GlobeNewswire Inc | Oct 22, 2020 08:00AM EDT

October 22, 2020

OAK RIDGE, N.J., Oct. 22, 2020 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $14.4 million and earnings per diluted share ("EPS") of $0.28 for the three months ended September 30, 2020 compared to net income of $18.9 million and diluted EPS of $0.37 for the third quarter of 2019. For the third quarter of 2020, annualized return on average assets was 0.76%, annualized return on average common equity was 7.64% and annualized return on average tangible common equity was 9.71%.

For the nine months ended September30, 2020, the Company reported net income of $38.7 million and earnings per diluted share ("EPS") of $0.76 compared to net income of $52.0 million and diluted EPS of $1.02 for the first nine months of 2019. For the first nine months of 2020, annualized return on average assets was 0.73%, annualized return on average common equity was 6.95% and annualized return on average tangible common equity was 8.86%.

The third quarter and year-to-date results were adversely impacted by provisions for loan losses of $8.0 million and $26.2 million, respectively, compared to $536,000 and $1.0 million for the same periods last year. The increased provision for the first nine months of 2020 was primarily due to the impact of COVID-19 on certain qualitative factors and loans on payment deferment resulting in approximately 75% of the provision. The remainder of the provision is attributable to loan growth, a change in the loan portfolio composition and a change in loss rates. As of September 30, 2020, the ratio of the allowance for loan loss to total loans was 1.11% compared to 0.78% as of December 31, 2019. The allowance for loan losses to total loans less Paycheck Protection Program ("PPP") loans of $325.1 million, was 1.18% as of September 30, 2020.

Thomas Shara, Lakeland Bancorps President and CEO commented, "We continue to be a trusted partner for our customers during these uncertain times with our loans growing this quarter by $86 million or 1.5% and year-to-date growth of 7.4% excluding Payment Protection Plan loans, while deposits grew this quarter by $141 million or 2.3% and year-to-date growth of 18%. In addition, we recorded a lower provision for loan loss this quarter as our asset quality remains strong. Loans on deferred payment status decreased to 2.7% of total loans at September 30, 2020 from 19% at June 30, 2020 and loan charge-offs remain negligible. In light of the customer preference to utilize digital banking channels along with a decrease in branch transactions, we will be closing three branches representing 6% of our branch network."

COVID-19 As part of Lakelands response to COVID-19, we initiated remote working plans and encouraged the use of our mobile and online banking alternatives. To assist COVID-19 impacted borrowers, we offered temporary payment deferrals on commercial, mortgage and consumer loans. At September 30, 2020, we have on deferral, approximately $149 million in commercial loans (includes commercial loans secured by real estate, commercial and industrial and other loans), $3 million in equipment finance loans and $3 million in residential mortgage and consumer loans, compared to $927 million, $40 million and $53 million, respectively, at June 30, 2020. The reduction in deferrals from June 30, 2020 to September 30, 2020 was due primarily to borrowers resuming their regular payment schedule. We also participated in the Small Business Administration Paycheck Protection Program ("PPP") to help strengthen local businesses and preserve jobs in our communities and have funded 2,066 loans totaling $326.6 million with $11.1 million in related fees, as well as $1.1 million in deferred costs.

Net Interest Margin and Net Interest Income

Net interest margin for the third quarter of 2020 of 2.96% decreased 29 and 10 basis points, respectively, compared to the third quarter of 2019 and the second quarter of 2020. Net interest margin for the first nine months of 2020 of 3.09% compared to 3.35% for the same period in 2019. The decrease in net interest margin was due primarily to a decrease in the yield on interest-earning assets partially offset by a decrease in the cost of interest-bearing liabilities.

The yield on interest-earning assets for the third quarter of 2020 was 3.49% compared to 4.32% for the third quarter of 2019 and 3.69% for the second quarter of 2020. The yield on interest-earning assets for the first nine months of 2020 was 3.77% compared to 4.41% during the same period in 2019. The current quarter and year-to-date decrease in yield on interest-earning assets, when compared to the prior periods, was due primarily to a reduction in the yield on loans due to decreases in the prime rate and LIBOR during 2019 and 2020, an increase in lower yielding federal funds sold, as well as the origination of PPP loans during the second quarter of 2020, which earn an effective yield of 2.50% including amortization of fees and costs.

The cost of interest-bearing liabilities for the third quarter of 2020 was 0.72% compared to 1.41% for the third quarter of 2019 and 0.86% for the second quarter of 2020. The cost of interest-bearing liabilities for the first nine months of 2020 was 0.91% compared to 1.39% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings has decreased since 2019 largely driven by reductions in market interest rates.

Net interest income for the third quarter of 2020 of $52.1 million increased $3.5 million and $1.6 million, respectively, compared to the third quarter of 2019 and the second quarter of 2020. Net interest income for the first nine months of 2020 of $152.6 million compared to $146.5 million for the first nine months of 2019. The increase in net interest income compared to prior periods was due primarily to the growth in the volume of interest-earning assets which was somewhat offset by a decrease in yield on interest-earning assets.

Noninterest Income

Noninterest income increased $73,000 to $6.8 million for the third quarter of 2020 from $6.7 million for the third quarter of 2019. Gains on sales of loans for the third quarter of 2020 increased $951,000 compared to the third quarter of 2019 due primarily to increased volume driven by lower interest rates, while commissions and fees for the third quarter of 2020 increased $122,000 due primarily to increases in mortgage application fees and commercial loan fees. Service charges on deposit accounts for the third quarter of 2020 decreased $563,000 compared to the third quarter of 2019 due primarily to changes in customer behavior resulting from the pandemic. Third quarter 2020 results also included losses on equity securities of $170,000 compared to a gain of $72,000 during the same period in 2019.

For the first nine months of 2020, noninterest income increased $1.5 million to $20.3 million compared to the first nine months of 2019 primarily due to increases in swap income and gains on sales of loans which increased $2.6 million and $1.3 million, respectively, resulting from increased volume driven by lower interest rates. The first nine months of 2020 included gains on sales of investment securities of $342,000 compared to none for the same period last year. Partially offsetting these favorable variances was service charges on deposits which decreased $1.5 million compared to the first nine months of 2019 due to the same reason mentioned in the quarterly comparison. The first nine months of 2020 also included a $625,000 loss on equity securities compared to a gain of $525,000 for the first nine months of 2019.

Noninterest Expense

Noninterest expense totaled $32.1 million for the third quarter of 2020 and increased $2.5 million compared to the third quarter of 2019. Salary and employee benefit expense for the third quarter of 2020 increased $632,000, or 3%, when compared to the same quarter of 2019 as a result of staff additions and normal merit increases. Furniture and equipment expense increased $806,000 compared to the third quarter of 2019 due primarily to an increase in costs associated with the Company's digital strategy initiative. FDIC insurance expense totaled $625,000 for the third quarter of 2020 and increased $1.0 million compared to the same period in 2019. In the third quarter of 2019, $420,000 in previously recorded FDIC expense was reversed due to FDIC assessment credits and no third quarter 2019 accrual was made, resulting from the insurance fund reserve ratio exceeding the required level.

Noninterest expense for the first nine months of 2020 of $96.1 million increased $830,000 compared to the first nine months of 2019. Salary and employee benefit expense increased $2.5 million compared to the first nine months of 2019 due to the same reasons discussed in the quarterly comparison. Furniture and equipment expense and FDIC insurance expense increased $1.9 million and $942,000, respectively, due to the same reasons mentioned in the quarterly comparison. Marketing expenses for the first nine months of 2020 decreased $590,000 due partially to the delay of marketing campaigns resulting from the pandemic. Year-to-date 2019 results included merger related expenses of $3.2 million due to the acquisition of Highlands Bank, while year-to-date 2020 results include 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 third quarter of 2020 was 23.3% compared to 25.3% for the third quarter of 2019. The decreased effective tax rate for the third quarter of 2020 was primarily a result of an increase in tax advantaged items as a percent of pretax income.

Financial Condition

At September30, 2020, total assets were $7.52 billion, an increase of $810.9 million compared to December31, 2019. For the nine months ended September30, 2020, total loans grew $705.8 million, including $325.1 million attributed to PPP loans, to $5.84 billion and investment securities decreased $9.3 million to $909.5 million. On the funding side, total deposits increased $972.7 million to $6.27 billion, while borrowings decreased $261.5 million to $351.2 million. At September30, 2020, total loans as a percent of total deposits was 93.4%.

Asset Quality

At September30, 2020, non-performing assets increased to $33.1 million, 0.44% of total assets, compared to $21.7 million, 0.32% of total assets, at December31, 2019. Non-accrual loans as a percent of total loans increased to 0.57% at September30, 2020 compared to 0.41% at December31, 2019. The increase in non-accrual loans from December 31, 2019, related primarily to one loan relationship totaling $9.5 million that was not COVID-19 related. The allowance for loan losses increased to $65.2 million, 1.11% of total loans, at September30, 2020, compared to $40.0 million, 0.78% of total loans, at December31, 2019. In the third quarter of 2020, the Company had net charge-offs of $597,000, or 0.04% of average loans, annualized, compared to $543,000, or 0.04%, for the same period in 2019. The provision for loan losses for the third quarter of 2020 was $8.0 million compared to a $536,000 provision for loan losses in the third quarter of 2019.

Capital

At September30, 2020, stockholders' equity was $753.6 million compared to $725.3 million at December31, 2019, a 4% increase. Lakeland Bank remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.36% at September30, 2020. The book value per common share and tangible book value per common share increased 6% and 8% to $14.93 and $11.77, respectively, compared to $14.13 and $10.94 at September30, 2019. At September 30, 2020, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio was 10.02% and 8.06%, respectively, compared to 10.81% and 8.62% at December 31, 2019. Excluding the impact of the PPP loans of $325.1 million, the Companys common equity to assets ratio and tangible common equity to tangible assets ratio was 10.47% and 8.44%, respectively, at September 30, 2020. On October21, 2020, the Company declared a quarterly cash dividend of $0.125 per share to be paid on November13, 2020, to shareholders of record as of November3, 2020.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements including the statement regarding the prospective impact of COVID-19 and our plans to close three branches that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words anticipates, projects, intends, estimates, expects, believes, plans, may, will, should, could, and other similar expressions are intended to identify such forward-looking statements. The Company cautions that these forward-looking statements are necessarily speculative and speak only as of the date made, and are subject to numerous assumptions, risks and uncertainties, all of which may change over time. Actual results could differ materially from such forward-looking statements. The following factors, among others, could cause the Companys 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; public health crises (such as the governmental, social and economic effects of the novel coronavirus); 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 Lakelands lending and equipment financing activities; successful implementation, deployment and upgrades of new and existing technology, systems, services and products; and customers acceptance of Lakelands products and services.

Explanation of Non-GAAP Financial Measures

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

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

The Company also uses an efficiency ratio that is a non-GAAP financial measure. The ratio that the Company uses excludes amortization of core deposit intangibles, provision for unfunded lending commitments 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 and gain on debt extinguishment, which can vary from period to period. The Company uses this ratio because it believes the ratio provides a relevant measure to compare the operating performance period to period.

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

About Lakeland

Lakeland Bank is the wholly-owned subsidiary of Lakeland Bancorp, Inc. (NASDAQ:LBAI), which has over $7 billion in total assets. 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 forhealthcare 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 Jerseys Best-In-State Banks byForbesand Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jerseys 50 Fastest Growing Companies by NJBIZ.Visit LakelandBank.comfor more information.

Thomas J. Shara President & CEO

Thomas F. Splaine EVP & CFO 973-697-2000

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) Three Months Ended Nine Months Ended September 30, September 30,(Dollars inthousands, except 2020 2019 2020 2019per share amounts)INCOME STATEMENT Net interest income $ 52,134 $ 48,682 $ 152,552 $ 146,486 Provision for loan (8,000 ) (536 ) (26,223 ) (1,044 ) lossesGains on sales ofinvestment ? ? 342 ? securitiesGains on sales of 1,437 486 2,562 1,285 loansGain (loss) on (170 ) 72 (625 ) 525 equity securitiesOther noninterest 5,506 6,142 17,986 17,002 incomeLong-term debt ? ? (356 ) ? prepayment feeMerger-related ? ? ? (3,178 ) expensesOther noninterest (32,097 ) (29,563 ) (95,707 ) (92,055 ) expensePretax income 18,810 25,283 50,531 69,021 Provision for (4,383 ) (6,409 ) (11,861 ) (17,064 ) income taxesNet income $ 14,427 $ 18,874 $ 38,670 $ 51,957 Basic earnings per $ 0.28 $ 0.37 $ 0.76 $ 1.02 common shareDiluted earnings $ 0.28 $ 0.37 $ 0.76 $ 1.02 per common shareDividends paid per $ 0.125 $ 0.125 $ 0.375 $ 0.365 common shareWeighted average 50,526 50,553 50,544 50,447 shares - basicWeighted average 50,620 50,694 50,645 50,595 shares - diluted SELECTED OPERATING RATIOSAnnualized return 0.76 % 1.17 % 0.73 % 1.11 %on average assetsAnnualized returnon average common 7.64 % 10.61 % 6.95 % 10.07 %equityAnnualized returnon average tangible 9.71 % 13.74 % 8.86 % 13.11 %common equity (1)Annualized yield oninterest-earning 3.49 % 4.32 % 3.77 % 4.41 %assetsAnnualized cost ofinterest-bearing 0.72 % 1.41 % 0.91 % 1.39 %liabilitiesAnnualized net 2.77 % 2.91 % 2.86 % 3.02 %interest spreadAnnualized net 2.96 % 3.25 % 3.09 % 3.35 %interest marginEfficiency ratio 53.96 % 52.77 % 54.95 % 55.05 %(1)Stockholders'equity to total 10.02 % 10.99 %assetsBook value per $ 14.93 $ 14.13 common shareTangible book valueper common share $ 11.77 $ 10.94 (1)Tangible commonequity to tangible 8.06 % 8.72 %assets (1) ASSET QUALITY September 30, September 30,RATIOS 2020 2019Ratio of allowancefor loan losses to 1.11 % 0.78 %total loansNon-performingloans to total 0.57 % 0.32 %loansNon-performingassets to total 0.44 % 0.26 %assetsAnnualized netcharge-offs to 0.02 % ? %average loans (1) See Supplemental Information - Non-GAAP Financial Measures Lakeland Bancorp, Inc.Financial Highlights(Unaudited) (Dollars in September 30, September 30,thousands) 2020 2019SELECTED BALANCE SHEET DATA AT PERIOD-ENDLoans $ 5,843,591 $ 4,923,414 Allowance for loan 65,242 38,655 lossesInvestment 909,535 905,078 securitiesTotal assets 7,522,184 6,492,474 Total deposits 6,266,516 5,210,619 Short-term 97,874 199,326 borrowingsOther borrowings 253,359 284,029 Stockholders' 753,572 713,204 equity Three Months Ended Nine Months Ended September 30, September 30, 2020 2019 2020 2019SELECTED AVERAGE BALANCE SHEET DATALoans $ 5,775,093 $ 4,937,488 $ 5,519,621 $ 4,908,952 Investment 873,066 869,734 881,332 860,840 securitiesInterest-earning 7,009,939 5,947,645 6,599,481 5,852,919 assetsTotal assets 7,516,069 6,379,675 7,073,438 6,273,860 Noninterest-bearing 1,475,422 1,100,413 1,317,195 1,080,235 demand depositsSavings deposits 548,662 494,377 523,653 503,260 Interest-bearingtransaction 3,086,260 2,678,424 2,942,307 2,599,004 accountsTime deposits 1,176,181 964,159 1,048,115 938,751 Total deposits 6,286,525 5,237,373 5,831,270 5,121,250 Short-term 58,845 74,042 100,303 104,450 borrowingsOther borrowings 269,093 287,839 273,567 292,447 Totalinterest-bearing 5,139,042 4,498,841 4,887,945 4,437,912 liabilitiesStockholders' 751,099 705,726 743,318 689,538 equity

Lakeland Bancorp, Inc.Consolidated Statements of Income(Unaudited) Three Months Ended Nine Months Ended September 30, September 30,(Dollars inthousands, except per 2020 2019 2020 2019share amounts)INTEREST INCOME Loans and netdeferred fees and $ 56,801 $ 58,563 $ 170,483 $ 175,324 costsFederal funds soldand interest-bearing 92 695 287 1,297 deposits with banksTaxable investment 4,139 5,007 14,131 14,865 securities and otherTax exempt investment 401 361 1,082 1,165 securities TOTAL INTEREST 61,433 64,626 185,983 192,651 INCOMEINTEREST EXPENSE Deposits 7,012 13,267 25,969 37,526 Federal fundspurchased andsecurities sold under 27 231 531 1,333 agreements torepurchaseOther borrowings 2,260 2,446 6,931 7,306 TOTAL INTEREST 9,299 15,944 33,431 46,165 EXPENSENET INTEREST INCOME 52,134 48,682 152,552 146,486 Provision for loan 8,000 536 26,223 1,044 losses NET INTEREST INCOME AFTER PROVISION FOR 44,134 48,146 126,329 145,442 LOAN LOSSESNONINTEREST INCOME Service charges on 2,288 2,851 6,663 8,179 deposit accountsCommissions and fees 1,667 1,545 4,503 4,682 Income on bank owned 670 691 2,000 2,064 life insurance(Loss) gain on equity (170 ) 72 (625 ) 525 securitiesGains on sales of 1,437 486 2,562 1,285 loansGains on sales of ? ? 342 ? investment securitiesSwap income 624 730 4,234 1,585 Other income 257 325 586 492 TOTAL NONINTEREST 6,773 6,700 20,265 18,812 INCOMENONINTEREST EXPENSE Salaries and employee 19,694 19,062 60,198 57,672 benefit expenseNet occupancy expense 2,692 2,767 8,016 8,350 Furniture and 2,890 2,084 8,233 6,365 equipment expenseFDIC insurance 625 (420 ) 1,373 431 expenseStationary, supplies 488 366 1,268 1,214 and postage expenseMarketing expense 381 423 840 1,430 Data processing 1,211 1,248 3,900 3,800 expenseTelecommunications 501 480 1,399 1,451 expenseATM and debit card 615 588 1,738 1,773 expenseCore depositintangible 250 288 776 893 amortizationOther real estateowned and other (2 ) 29 53 223 repossessed assetsexpense (income)Long-term debt ? ? 356 ? prepayment feeMerger-related ? ? ? 3,178 expensesOther expenses 2,752 2,648 7,913 8,453 TOTAL NONINTEREST 32,097 29,563 96,063 95,233 EXPENSEINCOME BEFOREPROVISION FOR INCOME 18,810 25,283 50,531 69,021 TAXESProvision for income 4,383 6,409 11,861 17,064 taxesNET INCOME $ 14,427 $ 18,874 $ 38,670 $ 51,957 EARNINGS PER COMMON SHARE: Basic $ 0.28 $ 0.37 $ 0.76 $ 1.02 Diluted $ 0.28 $ 0.37 $ 0.76 $ 1.02 DIVIDENDS PAID PER $ 0.125 $ 0.125 $ 0.375 $ 0.365 COMMON SHARE

Lakeland Bancorp, Inc.Consolidated Balance Sheets (Dollars in thousands) September 30, December 31, 2020 2019 (Unaudited) ASSETS Cash $ 314,591 $ 275,794 Interest-bearing deposits due from banks 31,337 6,577 Total cash and cash equivalents 345,928 282,371 Investment securities available for sale, at 783,331 755,900 fair valueEquity securities, at fair value 14,076 16,473 Investment securities held to maturity; fairvalue of $101,205 at September30, 2020 and 97,893 123,975 $124,904 at December 31, 2019Federal Home Loan Bank and other membership 14,235 22,505 stocks, at costLoans held for sale 4,197 1,743 Loans, net of deferred fees 5,843,591 5,137,823 Less: Allowance for loan losses 65,242 40,003 Net loans and leases 5,778,349 5,097,820 Premises and equipment, net 47,810 47,608 Operating lease right-of-use assets 17,028 18,282 Accrued interest receivable 21,480 16,832 Goodwill 156,277 156,277 Other identifiable intangible assets 3,538 4,314 Bank owned life insurance 114,418 112,392 Other assets 123,624 54,744 TOTAL ASSETS $ 7,522,184 $ 6,711,236 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest-bearing $ 1,474,847 $ 1,124,121 Savings and interest-bearing transaction 3,647,328 3,298,854 accountsTime deposits $250 thousand and under 961,402 652,144 Time deposits over $250 thousand 182,939 218,660 Total deposits 6,266,516 5,293,779 Federal funds purchased and securities sold 97,874 328,658 under agreements to repurchaseOther borrowings 135,111 165,816 Subordinated debentures 118,248 118,220 Operating lease liabilities 18,471 19,814 Other liabilities 132,392 59,686 TOTAL LIABILITIES 6,768,612 5,985,973 STOCKHOLDERS' EQUITY Common stock, no par value; authorized shares,100,000,000; issued shares 50,598,670 and outstanding shares 50,467,635 561,817 560,263 atSeptember30, 2020 and issued and outstanding shares 50,498,410at December31, 2019Retained earnings 182,329 162,752 Treasury shares, at cost, 131,035 shares atSeptember30, 2020 and no shares at December (1,452 ) ? 31, 2019Accumulated other comprehensive income 10,878 2,248 TOTAL STOCKHOLDERS' EQUITY 753,572 725,263 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,522,184 $ 6,711,236

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended September June 30, March 31, December 31, September 30, 30,(Dollars inthousands, 2020 2020 2020 2019 2019except pershare data)INCOME STATEMENTNet interest $ 52,134 $ 50,519 $ 49,899 $ 49,548 $ 48,682 incomeProvision for (8,000 ) (9,000 ) (9,223 ) (1,086 ) (536 ) loan lossesGains on salesof investment ? ? 342 ? ? securitiesGains on sales 1,437 710 415 375 486 of loans(Loss) gain onequity (170 ) 198 (653 ) (29 ) 72 securitiesOthernoninterest 5,506 4,573 7,907 7,638 6,142 incomeLong-term debt ? ? (356 ) ? ? prepayment feeMerger-related ? ? ? ? ? expensesOthernoninterest (32,097 ) (31,462 ) (32,148 ) (31,523 ) (29,563 ) expensePretax income 18,810 15,538 16,183 24,923 25,283 Provision for (4,383 ) (3,687 ) (3,791 ) (6,208 ) (6,409 ) income taxesNet income $ 14,427 $ 11,851 $ 12,392 $ 18,715 $ 18,874 Basic earningsper common $ 0.28 $ 0.23 $ 0.24 $ 0.37 $ 0.37 shareDilutedearnings per $ 0.28 $ 0.23 $ 0.24 $ 0.37 $ 0.37 common shareDividends paidper common $ 0.125 $ 0.125 $ 0.125 $ 0.125 $ 0.125 shareDividends paid $ 6,365 $ 6,365 $ 6,364 $ 6,363 $ 6,362 Weightedaverage shares 50,526 50,522 50,586 50,566 50,553 - basicWeightedaverage shares 50,620 50,593 50,728 50,748 50,694 - diluted SELECTEDOPERATING RATIOSAnnualizedreturn on 0.76 % 0.67 % 0.76 % 1.15 % 1.17 %average assetsAnnualizedreturn on 7.64 % 6.42 % 6.77 % 10.32 % 10.61 %average commonequityAnnualizedreturn onaverage 9.71 % 8.19 % 8.65 % 13.29 % 13.74 %tangiblecommon equity(1)Annualized netinterest 2.96 % 3.06 % 3.28 % 3.27 % 3.25 %marginEfficiency 53.96 % 55.62 % 55.30 % 54.20 % 52.77 %ratio (1)Commonstockholders' 10.02 % 9.96 % 10.51 % 10.81 % 10.99 %equity tototal assetsTangiblecommon equity 8.06 % 7.99 % 8.41 % 8.62 % 8.72 %to tangibleassets (1)Tier 1risk-based 10.34 % 10.45 % 10.61 % 11.02 % 11.24 %ratioTotalrisk-based 12.93 % 12.98 % 13.04 % 13.40 % 13.70 %ratioTier 1 8.36 % 8.69 % 9.38 % 9.41 % 9.34 %leverage ratioCommon equitytier 1 capital 9.83 % 9.93 % 10.08 % 10.46 % 10.66 %ratioBook value per $ 14.93 $ 14.77 $ 14.60 $ 14.36 $ 14.13 common shareTangible bookvalue per $ 11.77 $ 11.60 $ 11.43 $ 11.18 $ 10.94 common share(1) (1) See SupplementalInformation - 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 2020 2020 2020 2019 2019thousands)SELECTED BALANCE SHEET DATA AT PERIOD-ENDLoans $ 5,855,024 $ 5,769,127 $ 5,331,863 $ 5,140,940 $ 4,925,998 Allowance for loan 65,242 57,839 48,884 40,003 38,655 lossesInvestment 909,535 957,985 974,319 918,853 905,078 securitiesTotal assets 7,522,184 7,488,516 7,013,908 6,711,236 6,492,474 Total deposits 6,266,516 6,125,502 5,455,138 5,293,779 5,210,619 Short-term 97,874 183,116 419,085 328,658 199,326 borrowingsOther borrowings 253,359 273,954 258,944 284,036 284,029 Stockholders' 753,572 745,489 736,922 725,263 713,204 equity LOANS Commercial, real $ 4,326,074 $ 4,260,917 $ 4,073,911 $ 3,924,762 $ 3,749,413 estateCommercial,industrial and 426,821 402,239 467,346 431,934 391,486 otherPaycheck Protection 325,115 325,999 ? ? ? ProgramEquipment financing 116,410 115,651 116,421 111,076 104,689 Residential 342,583 334,455 334,114 335,191 337,482 mortgagesConsumer and home 318,021 329,866 340,071 337,977 342,928 equityTotal loans $ 5,855,024 $ 5,769,127 $ 5,331,863 $ 5,140,940 $ 4,925,998 DEPOSITS Noninterest-bearing $ 1,474,847 $ 1,486,273 $ 1,129,695 $ 1,124,121 $ 1,101,083 Savings andinterest-bearing 3,647,328 3,510,723 3,241,397 3,298,854 3,196,323 transactionaccountsTime deposits 1,144,341 1,128,506 1,084,046 870,804 913,213 Total deposits $ 6,266,516 $ 6,125,502 $ 5,455,138 $ 5,293,779 $ 5,210,619 Total loans tototal deposits 93.4 % 94.2 % 97.7 % 97.1 % 94.5 %ratio SELECTED AVERAGE BALANCE SHEET DATALoans $ 5,775,093 $ 5,572,865 $ 5,208,097 $ 5,025,377 $ 4,937,488 Investment 873,066 891,037 879,987 894,698 869,734 securitiesInterest-earning 7,009,939 6,650,993 6,133,003 6,022,525 5,947,645 assetsTotal assets 7,516,069 7,137,529 6,565,302 6,470,082 6,379,675 Noninterest-bearing 1,475,422 1,364,785 1,109,638 1,130,192 1,100,413 demand depositsSavings deposits 548,662 525,224 496,798 492,903 494,377 Interest-bearingtransaction 3,086,260 2,908,299 2,830,778 2,814,831 2,678,424 accountsTime deposits 1,176,181 1,093,760 872,998 873,924 964,159 Total deposits 6,286,525 5,892,068 5,310,212 5,311,850 5,237,373 Short-term 58,845 82,694 159,825 67,097 74,042 borrowingsOther borrowings 269,093 273,904 277,753 284,049 287,839 Totalinterest-bearing 5,139,042 4,883,881 4,638,152 4,532,804 4,498,841 liabilitiesStockholders' 751,099 742,050 736,719 719,292 705,726 equity

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended September June 30, March 31, December 31, September 30, 30,(Dollars in 2020 2020 2020 2019 2019thousands)AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS) AND COSTSASSETS Loans 3.91 % 4.03 % 4.47 % 4.60 % 4.71 %Taxableinvestment 2.09 % 2.31 % 2.56 % 2.34 % 2.50 %securities andotherTax-exempt 2.55 % 2.70 % 2.67 % 2.69 % 2.70 %securitiesFederal fundssold and 0.10 % 0.08 % 1.42 % 1.65 % 1.98 %interest-bearingcash accountsTotalinterest-earning 3.49 % 3.69 % 4.17 % 4.21 % 4.32 %assetsLIABILITIES Savings accounts 0.06 % 0.07 % 0.07 % 0.07 % 0.06 %Interest-bearingtransaction 0.44 % 0.55 % 0.97 % 1.05 % 1.24 %accountsTime deposits 1.19 % 1.48 % 1.81 % 1.93 % 2.00 %Borrowings 2.73 % 2.62 % 2.54 % 2.86 % 2.89 %Totalinterest-bearing 0.72 % 0.86 % 1.18 % 1.26 % 1.41 %liabilitiesNet interestspread (taxable 2.77 % 2.83 % 2.99 % 2.96 % 2.91 %equivalentbasis)Annualized netinterest margin(taxable 2.96 % 3.06 % 3.28 % 3.27 % 3.25 %equivalentbasis)Annualized cost 0.44 % 0.55 % 0.82 % 0.88 % 1.00 %of depositsASSET QUALITY DATAALLOWANCE FOR LOAN LOSSESBalance atbeginning of $ 57,839 $ 48,884 $ 40,003 $ 38,655 $ 38,662 periodProvision for 8,000 9,000 9,223 1,086 536 loan lossesCharge-offs (682 ) (142 ) (483 ) (198 ) (809 ) Recoveries 85 97 141 460 266 Balance at end $ 65,242 $ 57,839 $ 48,884 $ 40,003 $ 38,655 of period NET LOANCHARGE-OFFS (RECOVERIES)Commercial, real $ 298 $ (36 ) $ 111 $ (18 ) $ 203 estateCommercial,industrial and 173 (13 ) (31 ) 13 393 otherEquipment 95 (11 ) 71 (297 ) ? financingResidential (1 ) ? 96 ? (55 ) mortgagesConsumer and 32 105 95 40 2 home equityNet charge-offs $ 597 $ 45 $ 342 $ (262 ) $ 543 (recoveries) NON-PERFORMING ASSETSCommercial, real $ 26,145 $ 25,615 $ 24,770 $ 13,281 $ 9,164 estateCommercial,industrial and 1,484 1,546 1,909 1,539 795 otherEquipment 444 400 199 284 271 financingResidential 2,695 2,860 2,837 3,428 3,250 mortgagesConsumer and 2,322 2,432 2,689 2,606 2,437 home equityTotalnon-accrual 33,090 32,853 32,404 21,138 15,917 loansPropertyacquired through ? 354 393 563 944 foreclosure orrepossessionTotalnon-performing $ 33,090 $ 33,207 $ 32,797 $ 21,701 $ 16,861 assets Loans past due90 days or more $ 165 $ 58 $ 99 $ ? $ ? and stillaccruingLoansrestructured and $ 4,299 $ 4,667 $ 4,719 $ 5,650 $ 5,029 still accruing Ratio ofallowance for 1.11 % 1.00 % 0.92 % 0.78 % 0.78 %loan losses tototal loansTotalnon-accrual 0.57 % 0.57 % 0.61 % 0.41 % 0.32 %loans to totalloansTotalnon-performing 0.44 % 0.44 % 0.47 % 0.32 % 0.26 %assets to totalassetsAnnualized netcharge-offs 0.04 % ? % 0.03 % (0.02 ) % 0.04 %(recoveries) toaverage loans

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,except ratios 2020 2020 2020 2019 2019and per shareamounts)CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARETotal commonstockholders'equity at end $ 753,572 $ 745,489 $ 736,922 $ 725,263 $ 713,204 of period -GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,538 3,788 4,049 4,314 4,602 intangibleassetsTotal tangiblecommonstockholders' $ 593,757 $ 585,424 $ 576,596 $ 564,672 $ 552,325 equity at endof period -Non-GAAP Sharesoutstanding at 50,468 50,463 50,462 50,498 50,489 end of period Book value per $ 14.93 $ 14.77 $ 14.60 $ 14.36 $ 14.13 share - GAAP Tangible bookvalue per $ 11.77 $ 11.60 $ 11.43 $ 11.18 $ 10.94 share -Non-GAAP CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETSTotal tangiblecommonstockholders' $ 593,757 $ 585,424 $ 576,596 $ 564,672 $ 552,325 equity at endof period -Non-GAAP Total assetsat end of $ 7,522,184 $ 7,488,516 $ 7,013,908 $ 6,711,236 $ 6,492,474 period - GAAPLess: Goodwill 156,277 156,277 156,277 156,277 156,277 Less: Otheridentifiable 3,538 3,788 4,049 4,314 4,602 intangibleassetsTotal tangibleassets at end $ 7,362,369 $ 7,328,451 $ 6,853,582 $ 6,550,645 $ 6,331,595 of period -Non-GAAP Common equityto assets - 10.02 % 9.96 % 10.51 % 10.81 % 10.99 %GAAP Tangiblecommon equityto tangible 8.06 % 7.99 % 8.41 % 8.62 % 8.72 %assets -Non-GAAP CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITYNet income - $ 14,427 $ 11,851 $ 12,392 $ 18,715 $ 18,874 GAAP Total averagecommon $ 751,099 $ 742,050 $ 736,719 $ 719,292 $ 705,726 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 156,277 155,835 goodwillLess: Averageotheridentifiable 3,689 3,942 4,205 4,468 4,761 intangibleassetsTotal averagetangiblecommon $ 591,133 $ 581,831 $ 576,237 $ 558,547 $ 545,130 stockholders'equity -Non-GAAP Return onaverage common 7.64 % 6.42 % 6.77 % 10.32 % 10.61 %stockholders'equity - GAAP Return onaveragetangiblecommon 9.71 % 8.19 % 8.65 % 13.29 % 13.74 %stockholders'equity -Non-GAAP CALCULATION OFEFFICIENCY RATIOTotalnoninterest $ 32,097 $ 31,462 $ 32,504 $ 31,523 $ 29,563 expenseAmortizationof core (250 ) (261 ) (265 ) (289 ) (288 ) depositintangiblesLong term debtprepayment $ ? $ ? $ (356 ) feesNoninterestexpense, as $ 31,847 $ 31,201 $ 31,883 $ 31,234 $ 29,275 adjusted Net interest $ 52,134 $ 50,519 $ 49,899 $ 49,548 $ 48,682 incomeTotalnoninterest 6,773 5,481 8,011 7,984 6,700 incomeTotal revenue 58,907 56,000 57,910 57,532 55,382 Tax-equivalentadjustment on 108 93 88 91 97 municipalsecurities(Gains) onsales of ? ? (342 ) ? ? investmentsecuritiesTotal revenue, $ 59,015 $ 56,093 $ 57,656 $ 57,623 $ 55,479 as adjustedEfficiencyratio - 53.96 % 55.62 % 55.30 % 54.20 % 52.77 %Non-GAAP

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) For the Nine Months Ended September 30,(Dollars in thousands) 2020 2019 CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITYNet income - GAAP $ 38,670 $ 51,957 Total average common stockholders' equity - $ 743,318 $ 689,538 GAAPLess: Average goodwill $ 156,277 $ 154,531 Less: Average other identifiable intangible $ 3,944 $ 5,022 assetsTotal average tangible common stockholders' $ 583,097 $ 529,985 equity - Non-GAAP Return on average common stockholders' equity - 6.95 % 10.07 %GAAP Return on average tangible common stockholders' 8.86 % 13.11 %equity - Non-GAAP CALCULATION OF EFFICIENCY RATIO Total noninterest expense $ 96,063 $ 95,233 Amortization of core deposit intangibles $ (776 ) $ (893 ) Long-term debt prepayment fee $ (356 ) $ ? Merger-related expenses $ ? $ (3,178 ) Noninterest expense, as adjusted $ 94,931 $ 91,162 Net interest income $ 152,552 $ 146,486 Noninterest income $ 20,265 $ 18,812 Total revenue $ 172,817 $ 165,298 Tax-equivalent adjustment on municipal $ 289 $ 310 securitiesGains on sales of investment securities $ (342 ) $ ? Total revenue, as adjusted $ 172,764 $ 165,608 Efficiency ratio - Non-GAAP 54.95 % 55.05 %