 23,984 $ 35,091 $ 26,145 estateCommercial,industrial and 1,108 1,449 2,252 2,633 1,484 otherEquipment 224 264 293 327 444 financingResidential 123 ? 2,323 2,469 2,695 mortgagesConsumer and 452 308 2,274 2,243 2,322 home equityTotalnon-accrual 12,250 22,615 31,126 42,763 33,090 loansPropertyacquired through ? ? ? ? ? foreclosure orrepossessionTotalnon-performing $ 12,250 $ 22,615 $ 31,126 $ 42,763 $ 33,090 assetsLoans past due90 days or more $ ? $ ? $ ? $ 1 $ 165 and stillaccruingLoansrestructured and $ 3,414 $ 3,595 $ 3,799 $ 3,856 $ 4,299 still accruingRatio ofallowance for 0.99 % 1.01 % 1.10 % 1.18 % 1.11 %loan losses tototal loansTotalnon-accrual 0.21 % 0.38 % 0.51 % 0.71 % 0.57 %loans to totalloansTotalnon-performing 0.15 % 0.29 % 0.40 % 0.56 % 0.44 %assets to totalassetsAnnualized net(recoveries) (0.02 ) 0.10 % 0.07 % 0.04 % 0.04 %charge-offs to %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 September 30, June 30, March 31, December 31, September 30,(dollars inthousands, 2021 2021 2021 2020 2020except pershare amounts)Calculation of Tangible Book Value Per Common ShareTotal commonstockholders'equity at end $ 814,128 $ 796,676 $ 768,065 $ 763,784 $ 753,572 of period -GAAPLess: 156,277 156,277 156,277 156,277 156,277 GoodwillLess: Otheridentifiable 2,631 2,841 3,063 3,288 3,538 intangibleassetsTotal tangiblecommonstockholders' $ 655,220 $ 637,558 $ 608,725 $ 604,219 $ 593,757 equity at endof period -Non-GAAPSharesoutstanding at 50,602 50,601 50,598 50,480 50,468 end of periodBook value per $ 16.09 $ 15.74 $ 15.18 $ 15.13 $ 14.93 share - GAAPTangible bookvalue per $ 12.95 $ 12.60 $ 12.03 $ 11.97 $ 11.77 share -Non-GAAPCalculation of Tangible Common Equity to Tangible AssetsTotal tangiblecommonstockholders' $ 655,220 $ 637,558 $ 608,725 $ 604,219 $ 593,757 equity at endof period -Non-GAAPTotal assetsat end of $ 8,172,479 $ 7,854,238 $ 7,771,761 $ 7,664,297 $ 7,522,184 period - GAAPLess: 156,277 156,277 156,277 156,277 156,277 GoodwillLess: Otheridentifiable 2,631 2,841 3,063 3,288 3,538 intangibleassetsTotal tangibleassets at end $ 8,013,571 $ 7,695,120 $ 7,612,421 $ 7,504,732 $ 7,362,369 of period -Non-GAAPCommon equityto assets - 9.96 % 10.14 % 9.88 % 9.97 % 10.02 %GAAPTangiblecommon equityto tangible 8.18 % 8.29 % 8.00 % 8.05 % 8.06 %assets -Non-GAAPCalculation ofReturn onAverage TangibleCommon EquityNet income - $ 22,289 $ 27,407 $ 23,175 $ 18,848 $ 14,427 GAAPTotal averagecommon $ 807,956 $ 781,299 $ 770,255 $ 753,059 $ 751,099 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 156,277 156,277 goodwillLess: Averageotheridentifiable 2,758 2,979 3,192 3,433 3,689 intangibleassetsTotal averagetangiblecommon $ 648,921 $ 622,043 $ 610,786 $ 593,349 $ 591,133 stockholders'equity -Non-GAAPReturn onaverage common 10.94 % 14.07 % 12.20 % 9.96 % 7.64 %stockholders'equity - GAAPReturn onaveragetangiblecommon 13.63 % 17.67 % 15.39 % 12.64 % 9.71 %stockholders'equity -Non-GAAPCalculation ofEfficiency RatioTotalnoninterest $ 37,207 $ 34,097 $ 33,903 $ 36,945 $ 32,097 expenseAmortizationof core (211 ) (221 ) (226 ) (249 ) (250 )depositintangiblesMerger-related (1,072 ) ? ? ? ? expensesLong term debtextinguishment (831 ) ? ? (3,777 ) ? costsNoninterestexpense, as $ 35,093 $ 33,876 $ 33,677 $ 32,919 $ 31,847 adjustedNet interest $ 59,338 $ 59,740 $ 56,728 $ 55,135 $ 52,134 incomeTotalnoninterest 5,469 5,269 5,759 6,845 6,773 incomeTotal revenue 64,807 65,009 62,487 61,980 58,907 Tax-equivalentadjustment on 157 167 163 149 108 municipalsecuritiesGains on salesof investment ? (9 ) ? (871 ) ? securitiesTotal revenue, $ 64,964 $ 65,167 $ 62,650 $ 61,258 $ 59,015 as adjustedEfficiencyratio - 54.02 % 51.98 % 53.75 % 53.74 % 53.96 %Non-GAAP

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) For the Nine Months Ended September 30,(dollars in thousands) 2021 2020Calculation of Return on Average Tangible Common EquityNet income - GAAP $ 72,871 $ 38,670 Total average common stockholders' equity - $ 786,642 $ 743,318 GAAPLess: Average goodwill 156,277 156,277 Less: Average other identifiable intangible 2,975 3,944 assetsTotal average tangible common stockholders' $ 627,390 $ 583,097 equity - Non-GAAPReturn on average common stockholders' equity - 12.39 % 6.95 %GAAPReturn on average tangible common stockholders' 15.53 % 8.86 %equity - Non-GAAP Calculation of Efficiency Ratio Total noninterest expense $ 105,207 $ 96,063 Amortization of core deposit intangibles (658 ) (776 )Long-term debt extinguishment costs (831 ) (356 )Merger-related expenses (1,072 ) ? Noninterest expense, as adjusted $ 102,646 $ 94,931 Net interest income $ 175,806 $ 152,552 Noninterest income 16,497 20,265 Total revenue $ 192,303 $ 172,817 Tax-equivalent adjustment on municipal 487 289 securitiesGains on sales of investment securities (9 ) (342 )Total revenue, as adjusted $ 192,781 $ 172,764 Efficiency ratio - Non-GAAP 53.24 % 54.95 %