Lakeland Bancorp Announces Third Quarter Results

OAK RIDGE, N.J., Oct. 27, 2022 (GLOBE NEWSWIRE) -- Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $28.7 million and earnings per diluted share ("EPS") of $0.44 for the three months ended September 30, 2022 compared to net income of $22.3 million and diluted EPS of $0.43 for the three months ended September 30, 2021. For the third quarter of 2022, annualized return on average assets was 1.10%, annualized return on average common equity was 10.33% and annualized return on average tangible common equity was 13.87%.

Excluding merger-related expenses of $2.9 million after tax, third quarter net income was $31.6 million or $0.48 diluted EPS, resulting in an annualized return on average assets of 1.21%, annualized return on average common equity of 11.36%, and annualized return on average tangible common equity of 15.25% (see "Supplemental Information – Reconciliation of Net Income" for a reconciliation of these non-GAAP financial measures).

For the nine months ended September 30, 2022, the Company reported net income of $73.8 million and diluted EPS of $1.13 compared to net income of $72.9 million and diluted EPS of $1.42 for the first nine months of 2021. Annualized return on average assets was 0.96%, annualized return on average common equity was 8.99% and annualized return on average tangible common equity was 12.08% for the first nine months of 2022.

Excluding merger-related expenses of $6.4 million after tax, which relate to our January 2022 acquisition of 1st Constitution Bancorp and our recently announced merger with Provident Financial Services, Inc. ("Provident Financial"), net income for the nine months ended September 30, 2022 was $80.2 million, resulting in $1.23 diluted EPS, resulting in an annualized return on average assets of 1.05%, annualized return on average common equity of 9.78%, and annualized return on average tangible common equity of 13.13% (see "Supplemental Information – Reconciliation of Net Income" for a reconciliation of these non-GAAP financial measures).

Thomas Shara, Lakeland Bancorp’s President and CEO, commented, “We are very pleased with the results for the quarter which includes continued strong growth in loans and deposits while our asset quality remains stellar under the current economic conditions.”

Regarding Lakeland Bancorp's recently announced merger with Provident Financial Services, Mr. Shara continued, "We remain excited regarding our opportunity to partner with Provident. The combination of two high-performing, like-minded New Jersey institutions will create a preeminent super-community bank that has the same shared vision, values, and an unwavering commitment to employees, customers and our communities."

Third Quarter 2022 Highlights

• Loan growth for the third quarter of $160.3 million, or 2.2% compared to the linked second quarter was attributable to continued expansion in both the commercial and consumer portfolios.
• Net interest margin for the third quarter of 2022 increased to 3.28% compared to 3.10% in the third quarter of 2021.
• Nonperforming assets decreased 17% to $18.4 million for the third quarter of 2022 compared to $22.2 million for the linked second quarter of 2022.
• Efficiency ratio decreased to 49.8% in the third quarter of 2022 compared to 54.0% in the third quarter of 2021.

Net Interest Margin and Net Interest Income

Net interest margin for the third quarter of 2022 of 3.28% increased 18 basis points compared to the third quarter of 2021 and decreased 10 basis points compared to the second quarter of 2022. The increase in net interest margin compared to the third quarter of 2021 was due primarily to an increase in yields on loans, increased loan prepayment fees and higher average investment securities balances. The decrease in net interest margin compared to the second quarter of 2022 was due primarily to a large non-accrual interest recovery in the second quarter of 2022 and an increase in rates on interest-bearing liabilities during the third quarter of 2022. Net interest margin for the first nine months of 2022 was 3.23% compared to 3.19% for the same period of 2021. The variance in net interest margin compared to the first nine months of 2021 is due primarily to an increase in the yield on interest earning assets.

The yield on interest-earning assets for the third quarter of 2022 was 3.90% as compared to 3.40% for the third quarter of 2021 and 3.61% for the second quarter of 2022. The increase in the yield on interest-earning assets compared to prior periods was due primarily to an increase in the yield on loans and investment securities driven primarily by increases in market interest rates. The yield on interest-earning assets for the first nine months of 2022 was 3.58% as compared to 3.51% during the same period in 2021 and was due primarily to an increase in the yield on loans.

The cost of interest-bearing liabilities for the third quarter of 2022 was 0.94% compared to 0.41% for the third quarter of 2021 and 0.40% for the second quarter of 2022. The increase in the cost of interest-bearing liabilities compared to the third quarter of 2021 and the second quarter of 2022 was largely driven by increases in the rates paid on interest-bearing transaction accounts and time deposits. The cost of interest-bearing liabilities for the first nine months of 2022 was 0.56% compared to 0.45% for the same period in 2021 and was due primarily to an increase in rates on interest-bearing deposits partially offset by a decrease in rates on long-term borrowings.

Net interest income for the third quarter of 2022 of $80.3 million increased $20.9 million compared to the third quarter of 2021. Net interest income for the first nine months of 2022 was $231.0 million as compared to $175.8 million for the first nine months of 2021. The increase in net interest income compared to prior periods was due primarily to an increase in the average balances of loans and investment securities due to the 1st Constitution acquisition in January of 2022 and organic growth, partially offset by increased interest paid on interest-bearing liabilities related to increases in market interest rates.

Noninterest Income

For the third quarter of 2022, noninterest income totaled $7.2 million, an increase of $1.8 million as compared to the third quarter of 2021. Income on bank owned life insurance increased $823,000 compared to the third quarter of 2021 due primarily to death benefits received during the third quarter of 2022. Swap income for the third quarter of 2022 was $711,000 compared to none during the same period of 2021 due primarily to changes in the yield curve which increased demand for swap transactions. Commissions and fees increased $603,000 driven primarily by an increase in wire transfer charges and financial services income. Losses on equity securities totaled $464,000 in the third quarter of 2022 compared to $58,000 in the third quarter of 2021. Gains on sales of loans decreased $195,000 compared to the third quarter of 2021 due primarily to lower sale volume.

For the first nine months of 2022, noninterest income was $21.1 million, an increase of $4.6 million as compared to the first nine months of 2021. Commissions and fees increased $1.9 million due primarily to higher loan fees and increases in financial services income. Income on bank owned life insurance and service charges on deposits increased $1.2 million and $868,000, respectively, compared to the first nine months of 2021 due primarily to the same reasons mentioned in the quarterly analysis. Partially offsetting these favorable variances was losses on equity securities, which totaled $1.3 million in the first nine months of 2022 compared to losses of $191,000 in the first nine months of 2021.

Noninterest Expense

Noninterest expense for the third quarter of 2022 of $47.8 million was an increase of $10.6 million compared to the third quarter of 2021. The increase in noninterest expense was primarily due to compensation and employee benefits which increased $5.2 million resulting primarily from the addition of 1st Constitution employees, increased restricted stock plan expense and normal merit increases. Merger-related expense increased $2.4 million compared to the third quarter of 2021 due to the anticipated merger with Provident Financial. Premises and equipment expense increased $1.4 million compared to the third quarter of 2021 due primarily to branches added as the result of the 1st Constitution acquisition. Other operating expenses in the third quarter of 2022 increased $1.5 million compared to the same period in 2021 due primarily to increased marketing expense, core deposit intangible amortization, appraisal fees, consulting fees and insurance expense.

Noninterest expense for the first nine months of 2022 of $142.8 million was an increase of $37.6 million compared to the first nine months of 2021. Compensation and employee benefit expense and premises and equipment expense increased $18.9 million and $4.6 million, respectively, compared to the first nine months of 2021 due to the same reasons discussed in the quarterly comparison. Other operating expenses increased $6.0 million in the first nine months of 2022 compared to the same period in 2021 due primarily to an increase in core deposit intangible amortization, data processing, consulting and marketing fees. Merger-related expenses were $8.1 million due to the acquisition of 1st Constitution Bancorp and the anticipated merger with Provident Financial.

Income Tax Expense

The effective tax rate for the third quarter of 2022 was 25.0% compared to 26.4% for the third quarter of 2021. The decreased effective tax rate for the third quarter of 2022 was primarily a result of tax advantaged items increasing as a percentage of pretax income.

Financial Condition

At September 30, 2022, total assets were $10.52 billion, an increase of $2.32 billion, compared to December 31, 2021. As of September 30, 2022, total loans increased $1.59 billion, including $1.10 billion from 1st Constitution, to $7.57 billion while investment securities increased $425.9 million, including $342.3 million from 1st Constitution, to $2.05 billion from December 31, 2021. On the funding side, total deposits increased $1.71 billion from December 31, 2021, including $1.65 billion from 1st Constitution, to $8.68 billion at September 30, 2022. At September 30, 2022, total loans as a percent of total deposits was 87.2%.

Asset Quality

At September 30, 2022, non-performing assets totaled $18.4 million or 0.17% of total assets compared to $12.2 million, or 0.15% of total assets at September 30, 2021. Non-accrual loans as a percent of total loans was 0.24% at September 30, 2022, compared to 0.21% at September 30, 2021. The allowance for credit losses on loans totaled $68.9 million, 0.91% of total loans, at September 30, 2022, compared to $58.0 million, 0.99% of total loans, at September 30, 2021. At September 30, 2022, the allowance for credit losses included a day-one purchase accounting adjustment of $12.1 million for purchased credit impaired loans. In the third quarter of 2022, the Company had net recoveries of $32,000 compared to net recoveries of $269,000 or 0.02% of average loans on an annualized basis for the same period in 2021.

The provision for credit losses for the third quarter of 2022 was $1.4 million compared to a benefit of $2.7 million in the third quarter of 2021. The provision in the 2022 period is comprised of a provision for credit losses on loans of $11,000, a provision for credit losses on securities of $1.3 million and a provision for off-balance-sheet exposures of $22,000. For the nine months ended September 30, 2022, the provision for credit losses was $11.3 million, while the Company recorded a benefit for credit losses of $11.3 million for the same period in 2021. For the nine months ended September 30, 2022, the provision was comprised of a provision for credit losses on loans of $6.2 million, a provision for credit losses on securities of $4.1 million and a provision for off-balance-sheet exposures of $997,000.

Capital

At September 30, 2022, stockholders' equity was $1.08 billion compared to $827.0 million at December 31, 2021, a 31% increase, resulting primarily from the issuance of stock in connection with the 1st Constitution acquisition. Lakeland Bank remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 9.10% at September 30, 2022. The book value per common share increased 4% to $16.70 at September 30, 2022 compared to $16.09 at September 30, 2021. Tangible book value per common share was $12.36 and $12.95 at September 30, 2022 and 2021, respectively (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). At September 30, 2022, the Company’s common equity to assets ratio and tangible common equity to tangible assets ratio were 10.29% and 7.83%, respectively, compared to 9.96% and 8.18% at September 30, 2021. On October 25, 2022, the Company declared a quarterly cash dividend of $0.145 per share to be paid on November 17, 2022, to shareholders of record as of November 7, 2022.

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, 2021, as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, 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; inflation and other changes in economic conditions nationally, regionally and in the Company’s 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, which may affect demand for our products and the value of our financial instruments; pricing pressures on loan and deposit products; credit risks of the Company’s lending and leasing activities; successful implementation, deployment and upgrades of new and existing technology, systems, services and products; customers’ acceptance of the Company’s products and services; competition; 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; and expenses related to our proposed merger with Provident Financial, unexpected delays related to the merger, inability to obtain regulatory approvals or satisfy other closing conditions required to complete the merger, and failure to realize anticipated efficiencies and synergies from the merger. 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. 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 Company’s management uses in its analysis of the Company’s 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 company’s financial condition and, therefore, the Company’s 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" and "Supplemental Information – Reconciliation of Net Income" 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 $10.52 billion in total assets at September 30, 2022. 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 New Jersey's Best-In State-Bank by Forbes and Statista for the fourth consecutive year, Best Banks to Work For by American Banker, 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 973-697-6140 for more information.

Thomas J. Shara                                        Thomas F. Splaine

President & CEO                                        EVP & CFO

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

	Three Months EndedSeptember 30,								Nine Months EndedSeptember 30,
(dollars in thousands, except per share amounts)		2022				2021				2022				2021
Income Statement
Net interest income	$	80,285			$	59,338			$	230,975			$	175,806
(Provision) benefit for credit losses		(1,358	)			2,703				(11,274	)			11,304
Gains on sales of investment securities		—				—				—				9
Gains on sales of loans		355				550				2,496				1,865
Loss on equity securities		(464	)			(58	)			(1,313	)			(191	)
Other noninterest income		7,342				4,977				19,893				14,814
Long-term debt prepayment fees		—				(831	)			—				(831	)
Merger-related expenses		(3,488	)			(1,072	)			(8,073	)			(1,072	)
Other noninterest expense		(44,323	)			(35,304	)			(134,765	)			(103,304	)
Pretax income		38,349				30,303				97,939				98,400
Provision for income taxes		(9,603	)			(8,014	)			(24,147	)			(25,529	)
Net income	$	28,746			$	22,289			$	73,792			$	72,871
Basic earnings per common share	$	0.44			$	0.43			$	1.13			$	1.42
Diluted earnings per common share	$	0.44			$	0.43			$	1.13			$	1.42
Dividends paid per common share	$	0.145			$	0.135			$	0.425			$	0.395
Weighted average shares - basic		64,842				50,637				64,547				50,616
Weighted average shares - diluted		65,061				50,875				64,755				50,837
Selected Operating Ratios
Annualized return on average assets		1.10	%			1.10	%			0.96	%			1.24	%
Annualized return on average common equity		10.33	%			10.94	%			8.99	%			12.39	%
Annualized return on average tangible common equity (1)		13.87	%			13.63	%			12.08	%			15.53	%
Annualized yield on interest-earning assets		3.90	%			3.40	%			3.58	%			3.51	%
Annualized cost of interest-bearing liabilities		0.94	%			0.41	%			0.56	%			0.45	%
Annualized net interest spread		2.96	%			2.99	%			3.02	%			3.06	%
Annualized net interest margin		3.28	%			3.10	%			3.23	%			3.19	%
Efficiency ratio (1)		49.76	%			54.02	%			52.53	%			53.24	%
Stockholders' equity to total assets										10.29	%			9.96	%
Book value per common share									$	16.70			$	16.09
Tangible book value per common share (1)									$	12.36			$	12.95
Tangible common equity to tangible assets (1)										7.83	%			8.18	%
Asset Quality Ratios									September 30, 2022				September 30, 2021
Ratio of allowance for credit losses to total loans										0.91	%			0.99	%
Non-performing loans to total loans										0.24	%			0.21	%
Non-performing assets to total assets										0.17	%			0.15	%
Annualized net charge-offs to average loans										0.14	%			0.05	%
(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

(dollars in thousands)							September 30, 2022			September 30, 2021
Selected Balance Sheet Data at Period End
Loans							$	7,568,826		$	5,880,802
Allowance for credit losses								68,879			57,953
Investment securities								2,047,186			1,248,705
Total assets								10,515,599			8,172,479
Total deposits								8,677,799			6,930,912
Short-term borrowings								357,787			111,907
Other borrowings								219,148			212,107
Stockholders' equity								1,082,406			814,128
	Three Months Ended September 30,						Nine Months Ended September 30,
		2022			2021			2022			2021
Selected Average Balance Sheet Data
Loans	$	7,517,878		$	5,943,698		$	7,257,990		$	6,037,419
Investment securities		2,160,719			1,144,356			2,123,350			1,071,823
Interest-earning assets		9,755,797			7,611,259			9,617,082			7,396,178
Total assets		10,358,600			8,070,050			10,230,532			7,854,351
Noninterest-bearing demand deposits		2,325,391			1,702,788			2,277,192			1,637,101
Savings deposits		1,092,222			653,840			1,125,580			632,950
Interest-bearing transaction accounts		4,337,559			3,701,676			4,368,492			3,529,586
Time deposits		905,735			826,831			862,958			916,476
Total deposits		8,660,907			6,885,135			8,634,222			6,716,113
Short-term borrowings		240,728			108,519			159,033			89,240
Other borrowings		219,082			162,216			218,679			148,616
Total interest-bearing liabilities		6,795,326			5,453,082			6,734,742			5,316,868
Stockholders' equity		1,104,145			807,956			1,096,921			786,642

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

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
(in thousands, except per share data)			2022				2021				2022				2021
Interest Income
Loans and fees		$	84,924			$	59,957			$	229,706			$	179,264
Federal funds sold and interest-bearing deposits with banks			429				161				846				250
Taxable investment securities and other			9,589				4,232				24,583				12,242
Tax-exempt investment securities			1,485				588				4,229				1,831
Total Interest Income			96,427				64,938				259,364				193,587
Interest Expense
Deposits			13,618				3,987				22,486				13,349
Federal funds purchased and securities sold under agreements to repurchase			717				19				887				58
Other borrowings			1,807				1,594				5,016				4,374
Total Interest Expense			16,142				5,600				28,389				17,781
Net Interest Income			80,285				59,338				230,975				175,806
Provision (benefit) for credit losses			1,358				(2,703	)			11,274				(11,304	)
Net Interest Income after Provision for Credit Losses			78,927				62,041				219,701				187,110
Noninterest Income
Service charges on deposit accounts			2,808				2,536				8,145				7,277
Commissions and fees			2,212				1,609				6,873				4,962
Income on bank owned life insurance			1,468				645				3,118				1,922
Loss on equity securities			(464	)			(58	)			(1,313	)			(191	)
Gains on sales of loans			355				550				2,496				1,865
Gains on sales of investment securities, net			—				—				—				9
Swap income			711				—				1,110				634
Other income			143				187				647				19
Total Noninterest Income			7,233				5,469				21,076				16,497
Noninterest Expense
Compensation and employee benefits			26,636				21,478				81,253				62,403
Premises and equipment			7,574				6,206				23,225				18,602
FDIC insurance			690				461				2,034				1,793
Data processing			1,419				1,495				4,980				4,049
Merger-related expenses			3,488				1,072				8,073				1,072
Other operating expenses			8,004				6,495				23,273				17,288
Total Noninterest Expense			47,811				37,207				142,838				105,207
Income before provision for income taxes			38,349				30,303				97,939				98,400
Provision for income taxes			9,603				8,014				24,147				25,529
Net Income		$	28,746			$	22,289			$	73,792			$	72,871
Per Share of Common Stock
Basic earnings		$	0.44			$	0.43			$	1.13			$	1.42
Diluted earnings		$	0.44			$	0.43			$	1.13			$	1.42
Dividends		$	0.145			$	0.135			$	0.425			$	0.395

Lakeland Bancorp, Inc.
Consolidated Balance Sheets
(dollars in thousands)	September 30, 2022				December 31, 2021
	(Unaudited)
Assets
Cash	$	234,571			$	199,158
Interest-bearing deposits due from banks		11,192				29,372
Total cash and cash equivalents		245,763				228,530
Investment securities available for sale, at estimated fair value (allowance for credit losses of $4,165 at September 30, 2022 and $83 at December 31, 2021 )		1,074,013				769,956
Investment securities held to maturity (estimated fair value of $753,565 at September 30, 2022 and $815,211 at December 31, 2021, allowance for credit losses of $152 at September 30, 2022 and $181 at December 31, 2021)		934,947				824,956
Equity securities, at fair value		17,180				17,368
Federal Home Loan Bank and other membership stocks, at cost		21,046				9,049
Loans held for sale		890				1,943
Loans, net of deferred fees		7,568,826				5,976,148
Less: Allowance for credit losses		68,879				58,047
Net loans		7,499,947				5,918,101
Premises and equipment, net		54,670				45,916
Operating lease right-of-use assets		25,854				15,222
Accrued interest receivable		29,542				19,209
Goodwill		271,829				156,277
Other identifiable intangible assets		9,669				2,420
Bank owned life insurance		156,273				117,356
Other assets		173,976				71,753
Total Assets	$	10,515,599			$	8,198,056
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing	$	2,288,902			$	1,732,452
Savings and interest-bearing transaction accounts		5,354,716				4,474,144
Time deposits $250 thousand and under		807,211				623,393
Time deposits over $250 thousand		226,970				135,834
Total deposits		8,677,799				6,965,823
Federal funds purchased and securities sold under agreements to repurchase		357,787				106,453
Other borrowings		25,000				25,000
Subordinated debentures		194,148				179,043
Operating lease liabilities		27,224				16,523
Other liabilities		151,235				78,200
Total Liabilities		9,433,193				7,371,042
Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares; issued 64,935,026 shares and outstanding 64,803,991 shares at September 30, 2022 and issued 50,737,400 shares and outstanding 50,606,365 shares at December 31, 2021		854,336				565,862
Retained earnings		305,303				259,340
Treasury shares, at cost, 131,035 shares at September 30, 2022 and December 31, 2021		(1,452	)			(1,452	)
Accumulated other comprehensive (loss) income		(75,781	)			3,264
Total Stockholders' Equity		1,082,406				827,014
Total Liabilities and Stockholders' Equity	$	10,515,599			$	8,198,056

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands, except per share data)		September 30,2022				June 30,2022				March 31,2022				December 31,2021				September 30,2021
Income Statement
Net interest income		$	80,285			$	80,302			$	70,388			$	59,029			$	59,338
(Provision) benefit for credit losses			(1,358	)			(3,644	)			(6,272	)			(408	)			2,703
Gains on sales of investment securities			—				—				—				—				—
Gains on sales of loans			355				715				1,426				399				550
Loss on equity securities			(464	)			(364	)			(485	)			(94	)			(58	)
Other noninterest income			7,342				6,712				5,839				5,559				4,977
Long-term debt prepayment fees			—				—				—				—				(831	)
Merger-related expenses			(3,488	)			—				(4,585	)			(710	)			(1,072	)
Other noninterest expense			(44,323	)			(45,068	)			(45,374	)			(34,840	)			(35,304	)
Pretax income			38,349				38,653				20,937				28,935				30,303
Provision for income taxes			(9,603	)			(9,536	)			(5,008	)			(6,765	)			(8,014	)
Net income		$	28,746			$	29,117			$	15,929			$	22,170			$	22,289
Basic earnings per common share		$	0.44			$	0.44			$	0.25			$	0.43			$	0.43
Diluted earnings per common share		$	0.44			$	0.44			$	0.25			$	0.43			$	0.43
Dividends paid per common share		$	0.145			$	0.145			$	0.135			$	0.135			$	0.135
Dividends paid		$	9,506			$	9,507			$	8,809			$	6,921			$	7,001
Weighted average shares - basic			64,842				64,828				63,961				50,647				50,637
Weighted average shares - diluted			65,061				64,989				64,238				50,959				50,875
Selected Operating Ratios
Annualized return on average assets			1.10	%			1.15	%			0.64	%			1.06	%			1.10	%
Annualized return on average common equity			10.33	%			10.71	%			5.89	%			10.70	%			10.94	%
Annualized return on average tangible common equity (1)			13.87	%			14.45	%			7.88	%			13.26	%			13.63	%
Annualized net interest margin			3.28	%			3.38	%			3.02	%			2.98	%			3.10	%
Efficiency ratio (1)			49.76	%			50.69	%			57.77	%			53.19	%			54.02	%
Common stockholders' equity to total assets			10.29	%			10.51	%			10.60	%			10.09	%			9.96	%
Tangible common equity to tangible assets (1)			7.83	%			8.01	%			8.07	%			8.31	%			8.18	%
Tier 1 risk-based ratio			11.16	%			11.12	%			11.34	%			11.15	%			11.19	%
Total risk-based ratio			13.78	%			13.74	%			14.03	%			14.48	%			14.73	%
Tier 1 leverage ratio			9.10	%			9.05	%			8.97	%			8.51	%			8.60	%
Common equity tier 1 capital ratio			10.62	%			10.57	%			10.72	%			10.67	%			10.70	%
Book value per common share		$	16.70			$	16.82			$	16.82			$	16.34			$	16.09
Tangible book value per common share (1)		$	12.36			$	12.47			$	12.45			$	13.21			$	12.95

(1) See Supplemental Information - Non-GAAP Financial Measures

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		September 30,2022				June 30,2022				March 31,2022				December 31,2021				September 30,2021
Selected Balance Sheet Data at Period End
Loans		$	7,568,826			$	7,408,540			$	7,137,793			$	5,976,148			$	5,880,802
Allowance for credit losses on loans			68,879				68,836				67,112				58,047				57,953
Investment securities			2,047,186				2,124,213				2,139,054				1,621,329				1,248,705
Total assets			10,515,599				10,374,178				10,275,233				8,198,056				8,172,479
Total deposits			8,677,799				8,501,804				8,748,909				6,965,823				6,930,912
Short-term borrowings			357,787				432,206				102,911				106,453				111,907
Other borrowings			219,148				219,027				218,904				204,043				212,107
Stockholders' equity			1,082,406				1,090,145				1,089,282				827,014				814,128
Loans
Non-owner occupied commercial		$	2,873,824			$	2,777,003			$	2,639,784			$	2,316,284			$	2,300,637
Owner occupied commercial			1,141,290				1,179,527				1,122,754				908,449				884,144
Multifamily			1,186,036				1,134,938				1,104,206				972,233				907,903
Non-owner occupied residential			222,597				221,339				225,795				177,097				177,592
Commercial, industrial and other			612,494				647,531				620,611				405,832				363,976
Paycheck Protection Program			734				10,404				36,785				56,574				109,348
Construction			381,109				370,777				404,186				302,228				332,868
Equipment financing			137,999				134,136				123,943				123,212				119,709
Residential mortgages			690,453				622,417				564,042				438,710				407,021
Consumer and home equity			322,290				310,468				295,687				275,529				277,604
Total loans		$	7,568,826			$	7,408,540			$	7,137,793			$	5,976,148			$	5,880,802
Deposits
Noninterest-bearing		$	2,288,902			$	2,330,550			$	2,300,030			$	1,732,452			$	1,724,646
Savings and interest-bearing transaction accounts			5,354,716				5,407,212				5,602,674				4,474,144				4,401,367
Time deposits			1,034,181				764,042				846,205				759,227				804,899
Total deposits		$	8,677,799			$	8,501,804			$	8,748,909			$	6,965,823			$	6,930,912
Total loans to total deposits ratio			87.2	%			87.1	%			81.6	%			85.8	%			84.8	%
Selected Average Balance Sheet Data
Loans		$	7,517,878			$	7,229,175			$	7,021,462			$	5,902,152			$	5,943,698
Investment securities			2,160,719				2,188,199				2,019,578				1,423,650				1,144,356
Interest-earning assets			9,755,797				9,588,396				9,504,287				7,874,181				7,611,259
Total assets			10,358,600				10,192,140				10,138,437				8,332,637				8,070,050
Noninterest-bearing demand deposits			2,325,391				2,310,702				2,194,038				1,775,119				1,702,788
Savings deposits			1,092,222				1,153,591				1,131,359				670,039				653,840
Interest-bearing transaction accounts			4,337,559				4,369,067				4,399,531				3,862,443				3,701,676
Time deposits			905,735				803,421				879,427				781,199				826,831
Total deposits			8,660,907				8,636,781				8,604,355				7,088,800				6,885,135
Short-term borrowings			240,728				130,242				104,633				112,533				108,519
Other borrowings			219,082				218,958				217,983				204,266				162,216
Total interest-bearing liabilities			6,795,326				6,675,279				6,732,934				5,630,479				5,453,082
Stockholders' equity			1,104,145				1,090,613				1,095,913				822,001				807,956

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		September 30,2022				June 30,2022				March 31,2022				December 31,2021				September 30,2021
Average Annualized Yields (Taxable Equivalent Basis) and Costs
Assets
Loans			4.43	%			4.22	%			3.92	%			3.88	%			4.00	%
Taxable investment securities and other			2.12	%			1.81	%			1.60	%			1.60	%			1.68	%
Tax-exempt securities			2.12	%			2.02	%			1.91	%			2.20	%			2.15	%
Federal funds sold and interest-bearing cash accounts			2.21	%			0.55	%			0.16	%			0.14	%			0.12	%
Total interest-earning assets			3.90	%			3.61	%			3.25	%			3.22	%			3.40	%
Liabilities
Savings accounts			0.25	%			0.18	%			0.17	%			0.05	%			0.05	%
Interest-bearing transaction accounts			0.97	%			0.33	%			0.25	%			0.24	%			0.30	%
Time deposits			1.00	%			0.39	%			0.40	%			0.51	%			0.55	%
Borrowings			2.15	%			2.04	%			1.95	%			1.55	%			2.33	%
Total interest-bearing liabilities			0.94	%			0.40	%			0.34	%			0.33	%			0.41	%
Net interest spread (taxable equivalent basis)			2.96	%			3.22	%			2.92	%			2.89	%			2.99	%
Annualized net interest margin (taxable equivalent basis)			3.28	%			3.38	%			3.02	%			2.98	%			3.10	%
Annualized cost of deposits			0.62	%			0.22	%			0.19	%			0.19	%			0.23	%
Loan Quality Data
Allowance for Credit Losses on Loans
Balance at beginning of period		$	68,836			$	67,112			$	58,047			$	57,953			$	60,389
Initial allowance for credit losses on purchased credit deteriorated loans			—				—				12,077				—				—
Charge-offs on purchased credit deteriorated loans			—				—				(7,634	)			—				—
Provision (benefit) for credit losses on loans			11				1,583				4,630				(87	)			(2,705	)
Charge-offs			(56	)			(365	)			(170	)			(461	)			(969	)
Recoveries			88				506				162				642				1,238
Balance at end of period		$	68,879			$	68,836			$	67,112			$	58,047			$	57,953
Net Loan Charge-Offs (Recoveries)
Non owner occupied commercial		$	—			$	(4	)		$	4			$	—			$	6
Owner occupied commercial			—				(337	)			24				(1	)			(80	)
Multifamily			—				—				—				—				28
Non owner occupied residential			—				—				(14	)			(136	)			(5	)
Commercial, industrial and other			(49	)			272				778				(449	)			(265	)
Construction			—				—				6,804				(4	)			50
Equipment finance			(23	)			(40	)			82				60				139
Residential mortgages			—				—				(48	)			49				27
Consumer and home equity			40				(32	)			12				300				(169	)
Net (recoveries) charge-offs		$	(32	)		$	(141	)		$	7,642			$	(181	)		$	(269	)

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		September 30,2022				June 30,2022				March 31,2022				December 31,2021				September 30,2021
Non-Performing Assets (1)
Non owner occupied commercial		$	307			$	324			$	5,482			$	3,009			$	4,748
Owner occupied commercial			10,322				12,587				2,626				2,810				4,656
Multifamily			—				—				—				—				—
Non owner occupied residential			868				839				2,430				2,852				922
Commercial, industrial and other			3,623				4,882				6,098				6,763				1,108
Construction			—				—				220				—				—
Equipment finance			226				112				51				43				238
Residential mortgages			2,226				2,249				1,935				817				123
Consumer and home equity			798				1,168				898				687				453
Total non-performing assets		$	18,370			$	22,161			$	19,740			$	16,981			$	12,248
Loans past due 90 days or more and still accruing		$	31			$	—			$	—			$	1			$	—
Loans restructured and still accruing		$	3,113			$	3,189			$	3,290			$	3,342			$	3,414
Ratio of allowance for loan losses to total loans			0.91	%			0.93	%			0.94	%			0.97	%			0.99	%
Total non-accrual loans to total loans			0.24	%			0.30	%			0.28	%			0.28	%			0.21	%
Total non-performing assets to total assets			0.17	%			0.21	%			0.19	%			0.21	%			0.15	%
Annualized net (recoveries) charge-offs to average loans			—	%		(0.01)        %					0.44	%		(0.01)        %				(0.02)        %

(1) Includes non-accrual purchased credit deteriorated loans.

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited)

		At or for the Quarter Ended
(dollars in thousands, except per share amounts)		September 30,2022				June 30,2022				March 31,2022				December 31,2021				September 30,2021
Calculation of Tangible Book Value Per Common Share
Total common stockholders' equity at end of period - GAAP		$	1,082,406			$	1,090,145			$	1,089,282			$	827,014			$	814,128
Less: Goodwill			271,829				271,829				271,829				156,277				156,277
Less: Other identifiable intangible assets			9,669				10,250				10,842				2,420				2,631
Total tangible common stockholders' equity at end of period - Non-GAAP		$	800,908			$	808,066			$	806,611			$	668,317			$	655,220
Shares outstanding at end of period			64,804				64,794				64,780				50,606				50,602
Book value per share - GAAP		$	16.70			$	16.82			$	16.82			$	16.34			$	16.09
Tangible book value per share - Non-GAAP		$	12.36			$	12.47			$	12.45			$	13.21			$	12.95
Calculation of Tangible Common Equity to Tangible Assets
Total tangible common stockholders' equity at end of period - Non-GAAP		$	800,908			$	808,066			$	806,611			$	668,317			$	655,220
Total assets at end of period - GAAP		$	10,515,599			$	10,374,178			$	10,275,233			$	8,198,056			$	8,172,479
Less: Goodwill			271,829				271,829				271,829				156,277				156,277
Less: Other identifiable intangible assets			9,669				10,250				10,842				2,420				2,631
Total tangible assets at end of period - Non-GAAP		$	10,234,101			$	10,092,099			$	9,992,562			$	8,039,359			$	8,013,571
Common equity to assets - GAAP			10.29	%			10.51	%			10.60	%			10.09	%			9.96	%
Tangible common equity to tangible assets - Non-GAAP			7.83	%			8.01	%			8.07	%			8.31	%			8.18	%
Calculation of Return on Average Tangible Common Equity
Net income - GAAP		$	28,746			$	29,117			$	15,929			$	22,170			$	22,289
Total average common stockholders' equity - GAAP		$	1,104,145			$	1,090,613			$	1,095,913			$	822,001			$	807,956
Less: Average goodwill			271,829				271,829				265,409				156,277				156,277
Less: Average other identifiable intangible assets			9,982				10,569				10,851				2,544				2,758
Total average tangible common stockholders' equity - Non-GAAP		$	822,334			$	808,215			$	819,653			$	663,180			$	648,921
Return on average common stockholders' equity - GAAP			10.33	%			10.71	%			5.89	%			10.70	%			10.94	%
Return on average tangible common stockholders' equity - Non-GAAP			13.87	%			14.45	%			7.88	%			13.26	%			13.63	%
Calculation of Efficiency Ratio
Total noninterest expense		$	47,811			$	45,068			$	49,959			$	35,550			$	37,207
Less:
Amortization of core deposit intangibles			581				593				596				210				211
Merger-related expenses			3,488				—				4,585				710				1,072
Long term debt extinguishment costs			—				—				—				—				831
Noninterest expense, as adjusted		$	43,742			$	44,475			$	44,778			$	34,630			$	35,093
Net interest income		$	80,285			$	80,302			$	70,388			$	59,029			$	59,338
Total noninterest income			7,233				7,063				6,780				5,864				5,469
Total revenue			87,518				87,365				77,168				64,893				64,807
Tax-equivalent adjustment on municipal securities			395				382				346				213				157
Total revenue, as adjusted		$	87,913			$	87,747			$	77,514			$	65,106			$	64,964
Efficiency ratio - Non-GAAP			49.76	%			50.69	%			57.77	%			53.19	%			54.02	%

Lakeland Bancorp, Inc.Supplemental Information - Non-GAAP Financial Measures(Unaudited)

	For the Nine Months Ended September 30,
(dollars in thousands)		2022				2021
Calculation of Return on Average Tangible Common Equity
Net income - GAAP	$	73,792			$	72,871
Total average common stockholders' equity - GAAP	$	1,096,936			$	786,642
Less: Average goodwill		269,713				156,277
Less: Average other identifiable intangible assets		10,464				2,975
Total average tangible common stockholders' equity - Non-GAAP	$	816,759			$	627,390
Return on average common stockholders' equity - GAAP		8.99	%			12.39	%
Return on average tangible common stockholders' equity - Non-GAAP		12.08	%			15.53	%
Calculation of Efficiency Ratio
Total noninterest expense	$	142,838			$	105,207
Less:
Amortization of core deposit intangibles		1,770				658
Merger-related expenses		8,073				1,072
Long term debt extinguishment costs		—				831
Noninterest expense, as adjusted	$	132,995			$	102,646
Net interest income	$	230,975			$	175,806
Noninterest income		21,076				16,497
Total revenue	$	252,051			$	192,303
Tax-equivalent adjustment on municipal securities		1,124				487
Less: Gains on sales of investment securities		—				9
Total revenue, as adjusted	$	253,175			$	192,781
Efficiency ratio - Non-GAAP		52.53	%			53.24	%

Lakeland Bancorp, Inc.Supplemental Information - Reconciliation of Net Income(Unaudited)

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
(Dollars in thousands, except per share amounts)			2022				2021				2022				2021
Calculation of EPS excluding non-routine transactions
Net income - GAAP		$	28,746			$	22,289			$	73,792			$	72,871
Non-Routine Transactions:
Debt Prepayment Penalty			—				831				—				831
Tax deductible merger-related expenses			2,100				500				5,536				500
Tax effect on tax deductible merger-related expenses		$	(632	)			(400	)			(1,666	)			(400	)
Non-tax deductible merger-related expenses			1,388				572				2,538				572
Effect of non-routine transactions, net of tax		$	2,856			$	1,503			$	6,408			$	1,503
Net income available to common shareholders excluding non-routine transactions		$	31,602			$	23,792			$	80,200			$	74,374
Less: Earnings allocated to participating securities			339				303				847				839
Net Income, excluding non-routine transactions		$	31,263			$	23,489			$	79,353			$	73,535
Weighted average shares - Basic			64,842				50,637				64,547			$	50,616
Weighted average shares - Diluted			65,061				50,875				64,755			$	50,837
Basic earnings per share - GAAP		$	0.44			$	0.43			$	1.13			$	1.42
Diluted earnings per share - GAAP		$	0.44			$	0.43			$	1.13			$	1.42
Basic earnings per share, adjusted for non-routine transactions		$	0.48			$	0.46			$	1.23			$	1.45
Diluted earnings per share, adjusted for non-routine transactions		$	0.48			$	0.46			$	1.23			$	1.45
Calculation of return on average assets excluding non-routine transactions
Net Income, excluding non-routine transactions		$	31,602			$	23,792			$	80,200			$	74,374
Average assets			10,358,600				8,070,050				10,230,532				7,854,351
Return on average assets - GAAP			1.10	%			1.10	%			0.96	%			1.24	%
Return on average assets, adjusted for non-routine transactions			1.21	%			1.17	%			1.05	%			1.27	%
Calculation of return on average equity excluding non-routine transactions
Net Income, excluding non-routine transactions		$	31,602			$	23,792			$	80,200			$	74,374
Total average common stockholders' equity			1,104,145				807,956				1,096,936				786,642
Return on average common stockholders' equity - GAAP			10.33	%			10.94	%			8.99	%			12.39	%
Return on average common stockholders' equity, adjusted for non-routine transactions			11.36	%			11.68	%			9.78	%			12.64	%
Calculation of return on average tangible common equity excluding non-routine transactions
Net Income, excluding non-routine transactions		$	31,602			$	23,792			$	80,200			$	74,374
Total average tangible common stockholders' equity - Non-GAAP			822,334				648,921				816,744				627,390
Return on average tangible common stockholders' equity - Non-GAAP			13.87	%			13.63	%			12.08	%			15.53	%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions			15.25	%			14.55	%			13.13	%			15.85	%

Source: Lakeland Bancorp, Inc.

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