GlobeNewswire Inc | Jul 23, 2020 08:00AM EDT

July 23, 2020

OAK RIDGE, N.J., July 23, 2020 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the Company), the parent company of Lakeland Bank (Lakeland), reported net income of $11.9 million and earnings per diluted share (EPS) of $0.23 for the three months ended June 30, 2020 compared to net income of $17.5 million and diluted EPS of $0.34 for the second quarter of 2019. For the second quarter of 2020, annualized return on average assets was 0.67%, annualized return on average common equity was 6.42% and annualized return on average tangible common equity was 8.19%.

For the six months ended June30, 2020, the Company reported net income of $24.2 million and earnings per diluted share (EPS) of $0.47 compared to net income of $33.1 million and diluted EPS of $0.65 for the first six months of 2019. For the first six months of 2020, annualized return on average assets was 0.71%, annualized return on average common equity was 6.59% and annualized return on average tangible common equity was 8.42%.

The second quarter and year-to-date results were adversely impacted by a $9.0 million and $18.2 million provision for loan losses, respectively, compared to no provision and a $508,000 provision for the same periods last year. The increased provision for the first half of 2020 was primarily due to the impact of COVID-19 on certain qualitative factors and loans on payment deferment resulting in approximately $15.0 million of the provision. The remaining $3.2 million of the provision is attributable to loan growth, a change in the loan portfolio composition and a change in loss rates. As of June 30, 2020, the ratio of the allowance for loan loss to total loans was 1.00% compared to 0.78% as of December 31, 2019. The allowance for loan losses to total loans less Paycheck Protection Program (PPP) loans of $326.0 million, was 1.06% as of June 30, 2020.

Thomas Shara, Lakeland Bancorps President and CEO commented, While the pandemic has continued to impact our markets, Lakeland remains focused on expanding our customer relationships and carefully growing our franchise. Lakelands commitment to our communities is evident in our active participation in the PPP loan program, the recently launched Main Street Lending Program and numerous other charitable initiatives during this crisis. As conditions improved, the number of loan deferral requests has decreased dramatically and we are encouraged by the large volume of loans on payment deferment indicating a return to full or partial paying status. Although the pandemic has lessened in our markets and loan charge-offs continue to be negligible, we remain prudent with our elevated loan loss provision of $9.0 million which is consistent with last quarter.

Mr. Shara continued, Despite these conditions, Lakelands Q2 balance sheet growth has been robust as loans increased $111 million or 8% annualized, excluding originating $326.0 million in PPP loans, while deposits surged by $670 million. The additional liquidity combined with lower market interest rates and the impact of low yielding PPP loans reduced the net interest margin to 3.06% for the quarter. We will look to leverage this liquidity during the second half of the year as the economic forecast becomes clearer.

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 are offering temporary payment deferrals on commercial, mortgage and consumer loans. As of June 30, 2020, we have deferred approximately $927.0 million of commercial loans, $40.0 million of equipment finance and $53.0 million of residential mortgage and consumer loans. We are also participating in the Small Business Administration Paycheck Protection Program (PPP) to help strengthen local businesses and preserve jobs in our communities and as of June 30, 2020 have funded 2,066 loans totaling $326.0 million with $11.1 million in related fees, as well as $1.1 million in deferred costs. Additionally, to further support our customers, the Company is participating in the Main Street Lending Program established by the Federal Reserve to support lending to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.

Net Interest Margin and Net Interest Income

Net interest margin for the second quarter of 2020 of 3.06% decreased 33 and 22 basis points, respectively, from the second quarter of 2019 and the first quarter of 2020. Net interest margin for the first six months of 2020 of 3.16% compared to 3.41% 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 second quarter of 2020 was 3.69% compared to 4.46% for the second quarter of 2019 and 4.17% for the first quarter of 2020. The yield on interest-earning assets for the first six months of 2020 was 3.92% compared to 4.45% 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 second quarter of 2020 was 0.86% compared to 1.42% for the second quarter of 2019 and 1.18% for the first quarter of 2020. The cost of interest-bearing liabilities for the first six months of 2020 was 1.02% compared to 1.38% during the same period in 2019. The cost of interest-bearing transaction accounts, time deposits and borrowings have decreased since 2019 largely driven by reductions in the federal funds rate.

Net interest income for the second quarter of 2020 of $50.5 million increased $1.3 million and $620,000, respectively, compared to the second quarter of 2019 and the first quarter of 2020. Net interest income for the first six months of 2020 of $100.4 million compared to $97.8 million for the first six 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 and a decrease in interest rates on interest-bearing liabilities partially offset by a decrease in the yield on interest-earning assets.

Noninterest Income

Noninterest income decreased $908,000 to $5.5 million for the second quarter of 2020 from $6.4 million for the second quarter of 2019. Service charges on deposit accounts for the second quarter of 2020 decreased $880,000 compared to the second quarter of 2019 due primarily to changes in customer behavior resulting from the pandemic and New Jerseys Stay in Place Order. Commissions and fees for the second quarter of 2020 decreased $529,000 compared to the second quarter of 2019 due primarily to decreases in commercial loan fees and investment commission income. Partially offsetting these unfavorable variances was gains on sales of loans and swap income which increased $282,000 and $111,000, respectively, due primarily to increased volume driven by lower interest rates.

For the first six months of 2020, noninterest income increased $1.4 million to $13.5 million compared to the first six months of 2019 primarily due to a $2.8 million increase in swap income. The first half of 2020 included gains on sales of investment securities of $342,000 compared to none for the same period last year. Gains on sales of loans for the first six months of 2020 totaling $1.1 million increased $326,000 compared to the first six months of 2019 due to the same reason discussed above. Service charges on deposit accounts and commissions and fees decreased $953,000 and $301,000, respectively, compared to the same period in 2019 due to the same reasons discussed in the quarterly comparison. The first half of 2020 also included a $455,000 loss on equity securities compared to a gain of $453,000 for the first half of 2019.

Noninterest Expense

Noninterest expense totaled $31.5 million for the second quarter of 2020 and decreased $224,000 compared to the second quarter of 2019. Salary and employee benefit expense for the second quarter of 2020 increased $890,000, or 5%, when compared to the same quarter of 2019 as a result of staff additions and normal merit increases. Furniture and equipment expense increased $618,000 compared to the second quarter of 2019 due primarily to an increase in costs associated with the Companys digital strategy initiative, while marketing expense decreased $306,000 due partially to the delay of marketing campaigns resulting from the pandemic. The second quarter of 2019 also included $318,000 in merger related expenses from the Highlands Bancorp acquisition.

Noninterest expense for the first half of 2020 of $64.0 million decreased $1.7 million due primarily to merger related expenses in the first half of 2019 of $3.2 million. Salary and employee benefit expense and furniture and equipment expense increased $1.9 million and $1.1 million, respectively, compared to the first half of 2019 due to the same reasons discussed in the quarterly comparison. Marketing expenses for the first half of 2020 decreased $548,000 due to the same reason discussed in the quarterly comparison. First half of 2020 results 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 2020 was 23.7% compared to 27.0% for the second quarter of 2019. The increased effective tax rate for the second quarter of 2019 was primarily a result of a technical bulletin issued by the New Jersey Division of Taxation during the second quarter of 2019, which resulted in increasing our 2019 year-to-date effective tax rate to 24.5%.

Financial Condition

At June30, 2020, total assets were $7.49 billion, an increase of $777.3 million compared to December31, 2019. For the six months ended June30, 2020, total loans grew $618.3 million, including $326.0 million attributed to PPP loans, to $5.76 billion and investment securities increased $39.1 million to $958.0 million. On the funding side, total deposits increased $831.7 million to $6.13 billion, while borrowings decreased $155.6 million to $457.1 million. At June30, 2020, total loans as a percent of total deposits was 94.2%.

Asset Quality

At June30, 2020, non-performing assets increased to $33.2 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 June30, 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 $57.8 million, 1.00% of total loans, at June30, 2020, compared to $40.0 million, 0.78% of total loans, at December31, 2019. In the second quarter of 2020, the Company had net charge-offs of $45,000, or 0.00% of average loans, annualized, compared to net recoveries of $683,000, or 0.06%, for the same period in 2019. The provision for loan losses for the second quarter of 2020 was $9.0 million compared to no provision for loan losses in the second quarter of 2019.

Capital

At June30, 2020, stockholders equity was $745.5 million compared to $725.3 million at December31, 2019, a 3% increase. Lakeland Bank remains above FDIC well capitalized standards, with a Tier 1 leverage ratio of 8.69% at June30, 2020. The book value per common share and tangible book value per common share increased 7% and 9% to $14.77 and $11.60, respectively, compared to $13.85 and $10.66 at June30, 2019. On July21, 2020, the Company declared a quarterly cash dividend of $0.125 per share to be paid on August17, 2020, to shareholders of record as of August3, 2020.

Forward-Looking Statements

The information disclosed in this document includes various forward-looking statements - including the statements regarding the prospective impact of COVID-19 and Lakelands ability to leverage its increased liquidity - 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 New Jerseys #1 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. SharaPresident & CEO

Thomas F. SplaineEVP & CFO973-697-2000

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) Three Months Ended Six Months Ended June 30, June 30,(Dollars inthousands, except 2020 2019 2020 2019per share amounts)INCOME STATEMENT Net interest income $ 50,519 $ 49,198 $ 100,418 $ 97,804 Provision for loan (9,000 ) ? (18,223 ) (508 )lossesGains on sales ofinvestment ? ? 342 ? securitiesGains on sales of 710 428 1,125 799 loansGain on equity 198 100 (455 ) 453 securitiesOther noninterest 4,573 5,861 12,480 10,860 incomeLong-term debt ? ? (356 ) ? prepayment feeMerger-related ? (318 ) ? (3,178 )expensesOther noninterest (31,462 ) (31,368 ) (63,610 ) (62,492 )expensePretax income 15,538 23,901 31,721 43,738 Provision for (3,687 ) (6,444 ) (7,478 ) (10,655 )income taxesNet income $ 11,851 $ 17,457 $ 24,243 $ 33,083 Basic earnings per $ 0.23 $ 0.34 $ 0.48 $ 0.65 common shareDiluted earnings $ 0.23 $ 0.34 $ 0.47 $ 0.65 per common shareDividends paid per $ 0.125 $ 0.125 $ 0.250 $ 0.240 common shareWeighted average 50,522 50,509 50,554 50,393 shares - basicWeighted average 50,593 50,649 50,660 50,544 shares - diluted SELECTED OPERATING RATIOSAnnualized return 0.67 % 1.12 % 0.71 % 1.07 %on average assetsAnnualized returnon average common 6.42 % 10.16 % 6.59 % 9.79 %equityAnnualized returnon average tangible 8.19 % 13.21 % 8.42 % 12.77 %common equity (1)Annualized yield oninterest-earning 3.69 % 4.46 % 3.92 % 4.45 %assetsAnnualized cost ofinterest-bearing 0.86 % 1.42 % 1.02 % 1.38 %liabilitiesAnnualized net 2.83 % 3.04 % 2.91 % 3.07 %interest spreadAnnualized net 3.06 % 3.39 % 3.16 % 3.41 %interest marginEfficiency ratio 55.62 % 55.78 % 55.46 % 56.20 %(1)Stockholders'equity to total 9.96 % 10.90 %assetsBook value per $ 14.77 $ 13.85 common shareTangible book valueper common share $ 11.60 $ 10.66 (1)Tangible commonequity to tangible 7.99 % 8.61 %assets (1) ASSET QUALITY June 30, 2020 June 30, 2019RATIOSRatio of allowancefor loan losses to 1.00 % 0.78 %total loansNon-performingloans to total 0.57 % 0.29 %loansNon-performingassets to total 0.44 % 0.23 %assetsAnnualized netcharge-offs 0.01 % (0.02 )%(recoveries) toaverage loans (1) See Supplemental Information - Non-GAAP Financial Measures Lakeland Bancorp, Inc.Financial Highlights(Unaudited) (Dollars in June 30, 2020 June 30, 2019thousands)SELECTED BALANCE SHEET DATA AT PERIOD-ENDLoans $ 5,756,155 $ 4,922,373 Allowance for loan 57,839 38,662 lossesInvestment 957,985 863,474 securitiesTotal assets 7,488,516 6,407,195 Total deposits 6,125,502 5,082,598 Short-term 183,116 258,703 borrowingsOther borrowings 273,954 294,022 Stockholders' 745,489 698,463 equity Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019SELECTED AVERAGE BALANCE SHEET DATALoans $ 5,572,865 $ 4,917,109 $ 5,390,481 $ 4,894,447 Investment 891,037 854,608 885,512 856,318 securitiesInterest-earning 6,650,993 5,836,333 6,391,998 5,804,769 assetsTotal assets 7,137,529 6,256,523 6,851,415 6,220,076 Noninterest-bearing 1,364,785 1,083,745 1,237,212 1,069,979 demand depositsSavings deposits 525,224 502,340 511,011 507,775 Interest-bearingtransaction 2,908,299 2,562,365 2,869,539 2,558,636 accountsTime deposits 1,093,760 961,212 983,379 925,837 Total deposits 5,892,068 5,109,662 5,601,141 5,062,227 Short-term 82,694 110,941 121,260 119,907 borrowingsOther borrowings 273,904 283,177 275,828 294,788 Totalinterest-bearing 4,883,881 4,420,035 4,761,017 4,406,943 liabilitiesStockholders' 742,050 689,324 739,385 681,309 equity

Lakeland Bancorp, Inc.Consolidated Statements of Income(Unaudited) Three Months Ended Six Months Ended June 30, June 30,(Dollars in thousands, 2020 2019 2020 2019except per share amounts)INTEREST INCOME Loans and net deferred fees $ 55,825 $ 59,119 $ 113,682 $ 116,761 and costsFederal funds sold andinterest-bearing deposits 36 348 195 602 with banksTaxable investment 4,763 4,985 9,992 9,858 securities and otherTax exempt investment 349 396 681 804 securities TOTAL INTEREST INCOME 60,973 64,848 124,550 128,025 INTEREST EXPENSE Deposits 8,094 12,762 18,957 24,259 Federal funds purchased andsecurities sold under 75 494 504 1,102 agreements to repurchaseOther borrowings 2,285 2,394 4,671 4,860 TOTAL INTEREST EXPENSE 10,454 15,650 24,132 30,221 NET INTEREST INCOME 50,519 49,198 100,418 97,804 Provision for loan losses 9,000 ? 18,223 508 NET INTEREST INCOME AFTER 41,519 49,198 82,195 97,296 PROVISION FOR LOAN LOSSESNONINTEREST INCOME Service charges on deposit 1,875 2,755 4,375 5,328 accountsCommissions and fees 1,196 1,725 2,836 3,137 Income on bank owned life 665 690 1,330 1,373 insuranceGain (loss) on equity 198 100 (455 ) 453 securitiesGains on sales of loans 710 428 1,125 799 Gains on sales of ? ? 342 ? investment securitiesSwap income 767 656 3,610 855 Other income 70 35 329 167 TOTAL NONINTEREST INCOME 5,481 6,389 13,492 12,112 NONINTEREST EXPENSE Salaries and employee 20,269 19,379 40,504 38,610 benefit expenseNet occupancy expense 2,488 2,629 5,324 5,583 Furniture and equipment 2,783 2,165 5,343 4,281 expenseFDIC insurance expense 450 401 748 851 Stationary, supplies and 381 401 780 848 postage expenseMarketing expense 232 538 459 1,007 Data processing expense 1,436 1,225 2,689 2,552 Telecommunications expense 454 478 898 971 ATM and debit card expense 536 583 1,123 1,185 Core deposit intangible 261 301 526 605 amortizationOther real estate owned andother repossessed assets 43 108 55 194 expenseLong-term debt prepayment ? ? 356 ? feeMerger-related expenses ? 318 ? 3,178 Other expenses 2,129 3,160 5,161 5,805 TOTAL NONINTEREST EXPENSE 31,462 31,686 63,966 65,670 INCOME BEFORE PROVISION FOR 15,538 23,901 31,721 43,738 INCOME TAXESProvision for income taxes 3,687 6,444 7,478 10,655 NET INCOME $ 11,851 $ 17,457 $ 24,243 $ 33,083 EARNINGS PER COMMON SHARE: Basic $ 0.23 $ 0.34 $ 0.48 $ 0.65 Diluted $ 0.23 $ 0.34 $ 0.47 $ 0.65 DIVIDENDS PAID PER COMMON $ 0.125 $ 0.125 $ 0.250 $ 0.240 SHARE

Lakeland Bancorp, Inc.Consolidated Balance Sheets (Dollars in thousands) June 30, 2020 December 31, 2019 (Unaudited) ASSETS Cash $ 319,834 $ 275,794 Interest-bearing deposits due from banks 22,773 6,577 Total cash and cash equivalents 342,607 282,371 Investment securities available for sale, at fair 811,981 755,900 valueEquity securities, at fair value 17,182 16,473 Investment securities held to maturity; fairvalue of $113,241 at June 30, 2020 and $124,904 109,834 123,975 at December 31, 2019Federal Home Loan Bank and other membership 18,988 22,505 stocks, at costLoans held for sale 2,793 1,743 Loans, net of deferred fees 5,756,155 5,137,823 Less: Allowance for loan losses 57,839 40,003 Net loans and leases 5,698,316 5,097,820 Premises and equipment, net 47,894 47,608 Operating lease right-of-use assets 17,502 18,282 Accrued interest receivable 23,344 16,832 Goodwill 156,277 156,277 Other identifiable intangible assets 3,788 4,314 Bank owned life insurance 113,748 112,392 Other assets 124,262 54,744 TOTAL ASSETS $ 7,488,516 $ 6,711,236 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits: Noninterest-bearing $ 1,486,273 $ 1,124,121 Savings and interest-bearing transaction accounts 3,510,723 3,298,854 Time deposits $250 thousand and under 910,351 652,144 Time deposits over $250 thousand 218,155 218,660 Total deposits 6,125,502 5,293,779 Federal funds purchased and securities sold under 183,116 328,658 agreements to repurchaseOther borrowings 155,715 165,816 Subordinated debentures 118,239 118,220 Operating lease liabilities 18,976 19,814 Other liabilities 141,479 59,686 TOTAL LIABILITIES 6,743,027 5,985,973 STOCKHOLDERS' EQUITY Common stock, no par value; authorized shares,100,000,000; issued shares 50,594,196 andoutstanding shares 50,463,161 atJune 30, 2020 561,257 560,263 and issued and outstanding shares 50,498,410 atDecember31, 2019Retained earnings 174,267 162,752 Treasury shares, at cost, 131,035 shares at June (1,452 ) ? 30, 2020 and no shares at December 31, 2019Accumulated other comprehensive income 11,417 2,248 TOTAL STOCKHOLDERS' EQUITY 745,489 725,263 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,488,516 $ 6,711,236

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December September June 30, 31, 30,(Dollars in thousands, 2020 2020 2019 2019 2019except per share data)INCOME STATEMENT Net interest income $ 50,519 $ 49,899 $ 49,548 $ 48,682 $ 49,198 Provision for loan (9,000 (9,223 (1,086 (536 ? lossesGains on sales of ? 342 ? ? ? investment securitiesGains on sales of loans 710 415 375 486 428 (Loss) gain on equity 198 (653 (29 72 100 securitiesOther noninterest income 4,573 7,907 7,638 6,142 5,861 Long-term debt ? (356 ? ? ? prepayment feeMerger-related expenses ? ? ? ? (318 Other noninterest (31,462 (32,148 (31,523 (29,563 (31,368 expensePretax income 15,538 16,183 24,923 25,283 23,901 Provision for income (3,687 (3,791 (6,208 (6,409 (6,444 taxesNet income $ 11,851 $ 12,392 $ 18,715 $ 18,874 $ 17,457 Basic earnings per $ 0.23 $ 0.24 $ 0.37 $ 0.37 $ 0.34 common shareDiluted earnings per $ 0.23 $ 0.24 $ 0.37 $ 0.37 $ 0.34 common shareDividends paid per $ 0.125 $ 0.125 $ 0.125 $ 0.125 $ 0.125 common shareDividends paid $ 6,365 $ 6,364 $ 6,363 $ 6,362 $ 6,357 Weighted average shares 50,522 50,586 50,566 50,553 50,509 - basicWeighted average shares 50,593 50,728 50,748 50,694 50,649 - diluted SELECTED OPERATING RATIOSAnnualized return on 0.67 % 0.76 % 1.15 % 1.17 % 1.12 %average assetsAnnualized return on 6.42 % 6.77 % 10.32 % 10.61 % 10.16 %average common equityAnnualized return onaverage tangible common 8.19 % 8.65 % 13.29 % 13.74 % 13.21 %equity (1)Annualized net interest 3.06 % 3.28 % 3.27 % 3.25 % 3.39 %marginEfficiency ratio (1) 55.62 % 55.30 % 54.20 % 52.77 % 55.78 %Common stockholders' 9.96 % 10.51 % 10.81 % 10.99 % 10.90 %equity to total assetsTangible common equity 7.99 % 8.41 % 8.62 % 8.72 % 8.61 %to tangible assets (1)Tier 1 risk-based ratio 10.45 % 10.61 % 11.02 % 11.24 % 11.11 %Total risk-based ratio 12.98 % 13.04 % 13.40 % 13.70 % 13.60 %Tier 1 leverage ratio 8.69 % 9.38 % 9.41 % 9.34 % 9.30 %Common equity tier 1 9.93 % 10.08 % 10.46 % 10.66 % 10.52 %capital ratioBook value per common $ 14.77 $ 14.60 $ 14.36 $ 14.13 $ 13.85 shareTangible book value per $ 11.60 $ 11.43 $ 11.18 $ 10.94 $ 10.66 common share (1) (1) 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 2020 2020 2019 2019 2019thousands)SELECTED BALANCE SHEET DATA AT PERIOD-ENDLoans $ 5,769,127 $ 5,331,863 $ 5,140,940 $ 4,925,998 $ 4,925,300 Allowance for loan 57,839 48,884 40,003 38,655 38,662 lossesInvestment 957,985 974,319 918,853 905,078 863,474 securitiesTotal assets 7,488,516 7,013,908 6,711,236 6,492,474 6,407,195 Total deposits 6,125,502 5,455,138 5,293,779 5,210,619 5,082,598 Short-term 183,116 419,085 328,658 199,326 258,703 borrowingsOther borrowings 273,954 258,944 284,036 284,029 294,022 Stockholders' 745,489 736,922 725,263 713,204 698,463 equity LOANS Commercial, real $ 4,260,917 $ 4,073,911 $ 3,924,762 $ 3,749,413 $ 3,737,447 estateCommercial,industrial and 402,239 467,346 431,934 391,486 407,776 otherPaycheck Protection 325,999 ? ? ? ? ProgramEquipment financing 115,651 116,421 111,076 104,689 99,351 Residential 334,455 334,114 335,191 337,482 336,810 mortgagesConsumer and home 329,866 340,071 337,977 342,928 343,916 equityTotal loans $ 5,769,127 $ 5,331,863 $ 5,140,940 $ 4,925,998 $ 4,925,300 DEPOSITS Noninterest-bearing $ 1,486,273 $ 1,129,695 $ 1,124,121 $ 1,101,083 $ 1,089,474 Savings andinterest-bearing 3,510,723 3,241,397 3,298,854 3,196,323 3,007,784 transactionaccountsTime deposits 1,128,506 1,084,046 870,804 913,213 985,340 Total deposits $ 6,125,502 $ 5,455,138 $ 5,293,779 $ 5,210,619 $ 5,082,598 Total loans tototal deposits 94.2 % 97.7 % 97.1 % 94.5 % 96.9 %ratio SELECTED AVERAGE BALANCE SHEET DATALoans $ 5,572,865 $ 5,208,097 $ 5,025,377 $ 4,937,488 $ 4,917,109 Investment 891,037 879,987 894,698 869,734 854,608 securitiesInterest-earning 6,650,993 6,133,003 6,022,525 5,947,645 5,836,333 assetsTotal assets 7,137,529 6,565,302 6,470,082 6,379,675 6,256,523 Noninterest-bearing 1,364,785 1,109,638 1,130,192 1,100,413 1,083,745 demand depositsSavings deposits 525,224 496,798 492,903 494,377 502,340 Interest-bearingtransaction 2,908,299 2,830,778 2,814,831 2,678,424 2,562,365 accountsTime deposits 1,093,760 872,998 873,924 964,159 961,212 Total deposits 5,892,068 5,310,212 5,311,850 5,237,373 5,109,662 Short-term 82,694 159,825 67,097 74,042 110,941 borrowingsOther borrowings 273,904 277,753 284,049 287,839 283,177 Totalinterest-bearing 4,883,881 4,638,152 4,532,804 4,498,841 4,420,035 liabilitiesStockholders' 742,050 736,719 719,292 705,726 689,324 equity

Lakeland Bancorp, Inc.Financial Highlights(Unaudited) For the Quarter Ended June 30, March 31, December September June 30, 31, 30,(Dollars in thousands) 2020 2020 2019 2019 2019AVERAGE ANNUALIZED YIELDS (TAXABLE EQUIVALENT BASIS) AND COSTSASSETS Loans 4.03 % 4.47 % 4.60 % 4.71 % 4.82 %Taxable investment 2.31 % 2.56 % 2.34 % 2.50 % 2.55 %securities and otherTax-exempt securities 2.70 % 2.67 % 2.69 % 2.70 % 2.74 %Federal funds sold andinterest-bearing cash 0.08 % 1.42 % 1.65 % 1.98 % 2.15 %accountsTotal interest-earning 3.69 % 4.17 % 4.21 % 4.32 % 4.46 %assetsLIABILITIES Savings accounts 0.07 % 0.07 % 0.07 % 0.06 % 0.06 %Interest-bearing 0.55 % 0.97 % 1.05 % 1.24 % 1.25 %transaction accountsTime deposits 1.48 % 1.81 % 1.93 % 2.00 % 1.96 %Borrowings 2.62 % 2.54 % 2.86 % 2.89 % 2.90 %Total interest-bearing 0.86 % 1.18 % 1.26 % 1.41 % 1.42 %liabilitiesNet interest spread(taxable equivalent 2.83 % 2.99 % 2.96 % 2.91 % 3.04 %basis)Annualized net interestmargin (taxable 3.06 % 3.28 % 3.27 % 3.25 % 3.39 %equivalent basis)Annualized cost of 0.55 % 0.82 % 0.88 % 1.00 % 1.00 %depositsASSET QUALITY DATA ALLOWANCE FOR LOAN LOSSESBalance at beginning of $ 48,884 $ 40,003 $ 38,655 $ 38,662 $ 37,979 periodProvision for loan 9,000 9,223 1,086 536 ? lossesCharge-offs (142 ) (483 ) (198 ) (809 ) (413 )Recoveries 97 141 460 266 1,096 Balance at end of period $ 57,839 $ 48,884 $ 40,003 $ 38,655 $ 38,662 NET LOAN CHARGE-OFFS (RECOVERIES)Commercial, real estate $ (36 ) $ 111 $ (18 ) $ 203 $ (85 )Commercial, industrial (13 ) (31 ) 13 393 (909 )and otherEquipment financing (11 ) 71 (297 ) ? 293 Residential mortgages ? 96 ? (55 ) (2 )Consumer and home equity 105 95 40 2 20 Net charge-offs $ 45 $ 342 $ (262 ) $ 543 $ (683 )(recoveries) NON-PERFORMING ASSETS Commercial, real estate $ 25,615 $ 24,770 $ 13,281 $ 9,164 $ 10,205 Commercial, industrial 1,546 1,909 1,539 795 662 and otherEquipment financing 400 199 284 271 136 Residential mortgages 2,860 2,837 3,428 3,250 1,548 Consumer and home equity 2,432 2,689 2,606 2,437 1,873 Total non-accrual loans 32,853 32,404 21,138 15,917 14,424 Property acquiredthrough foreclosure or 354 393 563 944 532 repossessionTotal non-performing $ 33,207 $ 32,797 $ 21,701 $ 16,861 $ 14,956 assets Loans past due 90 daysor more and still $ 58 $ 99 $ ? $ ? $ ? accruingLoans restructured and $ 4,667 $ 4,719 $ 5,650 $ 5,029 $ 5,139 still accruing Ratio of allowance forloan losses to total 1.00 % 0.92 % 0.78 % 0.78 % 0.78 %loansTotal non-accrual loans 0.57 % 0.61 % 0.41 % 0.32 % 0.29 %to total loansTotal non-performing 0.44 % 0.47 % 0.32 % 0.26 % 0.23 %assets to total assetsAnnualized net ) )charge-offs (recoveries) ? % 0.03 % (0.02 % 0.04 % (0.06 %to average loans

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,except ratios 2020 2020 2019 2019 2019and per shareamounts)CALCULATION OF TANGIBLE BOOK VALUE PER COMMON SHARETotal commonstockholders'equity at end $ 745,489 $ 736,922 $ 725,263 $ 713,204 $ 698,463 of period -GAAPLess: 156,277 156,277 156,277 156,277 155,830 GoodwillLess: Otheridentifiable 3,788 4,049 4,314 4,602 4,891 intangibleassetsTotal tangiblecommonstockholders' $ 585,424 $ 576,596 $ 564,672 $ 552,325 $ 537,742 equity at endof period -Non-GAAP Sharesoutstanding at 50,463 50,462 50,498 50,489 50,441 end of period Book value per $ 14.77 $ 14.60 $ 14.36 $ 14.13 $ 13.85 share - GAAP Tangible bookvalue per $ 11.60 $ 11.43 $ 11.18 $ 10.94 $ 10.66 share -Non-GAAP CALCULATION OF TANGIBLE COMMON EQUITY TO TANGIBLE ASSETSTotal tangiblecommonstockholders' $ 585,424 $ 576,596 $ 564,672 $ 552,325 $ 537,742 equity at endof period -Non-GAAP Total assetsat end of $ 7,488,516 $ 7,013,908 $ 6,711,236 $ 6,492,474 $ 6,407,195 period - GAAPLess: 156,277 156,277 156,277 156,277 155,830 GoodwillLess: Otheridentifiable 3,788 4,049 4,314 4,602 4,891 intangibleassetsTotal tangibleassets at end $ 7,328,451 $ 6,853,582 $ 6,550,645 $ 6,331,595 $ 6,246,474 of period -Non-GAAP Common equityto assets - 9.96 % 10.51 % 10.81 % 10.99 % 10.90 %GAAP Tangiblecommon equityto tangible 7.99 % 8.41 % 8.62 % 8.72 % 8.61 %assets -Non-GAAP CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITYNet income - $ 11,851 $ 12,392 $ 18,715 $ 18,874 $ 17,457 GAAP Total averagecommon $ 742,050 $ 736,719 $ 719,292 $ 705,726 $ 689,324 stockholders'equity - GAAPLess: Average 156,277 156,277 156,277 155,835 154,171 goodwillLess: Averageotheridentifiable 3,942 4,205 4,468 4,761 5,058 intangibleassetsTotal averagetangiblecommon $ 581,831 $ 576,237 $ 558,547 $ 545,130 $ 530,095 stockholders'equity -Non-GAAP Return onaverage common 6.42 % 6.77 % 10.32 % 10.61 % 10.16 %stockholders'equity - GAAP Return onaveragetangiblecommon 8.19 % 8.65 % 13.29 % 13.74 % 13.21 %stockholders'equity -Non-GAAP CALCULATION OFEFFICIENCY RATIOTotalnoninterest $ 31,462 $ 32,504 $ 31,523 $ 29,563 $ 31,686 expenseAmortizationof core (261 ) (265 ) (289 ) (288 ) (301 )depositintangiblesMerger-related ? ? ? ? (318 )expensesLong term debtprepayment $ ? $ (356 ) feesNoninterestexpense, as $ 31,201 $ 31,883 $ 31,234 $ 29,275 $ 31,067 adjusted Net interest $ 50,519 $ 49,899 $ 49,548 $ 48,682 $ 49,198 incomeTotalnoninterest 5,481 8,011 7,984 6,700 6,389 incomeTotal revenue 56,000 57,910 57,532 55,382 55,587 Tax-equivalentadjustment on 93 88 91 97 105 municipalsecurities(Gains) onsales of ? (342 ) ? ? ? investmentsecuritiesTotal revenue, $ 56,093 $ 57,656 $ 57,623 $ 55,479 $ 55,692 as adjustedEfficiencyratio - 55.62 % 55.30 % 54.20 % 52.77 % 55.78 %Non-GAAP

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited) For the Six Months Ended June 30,(Dollars in thousands) 2020 2019 CALCULATION OF RETURN ON AVERAGE TANGIBLE COMMON EQUITYNet income - GAAP $ 24,243 $ 33,083 Total average common stockholders' equity - GAAP $ 739,385 $ 681,309 Less: Average goodwill $ 156,277 $ 153,868 Less: Average other identifiable intangible assets $ 4,073 $ 5,155 Total average tangible common stockholders' equity $ 579,035 $ 522,286 - Non-GAAP Return on average common stockholders' equity - 6.59 % 9.79 %GAAP Return on average tangible common stockholders' 8.42 % 12.77 %equity - Non-GAAP CALCULATION OF EFFICIENCY RATIO Total noninterest expense $ 63,966 $ 65,670 Amortization of core deposit intangibles $ (526 ) $ (605 )Long-term debt prepayment fee $ (356 ) $ ? Merger-related expenses $ ? $ (3,178 )Noninterest expense, as adjusted $ 63,084 $ 61,887 Net interest income $ 100,418 $ 97,804 Noninterest income $ 13,492 $ 12,112 Total revenue $ 113,910 $ 109,916 Tax-equivalent adjustment on municipal securities $ 181 $ 213 Gains on sales of investment securities $ (342 ) $ ? Total revenue, as adjusted $ 113,749 $ 110,129 Efficiency ratio - Non-GAAP 55.46 % 56.20 %