LBAI Lakeland Bancorp Inc

Lakeland Bancorp, Inc. (NASDAQ: LBAI) (the “Company”), the parent company of Lakeland Bank (“Lakeland”), reported net income of $33.6 million and earnings per diluted share ("EPS") of $0.51 for the three months ended December 31, 2022, compared to net income of $22.2 million and diluted EPS of $0.43 for the fourth quarter of 2021. For the fourth quarter of 2022, annualized return on average assets was 1.26%, annualized return on average common equity was 12.19% and annualized return on average tangible common equity was 16.42%.

For the year ended December 31, 2022, the Company reported net income of $107.4 million, a 13% increase compared to $95.0 million for 2021, resulting in return on average assets of 1.04%, return on average common equity of 9.80%, and return on average tangible common equity of 13.17% for 2022. For 2022, the Company reported diluted EPS of $1.63 compared to diluted EPS of $1.85 for 2021.

Excluding $8.6 million of merger-related expenses, for our January 2022 acquisition of 1st Constitution Bancorp and our pending merger with Provident Financial Services, Inc. ("Provident Financial"), net income for the year ended December 31, 2022, was $114.3 million, resulting in $1.74 diluted EPS. Excluding merger-related expenses, return on average assets was 1.11%; return on average common equity was 10.43%; and return on average tangible common equity was 14.02%. See "Supplemental Information - Reconciliation of Net Income" for a reconciliation of these non-GAAP financial measures.

The current year results include a $77.8 million increase in net interest income, offset by increases in non-interest expenses and the provision for credit losses of $47.5 million and $19.4 million, respectively. Fourth quarter 2022 results were favorably impacted by a $22.6 million, or 38%, increase in net interest income and a $3.2 million reduction in the provision for credit losses offset by a $9.8 million increase in non-interest expenses compared to the fourth quarter of 2021.

Thomas Shara, Lakeland Bancorp’s President and CEO commented, "2022 was an exceptional year for Lakeland Bancorp despite the economic uncertainty and rapidly changing interest rate conditions. Through the acquisition of 1st Constitution Bancorp in January 2022, we expanded Lakeland's presence into the fastest growing markets in New Jersey and eclipsed $10 billion in total assets. During the year we experienced strong organic loan growth of $790 million while continuing to improve upon our already excellent asset quality. We finished 2022 with record quarterly and annual earnings and total asset growth of 32%. All of these achievements are directly related to the hard work of our dedicated Lakeland associates and we are extremely proud of their accomplishments."

Regarding the announced merger with Provident Financial, Mr. Shara continued, "We are awaiting shareholder and regulatory approvals and continue to work to combine the companies into a preeminent super-community bank with an unwavering commitment to associates, customers and our communities."

Full Year 2022 Highlights

• Total assets grew $2.59 billion or 32% to $10.78 billion at December 31, 2022, including $1.97 billion due to the acquisition of 1st Constitution.
• Loan growth for 2022 was very robust at $1.89 billion or 32% resulting from acquired 1st Constitution loans totaling $1.10 billion and organic net loan growth of $794.6 million.
• Net interest margin for 2022 increased 11 basis points to 3.24% compared to 2021 due primarily to increases in yields of interest-earning assets.
• Net loan charge-offs for the year totaled $7.5 million, or 0.10% of average loans, of which $7.6 million were charge-offs of purchased credit deteriorated loans acquired from 1st Constitution.

Net Interest Margin and Net Interest Income

Net interest margin for the fourth quarter of 2022 of 3.28% increased 30 basis points compared to the fourth quarter of 2021 and remained flat compared to the third quarter of 2022. The increase compared to the fourth quarter of 2021 was primarily a result of an increase in the yield on loans and securities as well as an increase in loan balances, offset by an increase in interest-bearing liability balances and rates paid on those balances. Net interest margin for the full year of 2022 of 3.24% increased 11 basis points compared to 3.13% for 2021 for the same reasons as the fourth quarter comparison.

The yield on interest-earning assets for the fourth quarter of 2022 was 4.31% compared to 3.22% for the fourth quarter of 2021 and 3.90% for the third quarter of 2022. Yields on all categories of interest-earning assets increased when compared to the fourth quarter 2021, due primarily to the increases in market interest rates during 2022. In addition, average balances of interest-earning loans and securities increased by $1.83 billion and $721.6 million, respectively, and average balances of federal funds sold decreased by $500.0 million when compared to the fourth quarter of 2021. The increase in yield on interest-earning assets when compared to the third quarter of 2022 was due primarily to an increase in the yield on loans and securities and increased loan balances. The yield on interest-earning assets for 2022 was 3.77% compared to 3.43% for 2021 resulting primarily from an increase in the yields on interest earning assets and increased balances of loans and securities.

The cost of interest-bearing liabilities increased in the fourth quarter of 2022 to 1.50% compared to 0.33% for the fourth quarter of 2021 and 0.94% for the third quarter of 2022. The cost of interest-bearing liabilities for 2022 was 0.80% compared to 0.42% during the same period in 2021. The increase in the cost of interest-bearing liabilities in 2022 compared to prior periods was largely driven by increases in market interest rates. Additionally, the Company's total average overnight borrowings increased during 2022 and the Company paid higher rates on those borrowings.

Net interest income increased to $81.6 million for the fourth quarter of 2022 compared to $59.0 million for the fourth quarter of 2021, due primarily to the growth of interest-earning assets at higher yields, partially offset by higher rates paid on interest-bearing liabilities. Net interest income for 2022 was $312.6 million, as compared to $234.8 million for 2021 due to the same reasons discussed in the quarterly comparison.

Noninterest Income

Noninterest income increased $1.2 million to $7.0 million for the fourth quarter of 2022 from $5.9 million for the fourth quarter of 2021. Commissions and fees in the fourth quarter of 2022 increased $266,000 compared to the same period in 2021 due primarily to increases in investment commission income and commercial loan fees. Gain on sales of loans in the fourth quarter of 2022 decreased $130,000 due primarily to the Company retaining more originated residential mortgage loans in the loan portfolio. The Company recorded $466,000 in swap income in the fourth quarter of 2022 compared to none during the same period in 2021 due primarily to changes in the yield curve which increased the demand for swap transactions during 2022.

For 2022, noninterest income increased $5.7 million to $28.1 million compared to 2021. Service charges on deposit accounts increased $1.1 million compared to 2021 due primarily to increases in debit card income. Commissions and fees in 2022 increased $2.2 million compared to 2021 due to increases in investment commission income and commercial loan fees. Income on bank owned life insurance increased $1.3 million due primarily to death benefits received during 2022. Gains on sales of loans and swap income increased $501,000 and $942,000, respectively, compared to 2021.

Noninterest Expense

Noninterest expense totaled $45.4 million for the fourth quarter of 2022, an increase of $9.8 million compared to the fourth quarter of 2021. Compensation and employee benefit expense in the fourth quarter of 2022 increased $6.7 million, or 33%, compared to the fourth quarter of 2021 due primarily to staff additions and normal merit increases, as well as $772,000 of additional expense to accelerate the vesting of executive equity awards. In the fourth quarter of 2022, premises and equipment expense increased $1.5 million due primarily to additional rent, property tax and maintenance expenses from 1st Constitution properties and data processing expense decreased $147,000 due primarily to credits received from service providers compared to the fourth quarter of 2021. In the fourth quarter of 2022, merger-related costs included $533,000 for the merger with Provident Financial, while the fourth quarter of 2021 included $710,000 in merger-related costs for the acquisition of 1st Constitution Bancorp.

For 2022, noninterest expense increased $47.5 million to $188.2 million compared to $140.8 million for 2021 due primarily to compensation and employee benefit expense which increased $25.6 million, or 31%. The increase in compensation and employee benefits expense was due primarily to the same reasons discussed in the quarterly comparison. Premises and equipment expense in 2022 increased $6.1 million due to the same reason discussed in the quarterly comparison. Noninterest expense in 2022 included merger-related expenses of $8.6 million compared to $1.8 million in 2021. Additionally, noninterest expense in 2021 included $831,000 in long-term debt extinguishment costs compared to none in 2022.

Income Tax Expense

The effective tax rate for the fourth quarter of 2022 was 27.1% compared to 23.4% for the fourth quarter of 2021. The effective tax rate for both 2022 and 2021 was 25.4%. The effective tax rate for the fourth quarter of 2022 was primarily a result of the tax implications of executive accelerated vesting awards as well as tax-advantaged items decreasing as a percentage of pretax income.

Financial Condition

At December 31, 2022, total assets were $10.78 billion, an increase of $2.59 billion, or 32%, compared to December 31, 2021. For the year ended December 31, 2022, total loans increased $1.89 billion, including $1.10 billion from 1st Constitution, to $7.87 billion, while investment securities increased $416.1 million, including $342.3 million from 1st Constitution, to $2.04 billion. On the funding side, total deposits increased $1.60 billion, while borrowings increased $637.6 million to $948.1 million for the year ended December 31, 2022. At December 31, 2022, total loans as a percent of total deposits was 91.8%.

Asset Quality

At December 31, 2022, non-performing assets remained low at $17.4 million, 0.16% of total assets, compared to $17.0 million, 0.21% of total assets, at December 31, 2021. Non-accrual loans as a percent of total loans decreased to 0.22% at December 31, 2022 compared to 0.28% at December 31, 2021. At December 31, 2022, the allowance for credit losses was $70.3 million, 0.89% of total loans compared to $58.0 million, 0.97% of total loans, at December 31, 2021. The increase in the allowance from 2021 was primarily due to the initial allowance for credit losses on PCD loans acquired from 1st Constitution. In the fourth quarter of 2022, the Company had net charge-offs of $79,000, or 0.00% of average loans, annualized, compared to net recoveries of $181,000, or 0.01% of average loans, annualized, for the same period in 2021. Provision for credit losses on loans for the fourth quarter of 2022 was a provision of $1.5 million compared to a benefit of $87,000 in the fourth quarter of 2021. Provision for credit losses on investments for the fourth quarter of 2022 was a benefit of $3.9 million compared to a provision of $31,000 for the same period in 2021.

Capital

At December 31, 2022, stockholders' equity increased 34% to $1.1 billion as compared to $827.0 million at December 31, 2021. Lakeland Bancorp remains above FDIC “well capitalized” standards, with a Tier 1 leverage ratio of 9.16% at December 31, 2022. Book value per common share and tangible book value per common share were $17.09 and $12.76, respectively, compared to $16.34 and $13.21 at December 31, 2021 (see "Supplemental Information - Non-GAAP Financial Measures" for a reconciliation of non-GAAP financial measures, including tangible book value). On January 24, 2023, the Company declared a quarterly cash dividend of $0.145 per share to be paid on February 16, 2023, to shareholders of record as of February 6, 2023.

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 $10.78 billion in total assets at December 31, 2022. 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 for healthcare services, asset-based lending, equipment financing, small business loans and lines and cash management services. Consumer services include online and mobile banking, home equity loans and lines, mortgage options and wealth management solutions. Lakeland is proud to be recognized as one of New Jersey's Best-In State Banks by Forbes and Statista, rated a 5-Star Bank by Bauer Financial and named one of New Jersey's 50 Fastest Growing Companies by NJBIZ. Visit LakelandBank.com or 973-697-6140 for more information.

Thomas J. Shara	Thomas F. Splaine
President & CEO	EVP & CFO

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

	Three Months Ended December 31,								Years Ended December 31,
(dollars in thousands, except per share amounts)		2022				2021				2022				2021
Income Statement
Net interest income	$	81,640			$	59,029			$	312,615			$	234,835
(Provision) benefit for credit losses		2,760				(408	)			(8,514	)			10,896
Gain on investment securities transactions, net		—				—				—				9
Gain on sales of loans		269				399				2,765				2,264
Gain (loss) on equity securities		11				(94	)			(1,302	)			(285	)
Other noninterest income		6,743				5,559				26,636				20,373
Long-term debt extinguishment costs		—				—				—				(831	)
Merger-related expenses		(533	)			(710	)			(8,606	)			(1,782	)
Other noninterest expense		(44,837	)			(34,840	)			(179,602	)			(138,144	)
Pretax income		46,053				28,935				143,992				127,335
Provision for income taxes		(12,476	)			(6,765	)			(36,623	)			(32,294	)
Net income	$	33,577			$	22,170			$	107,369			$	95,041
Basic earnings per common share	$	0.51			$	0.43			$	1.64			$	1.85
Diluted earnings per common share	$	0.51			$	0.43			$	1.63			$	1.85
Dividends paid per common share	$	0.145			$	0.135			$	0.570			$	0.530
Weighted average shares - basic		64,854				50,647				64,624				50,624
Weighted average shares - diluted		65,222				50,959				64,918				50,870
Selected Operating Ratios
Annualized return on average assets		1.26	%			1.06	%			1.04	%			1.19	%
Annualized return on average common equity		12.19	%			10.70	%			9.80	%			11.95	%
Annualized return on average tangible common equity (1)		16.42	%			13.26	%			13.17	%			14.93	%
Annualized yield on interest-earning assets		4.31	%			3.22	%			3.77	%			3.43	%
Annualized cost of interest-bearing liabilities		1.50	%			0.33	%			0.80	%			0.42	%
Annualized net interest spread		2.81	%			2.89	%			2.97	%			3.01	%
Annualized net interest margin		3.28	%			2.98	%			3.24	%			3.13	%
Efficiency ratio (1)		49.67	%			53.19	%			51.79	%			53.23	%
Stockholders' equity to total assets										10.28	%			10.09	%
Book value per common share									$	17.09			$	16.34
Tangible book value per common share (1)									$	12.76			$	13.21
Tangible common equity to tangible assets (1)										7.88	%			8.31	%
Asset Quality Ratios									December 31, 2022				December 31, 2021
Ratio of allowance for credit losses on loans to total loans										0.89	%			0.97	%
Non-performing loans to total loans										0.22	%			0.28	%
Non-performing assets to total assets										0.16	%			0.21	%
Net charge-offs to average loans										0.10	%			0.04	%
(1) See Supplemental Information - Non-GAAP Financial Measures
Selected Balance Sheet Data at Period End										2022				2021
Loans									$	7,866,050			$	5,976,148
Allowance for credit losses on loans										70,264				58,047
Investment securities										2,037,386				1,621,329
Total assets										10,783,840				8,198,056
Total deposits										8,567,471				6,965,823
Short-term borrowings										728,797				106,453
Other borrowings										219,264				204,043
Stockholders' equity										1,108,587				827,014

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

	Three Months EndedDecember 31,								Year EndedDecember 31,
		2022				2021				2022				2021
Selected Average Balance Sheet Data
Loans	$	7,729,510			$	5,902,152			$	7,376,839			$	6,003,325
Investment securities		2,145,252				1,423,650				2,128,870				1,160,503
Interest-earning assets		9,923,173				7,874,181				9,694,234				7,516,662
Total assets		10,534,884				8,332,637				10,307,245				7,974,905
Noninterest-bearing demand deposits		2,240,197				1,775,119				2,267,867				1,671,889
Savings deposits		1,001,870				670,039				1,094,399				642,298
Interest-bearing transaction accounts		4,389,672				3,862,443				4,373,830				3,613,484
Time deposits		1,100,911				781,199				922,935				882,379
Total deposits		8,732,650				7,088,800				8,659,031				6,810,050
Short-term borrowings		311,875				112,533				197,557				95,111
Other borrowings		219,202				204,266				218,811				162,643
Total interest-bearing liabilities		7,023,530				5,630,480				6,807,532				5,395,915
Stockholders' equity		1,092,720				822,001				1,095,861				795,554

Lakeland Bancorp, Inc.Consolidated Statements of Income(Unaudited)

		Three Months EndedDecember 31,								Year EndedDecember 31,
(in thousands, except per share amounts)			2022				2021				2022				2021
Interest Income
Loans and fees		$	95,295			$	57,773			$	325,001			$	237,037
Federal funds sold and interest-bearing deposits with banks			449				190				1,295				440
Taxable investment securities and other			10,769				4,966				35,352				17,208
Tax exempt investment securities			1,666				802				5,895				2,633
Total Interest Income			108,179				63,731				367,543				257,318
Interest Expense
Deposits			21,767				3,444				44,253				16,793
Federal funds purchased and securities sold under agreements to repurchase			2,771				20				3,658				78
Other borrowings			2,001				1,238				7,017				5,612
Total Interest Expense			26,539				4,702				54,928				22,483
Net Interest Income			81,640				59,029				312,615				234,835
(Benefit) provision for credit losses			(2,760	)			408				8,514				(10,896	)
Net Interest Income after (Benefit) Provision for Credit Losses			84,400				58,621				304,101				245,731
Noninterest Income
Service charges on deposit accounts			2,840				2,579				10,985				9,856
Commissions and fees			2,243				1,977				9,116				6,939
Income on bank owned life insurance			862				754				3,980				2,676
Gain (loss) on equity securities			11				(94	)			(1,302	)			(285	)
Gain on sales of loans			269				399				2,765				2,264
Gain on investment securities transactions, net			—				—				—				9
Swap income			466				—				1,576				634
Other income			332				249				979				268
Total Noninterest Income			7,023				5,864				28,099				22,361
Noninterest Expense
Compensation and employee benefits			26,914				20,186				108,167				82,589
Premises and equipment			7,657				6,171				30,882				24,773
FDIC insurance			690				548				2,724				2,341
Data processing			1,258				1,405				6,238				5,454
Merger-related expenses			533				710				8,606				1,782
Other operating expenses			8,318				6,530				31,591				23,818
Total Noninterest Expense			45,370				35,550				188,208				140,757
Income before provision for income taxes			46,053				28,935				143,992				127,335
Provision for income taxes			12,476				6,765				36,623				32,294
Net Income		$	33,577			$	22,170			$	107,369			$	95,041
Per Share of Common Stock
Basic earnings		$	0.51			$	0.43			$	1.64			$	1.85
Diluted earnings		$	0.51			$	0.43			$	1.63			$	1.85
Dividends		$	0.145			$	0.135			$	0.570			$	0.530

Lakeland Bancorp, Inc.Consolidated Balance Sheets

(dollars in thousands)		December 31, 2022				December 31, 2021
		(Unaudited)
Assets
Cash		$	223,299			$	199,158
Interest-bearing deposits due from banks			12,651				29,372
Total cash and cash equivalents			235,950				228,530
Investment securities available for sale, at estimated fair value (allowance for credit losses of $310 at December 31, 2022 and $83 at December 31, 2021)			1,054,312				769,956
Investment securities held to maturity (estimated fair value of $760,455 at December 31, 2022 and $815,211 at December 31, 2021, allowance for credit losses of $107 at December 31, 2022 and $181 at December 31, 2021)			923,308				824,956
Equity securities, at fair value			17,283				17,368
Federal Home Loan Bank and other membership stocks, at cost			42,483				9,049
Loans held for sale			536				1,943
Loans, net of deferred fees			7,866,050				5,976,148
Less: Allowance for credit losses			70,264				58,047
Net loans			7,795,786				5,918,101
Premises and equipment, net			55,429				45,916
Operating lease right-of-use assets			20,052				15,222
Accrued interest receivable			33,374				19,209
Goodwill			271,829				156,277
Other identifiable intangible assets			9,088				2,420
Bank owned life insurance			156,985				117,356
Other assets			167,425				71,753
Total Assets		$	10,783,840			$	8,198,056
Liabilities and Stockholders' Equity
Liabilities
Deposits:
Noninterest-bearing		$	2,113,289			$	1,732,452
Savings and interest-bearing transaction accounts			5,246,005				4,474,144
Time deposits $250 thousand and under			901,505				623,393
Time deposits over $250 thousand			306,672				135,834
Total deposits			8,567,471				6,965,823
Federal funds purchased and securities sold under agreements to repurchase			728,797				106,453
Other borrowings			25,000				25,000
Subordinated debentures			194,264				179,043
Operating lease liabilities			21,449				16,523
Other liabilities			138,272				78,200
Total Liabilities			9,675,253				7,371,042
Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares; issued 65,002,738 shares and outstanding 64,871,703 shares at December 31, 2022 and issued 50,737,400 shares and outstanding 50,606,365 shares at December 31, 2021			855,425				565,862
Retained earnings			329,375				259,340
Treasury shares, at cost, 131,035 shares at December 31, 2022 and December 31, 2021			(1,452	)			(1,452	)
Accumulated other comprehensive (loss) income			(74,761	)			3,264
Total Stockholders' Equity			1,108,587				827,014
Total Liabilities and Stockholders' Equity		$	10,783,840			$	8,198,056

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands, except per share data)		December 31,2022				September 30,2022				June 30,2022				March 31,2022				December 31,2021
Income Statement
Net interest income		$	81,640			$	80,285			$	80,302			$	70,388			$	59,029
Benefit (provision) for credit losses			2,760				(1,358	)			(3,644	)			(6,272	)			(408	)
Gain on investment securities transactions, net			—				—				—				—				—
Gain on sales of loans			269				355				715				1,426				399
Gain (loss) on equity securities			11				(464	)			(364	)			(485	)			(94	)
Other noninterest income			6,743				7,342				6,712				5,839				5,559
Merger-related expenses			(533	)			(3,488	)			—				(4,585	)			(710	)
Other noninterest expense			(44,837	)			(44,323	)			(45,068	)			(45,374	)			(34,840	)
Pretax income			46,053				38,349				38,653				20,937				28,935
Provision for income taxes			(12,476	)			(9,603	)			(9,536	)			(5,008	)			(6,765	)
Net income		$	33,577			$	28,746			$	29,117			$	15,929			$	22,170
Basic earnings per common share		$	0.51			$	0.44			$	0.44			$	0.25			$	0.43
Diluted earnings per common share		$	0.51			$	0.44			$	0.44			$	0.25			$	0.43
Dividends paid per common share		$	0.145			$	0.145			$	0.145			$	0.135			$	0.135
Dividends paid		$	9,505			$	9,506			$	9,507			$	8,809			$	6,921
Weighted average shares - basic			64,854				64,842				64,828				63,961				50,647
Weighted average shares - diluted			65,222				65,061				64,989				64,238				50,959
Selected Operating Ratios
Annualized return on average assets			1.26	%			1.10	%			1.15	%			0.64	%			1.06	%
Annualized return on average common equity			12.19	%			10.33	%			10.71	%			5.89	%			10.70	%
Annualized return on average tangible common equity (1)			16.42	%			13.87	%			14.45	%			7.88	%			13.26	%
Annualized net interest margin			3.28	%			3.28	%			3.38	%			3.02	%			2.98	%
Efficiency ratio (1)			49.67	%			49.76	%			50.69	%			57.77	%			53.19	%
Common stockholders' equity to total assets			10.28	%			10.29	%			10.51	%			10.60	%			10.09	%
Tangible common equity to tangible assets (1)			7.88	%			7.83	%			8.01	%			8.07	%			8.31	%
Tier 1 risk-based ratio			11.24	%			11.16	%			11.12	%			11.34	%			11.15	%
Total risk-based ratio			13.83	%			13.78	%			13.74	%			14.03	%			14.48	%
Tier 1 leverage ratio			9.16	%			9.10	%			9.05	%			8.97	%			8.51	%
Common equity tier 1 capital ratio			10.71	%			10.62	%			10.57	%			10.72	%			10.67	%
Book value per common share		$	17.09			$	16.70			$	16.82			$	16.82			$	16.34
Tangible book value per common share (1)		$	12.76			$	12.36			$	12.47			$	12.45			$	13.21

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

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		December 31,2022				September 30,2022				June 30,2022				March 31,2022				December 31,2021
Selected Balance Sheet Data at Period End
Loans		$	7,866,050			$	7,568,826			$	7,408,540			$	7,137,793			$	5,976,148
Allowance for credit losses on loans			70,264				68,879				68,836				67,112				58,047
Investment securities			2,037,386				2,047,186				2,124,213				2,139,054				1,621,329
Total assets			10,783,840				10,515,599				10,374,178				10,275,233				8,198,056
Total deposits			8,567,471				8,677,799				8,501,804				8,748,909				6,965,823
Short-term borrowings			728,797				357,787				432,206				102,911				106,453
Other borrowings			219,264				219,148				219,027				218,904				204,043
Stockholders' equity			1,108,587				1,082,406				1,090,145				1,089,282				827,014
Loans
Non owner occupied commercial		$	2,906,014			$	2,873,824			$	2,777,003			$	2,639,784			$	2,316,284
Owner occupied commercial			1,246,189				1,141,290				1,179,527				1,122,754				908,449
Multifamily			1,260,814				1,186,036				1,134,938				1,104,206				972,233
Non owner occupied residential			218,026				222,597				221,339				225,795				177,097
Commercial, industrial and other			606,276				612,494				647,531				620,611				405,832
Paycheck Protection Program			435				734				10,404				36,785				56,574
Construction			380,100				381,109				370,777				404,186				302,228
Equipment finance			151,575				137,999				134,136				123,943				123,212
Residential mortgages			765,552				690,453				622,417				564,042				438,710
Consumer and home equity			331,069				322,290				310,468				295,687				275,529
Total loans		$	7,866,050			$	7,568,826			$	7,408,540			$	7,137,793			$	5,976,148
Deposits
Noninterest-bearing		$	2,113,289			$	2,288,902			$	2,330,550			$	2,300,030			$	1,732,452
Savings and interest-bearing transaction accounts			5,246,005				5,354,716				5,407,212				5,602,674				4,474,144
Time deposits			1,208,177				1,034,181				764,042				846,205				759,227
Total deposits		$	8,567,471			$	8,677,799			$	8,501,804			$	8,748,909			$	6,965,823
Total loans to total deposits ratio			91.8	%			87.2	%			87.1	%			81.6	%			85.8	%
Selected Average Balance Sheet Data
Loans		$	7,729,510			$	7,517,878			$	7,229,175			$	7,021,462			$	5,902,152
Investment securities			2,145,252				2,160,719				2,188,199				2,019,578				1,423,650
Interest-earning assets			9,923,173				9,755,797				9,588,396				9,504,287				7,874,181
Total assets			10,534,884				10,358,600				10,192,140				10,138,437				8,332,637
Noninterest-bearing demand deposits			2,240,197				2,325,391				2,310,702				2,194,038				1,775,119
Savings deposits			1,001,870				1,092,222				1,153,591				1,131,359				670,039
Interest-bearing transaction accounts			4,389,672				4,337,559				4,369,067				4,399,531				3,862,443
Time deposits			1,100,911				905,735				803,421				879,427				781,199
Total deposits			8,732,650				8,660,907				8,636,781				8,604,355				7,088,800
Short-term borrowings			311,875				240,728				130,242				104,633				112,533
Other borrowings			219,202				219,082				218,958				217,983				204,266
Total interest-bearing liabilities			7,023,530				6,795,326				6,675,279				6,732,933				5,630,480
Stockholders' equity			1,092,720				1,104,145				1,090,613				1,095,913				822,001

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		December 31,2022				September 30,2022				June 30,2022				March 31,2022				December 31,2021
Average Annualized Yields (Taxable Equivalent Basis) and Costs
Assets
Loans			4.84	%			4.43	%			4.22	%			3.92	%			3.88	%
Taxable investment securities and other			2.41	%			2.12	%			1.81	%			1.60	%			1.60	%
Tax-exempt securities			2.36	%			2.12	%			2.02	%			1.91	%			2.20	%
Federal funds sold and interest-bearing cash accounts			3.68	%			2.21	%			0.55	%			0.16	%			0.14	%
Total interest-earning assets			4.31	%			3.90	%			3.61	%			3.25	%			3.22	%
Liabilities
Savings accounts			0.29	%			0.25	%			0.18	%			0.17	%			0.05	%
Interest-bearing transaction accounts			1.46	%			0.97	%			0.33	%			0.25	%			0.24	%
Time deposits			1.77	%			1.00	%			0.39	%			0.40	%			0.51	%
Borrowings			3.52	%			2.15	%			2.04	%			1.95	%			1.55	%
Total interest-bearing liabilities			1.50	%			0.94	%			0.40	%			0.34	%			0.33	%
Net interest spread (taxable equivalent basis)			2.81	%			2.96	%			3.22	%			2.92	%			2.89	%
Annualized net interest margin (taxable equivalent basis)			3.28	%			3.28	%			3.38	%			3.02	%			2.98	%
Annualized cost of deposits			0.99	%			0.62	%			0.22	%			0.19	%			0.19	%
Asset Quality Data
Allowance for Credit Losses on Loans
Balance at beginning of period		$	68,879			$	68,836			$	67,112			$	58,047			$	57,953
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			1,464				11				1,583				4,630				(87	)
Charge-offs			(138	)			(56	)			(365	)			(170	)			(461	)
Recoveries			59				88				506				162				642
Balance at end of period		$	70,264			$	68,879			$	68,836			$	67,112			$	58,047
Net Loan Charge-Offs (Recoveries)
Non owner occupied commercial		$	—			$	—			$	(4	)		$	4			$	—
Owner occupied commercial			—				—				(337	)			24				(1	)
Multifamily			—				—				—				—				—
Non owner occupied residential			—				—				—				(14	)			(136	)
Commercial, industrial and other			(24	)			(49	)			272				778				(449	)
Construction			—				—				—				6,804				(4	)
Equipment finance			51				(23	)			(40	)			82				60
Residential mortgages			—				—				—				(48	)			49
Consumer and home equity			52				40				(32	)			12				300
Net (recoveries) charge-offs		$	79			$	(32	)		$	(141	)		$	7,642			$	(181	)

Lakeland Bancorp, Inc.Financial Highlights(Unaudited)

		For the Quarter Ended
(dollars in thousands)		December 31,2022				September 30,2022				June 30,2022				March 31,2022				December 31,2021
Non-Performing Assets
Non owner occupied commercial		$	618			$	307			$	324			$	5,482			$	3,009
Owner occupied commercial			9,439				10,322				12,587				2,626				2,810
Non owner occupied residential			441				868				839				2,430				2,852
Construction			2,978				3,623				4,882				6,098				6,763
Commercial, industrial and other			980				—				—				220				—
Equipment financing			114				226				112				51				43
Residential mortgages			2,011				2,226				2,249				1,935				817
Consumer and home equity			781				798				1,168				898				687
Total non-performing assets		$	17,362			$	18,370			$	22,161			$	19,740			$	16,981
Loans past due 90 days or more and still accruing		$	—			$	31			$	—			$	—			$	1
Loans restructured and still accruing			2,640				3,113				3,189				3,290				3,342
Ratio of allowance for credit losses on loans to total loans			0.89	%			0.91	%			0.93	%			0.94	%			0.97	%
Total non-accrual loans to total loans			0.22	%			0.24	%			0.30	%			0.28	%			0.28	%
Total non-performing assets to total assets			0.16	%			0.17	%			0.21	%			0.19	%			0.21	%
Annualized net (recoveries) charge-offs to average loans			—	%			—	%		(0.01		)%			0.44	%		(0.01		)%

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

		At or for the Quarter Ended
(dollars in thousands, except per share amounts)		December 31,2022				September 30,2022				June 30,2022				March 31,2022				December 31,2021
Calculation of Tangible Book Value Per Common Share
Total common stockholders' equity at end of period - GAAP		$	1,108,587			$	1,082,406			$	1,090,145			$	1,089,282			$	827,014
Less: Goodwill			271,829				271,829				271,829				271,829				156,277
Less: Other identifiable intangible assets			9,088				9,669				10,250				10,842				2,420
Total tangible common stockholders' equity at end of period - Non-GAAP		$	827,670			$	800,908			$	808,066			$	806,611			$	668,317
Shares outstanding at end of period			64,872				64,804				64,794				64,780				50,606
Book value per share - GAAP		$	17.09			$	16.70			$	16.82			$	16.82			$	16.34
Tangible book value per share - Non-GAAP		$	12.76			$	12.36			$	12.47			$	12.45			$	13.21
Calculation of Tangible Common Equity to Tangible Assets
Total tangible common stockholders' equity at end of period - Non-GAAP		$	827,670			$	800,908			$	808,066			$	806,611			$	668,317
Total assets at end of period - GAAP		$	10,783,840			$	10,515,599			$	10,374,178			$	10,275,233			$	8,198,056
Less: Goodwill			271,829				271,829				271,829				271,829				156,277
Less: Other identifiable intangible assets			9,088				9,669				10,250				10,842				2,420
Total tangible assets at end of period - Non-GAAP		$	10,502,923			$	10,234,101			$	10,092,099			$	9,992,562			$	8,039,359
Common equity to assets - GAAP			10.28	%			10.29	%			10.51	%			10.60	%			10.09	%
Tangible common equity to tangible assets - Non-GAAP			7.88	%			7.83	%			8.01	%			8.07	%			8.31	%
Calculation of Return on Average Tangible Common Equity
Net income - GAAP		$	33,577			$	28,746			$	29,117			$	15,929			$	22,170
Total average common stockholders' equity - GAAP		$	1,092,720			$	1,104,145			$	1,090,613			$	1,095,913			$	822,001
Less: Average goodwill			271,829				271,829				271,829				265,409				156,277
Less: Average other identifiable intangible assets			9,386				9,982				10,569				10,851				2,544
Total average tangible common stockholders' equity - Non-GAAP		$	811,505			$	822,334			$	808,215			$	819,653			$	663,180
Return on average common stockholders' equity - GAAP			12.19	%			10.33	%			10.71	%			5.89	%			10.70	%
Return on average tangible common stockholders' equity - Non-GAAP			16.42	%			13.87	%			14.45	%			7.88	%			13.26	%
Calculation of Efficiency Ratio
Total noninterest expense		$	45,370			$	47,811			$	45,068			$	49,959			$	35,550
Less:
Amortization of core deposit intangibles			581				581				593				596				210
Merger-related expenses			533				3,488				—				4,585				710
Noninterest expense, as adjusted		$	44,256			$	43,742			$	44,475			$	44,778			$	34,630
Net interest income		$	81,640			$	80,285			$	80,302			$	70,388			$	59,029
Total noninterest income			7,023				7,233				7,063				6,780				5,864
Total revenue		$	88,663			$	87,518			$	87,365			$	77,168			$	64,893
Tax-equivalent adjustment on municipal securities			443				395				382				346				213
Total revenue, as adjusted		$	89,106			$	87,913			$	87,747			$	77,514			$	65,106
Efficiency ratio - Non-GAAP			49.67	%			49.76	%			50.69	%			57.77	%			53.19	%

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

		For the Twelve Months Ended December 31,
(dollars in thousands)			2022				2021
Calculation of Return on Average Tangible Common Equity
Net income - GAAP		$	107,369			$	95,041
Total average common stockholders' equity - GAAP		$	1,095,861			$	795,554
Less: Average goodwill			270,246				156,277
Less: Average other identifiable intangible assets			10,192				2,866
Total average tangible common stockholders' equity - Non-GAAP		$	815,423			$	636,411
Return on average common stockholders' equity - GAAP			9.80	%			11.95	%
Return on average tangible common stockholders' equity - Non-GAAP			13.17	%			14.93	%
Calculation of Efficiency Ratio
Total noninterest expense		$	188,208			$	140,757
Less:
Amortization of core deposit intangibles			2,351				868
Merger-related expenses			8,606				1,782
Long-term debt extinguishment costs			—				831
Noninterest expense, as adjusted		$	177,251			$	137,276
Net interest income		$	312,615			$	234,835
Noninterest income			28,099				22,361
Total revenue		$	340,714			$	257,196
Tax-equivalent adjustment on municipal securities			1,567				700
Less: Gain on sales and calls of investment securities			—				9
Total revenue, as adjusted		$	342,281			$	257,887
Efficiency ratio - Non-GAAP			51.79	%			53.23	%

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

		For the Three Months EndedDecember 31,								For the Year EndedDecember 31,
(Dollars in thousands, except per share amounts)			2022				2021				2022				2021
Calculation of EPS excluding non-routine transactions
Net income - GAAP		$	33,577			$	22,170			$	107,369			$	95,041
Non-Routine Transactions:
Long-term debt extinguishment costs		$	—			$	—			$	—			$	831
Tax deductible merger-related expenses			54				302				5,590				802
Tax effect on tax deductible non-routine transactions			(16	)			(91	)			(1,682	)			(491	)
Non-tax deductible merger-related expenses			479				408				3,016				980
Effect of non-routine transactions, net of tax		$	517			$	619			$	6,924			$	2,122
Net income available to common shareholders excluding non-routine transactions		$	34,094			$	22,789			$	114,293			$	97,163
Less: Earnings allocated to participating securities			390				303				1,236				1,142
Net income, excluding non-routine transactions		$	33,704			$	22,486			$	113,057			$	96,021
Weighted average shares - Basic			64,854				50,647				64,624				50,624
Weighted average shares - Diluted			65,222				50,959				64,918				50,870
Basic earnings per share - GAAP		$	0.51			$	0.43			$	1.64			$	1.85
Diluted earnings per share - GAAP		$	0.51			$	0.43			$	1.63			$	1.85
Basic earnings per share, adjusted for non-routine transactions		$	0.52			$	0.44			$	1.75			$	1.90
Diluted earnings per share, adjusted for non-routine transactions		$	0.52			$	0.44			$	1.74			$	1.89
Calculation of return on average assets excluding non-routine transactions
Net Income, excluding non-routine transactions		$	34,094			$	22,789			$	114,293			$	97,163
Average assets			10,534,884				8,332,637				10,307,245				7,974,905
Return on average assets - GAAP			1.26	%			1.06	%			1.04	%			1.19	%
Return on average assets, adjusted for non-routine transactions			1.28	%			1.09	%			1.11	%			1.22	%
Calculation of return on average equity excluding non-routine transactions
Net Income, excluding non-routine transactions		$	34,094			$	22,789			$	114,293			$	97,163
Total average common stockholders' equity			1,092,720				822,001				1,095,861				795,554
Return on average common stockholders' equity - GAAP			12.19	%			10.70	%			9.80	%			11.95	%
Return on average common stockholders' equity, adjusted for non-routine transactions			12.38	%			11	%			10.43	%			12.21	%
Calculation of return on average tangible common equity excluding non-routine transactions
Net Income, excluding non-routine transactions		$	34,094			$	22,789			$	114,293			$	97,163
Total average tangible common stockholders' equity - Non-GAAP			811,505				663,180				815,423				636,411
Return on average tangible common stockholders' equity - Non-GAAP			16.42	%			13.26	%			13.17	%			14.93	%
Return on average tangible common stockholders' equity - Non-GAAP, adjusted for non-routine transactions			16.67	%			13.63	%			14.02	%			15.27	%