Lakeland Bancorp (LBAI) 8-K Other Events

Exhibit 99.4

UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED FINANCIAL DATA

On July 11, 2021, Lakeland Bancorp, Inc. (“Lakeland Bancorp”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with 1st Constitution Bancorp (“1st Constitution”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, 1st Constitution will merge with and into Lakeland Bancorp, with Lakeland Bancorp continuing as the surviving entity (the “Merger”).

The unaudited pro forma combined condensed consolidated balance sheet combines the historical information of Lakeland and 1st Constitution as of June 30, 2021 and assumes that the merger was completed on that date. The unaudited pro forma combined condensed consolidated income statements combine the historical financial information of Lakeland and 1st Constitution and give effect to the merger as if it had been completed as of the beginning of the fiscal year ended December 31, 2020.

The unaudited pro forma combined condensed consolidated financial data, while helpful in illustrating the financial characteristics of the resulting company under one set of assumptions, does not reflect the benefits of expected cost savings or opportunities to earn additional revenue and, accordingly, does not attempt to predict or suggest future results. It also does not necessarily reflect what the historical results of the resulting company would have been had our companies been combined during these periods.

The unaudited pro forma combined condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial condition had the merger been completed on the dates described above, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. The financial information should be read in conjunction with the accompanying Notes to the Unaudited Pro Forma Combined Condensed Consolidated Financial Information. Certain reclassifications have been made to 1st Constitution’s historical financial information to conform to Lakeland’s presentation of financial information. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma combined condensed consolidated financial information is subject to adjustment after the merger is completed and may vary significantly from the actual purchase price allocation that will be recorded upon completion of the merger.

The pro forma financial information includes estimated adjustments, including adjustments to record assets and liabilities of 1st Constitution at their respective fair values, and represents the pro forma estimates by Lakeland and 1st Constitution based on available fair value information as of the date of the merger agreement.

The unaudited pro forma combined condensed consolidated financial information has been derived from and should be read in conjunction with: Lakeland Bancorp’s audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2020, which were included in Lakeland Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2020, and the Company’s unaudited financial statements and the related notes thereto as of and for the six months ended June 30, 2021, which were included in Lakeland Bancorp’s Quarterly Report on Form 10-Q for the six months ended June 30, 2021, which were filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 8, 2021, and August 6, 2021, respectively, and 1st Constitution’s audited consolidated financial statements as of and for the year ended December 31, 2020 and 2019 and 1st Constitution’s unaudited consolidated financial statements as of and for the six months ended June 30, 2021, which are being filed as Exhibit 99.2 and Exhibit 99.3 to this Current Report on Form 8-K, respectively.

Pro Forma Balance Sheet—June 30, 2021 Consolidated

	Lakeland at June 30, 2021			1st Constitution at June 30, 2021			Pro Forma Adjustments			Pro Forma Combined at June 30, 2021
	(Dollars in thousands, except per share amounts)
Cash	$	358,052		$	18,386		$	(16,762	)(1)	$	359,676
Interest-bearing deposits due from banks		17,348			197,291						214,639
Total cash and cash equivalents		375,400			215,677			(16,762	)		574,315
Investment securities available for sale, at estimated fair value		988,673			130,886						1,119,559
Investment securities held to maturity		94,278			97,993			3,800	(2)		196,071
Equity securities, at fair value		15,440			—						15,440
Federal Home Loan Bank and other membership stocks, at cost		9,210			1,247						10,457
Loans held for sale		816			6,017						6,833
Loans, net of deferred fees		5,988,832			1,235,442			600	(3)		7,224,874
Less: Allowance for credit losses on loans and leases		60,389			16,925			3,975	(4)		81,289
Net loans		5,928,443			1,218,517			(3,375	)		7,143,585
Premises and equipment, net		47,641			14,043						61,684
Operating lease right-of-use assets		15,513			15,707						31,220
Accrued interest receivable		18,309			4,306						22,615
Goodwill		156,277			34,662			31,548	(5)		222,487
Other identifiable intangible assets		2,841			1,182			5,318	(6)		9,341
Bank owned life insurance		116,398			37,658			—			154,056
Other assets		84,999			11,350			(473	)(7)		95,876
Total Assets	$	7,854,238		$	1,789,245		$	20,056		$	9,663,539
Total deposits		6,715,035			1,546,061		$	1,100	(8)		8,262,196
Federal funds purchased and securities sold under agreements to repurchase		100,190			—			—			100,190
Other borrowings		25,000			—						25,000
Subordinated debentures		113,045			18,557			(2,000	)(9)		129,602
Operating lease liabilities		16,847			16,612						33,459
Other liabilities		87,445			12,358			—			99,803
Total Liabilities	$	7,057,562		$	1,593,588		$	(900	)	$	8,650,250
Common stock, no par value		563,980			111,775			120,023	(10)		795,778
Retained earnings		228,803			83,333			(98,518	)(11)		213,618
Treasury shares, at cost		(1,452	)		(739	)		739	(12)		(1,452	)
Accumulated other comprehensive income		5,345			1,288			(1,288	)(12)		5,345
Total Shareholders’ Equity		796,676			195,657			20,956			1,013,289
Total Liabilities and Shareholders’ Equity	$	7,854,238		$	1,789,245		$	20,056		$	9,663,539
Per share information
Common shares outstanding		50,601,349			10,284,848			3,678,890			64,565,087
Book value per common share	$	15.74		$	19.02					$	15.69

(1)   Adjustment to record merger related expenses and cash-out of 1st Constitution options 1st Constitution after-tax transaction expenses	$	9,252
Lakeland Bancorp pre-tax transaction expenses		5,275

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Cash out of 1st Constitution restricted stock units.					698
Cash out of 1st Constitution stock options, pre-tax.					1,537
Total merger-related adjustments to cash				$	16,762
(2)   Adjustment to record held to maturity investment securities at fair value				$	3,800
(3)   Adjustment to record loans at fair value
Interest rate adjustment to record loans at fair value	$	16,300
Less: Gross credit mark on loans		(20,900	)
Plus: Purchased credit discount (“PCD”) CECL reserve gross up amount		5,200
Net adjustment on loans				$	600
(4)   Reversal of existing 1st Constitution Bancorp allowance for loan and lease losses	$	(16,925	)
Less: PCD CECL reserve		5,200
Less: Provision for estimated lifetime credit losses for Non-PCD loans		15,700
Net adjustment to allowance for credit losses on loans and leases				$	3,975
(5)   Excess of purchase price less 1st Constitution tangible equity, elimination of existing 1st Constitution goodwill, net fair value adjustments and creation of core deposit intangible (“CDI”). The purchase price was estimated to equal $231,798 based on the issuance or 13,963,738 shares in the Merger reflecting 10,284,848 1st Constitution shares outstanding as of June 30, 2021 and an exchange ratio of 1.3577x. The purchase price assumption is based on an assumed price for Lakeland stock equal to $16.60 per share which was the closing price for Lakeland as of August 6, 2021.
1st Constitution tangible equity:
Total shareholders’ equity	$	195,657
Less: CDI		(1,182	)
Less: Goodwill		(34,662	)
1st Constitution tangible equity				$	159,813
Purchase price	$	231,798
Less: Tangible equity of 1st Constitution		(159,813	)
Plus: Net adjustment to record FCCY merger related expenses (after tax)		9,252
Excess of purchase price over tangible equity of 1st Constitution Bancorp		81,237
Less: Net fair value adjustments		(15,027	)
Preliminary pro forma goodwill resulting from merger				$	66,210
Less: 1st Constitution Bancorp existing goodwill					(34,662	)
Net adjustment to goodwill				$	31,548
(6)   Adjustment to record CDI
Estimated CDI				$	6,500
Less: 1st Constitution Bancorp existing CDI					(1,182	)
Net adjustment to CDI				$	5,318
(7)   Current/deferred income taxes created as a result of purchase accounting adjustments.
Current and deferred income taxes on fair value adjustments	$	(6,619	)
Plus: Current/deferred income taxes on Lakeland Bancorp transaction expenses		1,064

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Plus: Current/deferred income taxes on provision for non-PCD loans		4,726
Plus: Deferred taxes (net) eliminated on 1st Constitution Bancorp existing CDI		356
Current/deferred income taxes created as a result of purchase accounting adjustments				$	(473	)
(8)   Adjustment to record time deposits at fair value					(1,100	)
(9)   Adjustment to record subordinated debt at fair value.					2,000
(10)  Elimination of 1st Constitution Bancorp’s common stock and record issuance of a 13,963,738 shares of Lakeland Bancorp common stock, no par value, as consideration.
Shares issued based on 10,284,848 1st Constitution shares outstanding as of June 30, 2021 and an exchange ratio of 1.3577x.
Eliminate existing 1st Constitution existing common stock.	$	(111,775	)
Record Lakeland Bancorp common stock issued in consideration		231,798
Adjustment to common stock, no par value.					120,023
(11)  Eliminate 1st Constitution Bancorp’s retained earnings as of June 30, 2021.	$	(83,333	)
Record the impact to equity of the CECL non-purchased deteriorated credit loans net of taxes.	$	(10,974	)
Record Lakeland Bancorp’s transaction expenses, net of taxes.		(4,210	)
Total adjustments to retained earnings				$	(98,518	)
(12)  Eliminate 1st Constitution Bancorp’s other capital accounts.
Treasury shares, at cost				$	739
Accumulated other comprehensive income				$	(1,288	)

Pro Forma Income Statement—June 30, 2021 Consolidated

	Lakeland for the Six Months Ended June 30, 2021			1st Constitution for the Six Months Ended June 30, 2021		Pro Forma Adjustments			Pro Forma Combined for the Six Months Ended June 30, 2021
	(Dollars in thousands, except per share amounts)
Interest income:
Loans and fees	$	119,307		$	30,770	$	(100	)(1)	$	149,977
Federal funds sold and interest-earning deposits with banks		89			95					184
Investment securities		9,253			1,960		(475	)(2)		10,738
Total interest income		128,649			32,825		(575	)		160,899
Interest expense:
Deposits		9,362			2,940	$	(550	)(3)	$	11,752
Federal funds		39			—		—			39
Other borrowings		2,780			167		67	(4)		3,014
Total interest expense		12,181			3,107		(483	)		14,805
Net interest income		116,468			29,718		(92	)		146,094
Provision for loan losses		(8,601	)		2,000		—			(6,601	)
Net interest income after provision for loan losses		125,069			27,718		(92	)		152,695
Noninterest income:
Service charges on deposit accounts		4,741			224		—		$	4,965
Commissions and fees		3,353			—		—			3,353
Income on bank owned life insurance		1,277			342		—			1,619
Gain (loss) on equity securities		(133	)		—		—			(133	)
Gains on sales of loans		1,315			5,861		—			7,176
Gains on sales of investment securities, net		9			4		—			13
Swap income		634			—		—			634
Other income		(168	)		1,382		—			1,214
Total non-interest income		11,028			7,813		—		$	18,841
Non-interest expense:
Compensation and employee benefits		40,925			13,411		—		$	54,336
Premises and equipment		12,396			2,472		—			14,868
FDIC insurance		1,332			425		—			1,757
Data processing		2,554			996		—			3,550
Other operating expenses		10,793			4,328		432	(5)		15,553
Total non-interest expense		68,000			21,632		432		$	90,064
Income before tax expenses		68,097			13,899		(524	)		81,472
Income tax expense		17,515			3,818		(158	)(6)		21,175
Net income available to common shareholders	$	50,582		$	10,081	$	(366	)	$	60,297
Less: earnings allocated to participating securities		(531	)		—		—			(531	)

Pro Forma Income Statement—June 30, 2021 Consolidated

	Lakeland for the Six Months Ended June 30, 2021		1st Constitution for the Six Months Ended June 30, 2021		Pro Forma Adjustments			Pro Forma Combined for the Six Months Ended June 30, 2021
	(Dollars in thousands, except per share amounts)
Net income allocated to common shareholders	$	50,051	$	10,081	$	(366	)	$	59,766
Per share information
Basic earnings per share	$	0.99	$	0.98				$	0.93
Average basic shares outstanding		50,606,002		10,267,343		3,696,395	(7)		64,569,740
Diluted earnings per share	$	0.98	$	0.98				$	0.92
Average diluted shares outstanding		50,821,610		10,315,780		3,647,958	(7)		64,785,348

(1) Net adjustment to interest income to record the estimated amortization of the net fair value premium on loans over three years on a straight-line basis

(2) Net adjustment to interest income to record the estimated amortization of the fair value adjustment on held to maturity security investments over four years on a straight line basis.

(3) Net adjustment to deposit interest expense to record the estimated amortization of the fair value adjustment on deposits over one year on a straight-line basis.

(4) Net adjustment to interest expense to record the estimated amortization of the fair value adjustment on subordinated debt over fifteen years on a straight-line basis.

(5) Estimated adjustment to CDI amortization expense assuming a ten year life using the sum of the years digits amortization method.

Reverse amortization recorded for the six months ended June 30, 2021	$	(159	)
Adjustment to CDI amortization		591
Net adjustment	$	432

(6) Tax effect on the pro forma adjustments at an assumed 30.10% effective combined federal and state tax rate.

(7) Reflects the issuance of 13,963,738 shares of Lakeland Bancorp common stock in consideration for the outstanding share of 1st Constitution Bancorp.

Pro Forma Income Statement—December 31, 2020 Consolidated

	Lakeland for the Year Ended December 31, 2020			1st Constitution for the Year Ended December 31, 2020		Pro Forma Adjustments			Pro Forma Combined for the Year Ended December 31, 2020
	(Dollars in thousands, except per share amounts)
Interest income:
Loans and fees	$	229,036		$	63,808	$	(200	)(1)	$	292,644
Federal funds sold and interest-earning deposits with banks		348			107					455
Investment securities		19,458			5,231		(950	)(2)		23,739
Total interest income		248,842			69,146		(1,150	)		316,838
Interest expense:
Deposits		32,059			9,981	$	(1,100	)(3)	$	40,940
Federal funds		556			—		—			556
Other borrowings		8,540			662		133	(4)		9,335
Total interest expense		41,155			10,643		(967	)		50,831
Net interest income		207,687			58,503		(183	)		266,007
Provision for loan losses		27,222			6,698		15,700	(5)		49,620
Net interest income after provision for loan losses		180,465			51,805		(15,883	)		216,387
Non-interest income:
Service charges on deposit accounts		9,148			601		—		$	9,749
Commissions and fees		5,868			—		—			5,868
Income on bank owned life insurance		2,657			818		—			3,475
Gain (loss) on equity securities		(552	)		—		—			(552	)
Gains on sales of loans		3,322			10,230		—			13,552
Gains on sales of investment securities, net		1,213			101		—			1,314
Swap income		4,719			—		—			4,719
Other income		735			2,893		—			3,628
Total non-interest income		27,110			14,643		—		$	41,753
Non-interest expense:
Compensation and employee benefits		80,399			26,681		—		$	107,080
Premises and equipment		21,871			4,776		—			26,647
FDIC insurance		2,123			816		—			2,939
Data processing		4,964			1,871		—			6,835
Other operating expenses		23,441			7,611		792	(6)		31,844
Total noninterest expense		132,798			41,755		792		$	175,345
Income before tax expense		74,777			24,693		(16,675	)		82,795
Income tax expense		17,259			6,607		(5,019	)(7)		18,847
Net income available to common shareholders	$	57,518		$	18,086	$	(11,656	)	$	63,948

Pro Forma Income Statement—December 31, 2020 Consolidated

	Lakeland for the Year Ended December 31, 2020			1st Constitution for the Year Ended December 31, 2020		Pro Forma Adjustments			Pro Forma Combined for the Year Ended December 31, 2020
	(Dollars in thousands, except per share amounts)
Less: earnings allocated to participating securities		(511	)		—		—			(511	)
Net income allocated to common shareholders	$	57,007		$	18,086	$	(11,656	)	$	63,437
Per Share Information
Basic earnings per share	$	1.13		$	1.77				$	0.98
Average basic shares outstanding		50,540,136			10,220,319		3,743,419	(8)		64,503,874
Diluted earnings per share	$	1.13		$	1.76				$	0.98
Average diluted shares outstanding		50,650,495			10,260,965		3,702,773	(8)		64,614,233

(1) Net adjustment to interest income to record the estimated amortization of the net fair value premium on loans over three years on a straight-line basis.

(2) Net adjustment to interest income to record the estimated amortization of the fair value adjustment on held to maturity security investments over four years on a straight line basis.

(3) Net adjustment to interest expense to record the estimated amortization of the fair value adjustment on deposits over one year on a straight-line basis.

(4) Net adjustment to interest expense to record the estimated amortization of the fair value adjustment on subordinated debt over fifteen years on a straight-line basis.

(5) Adjustment to record provision expense of $15.7 million on 1st Constitution Bancorp’s non-PCD loans, including adoption of the current expected credit losses (“CECL”) methodology for 1st Constitution Bancorp loan portfolio (Day 2).

(6) Estimated adjustment to CDI amortization expense assuming a ten year life using the sum of the years digits amortization method.

	Amount
CDI intangible amortization.	$	—
Reverse amortization recorded for the six months ended June 30, 2021	$	(390	)
Adjustment to CDI amortization		1,182
Net adjustment	$	792

(7) Tax effect on the pro forma adjustments at an assumed 30.10% effective combined federal and state tax rate.

(8) Reflects the issuance of 13,963,738 shares of Lakeland Bancorp common stock in consideration for the outstanding share of 1st Constitution Bancorp.