The boards of directors of Lakeland Bancorp, the parent company of Lakeland Bank, and 1^st Constitution Bancorp, the parent company of 1^st Constitution Bank, entered into a definitive agreement and plan of merger under which Lakeland will acquire 1st Constitution.

The combined organization will have approximately $9.6 billion in assets and will rank as the fifth largest bank headquartered in New Jersey, according to the companies.

Lakeland will acquire all of the outstanding shares of 1^st Constitution in exchange for common shares of Lakeland and will cash out outstanding 1^st Constitution options. The exchange ratio will be fixed at 1.3577 Lakeland shares for each 1^st Constitution share, resulting in an aggregate transaction value of approximately $244.4 million, or $23.53 per share, which represents a 14% premium over the closing sale price per share of 1^st Constitution common stock on July 9.

“We are delighted to be combining with 1^st Constitution and expanding Lakeland’s presence into central New Jersey,” Thomas J. Shara, president and CEO of Lakeland Bancorp and Lakeland Bank, said. “This business combination provides attractive financial attributes to shareholders of both Lakeland and 1^st Constitution. This merger is consistent with our recent initiatives to expand into desirable markets. We look forward to working with 1^st Constitution in delivering a broad array of business and consumer products into our expanded marketplace.”

“We are excited to be partnering with such a respected and well-managed institution,” Robert F. Mangano, president and CEO of 1^st Constitution, said. “This merger will bring together two outstanding organizations with similar cultures as well as strong relationships in New Jersey.”

In connection with the merger, Mangano will joined the boards of directors of Lakeland and Lakeland Bank.

The boards of directors of both companies unanimously approved the merger agreement. The merger is expected to close in Q4/21 or Q1/22, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the shareholders of Lakeland and 1^st Constitution. In the transaction, 1^st Constitution will merge into Lakeland, and 1^st Constitution Bank will merge into Lakeland Bank, with Lakeland and Lakeland Bank continuing as the surviving entities.

Key Financial Highlights

• Approximately 10% accretive to Lakeland’s earnings per share
• Achievable cost savings assumption of 44%, or approximately $18 million, in 2022
• Approximately 3.9% dilutive to tangible book value per share at closing
• Tangible book value earn-back period projected to be approximately 3.3 years using the crossover method
• Anticipated internal rate of return of more than 20%
• Pro forma combined company with total assets of $9.6 billion, total loans of $7.4 billion and deposits of $8.2 billion

1^st Constitution’s directors and executive officers, who own in the aggregate approximately 13.2% of 1^st Constitution’s outstanding shares, signed voting agreements pursuant to which they have agreed to vote their shares in favor of the holding company merger.

Keefe, Bruyette & Woods served as financial advisor and Luse Gorman served as legal counsel to Lakeland.

Raymond James served as financial advisor and Day Pitney served as legal counsel to 1^st Constitution.