lbai-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended March 31, 2024
			OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission file number: 000-17820

LAKELAND BANCORP, INC.

(Exact name of registrant as specified in its charter)


New Jersey			22-2953275
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

250 Oak Ridge Road, Oak Ridge, New Jersey 07438

(Address of principal executive offices and zip code)

(973) 697-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Stock, no par value	LBAI	The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☒

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of April 19, 2024, there were 65,154,526 outstanding shares of Common Stock, no par value.

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LAKELAND BANCORP, INC.

Form 10-Q Index


		PAGE
	Part I. Financial Information

Item 1.	Financial Statements:

	Consolidated Balance Sheets as of March 31, 2024 (unaudited) and December 31, 2023	3
	Consolidated Statements of Income for the Three Months Ended March 31, 2024 and 2023 (unaudited)	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023 (unaudited)	5
	Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023 (unaudited)	6
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	50

	Part II. Other Information

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	52

Signatures		53

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets


	March 31, 2024		December 31, 2023
(dollars in thousands)	(unaudited)

Assets
Cash	$	203,186	$	293,366
Interest-bearing deposits due from banks	4,433		27,289
Total cash and cash equivalents	207,619		320,655
Investment securities available for sale, at fair value (allowance for credit losses of $0 at March 31, 2024 and December 31, 2023)	914,029		946,282
Investment securities held to maturity (fair value of $681,857 at March 31, 2024 and $702,563 at December 31, 2023 and allowance for credit losses of $146 at March 31, 2024 and December 31, 2023)	827,107		836,377
Equity securities, at fair value	17,646		17,697
Federal Home Loan Bank and other membership bank stock, at cost	52,205		52,517
Loans held for sale	564		664
Loans, net of deferred fees	8,320,424		8,343,861
Less: Allowance for credit losses	76,823		77,163
Total loans, net	8,243,601		8,266,698
Premises and equipment, net	51,783		52,846
Operating lease right-of-use assets	15,009		16,008
Accrued interest receivable	37,968		37,508
Goodwill	271,829		271,829
Other intangible assets	6,623		7,058
Bank owned life insurance	160,587		159,862
Other assets	158,314		152,566
Total Assets	$	10,964,884	$	11,138,567
Liabilities and Stockholders' Equity
Liabilities





Deposits	$	8,500,438	$	8,581,238
Federal funds purchased and securities sold under agreements to repurchase	602,956		714,152
Federal Home Loan Bank of New York term borrowings	325,000		325,000
Subordinated debentures	194,814		194,705
Operating lease liabilities	15,820		16,891
Other liabilities	146,426		137,212
Total Liabilities	9,785,454		9,969,198
Stockholders' Equity
Common stock, no par value; authorized 100,000,000 shares; issued 65,285,261 shares and outstanding 65,154,226 shares at March 31, 2024 and issued 65,161,310 shares and outstanding 65,030,275 shares at December 31, 2023	859,712		858,857
Retained earnings	386,319		376,044
Treasury shares, at cost, 131,035 shares at March 31, 2024 and December 31, 2023	(1,452)		(1,452)
Accumulated other comprehensive loss	(65,149)		(64,080)
Total Stockholders' Equity	1,179,430		1,169,369
Total Liabilities and Stockholders' Equity	$	10,964,884	$	11,138,567

The accompanying notes are an integral part of these consolidated financial statements.

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Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Statements of Income (Unaudited)


	For the Three Months Ended March 31,
(in thousands, except per share data)		2024		2023
Interest Income
Loans and fees		$	114,680	$	100,481
Federal funds sold and interest-bearing deposits with banks		1,102		728
Taxable investment securities and other		11,631		11,554
Tax-exempt investment securities		1,448		1,642
Total Interest Income		128,861		114,405
Interest Expense
Deposits		54,763		29,158
Federal funds purchased and securities sold under agreements to repurchase		5,560		7,222
Other borrowings		5,980		2,100
Total Interest Expense		66,303		38,480
Net Interest Income		62,558		75,925
(Benefit) provision for credit losses		(2,692)		7,893
Net Interest Income after (Benefit) Provision for Credit Losses		65,250		68,032
Noninterest Income
Service charges on deposit accounts		1,959		2,789
Commissions and fees		1,690		1,925
Income on bank owned life insurance		877		776
(Loss) gain on equity securities		(129)		148
Gains on sales of loans held for sale		305		430

Swap income		289		56
Other income		103		141
Total Noninterest Income		5,094		6,265
Noninterest Expense
Compensation and employee benefits		26,874		29,996
Premises and equipment		7,886		7,977
FDIC insurance expense		1,393		963
Data processing expense		1,781		1,862
Merger-related expenses		68		295
Other expenses		6,647		7,512
Total Noninterest Expense		44,649		48,605
Income before provision for income taxes		25,695		25,692
Provision for income taxes		5,900		5,887
Net Income		$	19,795	$	19,805
Per Share of Common Stock
Basic earnings		$	0.30	$	0.30
Diluted earnings		$	0.30	$	0.30
Dividends paid		$	0.145	$	0.145

The accompanying notes are an integral part of these consolidated financial statements.

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Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


	For the Three Months Ended March 31,
(in thousands)		2024		2023

Net income		$	19,795	$	19,805
Other comprehensive (loss) income, net of tax:
Unrealized (losses) gains on securities available for sale		(963)		7,582


Amortization of gain on debt securities reclassified to held to maturity		(106)		(126)


Other comprehensive (loss) gain		(1,069)		7,456
Total comprehensive income		$	18,726	$	27,261

The accompanying notes are an integral part of these consolidated financial statements.

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Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

For the Three Months Ended March 31, 2024 and 2023


(in thousands, except per share data)	Common Stock		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total

January 1, 2023	$	855,425	$	329,375	$	(1,452)	$	(74,761)	$	1,108,587


Net income	—		19,805		—		—		19,805
Other comprehensive income, net of tax	—		—		—		7,456		7,456


Stock based compensation	1,725		—		—		—		1,725
Retirement of restricted stock	(1,493)		—		—		—		(1,493)

Cash dividends on common stock of $0.145 per share	—		(9,500)		—		—		(9,500)
March 31, 2023	$	855,657	$	339,680	$	(1,452)	$	(67,305)	$	1,126,580

January 1, 2024	$	858,857	$	376,044	$	(1,452)	$	(64,080)	$	1,169,369


Net income	—		19,795		—		—		19,795
Other comprehensive loss, net of tax	—		—		—		(1,069)		(1,069)


Stock based compensation	1,635		—		—		—		1,635
Retirement of restricted stock	(780)		—		—		—		(780)

Cash dividends on common stock of $0.145 per share	—		(9,520)		—		—		(9,520)
March 31, 2024	$	859,712	$	386,319	$	(1,452)	$	(65,149)	$	1,179,430

The accompanying notes are an integral part of these consolidated financial statements.

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Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)


	For the Three Months Ended March 31,
(in thousands)	2024		2023
Cash Flows from Operating Activities:
Net income	$	19,795	$	19,805
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of premiums, discounts and deferred loan fees and costs	1,136		1,287
Depreciation and amortization	1,509		1,011
Amortization of intangible assets	436		516
Amortization of operating lease right-of-use assets	999		1,032
(Benefit) provision for credit losses	(2,692)		7,893
Loans originated for sale	(13,782)		(10,341)
Proceeds from sales of loans held for sale	14,186		11,307

Loss (gain) on equity securities	129		(148)
Income on bank owned life insurance	(868)		(776)
Gains on proceeds from bank owned life insurance policies	(24)		—
Gains on sales of loans held for sale	(305)		(430)
Gains on other real estate and other repossessed assets	(10)		(4)
Loss on sales of premises and equipment	37		—
Loss on sale of assets	—		41



Stock-based compensation	1,635		1,725

Excess tax (deficiencies) benefits	(242)		138
(Increase) decrease in other assets	(5,542)		22,861
Increase (decrease) in other liabilities	8,214		(19,156)
Net Cash Provided by Operating Activities	24,611		36,761
Cash Flows from Investing Activities:

Proceeds from repayments and maturities of available for sale securities	33,012		28,151
Proceeds from repayments and maturities of held to maturity securities	8,889		19,579



Purchase of held to maturity securities	(700)		—
Purchase of equity securities	(77)		(65)

Death benefit proceeds from bank owned life insurance policy	168		—
Proceeds from redemptions of Federal Home Loan Bank stock	62,863		48,022
Purchases of Federal Home Loan Bank stock	(62,550)		(51,345)
Net decrease (increase) in loans	23,830		(85,085)

Proceeds from sales of other real estate and repossessed assets	10		1,919

Purchases of premises and equipment	(825)		(2,012)
Net Cash Provided by (Used in) Investing Activities	64,620		(40,836)




















Cash Flows from Financing Activities:
Net decrease in deposits	(80,772)		(30,471)
(Decrease) increase in federal funds purchased and securities sold under agreements to repurchase	(111,195)		84,531






Retirement of restricted stock	(780)		(1,493)
Dividends paid	(9,520)		(9,500)
Net Cash (Used in) Provided by Financing Activities	(202,267)		43,067
Net (decrease) increase in cash and cash equivalents	(113,036)		38,992
Cash and cash equivalents, beginning of period	320,655		235,950
Cash and cash equivalents, end of period	$	207,619	$	274,942

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Lakeland Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)


	For the Three Months Ended March 31,
(in thousands)	2024		2023
Supplemental schedule of non-cash investing and financing activities:
Cash paid during the period for income taxes	$	365	$	257
Cash paid during the period for interest	65,050		37,444





Right-of-use assets obtained in exchange for new lease liabilities	—		309

The accompanying notes are an integral part of these consolidated financial statements.

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Lakeland Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

Note 1 – Significant Accounting Policies

Basis of Presentation

This quarterly report presents the consolidated financial statements of Lakeland Bancorp, Inc. and its subsidiaries, including Lakeland Bank (“Lakeland”) and Lakeland’s wholly owned subsidiaries (collectively, the “Company”). The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“U.S. GAAP”) and predominant practices within the banking industry. The Company’s unaudited interim financial statements reflect all adjustments, such as normal recurring accruals that are in the opinion of management, necessary for the fair presentation of the results of the interim periods. The results of operations for the three months ended March 31, 2024 do not necessarily indicate the results that the Company will achieve for all of 2024.

Certain information and footnote disclosures required under U.S. GAAP have been condensed or omitted, as permitted by rules and regulations of the Securities and Exchange Commission. These unaudited interim financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes that are presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Note 2 – Business Combinations

Provident Financial Services, Inc.

On September 26, 2022, the Company entered into a definitive merger agreement with Provident Financial Services, Inc. ("Provident") pursuant to which the companies will combine in an all-stock merger. Under the terms of the merger agreement, the Company will merge with and into Provident, with Provident as the surviving corporation, and Lakeland Bank will merge with and into Provident Bank, with Provident Bank as the surviving bank. Following the closing of the transaction, Lakeland shareholders will receive 0.8319 shares of Provident common stock for each share of Lakeland common stock they own.

The transaction has been approved by the boards of directors of both companies and, on February 1, 2023, shareholders of each company approved the proposed merger. Provident has received all required regulatory approvals subject to certain conditions and commitments (referred to as the “Regulatory Conditions”). The Regulatory Conditions include, but are not limited to: prior to consummation of the merger, Provident must complete the issuance of $200 million of Tier 2 qualifying subordinated debt; for three years following consummation of the merger, Provident Bank must maintain regulatory capital ratios at or above 8.50% for Tier 1 Leverage Capital and 11.25% for Total Risk Based Capital; and Provident Bank must maintain its commercial real estate concentrations (as a percent of capital and reserves) at levels at or below those forecasted in the pro forma financial projections that Provident Bank submitted to the FDIC. The merger is expected to be consummated during the second quarter of 2024.

The Company incurred merger-related expenses on the anticipated transaction with Provident of $68,000 during the first quarter of 2024 compared to $295,000 for the first quarter of 2023.

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Note 3 – Earnings Per Share

The following schedule shows the Company’s earnings per share calculations for the periods presented:


	For the Three Months Ended March 31,
(in thousands, except per share data)		2024		2023
Net income available to common shareholders		$	19,795	$	19,805
Less: earnings allocated to participating securities		187		196
Net income allocated to common shareholders		$	19,608	$	19,609
Weighted average number of common shares outstanding - basic		65,135		64,966
Share-based plans		189		262
Weighted average number of common shares outstanding - diluted		65,324		65,228
Basic earnings per share		$	0.30	$	0.30
Diluted earnings per share		$	0.30	$	0.30

There were no antidilutive options to purchase common stock excluded from the computation for the three months ended March 31, 2024 and 2023.

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Note 4 – Investment Securities

The amortized cost, gross unrealized gains and losses, allowance for credit losses and the fair value of the Company's available for sale securities are as follows:


	March 31, 2024
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
U.S. Treasury and U.S. government agencies	$	324,367	$	92	$	(19,570)	$	—	$	304,889
Mortgage-backed securities, residential	314,413		12		(36,346)		—		278,079
Collateralized mortgage obligations, residential	146,080		—		(13,874)		—		132,206
Mortgage-backed securities, multifamily	851		—		(184)		—		667
Collateralized mortgage obligations, multifamily	45,806		—		(4,033)		—		41,773
Asset-backed securities	41,313		8		(412)		—		40,909
Obligations of states and political subdivisions	19,013		—		(605)		—		18,408
Corporate bonds	112,490		1		(15,393)		—		97,098
Total	$	1,004,333	$	113	$	(90,417)	$	—	$	914,029


	December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
U.S. Treasury and U.S. government agencies	$	339,364	$	99	$	(19,694)	$	—	$	319,769
Mortgage-backed securities, residential	320,947		16		(34,546)		—		286,417
Collateralized mortgage obligations, residential	150,726		—		(13,656)		—		137,070
Mortgage-backed securities, multifamily	856		—		(180)		—		676
Collateralized mortgage obligations, multifamily	46,541		—		(4,045)		—		42,496
Asset-backed securities	44,561		—		(868)		—		43,693
Obligations of states and political subdivisions	19,699		—		(571)		—		19,128
Corporate bonds	112,544		—		(15,511)		—		97,033
Total	$	1,035,238	$	115	$	(89,071)	$	—	$	946,282

The amortized cost, gross unrealized gains and losses, allowance for credit losses and the fair value of the Company's held to maturity investment securities are as follows:


	March 31, 2024
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
U.S. government agencies	$	10,270	$	6	$	(499)	$	—	$	9,777
Mortgage-backed securities, residential	326,731		5		(57,889)		—		268,847
Collateralized mortgage obligations, residential	12,079		—		(2,878)		—		9,201
Mortgage-backed securities, multifamily	4,126		—		(677)		—		3,449

Obligations of states and political subdivisions	471,047		25		(82,520)		(25)		388,527
Corporate bonds	3,000		—		(823)		(121)		2,056
Total	$	827,253	$	36	$	(145,286)	$	(146)	$	681,857

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	December 31, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
U.S. government agencies	$	10,406	$	7	$	(499)	$	—	$	9,914
Mortgage-backed securities, residential	332,509		82		(52,165)		—		280,426
Collateralized mortgage obligations, residential	12,243		—		(2,796)		—		9,447
Mortgage-backed securities, multifamily	4,145		—		(651)		—		3,494

Obligations of states and political subdivisions	474,220		43		(77,379)		(25)		396,859
Corporate bonds	3,000		—		(456)		(121)		2,423
Total	$	836,523	$	132	$	(133,946)	$	(146)	$	702,563

The following table lists contractual maturities of investment securities classified as available for sale and held to maturity as of March 31, 2024. Mortgage-backed and asset-backed securities are not shown by maturity because expected maturities may differ from contractual maturities due to underlying loan prepayments of the issuer. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	151,972	$	148,067	$	25,668	$	25,508
Due after one year through five years	143,867		132,305		32,891		30,830
Due after five years through ten years	106,678		92,296		111,040		94,807
Due after ten years	53,353		47,727		314,718		249,215
	455,870		420,395		484,317		400,360
Mortgage-backed and asset-backed securities	548,463		493,634		342,936		281,497
Total	$	1,004,333	$	914,029	$	827,253	$	681,857

During the first quarter of 2023, there were no sales of available for sale securities. In the first quarter of 2024, the Company sold its subordinated debt securities of Signature Bank that it had previously charged off. It recorded a recovery of $2.9 million. Gains or losses on sales of securities are based on the net proceeds and the adjusted carrying amount of the securities sold using the specific identification method.

Securities with a carrying value of approximately $1.66 billion and $1.57 billion at March 31, 2024 and December 31, 2023, respectively, were pledged to secure public deposits, expand secured borrowing capacity and for other purposes required by applicable laws and regulations.

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The following tables indicate the length of time individual securities have been in a continuous unrealized loss position for the periods presented:


March 31, 2024	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
Available for Sale
U.S. Treasury and U.S. government agencies	$	3,515	$	7	$	290,930	$	19,563	57	$	294,445	$	19,570
Mortgage-backed securities, residential	212		1		276,555		36,345		130	276,767		36,346
Collateralized mortgage obligations, residential	—		—		132,206		13,874		100	132,206		13,874
Mortgage-backed securities, multifamily	—		—		667		184		1	667		184
Collateralized mortgage obligations, multifamily	—		—		41,773		4,033		18	41,773		4,033
Asset-backed securities	1,532		—		32,814		412		14	34,346		412
Obligations of states and political subdivisions	2,288		6		15,570		599		39	17,858		605
Corporate bonds	—		—		94,097		15,393		45	94,097		15,393
Total	$	7,547	$	14	$	884,612	$	90,403	404	$	892,159	$	90,417
Held to Maturity
U.S. government agencies	$	—	$	—	$	8,913	$	499	3	$	8,913	$	499
Mortgage-backed securities, residential	5,208		8		263,239		57,881		184	268,447		57,889
Collateralized mortgage obligations, residential	—		—		9,201		2,878		10	9,201		2,878
Mortgage-backed securities, multifamily	—		—		3,449		677		3	3,449		677

Obligations of states and political subdivisions	4,193		16		371,272		82,504		337	375,465		82,520
Corporate bonds	—		—		2,177		823		1	2,177		823
Total	$	9,401	$	24	$	658,251	$	145,262	538	$	667,652	$	145,286


December 31, 2023	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
Available for Sale
U.S. Treasury and U.S. government agencies	$	2,587	$	—	$	308,315	$	19,694	59	$	310,902	$	19,694
Mortgage-backed securities, residential	10		—		284,803		34,546		129	284,813		34,546
Collateralized mortgage obligations, residential	—		—		137,070		13,656		100	137,070		13,656
Mortgage-backed securities, multifamily	—		—		676		180		1	676		180
Collateralized mortgage obligations, multifamily	—		—		42,496		4,045		20	42,496		4,045
Asset-backed securities	2,694		25		40,999		843		16	43,693		868
Obligations of states and political subdivisions	270		—		16,353		571		36	16,623		571
Corporate bonds	—		—		97,033		15,511		46	97,033		15,511
Total	$	5,561	$	25	$	927,745	$	89,046	407	$	933,306	$	89,071
Held to Maturity
U.S. government agencies	$	—	$	—	$	8,956	$	499	3	$	8,956	$	499
Mortgage-backed securities, residential	285		2		274,528		52,163		183	274,813		52,165
Collateralized mortgage obligations, residential	—		—		9,447		2,796		11	9,447		2,796

Mortgage-backed securities, multifamily	—		—		3,494		651		3	3,494		651
Obligations of states and political subdivisions	3,691		2		380,787		77,377		341	384,478		77,379
Corporate bonds	—		—		2,544		456		1	2,544		456
Total	$	3,976	$	4	$	679,756	$	133,942	542	$	683,732	$	133,946

For available for sale securities, the Company assesses whether a loss is from credit or other factors and considers the extent to which fair value is less than amortized cost, adverse changes to the rating of the security by a rating agency, a security's market yield as compared to similar securities and adverse conditions related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows is less than the amortized cost, a credit loss exists and an allowance is created, limited by the amount that the fair value is less than the amortized cost basis. In the first quarter of 2023, the Company recorded a provision and a subsequent charge-off of $6.6 million in subordinated debt securities of Signature Bank, which failed in March 2023. In the first quarter of 2024, the Company recorded a $2.9 million recovery on the subordinated debt securities of Signature Bank.

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For held to maturity securities, management measures expected credit losses on a collective basis by major security type. All of the mortgage-backed securities are issued by U.S. government agencies and are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses and, therefore, the expectation of non-payment is zero. A range of historical losses method is utilized in estimating the net amount expected to be collected for mortgage-backed securities, collateralized mortgage obligations and obligations of states and political subdivisions.

The gross unrealized losses reported for residential mortgage-backed securities relate to investment securities issued by U.S. government sponsored entities such as Federal National Mortgage Association and Federal Home Loan Mortgage Corporation and U.S. government agencies such as Government National Mortgage Association. The total gross unrealized losses, shown in the tables above, were primarily attributable to changes in interest rates and levels of market liquidity, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities.

Credit Quality Indicators

Credit ratings, which are updated monthly, are a key measure for estimating the probability of a bond's default and for monitoring credit quality on an on-going basis. For bonds other than U.S. Treasuries and bonds issued or guaranteed by U.S. government agencies, credit ratings issued by one or more nationally recognized statistical rating organizations are considered in conjunction with an assessment by the Company's management. Investment grade reflects a credit quality of BBB or above.

The tables below indicate the credit profile of the Company's held to maturity investment securities at amortized cost:


March 31, 2024	AAA		AA		A		BB		Not Rated		Total
(in thousands)
U.S. government agencies	$	10,270	$	—	$	—	$	—	$	—	$	10,270
Mortgage-backed securities, residential	326,731		—		—		—		—		326,731
Collateralized mortgage obligations, residential	12,079		—		—		—		—		12,079
Mortgage-backed securities, multifamily	4,126		—		—		—		—		4,126

Obligations of states and political subdivisions	151,638		306,444		—		—		12,965		471,047
Corporate bonds	—		—		—		3,000		—		3,000
Total	$	504,844	$	306,444	$	—	$	3,000	$	12,965	$	827,253


December 31, 2023	AAA		AA		A		BB		Not Rated		Total
(in thousands)
U.S. government agencies	$	10,406	$	—	$	—	$	—	$	—	$	10,406
Mortgage-backed securities, residential	332,509		—		—		—		—		332,509
Collateralized mortgage obligations, residential	12,243		—		—		—		—		12,243
Mortgage-backed securities, multifamily	4,145		—		—		—		—		4,145

Obligations of states and political subdivisions	152,167		309,788		—		—		12,265		474,220
Corporate bonds	—		—		—		3,000		—		3,000
Total	$	511,470	$	309,788	$	—	$	3,000	$	12,265	$	836,523

Equity securities at fair value

The Company has an equity securities portfolio, which primarily consists of investments in Community Reinvestment funds. The fair value of the equity portfolio was $17.6 million and $17.7 million at March 31, 2024 and December 31, 2023, respectively. For the three months ended March 31, 2024 and 2023, there were no sales of equity securities or Community Reinvestment funds. The Company recorded fair value losses on equity securities of $129,000 for the first quarter of 2024 and fair value gains of $148,000 for the first quarter of 2023. Fair value gain or loss on equity securities are recorded in noninterest income.

As of March 31, 2024, the Company's investments in Community Reinvestment funds include $7.8 million that are primarily invested in community development loans that are guaranteed by the Small Business Administration (“SBA”). Because the funds are primarily guaranteed by the federal government, there are minimal changes in fair value between accounting periods. These funds can be redeemed with 60 days' notice at the net asset value less unpaid management fees with the approval of the fund manager. As of March 31, 2024, the net amortized cost equaled the fair value of the investment. There are no unfunded commitments related to these investments.

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The Community Reinvestment funds also included $9.8 million of investment in government guaranteed loans, mortgage-backed securities, small business loans and other instruments supporting affordable housing and economic development as of March 31, 2024. The Company may redeem these funds at the net asset value calculated at the end of the current business day less any unpaid management fees. There are no restrictions on redemptions for the holdings in these investments other than the notice required by the fund manager. There are no unfunded commitments related to these investments.

Note 5 – Loans

The following sets forth the composition of the Company’s loan portfolio:


(in thousands)	March 31, 2024		December 31, 2023
Non-owner occupied commercial	$	2,973,652	$	2,987,959
Owner occupied commercial	1,264,061		1,283,221
Multifamily	1,405,399		1,408,905
Non-owner occupied residential	202,014		213,986
Commercial, industrial and other	642,151		638,894
Construction	317,253		302,745
Equipment finance	178,157		179,171
Residential mortgage	997,569		985,768
Home equity and consumer	340,168		343,212
Total	$	8,320,424	$	8,343,861

Loans are recorded at amortized cost, which includes principal balance and net deferred loan fees and costs. The Company elected to exclude accrued interest receivable from amortized cost. Accrued interest receivable is reported separately in the Consolidated Balance Sheets and totaled $29.5 million at March 31, 2024 and $29.1 million at December 31, 2023. Loan origination fees and certain direct loan origination costs are deferred and the net fee or cost is recognized in interest income as an adjustment of yield. Net deferred loan fees are included in loans by respective segment and totaled $2.5 million at March 31, 2024 and $1.8 million at December 31, 2023.

Consumer loans included overdraft deposit balances of $459,000 and $619,000, at March 31, 2024 and December 31, 2023, respectively. At March 31, 2024 and December 31, 2023, the Company had $4.64 billion and $4.58 billion of loans pledged for potential borrowings at the Federal Home Loan Bank of New York ("FHLB"), respectively.

Credit Quality Indicators

Management closely and continually monitors the quality of its loans and assesses the quantitative and qualitative risks arising from the credit quality of its loans. Lakeland assigns a credit risk rating to all loans and loan commitments. The credit risk rating system has been developed by management to provide a methodology to be used by loan officers, department heads and senior management in identifying various levels of credit risk that exist within the loan portfolios. The risk rating system assists senior management in evaluating the loan portfolio and analyzing trends. In assigning risk ratings, management considers, among other things, the borrower’s ability to service the debt based on relevant information such as current financial information, historical payment experience, credit documentation, public information and current economic conditions.

Management categorizes loans and commitments into the following risk ratings:

Pass: "Pass" assets are well protected by the current net worth and paying capacity of the obligor or guarantors, if any, or by the fair value of any underlying collateral.

Watch: "Watch" assets require more than the usual amount of monitoring due to declining earnings, strained cash flow, increasing leverage and/or weakening market. These borrowers generally have limited additional debt capacity and modest coverage and average or below average asset quality, margins and market share.

Special Mention: "Special mention" assets exhibit identifiable credit weakness, which if not checked or corrected could weaken the loan quality or inadequately protect the bank’s credit position at some future date.

Substandard: "Substandard" assets are inadequately protected by the current sound worth and paying capacity of the obligors or of the collateral pledged, if any. A substandard loan has a well-defined weakness or weaknesses that may jeopardize the liquidation of the debt.

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Doubtful: "Doubtful" assets exhibit all of the weaknesses inherent in substandard loans, but have the added characteristics that the weaknesses make collection or liquidation in full improbable on the basis of existing facts.

Loss: “Loss” is a rating for loans or portions of loans that are considered uncollectible and of such little value that their continuance as bankable loans is not warranted.

The following table presents the risk category of loans by class of loan and vintage as of March 31, 2024.


	Term Loans by Origination Year
(in thousands)	2024		2023		2022		2021		2020		Pre-2020		Revolving Loans		Revolving to Term	Total
Non-owner occupied commercial
Pass	$	21,283	$	314,967	$	621,297	$	366,130	$	484,530	$	1,019,546	$	18,135	303	$	2,846,191
Watch	—		—		3,946		—		12,129		50,573		—		—	66,648
Special mention	—		3,494		—		—		—		27,084		—		—	30,578
Substandard	—		—		—		—		—		29,914		321		—	30,235
Total	21,283		318,461		625,243		366,130		496,659		1,127,117		18,456		303	2,973,652
Owner occupied commercial
Pass	15,707		58,590		335,849		162,969		148,880		391,368		8,535		—	1,121,898
Watch	—		—		—		3,769		3,052		52,826		41		—	59,688
Special mention	—		—		548		2,507		—		6,605		300		—	9,960
Substandard	—		—		960		43,341		19,854		8,360		—		—	72,515
Total	15,707		58,590		337,357		212,586		171,786		459,159		8,876		—	1,264,061
Multifamily
Pass	18,453		142,805		297,810		259,825		243,041		392,509		3,936		—	1,358,379
Watch	—		—		6,263		2,477		14,288		10,255		—		—	33,283
Special mention	—		—		—		—		555		11,611		—		—	12,166
Substandard	—		—		—		1,073		—		498		—		—	1,571
Total	18,453		142,805		304,073		263,375		257,884		414,873		3,936		—	1,405,399
Non-owner occupied residential
Pass	3,810		12,717		35,957		27,107		19,217		90,081		5,552		23	194,464
Watch	—		—		—		—		—		2,443		75		—	2,518
Special mention	—		—		2,102		—		—		1,161		—		—	3,263
Substandard	—		—		—		—		—		1,769		—		—	1,769
Total	3,810		12,717		38,059		27,107		19,217		95,454		5,627		23	202,014



Commercial, industrial and other
Pass	4,913		20,668		37,220		33,002		14,374		66,749		422,265		386	599,577
Watch	279		2,848		179		6,695		1,275		1,094		22,581		—	34,951
Special mention	—		404		1,657		722		38		246		3,527		—	6,594
Substandard	—		—		—		542		23		349		115		—	1,029
Total	5,192		23,920		39,056		40,961		15,710		68,438		448,488		386	642,151







Construction
Pass	7,704		57,258		159,684		62,976		2,706		8,809		2,817		—	301,954
Watch	—		2,499		1,104		—		—		—		—		—	3,603
Special mention	—		—		—		11,696		—		—		—		—	11,696
Substandard	—		—		—		—		—		—		—		—	—
Total	7,704		59,757		160,788		74,672		2,706		8,809		2,817		—	317,253
Current YTD period:
Gross charge-offs	—		—		—		—		—		564		—		—	564
Equipment finance
Pass	14,817		76,086		52,159		20,549		8,955		4,123		—		—	176,689


Substandard	—		70		877		380		50		91		—		—	1,468
Total	14,817		76,156		53,036		20,929		9,005		4,214		—		—	178,157

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	Term Loans by Origination Year
(in thousands)	2024		2023		2022		2021		2020		Pre-2020		Revolving Loans		Revolving to Term		Total




Residential mortgage
Pass	25,164		268,808		310,079		155,979		98,625		136,182		—		—		994,837


Substandard	—		—		—		1,163		417		1,152		—		—		2,732
Total	25,164		268,808		310,079		157,142		99,042		137,334		—		—		997,569




Consumer
Pass	3,548		24,618		39,872		27,283		6,832		20,921		215,543		346		338,963


Substandard	—		—		—		9		—		1,157		39		—		1,205
Total	3,548		24,618		39,872		27,292		6,832		22,078		215,582		346		340,168
Current YTD period:
Gross charge-offs	21		21		—		—		—		11		—		—		53

Total loans	$	115,678	$	985,832	$	1,907,563	$	1,190,194	$	1,078,841	$	2,337,476	$	703,782	$	1,058	$	8,320,424
Current YTD period:
Gross charge-offs	$	21	$	21	$	—	$	—	$	—	$	575	$	—	$	—	$	617

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The following table presents the risk category of loans by class of loan and vintage as of December 31, 2023.


	Term Loans by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Pre-2019		Revolving Loans		Revolving to Term	Total
Non-owner occupied commercial
Pass	$	315,447	$	611,051	$	371,828	$	489,642	$	266,172	$	793,791	$	16,498	—	$	2,864,429
Watch	2,512		3,237		—		7,328		—		49,126		—		—	62,203
Special mention	—		740		—		4,886		2,977		25,104		—		—	33,707
Substandard	—		—		—		—		—		27,325		295		—	27,620
Total	317,959		615,028		371,828		501,856		269,149		895,346		16,793		—	2,987,959
Owner occupied commercial
Pass	58,328		342,669		187,089		150,210		68,978		334,536		9,315		—	1,151,125
Watch	—		—		23,554		1,673		23,288		33,480		644		—	82,639
Special mention	—		556		3,512		1,403		1,646		5,262		—		960	13,339
Substandard	—		—		8,643		19,847		1,836		5,792		—		—	36,118
Total	58,328		343,225		222,798		173,133		95,748		379,070		9,959		960	1,283,221
Multifamily
Pass	143,030		300,128		263,154		250,089		63,413		328,095		5,496		—	1,353,405
Watch	—		1,383		8		29,538		3,783		6,509		—		—	41,221
Special mention	—		—		—		—		—		11,682		—		—	11,682
Substandard	—		—		1,095		—		—		1,502		—		—	2,597
Total	143,030		301,511		264,257		279,627		67,196		347,788		5,496		—	1,408,905






Non-owner occupied residential
Pass	14,720		36,596		27,974		19,708		23,560		75,250		6,261		—	204,069
Watch	—		2,117		—		—		—		3,499		75		—	5,691
Special mention	—		—		—		—		494		1,683		—		—	2,177
Substandard	—		—		—		—		531		1,518		—		—	2,049
Total	14,720		38,713		27,974		19,708		24,585		81,950		6,336		—	213,986







Commercial, industrial and other
Pass	19,628		38,783		41,152		20,639		24,297		43,755		415,925		557	604,736
Watch	4,137		1,558		878		49		272		1,129		16,771		1,875	26,669
Special mention	90		—		—		—		1		1,219		625		—	1,935
Substandard	—		375		820		29		126		325		3,879		—	5,554
Total	23,855		40,716		42,850		20,717		24,696		46,428		437,200		2,432	638,894






Current YTD period:
Gross charge-offs	—		—		13		—		—		14		—		—	27
Construction
Pass	46,970		145,072		60,681		2,688		4,912		3,999		8,079		3,039	275,440
Watch	2,337		1,101		10,512		—		—		—		657		—	14,607

Substandard	—		—		—		—		—		12,698		—		—	12,698
Total	49,307		146,173		71,193		2,688		4,912		16,697		8,736		3,039	302,745






Current YTD period:
Gross charge-offs	—		13		—		—		—		—		—		—	13
Equipment finance
Pass	80,831		56,719		23,839		10,917		5,742		605		—		—	178,653


Substandard	76		219		126		32		65		—		—		—	518
Total	80,907		56,938		23,965		10,949		5,807		605		—		—	179,171







Current YTD period:
Gross charge-offs	29		44		194		—		31		9		—		—	307

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	Term Loans by Origination Year
(in thousands)	2023		2022		2021		2020		2019		Pre-2019		Revolving Loans		Revolving to Term		Total
Residential mortgage
Pass	270,695		312,166		157,716		100,900		33,022		108,868		—		—		983,367
Watch	—		—		—		—		—		—		—		—		—
Special mention	—		—		—		—		—		—		—		—		—
Substandard	—		—		1,176		424		454		347		—		—		2,401
Total	270,695		312,166		158,892		101,324		33,476		109,215		—		—		985,768








Current YTD period:
Gross charge-offs	—		128		—		—		—		—		—		—		128
Consumer
Pass	25,790		40,640		27,989		7,117		3,445		18,865		218,035		99		341,980


Substandard	—		—		—		—		—		1,196		—		36		1,232
Total	25,790		40,640		27,989		7,117		3,445		20,061		218,035		135		343,212
Current YTD period:
Gross charge-offs	237		6		23		7		1		20		—		—		294
Total loans	$	984,591	$	1,895,110	$	1,211,746	$	1,117,119	$	529,014	$	1,897,160	$	702,555	$	6,566	$	8,343,861
Current YTD period:
Gross charge-offs	$	266	$	191	$	230	$	7	$	32	$	43	$	—	$	—	$	769

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Past Due and Non-Accrual Loans

Loans are considered past due if required principal and interest payments have not been received as of the date such payments were contractually due. A loan is generally considered non-performing when it is placed on non-accrual status. A loan is generally placed on non-accrual status when it becomes 90 days past due if such loan has been identified as presenting uncertainty with respect to the collectability of interest and principal. A loan past due 90 days or more may remain on accruing status if such loan is both well secured and in the process of collection.

The following tables present the payment status of the recorded investment in past due loans as of the periods noted, by class of loans.


March 31, 2024			Past Due
(in thousands)	Current		30 - 59 Days		60 - 89 Days		Greater than 89 days		Total		Total Loans
Non-owner occupied commercial	$	2,973,184	$	256	$	—	$	212	$	468	$	2,973,652
Owner occupied commercial	1,256,517		352		423		6,769		7,544		1,264,061
Multifamily	1,404,901		405		—		93		498		1,405,399
Non-owner occupied residential	201,040		457		—		517		974		202,014
Commercial, industrial and other	641,850		—		1		300		301		642,151
Construction	317,253		—		—		—		—		317,253
Equipment finance	176,169		1,254		77		657		1,988		178,157
Residential mortgage	988,884		5,734		2,010		941		8,685		997,569
Consumer	338,579		1,135		17		437		1,589		340,168
Total	$	8,298,377	$	9,593	$	2,528	$	9,926	$	22,047	$	8,320,424


December 31, 2023			Past Due
(in thousands)	Current		30 - 59 Days		60 - 89 Days		Greater than 89 days		Total		Total Loans
Non-owner occupied commercial	$	2,987,738	$	—	$	—	$	221	$	221	$	2,987,959
Owner occupied commercial	1,276,251		405		—		6,565		6,970		1,283,221
Multifamily	1,407,309		1,503		93		—		1,596		1,408,905
Non-owner occupied residential	213,324		662		—		—		662		213,986
Commercial, industrial and other	638,493		—		—		401		401		638,894
Construction	290,047		—		12,698		—		12,698		302,745
Equipment finance	177,657		249		928		337		1,514		179,171
Residential mortgage	975,408		7,469		1,660		1,231		10,360		985,768
Consumer	341,827		662		231		492		1,385		343,212
Total	$	8,308,054	$	10,950	$	15,610	$	9,247	$	35,807	$	8,343,861

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The following tables present information on non-accrual loans at March 31, 2024 and December 31, 2023:


March 31, 2024
(in thousands)	Non-accrual		Interest Income Recognized on Non-accrual Loans		Amortized Cost Basis of Loans > 89 days Past due but still accruing		Amortized Cost Basis of Non-accrual Loans without Related Allowance
Non-owner occupied commercial	$	745	$	—	$	—	$	—
Owner occupied commercial	7,018		—		—		6,703
Multifamily	1,167		—		—		1,073
Non-owner occupied residential	517		—		—		517
Commercial, industrial and other	323		—		—		—
Construction	—		—		—		—
Equipment finance	1,147		—		—		—
Residential mortgage	2,732		—		—		—
Consumer	1,204		—		—		—
Total	$	14,853	$	—	$	—	$	8,293


December 31, 2023
(in thousands)	Non-accrual		Interest Income Recognized on Non-accrual Loans		Amortized Cost Basis of Loans > 89 days Past due but still accruing		Amortized Cost Basis of Non-accrual Loans without Related Allowance
Non-owner occupied commercial	$	769	$	—	$	—	$	—
Owner occupied commercial	6,849		—		—		6,630
Multifamily	1,096		—		—		1,095
Non-owner occupied residential	—		—		—		—
Commercial, industrial and other	401		—		—		—
Construction	12,698		—		—		12,698
Equipment finance	518		—		—		—
Residential mortgage	2,400		—		—		—
Consumer	1,232		—		—		—
Total	$	25,963	$	—	$	—	$	20,423

At March 31, 2024 and December 31, 2023, there were no loans that were past due more than 89 days and still accruing. The Company had $659,000 and $621,000 in residential mortgages and consumer loans included in non-accrual and that were in the process of foreclosure at March 31, 2024 and December 31, 2023, respectively.

Purchased Credit Deteriorated ("PCD") Loans

The following summarizes the PCD loans acquired in the 1st Constitution acquisition as of the closing date, January 6, 2022.


(in thousands)	PCD Loans
Gross amortized cost basis	$	140,300
Interest component of expected cash flows (accretable difference)	(3,792)
Allowance for credit losses on PCD loans	(12,077)
Net PCD loans	$	124,431

At March 31, 2024, net PCD loans acquired from 1st Constitution totaled $68.4 million.

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Troubled Debt Restructurings and Modifications of Loans to Debtors Experiencing Financial Difficulty

The Company adopted Accounting Standards Update 2022-02, "Troubled Debt Restructurings and Vintage Disclosures" ("ASU 2022-02") as of January 1, 2023. Among other things, ASU 2022-02 eliminates the recognition and measurement guidance of troubled debt restructured loans ("TDRs") so that creditors will apply the same guidance to all modifications when determining whether a modification results in a new receivable or continuation of an existing receivable. ASU 2022-02 requires vintage disclosures of gross charge-offs as shown in the vintage disclosure above. It also replaces the historical disclosure of TDRs with the new disclosure of modifications of receivables to debtors experiencing financial difficulty.

Prior to the adoption of ASU 2022-02, loans were classified as TDRs in cases where borrowers experienced financial difficulties and Lakeland made certain concessionary modifications to contractual terms. Restructured loans typically involved a modification of terms such as a reduction of the stated interest rate, a moratorium of principal payments and/or an extension of the maturity date at a stated interest rate lower than the current market rate of a new loan with similar risk.

During the three months ended March 31, 2024 and for three months ended March 31, 2023, there were no loan modifications that met the definition of a modification to a debtor experiencing financial difficulty. At December 31, 2023, there were no loans that were modified that met the definition of a modification to a debtor experiencing financial difficulty.

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Note 6 - Allowance for Credit Losses

The Company measures expected credit losses for financial assets measured at amortized cost, including loans, investments and certain off-balance-sheet credit exposures in accordance with ASU 2016-13. See Note 1 - Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a description of the Company's methodology.

Under the standard, the Company's methodology for determining the allowance for credit losses on loans is based upon key assumptions, including the lookback periods, historic net charge-off factors, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation. At March 31, 2024, loans totaling $8.24 billion were evaluated collectively and the allowance on these balances totaled $74.5 million and loans totaling $77.3 million were evaluated on an individual basis with the specific allocations of the allowance for credit losses totaling $2.3 million. Loans evaluated on an individual basis include $68.7 million in PCD loans, which had a specific allowance for credit losses of $2.3 million. The Company made the election to exclude accrued interest receivable from the estimate of credit losses.

Allowance for Credit Losses - Loans

The allowance for credit losses on loans is summarized in the following table:


	For the Three Months Ended March 31,
(in thousands)		2024		2023
Balance at beginning of the period		$	77,163	$	70,264


Charge-offs		(617)		(139)
Recoveries		38		65
Net charge-offs		(579)		(74)
Provision for credit loss - loans		239		1,213
Balance at end of the period		$	76,823	$	71,403

The decrease in the provision for credit losses on loans for the first quarter of 2024 compared to the first quarter of 2023 included the impact of a decrease in loans outstanding and an improvement in macroeconomic factors.

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The following tables detail activity in the allowance for credit losses on loans by portfolio segment for the three months ended 2024 and 2023:


(in thousands)	Balance at December 31, 2023		Charge-offs		Recoveries		Provision (Benefit) for Credit Loss		Balance at March 31, 2024
Non-owner occupied commercial	$	24,319	$	—	$	—	$	(831)	$	23,488
Owner occupied commercial	6,387		—		—		(137)		6,250
Multifamily	9,746		—		—		518		10,264
Non-owner occupied residential	2,400		—		—		(158)		2,242
Commercial, industrial and other	9,044		—		20		(682)		8,382
Construction	2,246		(564)		—		1,819		3,501
Equipment finance	7,521		—		—		(612)		6,909
Residential mortgage	10,386		—		—		18		10,404
Consumer	5,114		(53)		18		304		5,383
Total	$	77,163	$	(617)	$	38	$	239	$	76,823


(in thousands)	Balance at December 31, 2022		Charge-offs		Recoveries		Provision (Benefit) for Credit Loss		Balance at March 31, 2023
Non owner occupied commercial	$	23,462	$	—	$	—	$	819	$	24,281
Owner occupied commercial	6,696		—		—		(638)		6,058
Multifamily	9,425		—		—		(415)		9,010
Non owner occupied residential	2,643		—		—		(50)		2,593
Commercial, industrial and other	8,836		—		35		(760)		8,111
Construction	2,968		—		—		137		3,105
Equipment finance	3,445		(61)		15		1,049		4,448
Residential mortgage	8,041		—		—		903		8,944
Consumer	4,748		(78)		15		168		4,853
Total	$	70,264	$	(139)	$	65	$	1,213	$	71,403

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The following tables present the recorded investment in loans by portfolio segment and the related allowance for credit losses at March 31, 2024 and December 31, 2023:


March 31, 2024	Loans								Allowance for Credit Losses
(in thousands)	Individually evaluated for impairment		Collectively evaluated for impairment		Acquired with deteriorated credit quality		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Non-owner occupied commercial	$	—	$	2,945,935	$	27,717	$	2,973,652	$	549	$	22,939	$	23,488
Owner occupied commercial	6,474		1,227,477		30,110		1,264,061		859		5,391		6,250
Multifamily	1,073		1,398,737		5,589		1,405,399		5		10,259		10,264
Non-owner occupied residential	1,039		199,986		989		202,014		10		2,232		2,242
Commercial, industrial and other	—		638,432		3,719		642,151		781		7,601		8,382
Construction	—		317,253		—		317,253		—		3,501		3,501
Equipment finance	—		178,157		—		178,157		—		6,909		6,909
Residential mortgage	—		997,202		367		997,569		43		10,361		10,404
Consumer	—		339,964		204		340,168		69		5,314		5,383
Total loans	$	8,586	$	8,243,143	$	68,695	$	8,320,424	$	2,316	$	74,507	$	76,823


December 31, 2023	Loans								Allowance for Credit Losses
(in thousands)	Individually evaluated for impairment		Collectively evaluated for impairment		Acquired with deteriorated credit quality		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Total
Non-owner occupied commercial	$	—	$	2,959,469	$	28,490	2,987,959		$	557	$	23,762	$	24,319
Owner occupied commercial	6,474		1,246,243		30,504		1,283,221		893		5,494		6,387
Multifamily	1,095		1,402,174		5,636		1,408,905		6		9,740		9,746
Non-owner occupied residential	522		212,460		1,004		213,986		14		2,386		2,400
Commercial, industrial and other	—		635,285		3,609		638,894		686		8,358		9,044
Construction	12,698		290,047		—		302,745		—		2,246		2,246
Equipment finance	—		179,171		—		179,171		—		7,521		7,521
Residential mortgage	—		985,398		370		985,768		56		10,330		10,386
Consumer	—		343,006		206		343,212		69		5,045		5,114
Total loans	$	20,789	$	8,253,253	$	69,819	$	8,343,861	$	2,281	$	74,882	$	77,163

Allowance for Credit Losses - Securities

At March 31, 2024 and December 31, 2023, the balance of the allowance for credit loss on available for sale and held to maturity securities was $0 and $146,000, respectively.

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The allowance for credit losses on securities is summarized in the following tables:


Available for Sale	For the Three Months Ended March 31,
(in thousands)	2024		2023
Balance at beginning of the period	$	—	$	310

Charge-offs	—		(6,640)
Recoveries	2,860		—
Net recoveries (charge-offs )	2,860		(6,640)
(Benefit) provision for credit loss expense	(2,860)		6,490
Balance at end of the period	$	—	$	160


Held to Maturity	For the Three Months Ended March 31,
(in thousands)		2024		2023
Balance at beginning of the period		$	146	$	107




(Benefit) provision for credit loss expense		—		50
Balance at end of the period		$	146	$	157

The provision for credit loss expense for available for sale securities changed from $6.5 million for the three months ended March 31, 2023 to a benefit of $2.9 million for the three months ended March 31, 2024 as a result of a $6.6 million provision and subsequent charge-off of subordinated debt securities of Signature Bank which failed in March 2023 and a subsequent sale and recovery of the Signature Bank subordinated debt securities in March 2024.

Accrued interest receivable on securities is reported as a component of accrued interest receivable on the consolidated balance sheets and totaled $8.2 million at March 31, 2024 and $8.1 million at December 31, 2023. The Company made the election to exclude accrued interest receivable from the estimate of credit losses on securities.

Allowance for Credit Losses - Off-Balance-Sheet Exposures

The allowance for credit losses on off-balance sheet exposures is reported in other liabilities in the Consolidated Balance Sheets. The liability represents an estimate of expected credit losses arising from off-balance sheet exposures such as letters of credit, guarantees and unfunded loan commitments. The process for measuring lifetime expected credit losses on these exposures is consistent with that for loans as discussed above, but is subject to an additional estimate reflecting the likelihood that funding will occur. No liability is recognized for off balance sheet credit exposures that are unconditionally cancellable by the Company. Adjustments to the liability are reported as a component of the provision for credit losses.

At March 31, 2024 and December 31, 2023, the balance of the allowance for credit losses for off-balance sheet exposures was $2.4 million and $2.5 million, respectively. For the three months ended March 31, 2024 and three months ended March 31, 2023, the Company recorded a benefit for credit losses on off-balance-sheet exposures of $72,000 and a provision for credit losses on off-balance sheet exposures of $140,000, respectively.

Note 7 – Leases

The Company leases certain premises and equipment under operating leases. Portions of certain properties are subleased for terms extending through 2025. At March 31, 2024, the Company had lease liabilities totaling $15.8 million and right-of-use assets totaling $15.0 million related to these leases. At December 31, 2023, the Company had lease liabilities totaling $16.9 million and right-of-use assets totaling $16.0 million. The calculated amount of the right-of-use assets and lease liabilities are impacted by the length of the lease term and the discount rate used to calculate the present value of the minimum lease payments. The Company's lease agreements often include one or more options to renew at the Company's discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. The Company uses its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term.

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At March 31, 2024, the weighted average remaining lease term for operating leases was 8.24 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.27%. At December 31, 2023, the weighted average remaining lease term for operating leases was 8.18 years and the weighted average discount rate used in the measurement of operating lease liabilities was 3.24%.

As the Company elected not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Lease costs were as follows:


	For the Three Months Ended March 31,
(in thousands)		2024		2023
Operating lease cost		$	1,127	$	1,190
Short-term lease cost		—		—
Variable lease cost		14		15
Sublease income		(26)		(32)
Net lease cost		$	1,115	$	1,173

The table below presents other information on the Company's operating leases for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
(in thousands)	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,071	$	1,113
Right-of-use assets obtained in exchange for new operating lease liabilities	—		309

There were no sale and leaseback transactions, leveraged leases or lease transactions with related parties during the three months ended March 31, 2024 or March 31, 2023. At March 31, 2024, the Company had no leases that had not yet commenced.

A maturity analysis of operating lease liabilities and a reconciliation of the undiscounted cash flows to the total operating lease liability at March 31, 2024 are as follows:


(in thousands)
Within one year	$	4,030
After one year but within three years	5,771
After three years but within five years	3,096
After five years	5,381
Total undiscounted cash flows	18,278
Discount on cash flows	(2,458)
Total operating lease liabilities	$	15,820

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Note 8 - Deposits

The following table sets forth the details of total deposits:


(dollars in thousands)	March 31, 2024				December 31, 2023

Noninterest-bearing demand	$	1,679,033	19.8	%	$	1,781,619	20.8	%
Interest-bearing checking	3,092,054		36.4	%	3,117,358		36.3	%
Money market	1,039,553		12.2	%	1,033,436		12.0	%
Savings	659,027		7.8	%	681,377		8.0	%
Certificates of deposit under $250 thousand	1,496,741		17.5	%	1,444,640		16.8	%
Certificates of deposit $250 thousand and over	534,030		6.3	%	522,808		6.1	%
Total deposits	$	8,500,438	100.0	%	$	8,581,238	100.0	%

At March 31, 2024 and December 31, 2023, certificates of deposit obtained through brokers totaled $120.0 million and $160.0 million, respectively. Brokered deposits are included in the table above as certificates of deposit under $250,000.

Note 9 – Borrowings

Overnight and Short-Term Borrowings

At March 31, 2024, the Company had $575.0 million overnight and short-term borrowings from the FHLB and $600.0 million at December 31, 2023. At March 31, 2024, Lakeland had overnight and short-term federal funds lines available to borrow up to $250.0 million from correspondent banks. Lakeland had no overnight borrowings from correspondent banks at March 31, 2024 and $89.4 million in overnight or short-term borrowings from correspondent banks at December 31, 2023. Lakeland may also borrow from the discount window of the Federal Reserve Bank of New York based on the fair value of collateral pledged. Lakeland had no borrowings with the Federal Reserve Bank of New York as of March 31, 2024 or December 31, 2023.

Also included in the balances at March 31, 2024 and December 31, 2023 were short-term securities sold under agreements to repurchase of $28.0 million and $24.8 million, respectively. The securities sold under agreements to repurchase are overnight sweep arrangement accounts with our customers. As of March 31, 2024, the Company had $20.7 million of mortgage-backed securities and $14.2 million of collateralized mortgage obligations pledged for its securities sold under agreements to repurchase.

At times, the fair values of securities collateralizing our securities sold under agreements to repurchase may decline due to changes in interest rates and may necessitate our lenders to issue a “margin call” which requires Lakeland to pledge additional collateral to meet that margin call.

FHLB Advances

At March 31, 2024 and December 31, 2023, the Company had advances from the FHLB, which totaled $325.0 million, with a weighted average rate of 4.71%. These advances are collateralized by first mortgage loans and have prepayment penalties. The schedule of maturities of advances at March 31, 2024 is as follows:


(in thousands)
Within one year	$	25,000
After one but within two years	—
After two years but within three years	—
After three years but within four years	300,000
	$	325,000

Note 10 – Share-Based Compensation

The Company's 2018 Omnibus Equity Incentive Plan (the "Plan") authorizes the granting of incentive stock options, supplemental stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), other stock-based awards and cash-based awards to officers, employees and non-employee directors of, and consultants and advisors to, the Company and its subsidiaries.

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Restricted Stock

The following is a summary of the Company’s restricted stock activity during the three months ended March 31, 2024:


	Number of Shares	Weighted Average Price
Outstanding, January 1, 2024	18,520	$	17.95
Granted	—	—
Vested	(18,520)	17.95

Outstanding, March 31, 2024	—	$	—

The Company did not grant any restricted stock in the first quarter of 2024. In the first three months of 2023, the Company granted 18,520 shares of restricted stock to non-employee directors at a grant date fair value of $17.95 per share. The restricted stock vested one year from the date it was granted with a compensation expense of $332,000 over such period.

The Company recognized share-based compensation expense on its restricted stock of $0 and $83,000 for the first quarter of 2024 and 2023, respectively. As of March 31, 2024, there was no unrecognized compensation cost related to unvested restricted stock.

Restricted Stock Units

The following is a summary of the Company’s RSU activity during the three months ended March 31, 2024:


	Number of Shares	Weighted Average Price
Outstanding, January 1, 2024	575,518	$	18.38
Granted	345,661	12.46
Vested	(203,931)	16.57
Forfeited	(1,065)	17.84
Outstanding, March 31, 2024	716,183	$	16.04

In the first three months of 2024, the Company granted 345,661 RSUs under the Plan at a weighted average grant date fair value of $12.46 per share. These units vest within a range of 2 to 3 years. A portion of these RSUs will vest subject to certain performance conditions in the applicable RSU agreement. There are also certain provisions in the compensation program which state that if a recipient of the RSUs reaches a certain age and years of service, the person has effectively earned a portion of the RSUs at that time. Compensation expense on these RSUs is expected to average approximately $1.4 million per year over a three-year period. In the first three months of 2023, the Company granted 269,070 RSUs under the Plan at a weighted average grant date fair value of $19.15 per share. Compensation expense on these RSUs is expected to average approximately $1.7 million per year over a three-year period.

For the first quarter of 2024 and 2023, the Company recognized share-based compensation expense on RSUs of $1.6 million and $1.6 million, respectively. Unrecognized compensation expense related to RSUs was approximately $7.4 million as of March 31, 2024, and that cost is expected to be recognized over a period of 1.66 years.

Stock Options

At March 31, 2024 and December 31, 2023, there were no stock options outstanding under the Plan. There were no stock option grants during the first three months of 2024 or 2023, respectively. There were no stock options exercised during the first three months of 2024 or 2023.

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Note 11 – Revenue Recognition

The Company’s primary source of revenue is interest income generated from loans and investment securities. Interest income is recognized according to the terms of the financial instrument agreement over the life of the loan or investment security unless it is determined that the counterparty is unable to continue making interest payments. Interest income also includes prepaid interest fees from commercial customers, which approximates the interest foregone on the balance of the loan prepaid.

The Company’s additional source of income, also referred to as noninterest income, is generated from deposit related fees, interchange fees, loan fees, merchant fees, loan sales, investment services and other miscellaneous income and is largely based on contracts with customers. In these cases, the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The Company considers a customer to be any party to which the Company will provide goods or services that are an output of the Company’s ordinary activities in exchange for consideration. There is little seasonality with regards to revenue from contracts with customers and all inter-company revenue is eliminated when the Company’s financial statements are consolidated.

Generally, the Company enters into contracts with customers that are short-term in nature where the performance obligations are fulfilled and payment is processed at the same time. Such examples include revenue related to merchant fees, interchange fees and investment services income. In addition, revenue generated from existing customer relationships such as deposit accounts are also considered short-term in nature, because the relationship may be terminated at any time and payment is processed at the time performance obligations are fulfilled. As a result, the Company does not have contract assets, contract liabilities or related receivable accounts for contracts with customers. In cases where collectability is a concern, the Company does not record revenue.

Generally, the pricing of transactions between the Company and each customer is either (i) established within a legally enforceable contract between the two parties, as is the case with loan sales, or (ii) disclosed to the customer at a specific point in time, as is the case when a deposit account is opened or before a new loan is underwritten. Fees are usually fixed at a specific amount or as a percentage of a transaction amount. No judgment or estimates by management are required to record revenue related to these transactions and pricing is clearly identified within these contracts.

The Company primarily operates in one geographic region, Northern and Central New Jersey and contiguous areas. Therefore, all significant operating decisions are based upon analysis of the Company as one operating segment or unit.

We disaggregate our revenue from contracts with customers by contract-type and timing of revenue recognition, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Noninterest income not generated from customers during the Company’s ordinary activities primarily relates to income from bank owned life insurance, gains/losses on the sale of investment securities, gains/losses on the sale of other real estate owned, gains/losses on the sale of property, plant and equipment and mortgage servicing rights.

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The following table sets forth the components of noninterest income for the three months ended March 31, 2024 and 2023:


	For the Three Months Ended March 31,
(in thousands)		2024		2023

Deposit-Related Fees and Charges
Debit card interchange income		$	672	$	1,610
Overdraft charges		900		840
ATM service charges		170		178
Demand deposit fees and charges		192		139
Savings service charges		25		22
Total deposit-related fees and charges		1,959		2,789
Commissions and fees
Loan fees		431		547
Wire transfer charges		440		432
Investment services income		289		429
Merchant fees		303		291
Commissions from sales of checks		90		88
Safe deposit income		105		103
Other income		26		31
Total commissions and fees		1,684		1,921
Gains on sales of loans held for sale		305		430
Other income
Gains on customer swap transactions		289		56
Title insurance income		—		19
Other income		100		133
Total other income		389		208
Revenue not from contracts with customers		757		917
Total Noninterest Income		$	5,094	$	6,265
Timing of Revenue Recognition:
Products and services transferred at a point in time		4,337		5,348

Revenue not from contracts with customers		757		917
Total Noninterest Income		$	5,094	$	6,265

Note 12 - Other Operating Expenses

The following table presents the major components of other operating expenses for the periods indicated:


	For the Three Months Ended March 31,
(in thousands)		2024		2023
Consulting and advisory board fees		$	825	$	1,001
ATM and debit card expense		718		724
Telecommunications expense		572		657
Marketing expense		484		511
Intangible asset amortization		436		516
Other real estate owned and other repossessed assets expense		22		—


Other operating expenses		3,590		4,103
Total other operating expenses		$	6,647	$	7,512

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Note 13 – Comprehensive Income (Loss)

The components of other comprehensive income (loss) are as follows:


	For the Three Months Ended
	March 31, 2024						March 31, 2023
(in thousands)	Before Tax Amount		Tax Benefit		Net of Tax Amount		Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
Unrealized (losses) gains on available for sale securities arising during the period	$	(1,348)	$	385	$	(963)	$	10,298	$	(2,716)	$	7,582



Amortization of gain on debt securities reclassified to held to maturity from available for sale	(145)		39		(106)		(172)		46		(126)


Other comprehensive (loss) income, net	$	(1,493)	$	424	$	(1,069)	$	10,126	$	(2,670)	$	7,456


	For the Three Months Ended March 31, 2024
(in thousands)	Unrealized Losses on Available for Sale Securities		Amortization of Gain on Debt Securities Reclassified to Held to Maturity		Total
Beginning balance	$	(65,570)	$	1,490	$	(64,080)

Net current period other comprehensive loss	(963)		(106)		(1,069)


Ending balance	$	(66,533)	$	1,384	$	(65,149)


	For the Three Months Ended March 31, 2023
(in thousands)	Unrealized Gains (Losses) on Available for Sale Securities		Amortization of Gain on Debt Securities Reclassified to Held to Maturity		Total
Beginning balance	$	(76,729)	$	1,968	$	(74,761)

Net current period other comprehensive gain	7,582		(126)		7,456


Ending balance	$	(69,147)	$	1,842	$	(67,305)

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Note 14 – Derivatives

Lakeland is a party to interest rate derivatives that are not designated as hedging instruments. Lakeland executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that Lakeland executes with a third-party financial institution, such that Lakeland minimizes its net risk exposure resulting from such transactions. Because the interest rate swaps do not meet hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss given default for all counterparties. Lakeland had no investment securities available for sale pledged for collateral on its interest rate swaps with financial institutions at March 31, 2024 and December 31, 2023.

The following table presents summary information regarding these derivatives for the periods presented (dollars in thousands):


March 31, 2024	Notional Amount		Average Maturity (Years)	Weighted Average Fixed Rate		Weighted Average Variable Rate	Fair Value
Classified in Other Assets:
Third Party interest rate swaps	$	1,002,032	6.4	3.90	%	1 Mo. SOFR + 1.98	$	95,366

Customer interest rate swaps	247,694		4.5	6.46	%	1 Mo. SOFR + 2.14	2,371

Classified in Other Liabilities:
Customer interest rate swaps	$	1,002,032	6.4	3.90	%	1 Mo. SOFR + 1.98	$	(95,370)

Third Party interest rate swaps	247,694		4.5	6.46	%	1 Mo. SOFR + 2.14	(2,371)


December 31, 2023	Notional Amount		Average Maturity (Years)	Weighted Average Fixed Rate		Weighted Average Variable Rate	Fair Value
Classified in Other Assets:
Third Party interest rate swaps	$	946,843	6.6	3.79	%	1 Mo. SOFR + 1.98	$	81,309

Customer interest rate swaps	266,607		5.2	6.26	%	1 Mo. SOFR + 2.07	6,257

Classified in Other Liabilities:
Customer interest rate swaps	$	946,843	6.6	3.79	%	1 Mo. SOFR + 1.98	(81,313)

Third party interest rate swaps	266,607		5.2	6.26	%	1 Mo. SOFR + 2.07	(6,257)

Note 15 – Goodwill and Other Intangible Assets

The Company had goodwill of $271.8 million at March 31, 2024 and December 31, 2023, respectively. The Company reviews its goodwill and intangible assets annually on November 30, or more frequently if conditions warrant, for impairment. In testing goodwill for impairment, the Company compares the estimated fair value of its reporting unit to its carrying amount, including goodwill. The Company has determined that it has one reporting unit. During the three months ended March 31, 2024, there were no triggering events that would more likely than not reduce the fair value of our one reporting unit below its carrying amount. There was no impairment of goodwill recognized during the three months ended March 31, 2024 and 2023.

The Company had core deposit intangibles of $6.6 million and $7.1 million at March 31, 2024 and December 31, 2023, respectively. Amortization of core deposit intangible totaled $436,000 and $516,000 for the first quarters of 2024 and 2023, respectively. The estimated future amortization expense for the remainder of 2024 and for each of the succeeding five years ended December 31 is as follows (in thousands):


For the Year Ended
2024	$	1,301
2025	1,465
2026	1,193
2027	955
2028	724
2029	492

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Note 16 – Fair Value Measurement and Fair Value of Financial Instruments

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for an asset or liability in an orderly transaction between market participants at the measurement date. U.S. GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest level priority to unobservable inputs (level 3 measurements). The following describes the three levels of fair value hierarchy:

Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities; includes U.S. Treasury Notes, and other U.S. Government Agency securities that actively trade in over-the-counter markets; equity securities and mutual funds that actively trade in over-the-counter markets.

Level 2 – quoted prices for similar assets or liabilities in active markets; or quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs other than quoted prices that are observable for the asset or liability including yield curves, volatilities and prepayment speeds.

Level 3 – unobservable inputs for the asset or liability that reflect the Company’s own assumptions about assumptions that market participants would use in the pricing of the asset or liability and that are consequently not based on market activity but upon particular valuation techniques.

The Company’s assets that are measured at fair value on a recurring basis are its investment securities available for sale, equity securities and its interest rate swaps. The Company obtains fair values on its securities using information from a third-party servicer. If quoted prices for securities are available in an active market, those securities are classified as Level 1 securities. The Company has U.S. Treasury Notes that are classified as Level 1 securities. Level 2 securities were primarily comprised of U.S. Agency bonds, mortgage-backed securities, obligations of state and political subdivisions and corporate securities. Fair values were estimated primarily by obtaining quoted prices for similar assets in active markets or through the use of pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, bids and offers. On a quarterly basis, the Company reviews the pricing information received from the Company’s third-party pricing service. This review may include a comparison to non-binding third-party quotes.

The fair values of derivatives are based on valuation models from a third party using current market terms (including interest rates and fees), the remaining terms of the agreements and the credit worthiness of the counter party as of the measurement date (Level 2).

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Recurring Fair Value Measurements

The following table sets forth the Company’s financial assets that were accounted for at fair value on a recurring basis as of the periods presented by level within the fair value hierarchy. During the three months ended March 31, 2024 and during 2023, the Company did not make any transfers between any levels within the fair value hierarchy. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement:


March 31, 2024	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
(in thousands)
Assets:
Investment securities, available for sale
U.S. Treasury and government agencies	$	135,076	$	169,813	$	—	$	304,889
Mortgage-backed securities, residential	—		278,079		—		278,079
Collateralized mortgage obligations, residential	—		132,206		—		132,206
Mortgage-backed securities, multifamily	—		667		—		667
Collateralized mortgage obligations, multifamily	—		41,773		—		41,773
Asset-backed securities	—		40,909		—		40,909
Obligations of states and political subdivisions	—		18,408		—		18,408
Corporate bonds	—		97,098		—		97,098
Total investment securities, available for sale	135,076		778,953		—		914,029
Equity securities	—		17,646		—		17,646
Derivative assets	—		97,737		—		97,737
Total Assets	$	135,076	$	894,336	$	—	$	1,029,412
Liabilities:
Derivative liabilities	$	—	$	97,741	$	—	$	97,741
Total Liabilities	$	—	$	97,741	$	—	$	97,741


December 31, 2023	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
(in thousands)
Assets:
Investment securities, available for sale
U.S. Treasury and government agencies	$	147,484	$	172,285	$	—	$	319,769
Mortgage-backed securities, residential	—		286,417		—		286,417
Collateralized mortgage obligations, residential	—		137,070		—		137,070
Mortgage-backed securities, multifamily	—		676		—		676
Collateralized mortgage obligations, multifamily	—		42,496		—		42,496
Asset-backed securities	—		43,693		—		43,693
Obligations of states and political subdivisions	—		19,128		—		19,128
Corporate bonds	—		97,033		—		97,033
Total investment securities, available for sale	147,484		798,798		—		946,282
Equity securities	—		17,697		—		17,697
Derivative assets	—		87,566		—		87,566
Total Assets	$	147,484	$	904,061	$	—	$	1,051,545
Liabilities:
Derivative liabilities	$	—	$	87,570	$	—	$	87,570
Total Liabilities	$	—	$	87,570	$	—	$	87,570

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Non-Recurring Fair Value Measurements

The Company has a held for sale loan portfolio that consists of residential mortgages that are being sold in the secondary market. The Company records these mortgages at the lower of cost or fair value. Fair value is generally determined by the value of purchase commitments.

Loans that do not have similar risk characteristics to the segments reported must be individually evaluated to determine an appropriate allowance. Management has identified criteria and procedures for identifying whether a loan should be individually evaluated for calculation of expected credit losses. If a loan is identified as meeting any of the criteria, it is deemed to have risk characteristics that are unique and will be separated from a pool. Those loans that are considered to have unique risk characteristics are then subjected to an individual allowance evaluation using either the fair value of the collateral, less estimated costs to sell, if collateral-dependent or the discounted cash flow method.

Other real estate owned (OREO) and other repossessed assets, representing property acquired through foreclosure or deed in lieu of foreclosure, are carried at fair value less estimated disposal costs of the acquired property. Fair value on other real estate owned is based on the appraised value of the collateral using discount rates or capitalization rates similar to those used in impaired loan valuation. The fair value of other repossessed assets is estimated by inquiry through a recognized valuation resource. At March 31, 2024 and December 31, 2023, the Company had no OREO or other repossessed assets.

Changes in the assumptions or methodologies used to estimate fair values may materially affect the estimated amounts. Changes in economic conditions, locally or nationally, could impact the value of the estimated amounts of individually evaluated loans, OREO and other repossessed assets. The Company had no financial assets that were measured on a nonrecurring basis at March 31, 2024 or December 31, 2023.

Fair Value of Certain Financial Instruments

Estimated fair values have been determined by the Company using the best available data and an estimation methodology suitable for each category of financial instruments. Management is concerned that there may not be reasonable comparability between institutions due to the wide range of permitted assumptions and methodologies in the absence of active markets. This lack of uniformity gives rise to a high degree of subjectivity in estimating financial instrument fair values.

The estimation methodologies used, the estimated fair values and recorded book balances at March 31, 2024 and December 31, 2023, are outlined below.

This summary, as well as the table below, excludes financial assets and liabilities for which carrying value approximates fair value. For financial assets, these include cash and cash equivalents. For financial liabilities, these include noninterest-bearing demand deposits, savings and interest-bearing transaction accounts and federal funds purchased and securities sold under agreements to repurchase. The estimated fair value of demand, savings and interest-bearing transaction accounts is the amount payable on demand at the reporting date. Carrying value is used because there is no stated maturity on these accounts, and the customer has the ability to withdraw the funds immediately. Also excluded from this summary and the following table are those financial instruments recorded at fair value on a recurring basis, as previously described.

The fair value of investment securities held to maturity is measured using information from the same third-party servicer used for investment securities available for sale using the same methodologies discussed above.

FHLB stock is an equity interest that can be sold to the issuing FHLB, to other FHLBs, or to other member banks at its par value. Because ownership of these securities is restricted, they do not have a readily determinable fair value. As such, the Company’s FHLB stock is recorded at cost or par value and is evaluated for impairment each reporting period by considering the ultimate recoverability of the investment rather than temporary declines in value. The Company’s evaluation primarily includes an evaluation of liquidity, capitalization, operating performance, commitments, and regulatory or legislative events.

The net loan portfolio has been valued using an exit price approach, which incorporates a buildup discount rate calculation that uses a swap rate adjusted for credit risk, servicing costs, a liquidity premium and a prepayment premium.

For fixed maturity certificates of deposit, fair value is estimated based on the present value of discounted cash flows using the rates currently offered for deposits of similar remaining maturities. The carrying amount of accrued interest payable approximates its fair value.

The fair value of long-term debt is based upon the discounted value of contractual cash flows. The Company estimates the discount rate using the rates currently offered for similar borrowing arrangements. The fair value of subordinated debentures is based on bid/ask prices from brokers for similar types of instruments.

The fair values of commitments to extend credit and standby letters of credit are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of guarantees and letters of credit is based on fees

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currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. The fair value of commitments to extend credit and standby letters of credit are deemed immaterial.

The following table presents the carrying values, fair values and placement in the fair value hierarchy of the Company’s financial instruments not carried at fair value as of March 31, 2024 and December 31, 2023:


March 31, 2024	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in thousands)
Financial Assets:
Investment securities, held to maturity
U.S. government agencies	$	10,270	$	9,777	$	—	$	9,777	$	—
Mortgage-backed securities, residential	326,731		268,847		—		268,847		—
Collateralized mortgage obligations, residential	12,079		9,201		—		9,201		—
Mortgage-backed securities, multifamily	4,126		3,449		—		3,449		—

Obligations of states and political subdivisions	471,022		388,527		—		388,527		—
Corporate bonds	2,879		2,056		—		2,056		—
Total investment securities, held to maturity	$	827,107	$	681,857	$	—	$	681,857	$	—
Federal Home Loan Bank and other membership bank stocks	52,205		52,205		—		52,205		—
Loans, net of allowance for loan losses	8,243,601		7,730,750		—		—		7,730,750
Financial Liabilities:
Certificates of deposit	2,030,771		2,015,847		—		2,015,847		—
Long-term FHLB advances	325,000		329,757		—		329,757		—
Subordinated debentures	194,814		151,092		—		—		151,092

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December 31, 2023	Carrying Value		Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(in thousands)
Financial Assets:
Investment securities, held to maturity
U.S. government agencies	$	10,406	$	9,914	$	—	$	9,914	$	—
Mortgage-backed securities, residential	332,509		280,426		—		280,426		—
Collateralized mortgage obligations, residential	12,243		9,447		—		9,447		—
Mortgage-backed securities, multifamily	4,145		3,494		—		3,494		—

Obligations of states and political subdivisions	474,195		396,859		—		396,859		—
Corporate bonds	2,879		2,423		—		2,423		—
Total investment securities, held to maturity	836,377		702,563		—		702,563		—
Federal Home Loan Bank and other membership bank stocks	52,517		52,517		—		52,517		—
Loans, net of allowance for loan losses	8,266,698		7,714,736		—		—		7,714,736
Financial Liabilities:
Certificates of deposit	1,967,448		1,953,446		—		1,953,446		—
Long-term FHLB advances	325,000		333,878		—		333,878		—
Subordinated debentures	194,705		149,063		—		—		149,063

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Note Regarding 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 with respect to credit quality (including delinquency trends and the allowance for credit losses), corporate objectives and other financial and business matters. 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 put undue reliance on forward-looking statements.

In addition to the risk factors disclosed elsewhere in this document and in the Company's most recently filed Annual Report on Form 10-K, the following factors, among others, could cause the Company’s actual results to differ materially and adversely from such forward-looking statements: changes in levels of inflation and market interest rates, which may affect demand for our products and the value of our financial instruments; pricing pressures on loan and deposit products; changes in the financial services industry and the U.S. and global capital markets; 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 affecting the financial services industry; changes in federal and state tax laws; government intervention in the U.S. financial system; credit risks of Lakeland’s lending activities; the effects of the recent turmoil in the banking industry (including the failures of three financial institutions); successful implementation, deployment and upgrades of new and existing technology, systems, services and products; customers’ acceptance of Lakeland’s products and services; and expenses related to our proposed merger with Provident Financial Services, Inc. ("Provident"), unexpected delays related to the merger, inability to satisfy closing conditions required to complete the merger, and failure to realize anticipated efficiencies and synergies from the merger.

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The above-listed risk factors are not exhaustive, particularly as to possible future events, and new risk factors may emerge from time to time. Certain events may occur that could cause the Company’s actual results to be materially different than those described in the Company’s periodic filings with the Securities and Exchange Commission. 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.

Critical Accounting Policies, Judgments and Estimates

The accounting and reporting policies of the Company and its subsidiaries conform to U.S. generally accepted accounting principles and predominant practices within the banking industry. The consolidated financial statements include the accounts of the Company, Lakeland and its subsidiaries, including Lakeland NJ Investment Corp., Lakeland Investment Corp., Lakeland Equity, Inc., Lakeland Preferred Equity, Inc., 1st Constitution Investment Company of New Jersey, Inc. and 1st Constitution Real Estate Corporation. All intercompany balances and transactions have been eliminated.

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. There have been no material changes in the Company’s critical accounting policies, judgments and estimates, including assumptions or estimation techniques utilized, as compared to those disclosed in the Company’s most recent Annual Report on Form 10-K.

Executive Summary

During the year ended December 31, 2023, the banking industry experienced volatility with high-profile bank failures and industry-wide concerns related to liquidity, deposit outflows, unrealized securities losses and eroding confidence in the banking system. Despite industry concerns, the Company's liquidity position remains strong. The Company took a number of preemptive actions, which included pro-active outreach to clients and actions to maximize its funding sources in response to these recent developments, including increasing brokered time deposits and increasing collateralized lines of credit with the FHLB and the Federal Reserve Bank of New York. We also increased our usage of the Insured Cash Sweep ("ICS") product, as a method to increase the level of our customers' deposit insurance. As of March 31, 2024, the Company had $2.3 billion in deposits that were both uninsured and uncollateralized and we have cash and additional borrowing capacity of $2.7 billion. Furthermore, the Company's capital ratios remain above levels considered by the regulators to be "well-capitalized" as of March 31, 2024. For more information, see "Liquidity" below.

On September 27, 2022, the Company and Provident announced that they had entered into a definitive merger agreement pursuant to which the companies will combine in an all-stock merger. The merger proposes to combine two complementary banking platforms into a company that will have more than $25 billion in assets, $19 billion in total loans and $18 billion in total deposits. On February 1, 2023, the shareholders of both the Company and Provident approved the transaction. Provident has received all required regulatory approvals subject to certain conditions. The merger is expected to be consummated during the second quarter of 2024. For more information please see Note 2 in Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Financial Overview

The Company reported net income of $19.8 million and earnings per diluted share ("EPS") of $0.30 for the three months ended March 31, 2024, compared to net income of $19.8 million and EPS of $0.30 for the three months ended March 31, 2023. For the first quarter of 2024, annualized return on average assets was 0.73%, annualized return on average common equity was 6.79% and annualized return on average tangible common equity (a Non-GAAP financial measure) was 8.91%, compared to 0.75%, 7.17%, and 9.57%, respectively, for the first quarter of 2023.

Net interest margin for the first quarter of 2024 of 2.46% decreased 61 basis points compared to the first quarter of 2023 and decreased six basis points compared to the fourth quarter of 2023.

Total loans, net of deferred fees, declined $23.4 million during the first three months of 2024 to $8.32 billion. Total deposits decreased $80.8 million during the first three months of 2024 to $8.50 billion.

Comparison of Operating Results for the Three Months Ended March 31, 2024 and 2023

Net Income

Net income was $19.8 million, or $0.30 per diluted share, for the first three months of 2024 similar to the first three months of 2023.

Net interest income on a tax equivalent basis for the first three months of 2024 was $62.9 million, compared to $76.4 million for the first three months of 2023. The decrease in net interest income was due primarily to an increase in the cost of

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interest-bearing liabilities partially offset by an increase in the yield on interest earning assets. The net interest margin of 2.46% in the first three months of 2024 decreased from 3.07% for the same period in 2023, primarily due to the increase in the cost of interest-bearing deposits partially offset by an increase in the yield in interest-earning assets. The components of net interest income are discussed in greater detail below.

The following table reflects the components of the Company’s net interest income, setting forth for the periods presented, (1) average assets, liabilities and stockholders’ equity, (2) interest income earned on interest-earning assets and interest expense paid on interest-bearing liabilities, (3) average yields earned on interest-earning assets and average rates paid on interest-bearing liabilities, (4) the Company’s net interest spread (i.e., the average yield on interest-earning assets less the average cost of interest-bearing liabilities) and (5) the Company’s net interest margin. Rates for the three months ended March 31, 2024 and March 31, 2023 are computed on a tax equivalent basis using a tax rate of 21%.


	For the Three Months Ended March 31, 2024						For the Three Months Ended March 31, 2023
(dollars in thousands)	Average Balance		Interest Income/ Expense		Average Rates Earned/ Paid		Average Balance		Interest Income/ Expense		Average Rates Earned/ Paid

ASSETS
Interest-earning assets:
Loans (1)	$	8,304,236	$	114,680	5.48	%	$	7,900,426	$	100,481	5.10	%
Taxable investment securities and other	1,623,585		11,631		2.87	%	1,771,565		11,554		2.61	%
Tax-exempt securities	292,765		1,833		2.50	%	345,511		2,078		2.41	%
Federal funds sold (2)	78,304		1,102		5.66	%	73,839		728		4.00	%
Total interest-earning assets	10,298,890		129,246		4.98	%	10,091,341		114,841		4.56	%
Noninterest-earning assets:
Allowance for credit losses	(78,052)						(71,292)
Other assets	667,598						678,758
TOTAL ASSETS	$	10,888,436					$	10,698,807

LIABILITIES AND STOCKHOLDERS’ EQUITY
Interest-bearing liabilities:
Savings accounts	$	669,336	$	319	0.19	%	$	928,796	$	652	0.28	%
Interest-bearing transaction accounts	4,210,331		31,377		3.00	%	4,224,024		19,259		1.85	%
Time deposits	2,029,735		23,067		4.57	%	1,385,661		9,247		2.71	%
Federal funds purchased	387,290		5,385		5.50	%	589,056		7,101		4.82	%
Securities sold under agreements to repurchase	28,257		175		2.45	%	28,555		121		1.70	%
Long-term borrowings	519,748		5,980		4.55	%	219,308		2,100		3.83	%
Total interest-bearing liabilities	7,844,697		66,303		3.39	%	7,375,400		38,480		2.11	%
Noninterest-bearing liabilities:
Demand deposits	1,710,604						2,040,070
Other liabilities	160,811						162,981
Stockholders' equity	1,172,324						1,120,356
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	10,888,436					$	10,698,807
Net interest income/spread			62,943		1.60	%			76,361		2.45	%
Tax equivalent basis adjustment			385						436
NET INTEREST INCOME			$	62,558					$	75,925
Net interest margin (3)					2.46	%					3.07	%

(1)Includes non-accrual loans, the effect of which is to reduce the yield earned on loans, and deferred loan fees.

(2)Includes interest-bearing cash accounts.

(3)Annualized net interest income on a tax equivalent basis divided by interest-earning assets.

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On a tax equivalent basis, interest income increased $14.4 million, or 13%, from $114.8 million in the three months ended March 31, 2023, to $129.2 million in the same period of 2024. The increase in interest income was primarily due to an increase in the yields of interest-earning assets resulting from the increased interest rate environment. Average loans increased $403.8 million, or 5%, compared to the first three months of 2023 which also contributed to the increase in interest income. The yield on average loans of 5.48% in the three months ended March 31, 2024, was 38 basis points higher than the same period in 2023 due to the increased interest rate environment. Average taxable and tax-exempt securities decreased $148.0 million and $52.7 million, respectively, for the first three months of 2024 compared to the same period in 2023 due to maturities of securities. The yield on average taxable and tax-exempt investment securities increased 26 and 9 basis points, respectively. Average federal funds sold increased $4.5 million in the first three months of 2024 compared to the same period in 2023 and the yield on federal funds sold increased 166 basis points.

Total interest expense of $66.3 million in the first three months of 2024 was $27.8 million greater than the interest expense reported for the same period in 2023. Total average interest-bearing liabilities increased $469.3 million, while the cost of average interest-bearing liabilities increased from 2.11% in the three months ended March 31, 2023 to 3.39% in the first three months of 2024. Rates paid increased in all categories of interest-bearing deposits due to the increased interest rate environment. The cost of borrowings and time deposits increased by 42 basis points and 186 basis points, respectively. Additionally, higher costing average borrowings and time deposit balances increased $98.4 million and $644.1 million, respectively. Average time deposits as a percent of interest-bearing liabilities increased from 19% in the three months ended March 31, 2023 to 26% in the three months ended March 31, 2024. Time deposits typically have a higher cost of funds than savings and interest-bearing transaction accounts.

Provision for Credit Losses

In the three months ended March 31, 2024, the Company recorded a $2.7 million benefit for credit losses compared to a $7.9 million provision for the same period last year. As of March 31, 2024, the provision was comprised of a provision for credit losses on loans of $239,000, a benefit for credit losses on securities of $2.9 million and a benefit for off-balance-sheet exposures of $72,000. The provision for credit losses on loans in the three months ended March 31, 2023 was comprised of a provision for credit losses on loans of $1.2 million, a provision for credit losses on securities of $6.5 million and a provision for off-balance-sheet exposures of $140,000. The benefit for credit losses on securities during the first three months of 2024 resulted primarily from a $2.9 million recovery on Signature Bank subordinated debt previously charged off, while the provision for securities losses during the first three months of 2023 was primarily due to a $6.6 million provision and subsequent charge-off of Signature Bank subordinated debt which failed in March 2023. Charge-offs totaled $617,000 and recoveries totaled $2.9 million (including the recovery of the Signature Bank subordinated debt) in the first three months of 2024 compared to $6.8 million in charge-offs (including the charge-off of the Signature Bank subordinated debt) and $65,000 in recoveries in the first three months of 2023. For more information regarding the determination of the provision, see “Risk Elements” below.

Noninterest Income

For the three months ended March 31, 2024, noninterest income totaled $5.1 million, a decrease of $1.2 million as compared to the three months ended March 31, 2023. Service charges on deposit accounts declined $830,000 from the first quarter of 2023 to the same period in 2024 resulting from a decline in interchange income due to the impact of the Durbin Amendment which became effective for Lakeland in the third quarter of 2023. One of the provisions of the Durbin Amendment is reduced interchange income for banks over $10 billion in assets. Commissions and fees decreased $235,000 driven primarily by decreases in loan fee income and investment services income. Losses on equity securities totaled $129,000 in the first quarter of 2024 compared to gains of $148,000 in the first quarter of 2023. Gains on sales of loans decreased $125,000 compared to the first quarter of 2023, while swap income increased $233,000. Additionally, income on bank owned life insurance increased $101,000 from the first quarter of 2023 to the same period in 2024 due primarily to a claim received in the first quarter of 2024.

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Noninterest Expense

Noninterest expense for the three months ended March 31, 2024 of $44.6 million decreased $4.0 million compared to the three months ended March 31, 2023 due primarily to compensation and employee benefits which decreased $3.1 million primarily as a result of a decline in headcount related to the anticipated merger with Provident Financial Services, Inc. Merger-related expenses declined from $295,000 in the first quarter of 2023 to $68,000 for the first quarter of 2024 due to the timing of expenses incurred. Other operating expenses in the first quarter of 2024 decreased $865,000 compared to the same period in 2023 due primarily to decreased consulting fees, telecommunications expense, appraisal fees and other expenses. FDIC insurance expense increased $430,000 due to an increase in the assessment rate starting in second quarter of 2023 related to Lakeland's asset size exceeding $10 billion. The Company’s efficiency ratio, a non-GAAP financial measure, was 64.88% in the first three months of 2024, compared to 57.84% for the same period in 2023. The Company uses this ratio because it believes that the ratio provides a good comparison of period-to-period performance and because the ratio is widely accepted in the banking industry. The efficiency ratio increased from first quarter 2023 to first quarter 2024 due to decreased revenue resulting from increased deposit and borrowing costs.

The following table shows the calculation of the efficiency ratio, a non-GAAP measure, for the periods presented:


	Three Months Ended March 31,
(dollars in thousands)	2024			2023

Total noninterest expense	$	44,649		$	48,605
Less:
Amortization of core deposit intangibles	436			516
Merger-related expenses	68			295


Noninterest expense, as adjusted	$	44,145		$	47,794

Net interest income	$	62,558		$	75,925
Noninterest income	5,094			6,265
Total revenue	67,652			82,190
Tax-equivalent adjustment on municipal securities	385			436


Total revenue, as adjusted	$	68,037		$	82,626
Efficiency ratio	64.88		%	57.84		%

Income Tax Expense

The effective tax rate in the first three months of 2024 was 23.0% compared to 22.9% during the same period last year.

Financial Condition

The Company’s total assets decreased $173.7 million from December 31, 2023, to $10.96 billion at March 31, 2024. Total loans, net of deferred fees, were $8.32 billion, a decrease of $23.4 million from $8.34 billion at December 31, 2023. Total deposits were $8.50 billion, a decrease of $80.8 million from December 31, 2023, while total borrowings decreased $111.1 million to $1.12 billion at March 31, 2024.

Loans

Lakeland primarily serves New Jersey, the Hudson Valley region in New York and the surrounding areas. Its equipment finance division serves a broader market with a primary focus on the Northeast United States. Total loans, net of deferred fees, totaled $8.32 billion at March 31, 2024, a decrease of $23.4 million as compared to December 31, 2023. Loan balances increased from December 31, 2023 in residential mortgages by $11.8 million, or 1% and construction loans by $14.5 million or 5%, while commercial real estate loans declined by $48.9 million or 1%. For more information on the loan portfolio, see Note 5 in Notes to the Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

Risk Elements

Commercial loans are placed on a non-accrual status with all accrued interest and unpaid interest reversed if (a) because of the deterioration in the financial position of the borrower, they are maintained on a cash basis (which means payments are applied when and as received rather than on a regularly scheduled basis), (b) payment of all contractual principal and interest is not expected, or (c) principal and interest have been in default for a period of 90 days or more unless the obligation is both well-secured and in process of collection. Residential mortgage loans and closed-end consumer loans are placed on non-accrual status at the time principal and interest have been in default for a period of 90 days or more, except

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where there exists sufficient collateral to cover the defaulted principal and interest payments, and the loans are well-secured and in the process of collection. Open-end consumer loans secured by real estate are generally placed on non-accrual status and reviewed for charge-off when principal and interest payments are four months in arrears unless the obligations are well-secured and in the process of collection. Interest thereafter on such charged-off consumer loans is taken into income when received only after full recovery of principal. As a general rule, a non-accrual asset may be restored to accrual status when none of its principal or interest is due and unpaid and satisfactory payments have been received for a sustained period (usually six months), or when it otherwise becomes well-secured and in the process of collection.

Non-performing assets, including non-accrual PCD loans, decreased $11.1 million, or 43%, from $26.0 million at December 31, 2023 to $14.9 million at March 31, 2024. Construction loans decreased $12.7 million due to the payoff of a construction loan that was in non-accrual status as of December 31, 2023. Non-accrual loans at March 31, 2024 included two loan relationships with a balance of $1 million or greater, totaling $7.5 million and one loan relationship between $500,000 and $1.0 million, totaling $517,000. At March 31, 2024 and December 31, 2023 there were no loans that were past due more than 89 days and still accruing.

During the three months ended March 31, 2023, the Company adopted Accounting Standards Update 2022-02, "Troubled Debt Restructurings and Vintage Disclosures" ("ASU 2022-02"). Among other things, ASU 2022-02 eliminates the recognition and measurement guidance of TDRs so that creditors will apply the same guidance to all modifications when determining whether a modification results in a new receivable or continuation of an existing receivable. ASU 2022-02 requires vintage disclosures of gross charge-offs as shown in the vintage disclosure contained in Note 5 in the Notes to the Financial Statements contained in this Quarterly Report on Form 10-Q. It also replaces the disclosure of TDRs with the disclosure of modifications of receivables to debtors experiencing financial difficulty.

During the three months ended March 31, 2024 and March 31, 2023, there were no loan modifications that met the definition of a modification to a debtor experiencing financial difficulty. As of December 31, 2023, there were no loan modifications that met the definition of a modification to a debtor experiencing financial difficulty.

At March 31, 2024 and December 31, 2023, the Company had $97.7 million and $64.8 million, respectively, of loans that were rated substandard that were not classified as non-performing. There were no loans at March 31, 2024, other than those designated non-performing or substandard, where the Company was aware of any credit conditions of any borrowers or obligors that would indicate a strong possibility of the borrowers not complying with present terms and conditions of repayment and which may result in such loans being included as non-accrual, past due or renegotiated at a future date.

Allowance for Credit Losses on Loans

The Company accounts for the allowance for credit losses using ASU 2016-13 - Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which requires the measurement of expected credit losses for financial assets measured at amortized cost, including loans and certain off-balance-sheet credit exposures. Under the standard, the Company's methodology for determining the allowance for credit losses on loans is based upon key assumptions, including the lookback periods, historic net charge-off factors, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.

The overall balance of the allowance for credit losses on loans of $76.8 million at March 31, 2024 decreased $340,000 from December 31, 2023.

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	As of and for the Three Months Ended March 31,						As of and for the Year Ended
(dollars in thousands)	2024			2023			December 31, 2023

Allowance for credit losses on loans to total loans outstanding	0.92		%	0.90		%	0.92		%
Allowance for credit losses on loans	$	76,823		$	71,403		$	77,163
Total loans outstanding	8,320,424			7,952,553			8,343,861

Non-accrual loans to total loans outstanding	0.18		%	0.21		%	0.31		%
Non-accrual loans	$	14,853		$	16,878		$	25,963
Total loans outstanding	8,320,424			7,952,553			8,343,861

Allowance for credit losses on loans to non-accrual loans	517.22		%	423.05		%	297.20		%
Allowance for credit losses on loans	$	76,823		$	71,403		$	77,163
Non-accrual loans	14,853			16,878			25,963

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	As of and for the Three Months Ended March 31,						As of and for the Year Ended
(dollars in thousands)	2024			2023			December 31, 2023
Net charge-offs (recoveries) during the period to average loans outstanding:
Non-owner occupied commercial	—		%	—		%	—		%
Net charge-offs during the period	$	—		$	—		$	—
Average amount outstanding	2,970,717			2,922,664			2,965,982

Owner occupied commercial	—		%	—		%	—		%
Net recoveries during the period	$	—		$	—		$	(6)
Average amount outstanding	1,278,246			1,234,056			1,232,996

Multifamily	—		%	—		%	—		%
Net charge-offs during the period	$	—		$	—		$	—
Average amount outstanding	1,397,120			1,278,138			1,320,378

Non owner occupied residential	—		%	—		%	—		%
Net recoveries during the period	$	—		$	—		$	—
Average amount outstanding	211,153			214,975			210,654

Commercial, industrial and other	(0.01)		%	(0.02)		%	(0.03)		%
Net recoveries during the period	$	(20)		$	(35)		$	(205)
Average amount outstanding	615,954			562,161			588,466

Construction	0.72		%	—		%	—		%
Net charge-offs during the period	$	564		$	—		$	13
Average amount outstanding	314,282			391,806			364,483

Equipment finance	—		%	0.12		%	0.16		%
Net charge-offs during the period	$	—		$	46		$	277
Average amount outstanding	177,150			155,029			168,366

Residential mortgage	—		%	—		%	0.01		%
Net charge-offs during the period	$	—		$	—		$	128
Average amount outstanding	994,790			811,347			903,480

Consumer	0.04		%	0.08		%	0.03		%
Net charge-offs during the period	$	35		$	63		$	102
Average amount outstanding	343,172			329,642			338,577

Total loans	0.03		%	—		%	—		%
Net charge-offs during the period	$	579		$	74		$	309
Average amount outstanding	8,302,584			7,899,818			8,093,382

Non-accrual loans of $14.9 million at March 31, 2024 decreased $11.1 million from December 31, 2023. The allowance for credit losses as a percent of total loans was 0.92% at March 31, 2024 compared to 0.92% at December 31, 2023. Net charge-offs as a percentage of average loans outstanding was 0.03% and 0.00% for the three months ended March 31, 2024 and 2023, respectively.

Management believes, based on appraisals and estimated selling costs, that the majority of the Company's non-performing loans are adequately secured and that reserves on its non-performing loans are adequate. Based upon the process employed and giving recognition to all accompanying factors related to the loan portfolio, management considers the allowance for credit losses to be adequate at March 31, 2024.

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Investment Securities

Investment securities decreased $41.5 million in the three months ended March 31, 2024 to $1.74 billion at March 31, 2024 compared to $1.78 billion at December 31, 2023. For detailed information on the composition and maturity distribution of the Company’s investment securities portfolio, see Note 4 in Notes to the Consolidated Financial Statements contained in this Quarterly Report on Form 10-Q.

Deposits

Total deposits decreased from $8.58 billion at December 31, 2023 to $8.50 billion at March 31, 2024, a decrease of $80.8 million. Savings and interest-bearing transaction accounts decreased $41.5 million, or 1%, while total time deposits increased $63.3 million, or 3%, as depositors moved funds to higher yielding non-core products. Noninterest-bearing deposits also decreased $102.6 million during the three months ended March 31, 2024 to $1.7 billion.

Liquidity

“Liquidity” measures whether an entity has sufficient cash flow to meet its financial obligations and commitments on a timely basis. The Company is liquid when its subsidiary bank has the cash available to meet the borrowing and cash withdrawal requirements of customers and the Company can pay for current and planned expenditures and satisfy its debt obligations.

Lakeland funds loan demand and operating expenses from several sources:

•Net income. Cash provided by operating activities was $24.6 million for the first three months of 2024 compared to $36.8 million for the same period in 2023.

•Deposits. Lakeland can offer new products or change its rate structure in order to increase deposits.

•Sales of investment securities. At March 31, 2024, the Company had $914.0 million in securities designated “available for sale.” Of these securities, $849.0 million were pledged to secure public deposits, and for other purposes required by applicable laws and regulations.

•Principal repayments on loans.

•Credit lines. As a member of the FHLB, Lakeland has the ability to borrow overnight based on the fair value of collateral pledged. Lakeland had $575.0 million of overnight borrowings from the FHLB on March 31, 2024. Lakeland had remaining availability of $1.0 billion for borrowing at the FHLB on March 31, 2024. Lakeland also has overnight federal funds lines available for it to borrow up to $250.0 million, none of which was borrowed overnight on March 31, 2024. Lakeland may also borrow from the discount window of the Federal Reserve Bank of New York. As of March 31, 2024, Lakeland had availability to borrow up to $1.1 billion from the Federal Reserve, although it has no present intention to do so. Lakeland had no borrowings with the Federal Reserve Bank of New York as of March 31, 2024.

•Other borrowings. Lakeland can also generate funds by utilizing long-term debt or securities sold under agreements to repurchase that would be collateralized by security or mortgage collateral. At times, the fair value of securities collateralizing our securities sold under agreements to repurchase may decline due to changes in interest rates and may necessitate our lenders to issue a “margin call” which requires Lakeland to pledge additional collateral to meet that margin call.

Management and the Board monitor the Company’s liquidity through the Asset/Liability Committee, which monitors the Company’s compliance with certain regulatory ratios and other various liquidity guidelines. Management is closely monitoring changes in liquidity needs. The Company has increased collateral pledged and expanded access to additional borrowings should it be necessary in order to meet liquidity needs. While we are unable to predict actual fluctuations in deposit or cash balances, management continues to monitor liquidity and believes that its current level of liquidity is sufficient to meet its current and future operational needs.

The cash flow statements for the periods presented provide an indication of the Company’s sources and uses of cash, as well as an indication of the ability of the Company to maintain an adequate level of liquidity. A discussion of the cash flow statement for the three months ended March 31, 2024 follows.

Cash and cash equivalents totaling $207.6 million on March 31, 2024 decreased $113.0 million from December 31, 2023. Operating activities provided $24.6 million in net cash. Investing activities provided $64.6 million in net cash, primarily due to maturities and payoffs of investment securities of $41.9 million and net loan payments of $23.8 million. Financing activities used $202.3 million in net cash primarily due to declines in deposits and short term borrowings of $80.8 million and $111.2 million, respectively. The Company anticipates that it will have sufficient funds available to meet its current loan commitments and deposit maturities.

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The following table sets forth contractual obligations and other commitments representing required and potential cash outflows as of March 31, 2024. Interest on subordinated debentures and long-term borrowed funds is calculated based on current contractual interest rates.


(in thousands)	Total		Within One Year		After One But Within Three Years		After Three But Within Five Years		After Five Years

Minimum annual rentals on noncancellable operating leases	$	18,278	$	4,030	$	5,771	$	3,096	$	5,381
Benefit plan commitments	3,781		373		745		745		1,918
Remaining contractual maturities of time deposits	2,030,771		1,925,493		102,565		2,713		—
Subordinated debentures	194,814		—		—		—		194,814
Loan commitments	1,517,434		991,997		184,741		83,115		257,581
Long-term FHLB advances	325,000		25,000		—		300,000		—
Interest on other borrowings (1)	128,581		23,546		46,750		23,948		34,337
Standby letters of credit	30,859		29,101		403		1,355		—
Total	$	4,249,518	$	2,999,540	$	340,975	$	414,972	$	494,031

(1) Includes interest on other borrowings and subordinated debentures at a weighted rate of 4.53%.

Capital Resources

Total stockholders’ equity increased to $1.18 billion on March 31, 2024 from $1.17 billion on December 31, 2023, an increase of $10.1 million. Book value per common share increased to $18.10 on March 31, 2024 from $17.98 on December 31, 2023. Tangible book value per share increased from $13.69 per share on December 31, 2023 to $13.83 per share on March 31, 2024. Please see “Non-GAAP Financial Measures” below. The increase in stockholders’ equity from December 31, 2023 to March 31, 2024 was due in part to $19.8 million of net income partially offset by other comprehensive loss of $1.1 million and by the payment of cash dividends on common stock of $9.5 million.

The Company and Lakeland are subject to various regulatory capital requirements that are monitored by federal banking agencies. Failure to meet minimum capital requirements can lead to certain supervisory actions by regulators; any supervisory action could have a direct material adverse effect on the Company or Lakeland or their financial statements. The Company and Lakeland Bank include in their Common Tier 1 Capital ("CET1") common stock and related surplus, and retained earnings net of treasury stock. In connection with the adoption of the Basel III Capital Rules, we elected to opt out of the requirement to include components of accumulated other comprehensive income/loss in CET1. As of March 31, 2024, the Company and Lakeland met all capital adequacy requirements to which they are subject.

As of March 31, 2024, the Company’s capital levels remained characterized as “well-capitalized.”

The capital ratios for the Company and Lakeland Bank for the periods presented are as follows:


	Tier 1 Capital to Total Average Assets Ratio				Common Equity Tier 1 to Risk-Weighted Assets Ratio				Tier 1 Capital to Risk- Weighted Assets Ratio				Total Capital to Risk- Weighted Assets Ratio
	March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023		March 31, 2024		December 31, 2023
Lakeland Bancorp	9.46	%	9.27	%	11.20	%	11.00	%	11.72	%	11.51	%	14.33	%	14.11	%
Lakeland Bank	10.29	%	10.09	%	12.74	%	12.53	%	12.74	%	12.53	%	13.64	%	13.43	%
Required capital ratios including conservation buffer	4.00	%	4.00	%	7.00	%	7.00	%	8.50	%	8.50	%	10.50	%	10.50	%
“Well capitalized” institution under FDIC Regulations	5.00	%	5.00%		6.50	%	6.50%		8.00	%	8.00%		10.00	%	10.00%

Non-GAAP Financial Measures

Reported amounts are presented in accordance with U.S. GAAP. The Company’s management uses certain supplemental non-GAAP information in its analysis of the Company’s financial results. Specifically, the Company 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, such information is useful to investors.

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The Company also 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 Company’s management believes that providing this information to analysts and investors allows them to better understand and evaluate the Company’s core financial results for the periods in question.

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


(dollars in thousands, except share and per share amounts)	March 31, 2024			December 31, 2023
Calculation of Tangible Book Value per Common Share
Total common stockholders’ equity at end of period - GAAP	$	1,179,430		$	1,169,369
Less:
Goodwill	271,829			271,829
Other identifiable intangible assets, net	6,623			7,058
Total tangible common stockholders’ equity at end of period - Non-GAAP	$	900,978		$	890,482
Shares outstanding at end of period	65,154			65,030
Book value per share - GAAP	$	18.10		$	17.98
Tangible book value per share - Non-GAAP	$	13.83		$	13.69
Calculation of Tangible Common Equity to Tangible Assets
Total tangible common stockholders’ equity at end of period - Non-GAAP	$	900,978		$	890,482

Total assets at end of period	$	10,964,884		$	11,138,567
Less:
Goodwill	271,829			271,829
Other identifiable intangible assets, net	6,623			7,058
Total tangible assets at end of period - Non-GAAP	$	10,686,432		$	10,859,680
Common equity to assets - GAAP	10.76		%	10.50		%
Tangible common equity to tangible assets - Non-GAAP	8.43		%	8.20		%


	For the Three Months Ended March 31,
(dollars in thousands)	2024			2023
Calculation of Return on Average Tangible Common Equity
Net income - GAAP	$	19,795		$	19,805
Total average common stockholders’ equity	$	1,172,324		$	1,120,356
Less:
Average goodwill	271,829			271,829
Average other identifiable intangible assets, net	6,905			8,904
Total average tangible common stockholders’ equity - Non-GAAP	$	893,590		$	839,623
Return on average common stockholders’ equity - GAAP	6.79		%	7.17		%
Return on average tangible common stockholders’ equity - Non-GAAP	8.91		%	9.57		%

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Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Update 2023-09, "Income Taxes (Topic 740)" ("ASU 2023-09"). The amendments in this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to rate reconciliation and income taxes paid information. This ASU will be effective for financial statements issued by public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is evaluating the impact this ASU will have on the Company's disclosures.

In June 2022, the Financial Accounting Standards Board ("FASB") issued Update 2022-03, "Fair Value Measurement (Topic 820)" ("ASU 2022-03"). The guidance clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibits the sale of an equity security, amends a related illustrative example, and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. This ASU will be effective for financial statements issued by public business entities for fiscal years and interim periods beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption of this standard did not have a material impact on the Company's financial statements.

In March 2020, FASB issued Update 2020-04, an update to Topic 848, Reference Rate Reform. The update provides guidance to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The update provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met and only applies to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In addition, the update provides optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification for contracts that are modified because of reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. In December 2022, FASB issued Update 2022-06 Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which allows companies to apply the standard as of the beginning of the interim period that includes March 12, 2020 or any date thereafter until December 31, 2024. During this time period, the Company continued to convert LIBOR-based loans to SOFR and does not expect the impact to its financial statements to be material.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company manages interest rate risk and market risk by identifying and quantifying interest rate risk exposures using simulation analysis and economic value at risk models. Net interest income simulation considers the relative sensitivities of the balance sheet including the effects of interest rate caps on adjustable rate mortgages and the relatively stable aspects of core deposits. As such, net interest income simulation is designed to address the probability of interest rate changes and the behavioral response of the balance sheet to those changes. Market Value of Portfolio Equity represents the fair value of the net present value of assets, liabilities and off-balance-sheet items. Changes in estimates and assumptions made for interest rate sensitivity modeling could have a significant impact on projected results and conclusions. These assumptions could include prepayment rates, sensitivity of non-maturity deposits and other similar assumptions. Therefore, if our assumptions should change, this technique may not accurately reflect the impact of general interest rate movements on the Company’s net interest income or net portfolio value.

The starting point (or “base case”) for the following table is an estimate of the following year’s net interest income assuming that both interest rates and the Company’s interest-sensitive assets and liabilities remain at period-end levels. The net interest income estimated for this purpose for the next twelve months (the base case) is $267.4 million. The information provided for net interest income assumes that changes in interest rates change gradually in equal increments (“rate ramp”) over the twelve month period.


	Changes in Interest Rates
Rate Ramp	+200 bp		-200 bp
Asset/Liability Policy limit	(5.0)	%	(5.0)	%
March 31, 2024	(2.6)	%	2.1	%
December 31, 2023	(2.8)	%	2.2	%

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The Company’s review of interest rate risk includes policy limits for net interest income changes in various “rate shock” scenarios. Rate shocks assume that current interest rates change immediately. The information provided for net interest income assumes fluctuations or “rate shocks” for changes in interest rates as shown in the table below.


	Changes in Interest Rates
Rate Shock	+400 bp		+300 bp		+200 bp		+100 bp		-100 bp		-200 bp		-300 bp		-400 bp
Asset/Liability Policy limit	(25.0)	%	(20.0)	%	(15.0)	%	(10.0)	%	(10.0)	%	(15.0)	%	(20.0)	%	(25.0)	%
March 31, 2024	(9.8)	%	(7.8)	%	(5.7)	%	(2.7)	%	2.0	%	3.7	%	5.0	%	6.7	%
December 31, 2023	(10.5)	%	(8.3)	%	(6.1)	%	(2.9)	%	2.0	%	3.8	%	5.1	%	6.4	%

The base case for the following table is an estimate of the Company’s net portfolio value for the periods presented using current discount rates, and assuming the Company’s interest-sensitive assets and liabilities remain at period-end levels. The net portfolio value at March 31, 2024 (the base case) was $1.42 billion. The information provided for the net portfolio value assumes fluctuations or “rate shocks” for changes in interest rates as shown in the table below. Rate shocks assume that current interest rates change immediately.


	Changes in Interest Rates
Rate Shock	+400 bp		+300 bp		+200 bp		+100 bp		-100 bp		-200 bp		-300 bp		-400 bp
Asset/Liability Policy limit	(35.0)	%	(25.0)	%	(20.0)	%	(10.0)	%	(10.0)	%	(20.0)	%	(25.0)	%	(35.0)	%
March 31, 2024	(20.5)	%	(16.0)	%	(11.4)	%	(5.3)	%	4.1	%	6.9	%	7.9	%	6.0	%
December 31, 2023	(22.7)	%	(17.5)	%	(12.2)	%	(5.8)	%	4.4	%	7.6	%	9.7	%	5.0	%

The information set forth in the above tables and the net interest income estimate set forth above are based on significant estimates and assumptions, and constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995. For more information regarding the Company’s market risk and assumptions used in the Company’s simulation models, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes in net interest income requires the making of certain assumptions regarding prepayment and deposit decay rates, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While management believes such assumptions are reasonable, there can be no assurance that assumed prepayment rates and decay rates will approximate actual future loan prepayment and deposit withdrawal activity. Moreover, the net interest income table presented assumes that the composition of interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the net interest income table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.

Item 4. Controls and Procedures

(a)Disclosure controls and procedures. As of the end of the Company’s most recently completed fiscal quarter covered by this report, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and are operating in an effective manner and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b)Changes in internal controls over financial reporting. There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no pending legal proceedings involving the Company or Lakeland other than those arising in the normal course of business. Management does not anticipate that the potential liability, if any, arising out of such legal proceedings will have a material effect on the financial condition or results of operations of the Company and Lakeland on a consolidated basis. All previously disclosed actions related to the merger with Provident filed against the Company and its directors were dismissed without payment or any settlement.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.


Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

The following table presents information regarding shares of our common stock repurchased during the first quarter of 2024.


Period	Total Number of Shares (or Units) Purchased (1)	Weighted Average Price Paid per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs


January 1 to January 31, 2024	—	$—	—	2,393,423
February 1 to February 29, 2024	—	—	—	2,393,423
March 1 to March 31, 2024	—	—	—	2,393,423

(1)On October 24, 2019, the Company announced that its Board of Directors authorized a new share repurchase program. Under the repurchase program, the Company may repurchase up to 2,524,458 shares of its common stock, or approximately 5% of its outstanding shares of common stock at September 30, 2019. Repurchases may be made from time to time through a combination of open market and privately negotiated repurchases. The specific timing, price and quantity of repurchases will be at the discretion of the Company and will depend on a variety of factors, including general market conditions, the trading price of the common stock, legal and contractual requirements and the Company's financial performance. The share repurchase program has no expiration date.


Item 3. Defaults Upon Senior Securities			Not Applicable


Item 4. Mine Safety Disclosures			Not Applicable


Item 5. Other Information

During the three months ended March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement,” as that term is used in SEC regulations.

Item 6. Exhibits


2.1			Agreement and Plan of Merger, dated September 26, 2022, by and among Provident Financial Services, Inc., NL 239 Corp. and Lakeland Bancorp, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on September 27, 2022)
2.2			Amendment No. 1, dated December 20, 2023, to the Agreement and Plan of Merger, dated as of September 26, 2022, by and among Provident Financial Services, Inc., NL 239 Corp. and Lakeland Bancorp, Inc. is incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K filed with the SEC on December 20, 2023.
2.3			Amendment No. 2, dated March 29, 2024, to the Agreement and Plan of Merger, dated as of September 26, 2022, by and among Provident Financial Services, Inc., NL 239 Corp. and Lakeland Bancorp, Inc. is incorporated by reference to Exhibit 2.1 to Registrant's Current Report on Form 8-K filed with the SEC on March 29, 2024.
3.1			Lakeland Bancorp, Inc. Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018)
3.2			Lakeland Bancorp, Inc. Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K, filed with the SEC on April 9, 2020)
4.1			Indenture, dated September 15, 2021, between Lakeland Bancorp, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 15, 2021)
4.2			First Supplemental Indenture, dated September 15, 2021, between Lakeland Bancorp, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on September 15, 2021)
4.3			Form of 2.875% Fixed-to-Floating Rate Subordinated Notes due 2031 (included in Exhibit 4.2)
31.1			Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document)
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Lakeland Bancorp, Inc.
(Registrant)

/s/ Thomas J. Shara
Thomas J. Shara
President and Chief Executive Officer
(Principal Executive Officer)

/s/ Thomas F. Splaine
Thomas F. Splaine
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

Date: April 26, 2024