What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-01 compared with 2021-03-01 · 360 added, 384 removed, 1994 unchanged (27% of the section changed)

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for credit losses - Loans evaluated on a collective basis

As discussed in Notes 1 and 7 to the consolidated financial statements, the Company’s allowance for credit losses on loans (excluding purchase credit deteriorated (PCD) loans) evaluated on a collective basis (the collective ACL on loans) was $79.4 million of a total allowance for credit losses of $101.5 million as of December 31, 2020.

The collective ACL on loans includes the measure of expected credit losses on a collective (pooled) basis for class segments of loans that share similar risk characteristics.

The Company estimated the collective ACL on loans using relevant available information, from internal and external sources, related to past events, current conditions, and reasonable and supportable forecasts.

The Company uses a discounted cash flow methodology where the respective quantitative allowance for each segment is measured by comparing the

present value of expected principal and interest cash flows projected using an econometric, probability of default (PD) and loss given default (LGD) modeling methodology to the amortized cost.

The Company uses regression models to develop the PD and LGD assumptions, which are derived from historical credit loss experience for both the Company and class segment‑specific selected peers and incorporate an external economic forecast over a reasonable and supportable forecast period.

After the reasonable and supportable forecast period, the Company reverts to long‑term average economic factors over a reversion period on a straight‑line basis.

Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan‑level stated interest rate.

After quantitative considerations, the Company applies additional qualitative adjustments, which include limitations inherent in the quantitative model, so that the collective ACL is reflective of the estimate of lifetime losses that exist in the loan portfolio at the balance sheet date.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for credit losses for loans evaluated on a collective basis

As discussed in Notes 1 and 7 to the consolidated financial statements, the Company’s allowance for credit losses on loans evaluated on a collective basis (the collective ACL on loans) was $76.5 million of a total allowance for credit losses of $80.7 million as of December 31, 2021.

The collective ACL on loans includes the measure of expected credit losses on a collective basis for loans that share similar risk characteristics.

The Company uses a discounted cash flow methodology where the respective quantitative allowance for each loan segment is measured by comparing the present value of expected principal and interest cash flows projected using an econometric, probability of default (PD) and loss given default (LGD) modeling methodology to the amortized cost.

The Company uses regression models to develop the

PD and LGD assumptions, which are derived from historical credit loss experience for both the Company and selected peers and incorporate an external economic forecast over a reasonable and supportable forecast period.

After the reasonable and supportable forecast period, the Company reverts to the long-term average of selected economic factors on a straight-line basis over a reversion period.

The Company considers qualitative adjustments to credit loss estimates for information not already captured in the quantitative component of the loss estimation process.

We identified the assessment of the collective ACL on loans as a critical audit matter.

A high degree of audit effort, including specialized skills and knowledge, and subjective and complex auditor judgment was involved in the assessment of the collective ACL on loans due to significant measurement uncertainty.

Specifically, the assessment encompassed the evaluation of the collective ACL on loans methodology, including the methods and models used to estimate (1) the PD and LGD and their significant assumptions, including portfolio segmentation, the external economic forecast and macroeconomic factors, the reasonable and supportable forecast periods, the composition of the peer group and the period from which historical Company and peer experience was used, (2) the expected prepayments assumption, and (3) the qualitative adjustments and their significant assumptions, including the effects of limitations inherent in the quantitative model.

The assessment also included an evaluation of the conceptual soundness and performance of the PD and LGD models.

The assessment also included an evaluation of the conceptual soundness of the PD and LGD models.

In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s measurement of the collective ACL on loans estimate, including controls over the:

• development of the collective ACL on loans methodology

• development of the PD and LGD models

• monitoring of the PD and LGD models

• identification and determination of the expected prepayments assumptions and the significant assumptions used in the PD and LGD models

• identification and determination of the significant assumptions used in the PD and LGD models

• development of the qualitative adjustments, including the significant assumptions used in the measurement of the qualitative adjustments

• analysis of the collective ACL on loan results, trends, and ratios.

We evaluated the Company’s process to develop the collective ACL on loans estimate by testing certain sources of data, factors, and assumptions that the Company used, and considered the relevance and reliability of such data, factors, and assumptions.

We evaluated the Company’s process to develop the collective ACL on loans estimate by testing certain sources of data and assumptions that the Company used, and considered the relevance and reliability of such data and assumptions.

In addition, we involved credit risk professionals with specialized skills and knowledge, who assisted in:

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generally accepted accounting principles

• evaluating judgments made by the Company relative to the development and performance monitoring of the PD and LGD models, by comparing them to relevant Company‑specific metrics and trends and the applicable industry and regulatory practices

• assessing the conceptual soundness and performance testing of the PD and LGD models, by inspecting the model documentation to determine whether the models are suitable for their intended use

• evaluating the expected prepayments assumption by comparing to relevant Company‑specific metrics and trends and the applicable industry and regulatory practices

• evaluating the economic forecast through comparison to publicly available forecasts

• assessing the economic forecast used by comparing it to the Company’s business environment and relevant industry practices

• evaluating the length of the period from which historical Company and peer experience was used and the reasonable and supportable forecast period by comparing them to specific portfolio risk characteristics and trends

• assessing the composition of the peer group by comparing to Company and specific portfolio risk characteristics

• determining whether the loan portfolio is segmented by similar risk characteristics by comparing to the Company’s business environment and relevant industry practices

• evaluating the methodology used to develop the qualitative adjustments and the effect of those adjustments on the collective ACL on loans compared with relevant credit risk factors and consistency with credit trends and identified limitations of the underlying quantitative models.

We also assessed the sufficiency of the audit evidence obtained related to the collective ACL on loans by evaluating the:

• evaluating judgments made by the Company relative to the development of the PD and LGD models by comparing them to relevant Company-specific metrics and trends and the applicable industry and regulatory practices

• assessing the conceptual soundness and design of the PD and LGD models by inspecting the Company’s model documentation to determine whether the models are suitable for their intended use

• assessing the selected economic forecast used by comparing it to the Company’s business environment and relevant industry practices

We also evaluated the cumulative results of the procedures performed to assess the sufficiency of the audit evidence obtained related to the collective ACL on loans by evaluating the:

• cumulative results of the audit procedures

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• potential bias in the accounting estimate.

Assessment of the fair value measurement of loans acquired in the SB One Bancorp acquisition

As discussed in Note 3 to the consolidated financial statements, on July 31, 2020, the Company completed its acquisition of SB One Bancorp (SB One).

The acquisition was accounted for as a business combination using the acquisition method of accounting.

Accordingly, assets acquired, liabilities assumed and consideration paid for SB One were recorded at their fair values at the acquisition date.

The acquisition‑date fair value of the acquired loans was $1.77 billion, which was determined based on a discounted cash flow method based on the remaining maturity and repricing terms, with the cash flows being adjusted for expected losses and prepayments.

We identified the assessment of the fair value measurement of loans acquired in the SB One acquisition as a critical audit matter.

There was a high degree of subjective and complex auditor judgment, including specialized skills and knowledge, in the assessment of the fair value measurement of loans acquired due to significant measurement uncertainty.

The assessment encompassed the evaluation of the fair value methodology for acquired loans, including the identification of Purchase Credit Deterioration (PCD) loans, valuation assumptions related to prepayment speeds, expected losses and discount rates and the inputs used to determine those key assumptions.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the measurement of the fair value of loans acquired, including controls over the:

• development of the fair value methodology

• identification of PCD loans

• determination of the key valuation assumptions

• evaluation of the inputs used to develop those key assumptions

• analysis of the fair value measurement of loans acquired results

We involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the fair value measurement methodology for compliance with U.S.

generally accepted accounting principles, and

• developing an independent estimate of the fair value of a sample of loans using independently developed key assumptions including prepayment speeds, expected losses and discount rates used by other market participants, and compared the result to the Company’s fair value estimate

We have not been able to determine the specific year that we began serving as the Company’s auditor;

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December 31, 2021 and 2020

(Dollars in Thousands, except share data))U8i 754er32qd X ACSDXF

(Dollars in Thousands, except share data)

December 31, 2021 December 31, 2020

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Retained earnings 814,533 718,090

Accumulated other comprehensive income 17,655 3,821

Accumulated other comprehensive income, net of tax 6,863 17,655

Treasury stock ( 79,603 ) ( 59,018 )

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Net interest income 366,023 312,570 297,973

Provision for credit losses 29,719 13,100 23,700

Provision (benefit) charge for credit losses ( 24,339 ) 29,719 13,100

Net interest income after provision for credit losses 390,362 282,851 284,873

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Net income $ 167,921 $ 96,951 $ 112,633

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Unrealized gains and losses on available for sale debt securities:

Net unrealized gains (losses) arising during the period 14,944 18,351 ( 6,129 )

Reclassification adjustment for gains (losses) included in net income — — —

Net unrealized (losses) gains arising during the period ( 23,730 ) 14,944 18,351

Reclassification adjustment for gains included in net income ( 171 ) — —

Total ( 23,901 ) 14,944 18,351

Unrealized (losses) gains on derivatives ( 5,269 ) ( 579 ) 221

Unrealized gains (losses) on derivatives 9,047 ( 5,269 ) ( 579 )

Amortization related to post-retirement obligations 4,062 4,159 ( 1,615 )

Total other comprehensive income (loss) 13,834 16,157 ( 4,687 )

Total other comprehensive (loss) income, net of tax ( 10,792 ) 13,834 16,157

Total comprehensive income $ 157,129 $ 110,785 $ 128,790

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COMPREHENSIVE

INCOME (LOSS)

STOCKHOLDERS’

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Net income — — 112,633 — — — — — 112,633

Other comprehensive loss, net of tax — — — ( 4,687 ) — — — — ( 4,687 )

Other comprehensive income, net of tax — — — 16,157 — — — — 16,157

Cash dividends paid ($ 1.12 per share)

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Shares issued dividend reinvestment plan — 671 — — 1,559 — — — 2,230

Reclass of stock award shares — ( 24,024 ) — — 24,024 — — — —

Option exercises — ( 96 ) — — 235 — — — 139

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COMPREHENSIVE

INCOME (LOSS)

COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS

STOCKHOLDERS’

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Net income — — 96,951 — — — — — 96,951

Other comprehensive loss, net of tax — — — 16,157 — — — — 16,157

Reclassification due to the adoption of ASU No.

Other comprehensive income, net of tax — — — 13,834 — — — — 13,834

Effect of adopting ASU No.

2016-13 ("CECL")

— — ( 8,311 ) — — — — — ( 8,311 )

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— — ( 65,823 ) — — — — — ( 65,823 )

Distributions from DDFP — 164 — — — — 671 ( 671 ) 164

Distributions from deferred comp plans — 84 — — — — 620 ( 620 ) 84

Purchases of treasury stock — — — — ( 21,161 ) — — — ( 21,161 )

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Shares issued dividend reinvestment plan — 50 — — 401 — — — 451

Reclass of stock award shares — ( 24,024 ) — — 24,024 — — — —

Option exercises — ( 96 ) — — 235 — — — 139

Treasury shares issued due to acquisition — ( 50,387 ) — — 231,215 — — — 180,828

Allocation of ESOP shares — ( 116 ) — — — 4,670 — — 4,554

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(Dollars in Thousands)

COMPREHENSIVE INCOME TREASURY

COMPREHENSIVE INCOME (LOSS) TREASURY

COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL

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Net income — — 167,921 — — — — — 167,921

Other comprehensive income, net of tax — — — 13,834 — — — — 13,834

Acquisition of deferred compensation plan — — — — — — ( 1,336 ) 1,336 —

Other comprehensive loss, net of tax — — — ( 10,792 ) — — — — ( 10,792 )

Cash dividends paid ($ 0.94 per share)

— — ( 71,478 ) — — — — — ( 71,478 )

Effect of adopting ASU No.

2016-13 ("CECL")

— — ( 8,311 ) — — — — — ( 8,311 )

Distributions from deferred comp plans — 154 — — — — 565 ( 565 ) 154

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Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 961 ) — — — ( 961 )

Shares issued dividend reinvestment plan — 50 — — 401 — — — 451

Treasury shares issued due to acquisition — ( 50,387 ) — — 231,215 — — — 180,828

Option exercises — ( 200 ) — — 1,087 — — — 887

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Depreciation and amortization of intangibles 12,656 11,012 10,395

Provision for credit losses on loans and securities 29,719 13,100 23,700

Provision for credit loss for off-balance sheet credit exposure 1,814 — —

Provision (benefit) charge for credit losses ( 24,339 ) 29,719 13,100

Credit loss expense for off-balance sheet credit exposure 1,515 1,814 —

Deferred tax expense (benefit) 12,413 ( 7,929 ) 1,674

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Net gain on sale of foreclosed assets ( 461 ) ( 821 ) ( 190 )

Decrease (increase) in accrued interest receivable 8,472 2,444 ( 1,829 )

(Increase) decrease in other assets ( 106,811 ) ( 46,237 ) 5,266

Increase in other liabilities 59,883 25,312 4,817

Decrease in accrued interest receivable 4,460 8,472 2,444

Decrease (increase) in other assets 10,264 ( 106,811 ) ( 46,237 )

(Decrease) increase in other liabilities ( 48,113 ) 59,883 25,312

Net cash provided by operating activities 158,182 106,911 136,925

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Purchases of loans ( 5,230 ) — —

Net (increase) decrease in loans ( 717,947 ) ( 79,812 ) 79,388

Net decrease (increase) in loans 253,221 ( 717,947 ) ( 79,812 )

Proceeds from sales of premises and equipment 42 947 —

Purchases of premises and equipment ( 13,805 ) ( 12,825 ) ( 4,882 )

Net cash provided by (used in) investing activities ( 507,984 ) 42,867 46,705

Net cash (used in) provided by investing activities ( 717,936 ) ( 507,984 ) 42,867

Cash flows from financing activities:

Net increase in deposits 1,396,183 977,442 272,487

Increase (decrease) in mortgage escrow deposits 7,494 1,236 ( 365 )

Increase in mortgage escrow deposits 142 7,494 1,236

Purchase of treasury stock ( 20,711 ) ( 21,161 ) ( 19,867 )

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Payments on long-term borrowings ( 1,454,440 ) ( 2,286,722 ) ( 1,549,551 )

Net (decrease) increase in short-term borrowings ( 294,033 ) ( 10,585 ) ( 190,857 )

Net cash (used in) provided by financing activities 746,678 ( 135,705 ) ( 250,597 )

Net increase (decrease) in cash and cash equivalents 345,605 44,087 ( 48,173 )

Net decrease in short-term borrowings ( 8,443 ) ( 294,033 ) ( 10,585 )

Repayment of subordinated debentures ( 15,000 ) — —

Net cash provided by (used in) financing activities 739,864 746,678 ( 135,705 )

Net increase in cash and cash equivalents 180,110 345,605 44,087

Cash and cash equivalents at beginning of period 418,053 109,748 104,681

Restricted cash at beginning of period 114,300 77,000 37,980

Total cash, cash equivalents and restricted cash at beginning of period 532,353 186,748 142,661

Cash and cash equivalents at end of period 685,163 418,053 109,748

Restricted cash at end of period 27,300 114,300 77,000

Total cash, cash equivalents and restricted cash at end of period $ 712,463 532,353 186,748

Cash paid during the period for:

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As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Changes in estimates will be reflected in the financial statements in future periods.

Cash and Cash Equivalents

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The available for sale debt securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated other comprehensive income or loss in Stockholders’ Equity.

Estimated fair values are based on market quotations or matrix pricing.

Estimated fair values are provided by reputable and widely used pricing services who maintain pricing methodologies appropriate for varying security classes using valuation techniques that are in accordance with U.S.

Securities which the Company has the positive intent and ability to hold to maturity are classified as held to maturity debt securities and carried at amortized cost.

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Discounts on securities are accreted to income over the remaining period to the contractual maturity, adjusted for anticipated prepayments.

Dividend and interest income are recognized when earned.

Interest income is recognized on an accrual basis, while dividend income is recognized when earned.

Realized gains and losses are recognized when securities are sold or called based on the specific identification method.

Equity Securities

The Company holds equity securities that are traded in active markets with readily accessible quoted market prices.

Fair Value of Financial Instruments

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Loans receivable are carried at unpaid principal balances plus unamortized premiums, purchase accounting mark-to-market adjustments, certain deferred direct loan origination costs and deferred loan origination fees and discounts, less the allowance for credit losses.

The Bank defers loan origination fees and certain direct loan origination costs and accretes or amortizes such amounts as an adjustment to the yield over the expected lives of the related loans using the interest method.

The Bank defers loan origination fees and certain direct loan origination costs and accretes or amortizes such amounts as an adjustment to the yield over the contractual lives of the related loans using the interest method.

Premiums and discounts on loans purchased are amortized or accreted as an adjustment of yield over the contractual lives of the related loans, adjusted for prepayments when applicable, using methodologies which approximate the interest method.

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Purchased credit deteriorated (“PCD”) loans are loans acquired that have experienced more-than-insignificant deterioration in credit quality since origination.

The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following:

(1) non-accrual status;

(2) troubled debt restructured designation;

(3) risk ratings of special mention, substandard or doubtful;

(4) watchlist credits;

and (5) delinquency status, including loans that are current on acquisition date, but had been previously delinquent.

At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

Subsequent to the acquisition date, the initial allowance for credit losses on PCD loans will increase or decrease based on future evaluations, with changes recognized in the provision for credit losses.

Allowance for Credit Losses on Loans

The allowance for credit losses is a valuation account that reflects management’s evaluation of the current expected credit losses in the loan portfolio.

The Company maintains the allowance for credit losses through provisions for credit losses that are charged to income.

The Company maintains the allowance for credit losses through provisions for credit losses that are

charged to income.

Charge-offs against the allowance for credit losses are taken on loans where management determines that the collection of loan principal and interest is unlikely.

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The adoption of the standard did not result in a change to the Company's results of operations upon adoption as it was recorded as an $ 8.3 million cumulative effect adjustment, net of income taxes, to retained earnings.

The allowance for credit losses is a valuation account that reflects management’s evaluation of the current expected credit losses in the loan portfolio.

The Company maintains the allowance for credit losses through provisions for credit losses that are charged to income.

Charge-offs against the allowance for credit losses are taken on loans where management determines that the collection of loan principal and interest is unlikely.

Recoveries made on loans that have been charged-off are credited to the allowance for credit losses.

The calculation of the allowance for credit losses is a critical accounting policy of the Company.

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The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist.

The respective quantitative allowance for each segment is measured using an econometric, discounted PD/LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to an external economic forecast.

The respective quantitative allowance for each segment is measured using an econometric, discounted PDR/LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to an external economic forecast.

Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled cash flows and amortized cost basis.

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management has a reasonable expectation at the reporting date that a troubled debt restructuring (“TDR”) will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

After quantitative considerations, management applies additional qualitative adjustments so that the allowance for credit loss is reflective of the estimate of lifetime losses that exist in the loan portfolio at the balance sheet date.

Qualitative considerations include limitations inherent in the quantitative model;

portfolio concentrations that may affect loss experience across one or more components of the portfolio;

changes in industry conditions;

changes in the Company’s loan review process;

changes in the Company's loan policies and procedures, economic forecast uncertainty and model imprecision.

The Company considers qualitative adjustments to credit loss estimates for information not already captured in the quantitative component of the loss estimation process.

Qualitative factors are based on portfolio concentration levels, model imprecision, changes in industry conditions, changes in the Company’s loan review process, changes in the Company’s loan policies and procedures, and economic forecast uncertainty.

Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses.

Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation and have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled.

Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation.

The segments have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled.

As of December 31, 2021, the portfolio and class segments for the Company’s loan portfolio were:

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or which may be identified through the Company’s loan review process.

Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is at least $ 1.0 million, or if the loan was modified in a Troubled Debt Restructuring (“TDR”).

When management determines that foreclosure is probable, expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is at least $1.0 million, or if the loan was modified as a TDR.

For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the fair value of the collateral less any selling costs.

If the loan is not collateral dependent, the allowance for credit losses related to individually assessed loans is based on discounted expected cash flows using the loan’s initial effective interest rate.

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The allowance for credit losses on a TDR is measured using the same method as all other impaired loans, except that the original interest rate is used to discount the expected cash flows, not the rate specified within the restructuring.

As previously noted, in accordance with the CARES Act, the Company elected to not apply troubled debt restructuring classification to any COVID-19 related loan modifications that occurred after March 1, 2020 to borrowers who were current as of December 31, 2019.

Accordingly, these modifications were not classified as TDRs.

In addition, for loans modified in response to the COVID-19 pandemic that did not meet the above criteria (e.g., current payment status at December 31, 2019), the Company applied the guidance included in an interagency statement issued by the bank regulatory agencies.

This guidance states that loan modifications performed in light of the COVID-19 pandemic, including loan payment deferrals that are up to six months in duration, that were granted to borrowers who were current as of the implementation date of a loan modification program or modifications granted under government mandated modification programs, are not TDRs.

For loans acquired that have experienced more-than-insignificant deterioration in credit quality since origination are considered PCD loans.

Loans acquired that have experienced more-than-insignificant deterioration in credit quality since origination are considered PCD loans.

The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following:

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At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics.

This allowance for credit loss is calculated using management's best estimate of projected losses over the remaining life of the loans in accordance with ASC 326-20.

This represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective PCD loan pool.

Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment or a protracted period of elevated unemployment, increasing vacancy rates in commercial investment properties and possible increases in interest rates in the absence of economic improvement.

As the impact of the COVID-19 pandemic continues to unfold, the effectiveness of medical advances, government programs, and the resulting impact on consumer behavior and employment conditions will have a material bearing on future credit conditions.

Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment, accelerated inflation, increasing vacancy rates in commercial investment properties and possible increases in interest rates in the absence of economic improvement.

As the impact of COVID-19 and related variants continues, the effectiveness of medical advances, government programs, and the resulting impact on consumer behavior and employment conditions will have a material bearing on future credit conditions.

Any one or a combination of these events may adversely affect borrowers’ ability to repay the loans, resulting in increased delinquencies, credit losses and higher levels of provisions.

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Although management believes that the Company has established and maintained the allowance for credit losses at appropriate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating environment and economic forecast.

Management evaluates its estimates and assumptions on an ongoing basis

giving consideration to forecasted economic factors, historical loss experience and other factors.

Management evaluates its estimates and assumptions on an ongoing basis giving consideration to forecasted economic factors, historical loss experience and other factors.

Such estimates and assumptions are adjusted when facts and circumstances dictate.

In addition to the ongoing impact of the COVID-19 pandemic, illiquid credit markets, volatile securities markets, and declines in the housing and commercial real estate markets and the economy in general may increase the uncertainty inherent in such estimates and assumptions.

In addition to the ongoing impact of COVID-19, illiquid credit markets, volatile securities markets, and declines in the housing and commercial real estate markets and the economy in general may increase the uncertainty inherent in such estimates and assumptions.

As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

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Although management uses the best information available, the level of the allowance for credit losses remains an estimate that is subject to significant judgment and short-term change.

Going forward, the impact of utilizing the CECL approach to calculate the allowance for credit losses on loans will be significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized.

Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings.

For the year ended, December 31, 2020, changing economic forecasts attributable to the COVID-19 pandemic and projected economic recovery led to provisions for credit losses and off-balance sheet credit exposures.

The CECL approach to calculate the allowance for credit losses on loans is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized.

Material changes to these and other relevant factors creates greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings.

For the year ended December 31, 2021, the changing economic forecasts attributable to COVID-19 and the projected economic recovery led the Company to record a negative provision for credit

losses, compared to the same periods last year.

See Note 7 to the Consolidated Financial Statements for more information on the allowance for credit losses on loans.

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Prior to the adoption of CECL on January 1, 2020, the Company calculated the allowance for loan losses using the incurred loss method.

Using this method, the allowance represented management's best estimate of probably incurred losses inherent in the current loan portfolio.

Using this method, the allowance represented management's best estimate of probable incurred losses inherent in the current loan portfolio.

While management used information to recognize losses on loans, additions and reductions of the allowance for loan losses may fluctuate from one reporting period to another based on changes in economic conditions or changes in the values of properties securing loans in the process of foreclosure.

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changes in collateral values.

Qualitative adjustments reflect risks in the loan portfolio not captured by the quantitative loss factors and, as such, are evaluated from a risk level perspective relative to the risk levels present over the look-back period.

The Company considers qualitative adjustments to credit loss estimates for information not already captured in the quantitative component of the loss estimation process.

Qualitative adjustments are recalibrated at least annually and evaluated at least quarterly.

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Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions.

Goodwill is an intangible asset with an indefinite useful life and, in accordance with GAAP, is not amortized, but is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates.

Goodwill is analyzed for impairment each

year at September 30.

In accordance with GAAP, goodwill with an indefinite useful life is not amortized, but is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates.

Goodwill is analyzed for impairment once a year.

As permitted by GAAP, the Company prepares a qualitative assessment in determining whether goodwill may be impaired.

The factors considered in the assessment include macroeconomic conditions, industry and market conditions and overall financial performance of the Company, among others.

The Company completed its annual goodwill impairment test as of September 30, 2020.

Based upon its qualitative assessment of goodwill, the Company concluded that goodwill was not impaired and no further quantitative analysis was warranted.

The Company completed its annual qualitative assessment of goodwill as of July 1, 2021.

Based upon its assessment of goodwill, the Company concluded that no further quantitative analysis was warranted.

Core deposit premiums represent the intangible value of depositor relationships assumed in previous purchase acquisitions and are amortized on an accelerated basis over 8.8 years, while the core deposit premium related to SB One is amortized over its estimated useful life of 10.0 years.

11 unchanged sentences

GAAP requires an employer to:

(a) recognize in its statement of financial position the over-funded or under-funded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation;

(a) recognize in its statement of financial condition the over-funded or under-funded status of a defined benefit postretirement plan measured as the difference between the fair value of plan assets and the benefit obligation;

(b) measure a plan’s assets and its obligations that determine its funded status at the end of the employer’s fiscal year (with limited exceptions);

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If pre-vesting termination (forfeiture) occurs, then any expense recognized to date can be reversed.

The grant date fair value is recognized ratably over

the performance period.

The grant date fair value is recognized ratably over the performance period.

The expense related to a performance condition stock award or stock option is based on the fair value of the award on the date of grant, adjusted periodically based upon the number of awards or options expected to be earned, recognized over the performance period.

12 unchanged sentences

GAAP requires an employer to:

(a) recognize in its statement of financial position the over-funded or under-funded status of a defined benefit post-retirement plan measured as the difference between the fair value of plan assets and the benefit obligation;

(a) recognize in its statement of financial condition the over-funded or under-funded status of a defined benefit post-retirement plan measured as the difference between the fair value of plan assets and the benefit obligation;

(b) measure a plan’s assets and its obligations that determine its funded status as of the end of the employer’s fiscal year (with limited exceptions);

2 unchanged sentences

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction and, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

As such, all changes in fair value of the Company’s interest rate derivatives not used to manage interest rate risk are recognized directly in earnings.

The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities.

As such, all changes in fair value of the Company’s derivatives are recognized directly in earnings.

The Company also uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount.

Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

These derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings.

Interest rate swaps designated as cash flow hedges, and which satisfy hedge accounting requirements, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount.

These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.

The change in the fair value of these derivatives is recorded in accumulated other comprehensive income, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings.

The fair value of the Company's derivatives is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.

6 unchanged sentences

The Company operates primarily in the geographical regions of northern and central New Jersey, Queens County, New York and eastern Pennsylvania.

Management makes operating decisions and assesses performance based on an ongoing review of the Bank’s consolidated financial results.

Therefore, the Company has a single operating segment for financial reporting purposes.

The Company has a single reporting segment for financial reporting purposes.

Earnings Per Share

4 unchanged sentences

Impact of Recent Accounting Pronouncements

Accounting Pronouncements Adopted in 2020

In May 2019, the Financial Accounting Standards Board ("FASB") issued ASU No.

2019-05, “Financial Instruments - Credit Losses (Topic 326);

Targeted Transition Relief.” This ASU allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10.

The fair value option election does not apply to held-to-maturity debt securities.

Entities are required to make this election on an instrument-by-instrument basis.

ASU 2019-05 had the same effective date as ASU 2016-13 (i.e., the first quarter of 2020).

The adoption of this guidance had no impact on the Company’s consolidated financial statements.

In April 2019, the FASB issued ASU No.

2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments" which clarifies and improves areas of guidance related to the recently issued standards on credit losses, hedging, recognition and measurement.

The most significant provisions of this ASU relate to how companies will estimate expected credit losses under Topic 326 by incorporating (1) expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) clarifying that contractual extensions or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured.

2019-04 is effective for reporting periods beginning January 1, 2020.

The adoption of this guidance had no impact related to Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments on the Company’s consolidated financial statements.

At January 1, 2020, a $ 1.3 million allowance for credit losses for off-balance sheet credit exposures was recorded related to extensions on construction loans and is reflected below in the ASU 2016-13 calculation.

In August 2018, the FASB issued ASU No.

2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements.

Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

2018-13 was effective for interim and annual reporting periods beginning after December 15, 2019;

early adoption was permitted.

Entities are also allowed to elect early adoption of the eliminated or modified disclosure requirements and delay adoption of the new disclosure requirements until their effective date.

The adoption of this guidance had no impact on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Measurement of Credit Losses on Financial Instruments.” The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments by a reporting entity at each reporting date.

The amendments in this ASU require financial assets measured at amortized cost to be presented at the net amount expected to be collected.

The allowance for credit losses would represent a valuation account that would be deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset.

The income statement would reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected

credit losses that have taken place during the period.

The measurement of expected credit losses would be based on relevant information about past events, including historical experience, current conditions, and a reasonable and supportable forecast that affect the collectability of the reported amount.

An entity will be required to use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances.

Furthermore, ASU 2016-13 will necessitate establishing an allowance for expected credit losses on held to maturity debt securities.

This also applies to off-balance sheet credit exposures, which includes loan commitments, unused lines of credit and other similar instruments.

The amendments in ASU 2016-13 are effective for fiscal years, including interim periods, beginning after December 15, 2019.

Early adoption of this ASU was permitted for fiscal years beginning after December 15, 2018.

The adoption of ASU 2016-13 involves changing from an "incurred loss" model, which encompasses allowances for current known and inherent losses within the portfolio, to an "expected loss" model (“CECL”), which encompasses allowances for losses expected to be incurred over the life of the portfolio.

The Company adopted CECL on January 1, 2020 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet ("OBS") credit exposures.

Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be recorded with previously applicable GAAP.

The Company recorded a $ 7.9 million increase to the allowance for credit losses and a $ 3.2 million liability for off-balance sheet credit exposures, which resulted in an $ 8.3 million cumulative effect adjustment decrease, net of tax, to retained earnings.

With regard to regulatory capital, the Company has elected to utilize the five-year CECL transition, which gives the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay.

Accounting Pronouncements Not Yet Adopted

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Upon completion of the plan of conversion, a “liquidation account” was established in an amount equal to the total equity of the Bank as of the latest practicable date prior to the conversion.

The liquidation account was established to provide a limited priority claim to the assets of the Bank to “eligible account holders” and “supplemental eligible account holders” as defined in

the Plan, who continue to maintain deposits in the Bank after the conversion.

The liquidation account was established to provide a limited priority claim to the assets of the Bank to “eligible account holders” and “supplemental eligible account holders” as defined in the Plan, who continue to maintain deposits in the Bank after the conversion.

In the unlikely event of a complete liquidation of the Bank, and only in such event, each eligible account holder and supplemental eligible account holder would receive a liquidation distribution, prior to any payment to the holder of the Bank’s common stock.

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Under this method of accounting, the respective assets acquired and liabilities assumed were recorded at their estimated fair value.

The excess of consideration paid over the estimated fair value of the net assets acquired totaled $ 22.4 million and was recorded as goodwill.

The calculation of goodwill is subject to change for up to one year after the closing date of the transaction as additional information relative to closing date estimates and uncertainties becomes available.

As the Company finalizes its analysis of these assets and liabilities, there may be adjustments to the recorded carrying values.

The excess of consideration paid over the estimated fair value of the net assets acquired initially totaled $ 22.4 million and was recorded as goodwill.

The calculation of goodwill was subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

(see Goodwill section for further details).

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition from SB One (in thousands):

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Loans acquired in the SB One acquisition were recorded at fair value, and there was no carryover related allowance for credit losses.

The fair values of loans acquired from SB One were estimated using the discounted cash flow method based on the

remaining maturity and repricing terms.

The fair values of loans acquired from SB One were estimated using the discounted cash flow method based on the remaining maturity and repricing terms.

Cash flows were adjusted for expected losses and prepayments.

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The projected cash flows were developed using projected deposit attrition rates.

The fair value of the customer relationship intangible was determined based on a discounted cash flow analysis using the excess of the future cash inflows (i.e., revenue from existing customer the relationships) over the related cash outflows (i.e., operating costs) generated over the useful life of the acquired customer base.

The fair value of the customer relationship intangible was determined based on a discounted cash flow analysis using the excess of the future cash inflows (i.e., revenue from existing customer relationships) over the related cash outflows (i.e., operating costs) generated over the useful life of the acquired customer base.

These cash flows were discounted to present value using an asset-specific risk-adjusted discount rate.

2 unchanged sentences

The insurance agency customer relationship intangible totaled $ 6.8 million and is being amortized over its estimated useful life of approximately 13 years based on customer revenue attrition on an annualized basis.

The calculation of goodwill is subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

As the Company finalizes its review of the acquired assets and liabilities, certain adjustments to the recorded carrying values may be required.

The goodwill will be evaluated annually for impairment.

The goodwill is not deductible for tax purposes.

As noted above, the acquisition was accounted for under the acquisition method of accounting.

Under this method of accounting, the purchase price has been allocated to the respective assets acquired and liabilities assumed based upon their estimated fair values, net of tax.

The excess of consideration paid over the estimated fair value of the net assets acquired was recorded as goodwill, and initially totaled $ 22.4 million.

The calculation of goodwill was subject to change for up to one year after the date of acquisition as additional information relative to the closing date estimates and uncertainties become available.

The Company updated certain estimates used in the purchase price allocation, primarily with respect to the marginal tax rate of deferred tax assets (“DTA”).

As a result, the fair value of the net assets acquired decreased by $ 1.4 million.

The impact of these measurement period adjustments increased goodwill to $ 23.9 million.

The Company has finalized the purchase price

allocation and these measurement period adjustments are recorded as current period adjustments in accordance with ASU 2015-16.

Goodwill is not deductible for tax purposes and will be evaluated annually for impairment.

Bank Owned Life Insurance ("BOLI")

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The cash flows were projected through the remaining contractual term of the Trust Preferred issuance and based on the call date for the subordinated debt issuance.

Merger-Related Expenses

Merger-related expenses, which are recorded in other operating expenses on the Consolidated Statements of Income, totaled $ 6.3 million for the year ended December 31, 2020, respectively, and primarily consisted of consulting and legal expenses.

Acquisition of Tirschwell & Loewy, Inc.

13 unchanged sentences

In the fourth quarter of 2019, the Company recognized a $ 2.8 million increase in the estimated fair value of the contingent consideration liability.

While performance of the acquired business has been adversely impacted at December 31, 2020 due to worsening economic conditions and declining asset valuations attributable to the COVID-19 pandemic, asset valuations improved in the fourth quarter of 2020 and management has not identified a reduction in assets under management due to a declining customer base.

As a result, the $ 9.4 million fair value of the contingent liability was unchanged at December 31, 2020, from December 31, 2019, with maximum potential future payments totaling $ 11.0 million.

In May of 2021, a $ 4.0 million earn out was paid as certain acquisition agreement limits were satisfied in year two of the acquisition.

Additionally, in September of 2021, as a result of declining asset valuations, a $ 3.4 million reduction in the contingent consideration related to possible future earn-out provisions was recorded.

As a result, the estimated fair value of the contingent consideration liability at December 31, 2021 was $ 2.0 million .

(4) Restrictions on Cash and Due from Banks

18 unchanged sentences

Held to maturity debt securities at December 31, 2021 and 2020 are summarized as follows (in thousands):

Allowance for credit losses Fair

Agency obligations $ 9,996 — ( 175 ) 9,821

3 unchanged sentences

$ 436,189 14,482 ( 962 ) 449,709

At December 31, 2020, total amortized cost, net of allowance for credit losses totaled $ 451.0 million.

Allowance for credit losses Fair

At December 31, 2021, the allowance for credit losses on held to maturity debt securities totaled $ 39,000 and is excluded from amortized cost in the table above.

Agency obligations $ 7,600 6 ( 5 ) 7,601

3 unchanged sentences

$ 451,043 21,551 ( 65 ) 472,529

At December 31, 2020, the allowance for credit losses on held to maturity debt securities totaled $ 78,000 and is excluded from amortized cost in the table above.

The Company generally purchases securities for long-term investment purposes, and differences between carrying and fair values may fluctuate during the investment period.

13 unchanged sentences

There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2020.

For the 2018 period, the Company recognized gains of $ 10,000 and losses of $ 1,000 related to calls on certain securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 32.0 million.

For the 2019 period, the Company recognized gains of $ 72,000 and no losses related to calls on certain securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 33.9 million.

There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2019.

9 unchanged sentences

Less than 12 months 12 months or longer Total

Fair value Gross

Agency obligations $ 9,821 ( 175 ) — — 9,821 ( 175 )

4 unchanged sentences

Less than 12 months 12 months or longer Total

Fair value Gross

Agency obligations $ 1,995 ( 5 ) — — 1,995 ( 5 )

3 unchanged sentences

The number of securities in an unrealized loss position as of December 31, 2021 totaled 53 , compared with 7 at December 31, 2020.

The decrease in the number of securities in an unrealized loss position at December 31, 2020 was due to lower current market interest rates compared to rates at December 31, 2019.

The increase in the number of securities in an unrealized loss position at December 31, 2021 was due to higher current market interest rates compared to rates at December 31, 2020.

Credit Quality Indicators.

16 unchanged sentences

At December 31, 2021, the held to maturity debt securities portfolio was comprised of 15 % rated AAA, 73 % rated AA, 12 % rated A, and less than 1 % either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s.

Securities not explicitly rated were grouped where possible under the credit rating of the issuer of the security.

At December 31, 2020, the allowance for credit losses on held to maturity debt securities was $ 78,000 , an increase from $ 70,000 at January 1, 2020, when the Company adopted CECL.

Securities not explicitly rated, such as U.S.

Government mortgage-backed securities, were grouped where possible under the credit rating of the issuer of the security.

At December 31, 2021, the allowance for credit losses on held to maturity debt securities was 39,000 , a decrease from $ 78,000 at December 31, 2020.

(6) Available for Sale Debt Securities

On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology.

The Company did not record an allowance for credit losses on available for sale debt securities as this portfolio consisted primarily of debt securities explicitly or implicitly backed by the U.S.

Government for which credit risk is deemed immaterial.

The Company did not record an allowance for credit losses on available for sale debt securities as this portfolio consisted primarily of agency securities that carry no credit risk.

The impact going forward will depend on the composition, characteristics, and credit quality of the securities portfolio as well as the economic conditions at future reporting periods.

2 unchanged sentences

Available for sale debt securities at December 31, 2021 and 2020 are summarized as follows (in thousands):

Agency obligations $ 1,001 8 — 1,009

Treasury obligations $ 196,897 298 ( 866 ) 196,329

Mortgage-backed securities 1,711,312 14,082 ( 16,563 ) 1,708,831

3 unchanged sentences

$ 2,058,135 17,619 ( 17,903 ) 2,057,851

Agency obligations $ 1,001 8 — 1,009

Mortgage-backed securities 910,393 28,872 ( 852 ) 938,413

Asset-backed securities 52,295 1,535 — 53,830

State and municipal obligations 69,687 1,666 ( 95 ) 71,258

1 unchanged sentence

$ 1,073,570 32,890 ( 971 ) 1,105,489

Available for sale debt securities having a carrying value of $ 618.0 million and $ 536.4 million at December 31, 2020 and 2019, respectively, are pledged to secure securities sold under repurchase agreements and municipal deposits.

Available for sale debt securities having a carrying value of $ 1.56 billion and $ 618.0 million at December 31, 2021 and 2020, respectively, are pledged to secure securities sold under repurchase agreements and municipal deposits.

The amortized cost and fair value of available for sale debt securities at December 31, 2021, by contractual maturity, are shown below (in thousands).

Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.

Due in one year or less $ 2,997 3,022

Due after one year through five years 102,612 102,039

2 unchanged sentences

$ 301,708 302,223

Investments which pay principal on a periodic basis totaling $ 963.7 million at amortized cost and $ 993.3 million at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

During 2020, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 13.9 million, with no gain or loss recognized.

For 2019, there were no sales or calls of securities from the available for sale debt securities.

Investments which pay principal on a periodic basis totaling $ 1.76 billion at amortized cost and fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

During 2021, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 9.4 million, with gains of $ 230,000 and no loss recognized.

For 2020, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 13.9 million, with no gain or loss recognized.

The following tables represent the Company's disclosure on available for sale debt securities in an unrealized loss position (in thousands):

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Fair value Gross

Treasury obligations $ 98,621 ( 866 ) — — 98621 ( 866 )

Mortgage-backed securities $ 1,147,403 ( 15,176 ) 33,850 ( 1,387 ) 1,181,253 ( 16,563 )

Asset-backed securities 1,930 ( 5 ) — — 1,930 ( 5 )

State and municipal obligations 10,732 ( 122 ) — — 10,732 ( 122 )

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Mortgage-backed securities $ 127,600 ( 824 ) 8,007 ( 28 ) 135,607 ( 852 )

State and municipal obligations 5,275 ( 95 ) — — 5,275 ( 95 )

Corporate obligations — — 2,000 ( 24 ) 2,000 ( 24 )

1 unchanged sentence

The number of securities in an unrealized loss position as of December 31, 2021 totaled 113 , compared with 42 at December 31, 2020.

The decrease in the number of securities in an unrealized loss position at December 31, 2020 was due to lower current market interest rates compared to rates at December 31, 2019.

The increase in the number of securities in an unrealized loss position at December 31, 2021 was due to higher current market interest rates compared to rates at December 31, 2020.

All securities in an unrealized loss position were investment grade at December 31, 2021.

There was one private-label mortgage-backed security in an unrealized loss position at December 31, 2020, with an amortized cost of $ 17,445 and unrealized loss of $ 1,300 .

There were two private-label mortgage-backed securities in an unrealized loss position at December 31, 2021, with an amortized cost of $ 2.1 million, with an unrealized loss of $ 105,700 .

This private-label mortgage-backed security was investment grade at December 31, 2021.

13 unchanged sentences

Total gross loans 9,593,879 9,839,858

PCI loans prior to CECL — 746

Premiums on purchased loans 1,451 1,566

2 unchanged sentences

Total loans $ 9,581,624 9,822,890

In the first quarter of 2021, $ 101.7 million of loans acquired in the SB One transaction that were previously classified as consumer loans were classified as commercial mortgage loans, following further analysis of the underwriting documents and operational intent of the borrower.

These loans are comprised of term loans and lines of credit secured by 1-4 family residential properties that are held by borrowers to generate rental income.

Premiums and discounts on purchased loans are amortized over the lives of the loans as an adjustment to yield.

2 unchanged sentences

The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands):

The December 31, 2020 balances include PCD loans, while the December 31, 2019 balances exclude PCI loans (in accordance with ASC 310, prior to the adoption of ASU 2016-13 on January 1, 2020):

At December 31, 2021

30-59 Days 60-89 Days Non-accrual 90 days or more past due and

Total Past Due Current Total Loans

Days Non-accrual 90 days or more past due and

Past Due Current Total Loans

Non-accrual loans with no related allowance

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At December 31, 2020

30-59 Days 60-89 Days Non-accrual 90 days or more past due and

accruing Total Past Due Current Total Loans

Days Non-accrual 90 days or more past due and

accruing Total

Past Due Current Total Loans

Non-accrual loans with no related allowance

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Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers.

The principal amount of these nonaccrual loans was $ 87.1 million and $ 40.2 million at December 31, 2020 and 2019, respectively.

There were no loans 90-days or greater past due and still accruing interest at December 31, 2020 and 2019.

The increase in non-performing loans in 2020 reflects the effects of the protracted duration of the pandemic and related government response, and the attendant increased uncertainty of affected borrowers’ ability to repay all contractually due principal and interest.

Management has elected to measure an allowance for credit losses for accrued interest receivables specifically related to any loan that has been deferred as a result of COVID-19.

Generally, accrued interest is written off by reversing interest income during the quarter the loan is moved from an accrual to a non-accrual status.

The principal amount of non-accrual loans was $ 48.0 million and $ 87.1 million at December 31, 2021 and 2020, respectively.

There were no loans 90-days or greater past due and still accruing interest at December 31, 2021 and 2020.

The decrease in non-performing loans in 2021 reflects the ongoing economic recovery from the depths of the pandemic recession as improving economic conditions and historically low interest rates positively affected borrowers’ ability to repay contractually due principal and interest payments.

If the non-accrual loans had performed in accordance with their original terms, interest income would have increased by $ 1.2 million, $ 3.2 million and $ 1.7 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

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Included in this total were 115 TDRs related to 111 borrowers totaling $ 21.9 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2021.

At December 31, 2019,

there were 158 impaired loans totaling $ 70.6 million, of which 147 loans totaling $ 48.3 million were TDRs.

At December 31, 2020, there were 169 impaired loans totaling $ 86.0 million, of which 135 loans totaling $ 39.6 million were TDRs.

Included in this total were 112 TDRs related to 110 borrowers totaling $ 23.1 million that were performing in accordance with their restructured terms and which continued to accrue interest at December 31, 2020.

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Provision charged to operations ( 13,720 ) ( 6,313 ) ( 4,267 ) ( 24,300 )

Increase (decrease) due to the initial adoption of CECL 14,188 ( 9,974 ) 3,706 7,920

Initial allowance related to PCD loans 11,984 1,582 20 13,586

Recoveries of loans previously charged off 859 7,169 1,002 9,030

4 unchanged sentences

Provision charged to operations 18,945 10,199 568 29,712

Increase (decrease) due to the initial adoption of CECL - Retained earnings 14,188 ( 9,974 ) 3,706 7,920

Initial allowance on credit loans related to PCD loans 11,984 1,582 20 13,586

Recoveries of loans previously charged off 396 1,776 464 2,636

1 unchanged sentence

Balance at end of period $ 68,307 27,084 6,075 101,466

For the year ended December 31, 2021, the Company recorded a $ 24.3 million negative provision for credit losses on loans.

The reduction in provision for credit losses for the year ended December 31, 2021, compared to the prior year, was primarily the result of improved asset quality, an improved economic forecast and the resultant favorable impact on expected credit losses, compared to the prior year where the provision for credit losses was based upon a weak economic forecast and a more uncertain outlook attributable to the COVID-19 pandemic.

As a result of the January 1, 2020 adoption of CECL, the Company recorded a $ 7.9 million increase to the allowance for credit losses on loans.

For the year ended December 31, 2020, the Company recorded a $ 29.7 million provision for credit losses on loans.

The increase in the provision for credit losses for the year ended December 31, 2020 reflects management’s best estimate of projected losses over the life of loans in the portfolio in accordance with the CECL approach, given the economic

outlook and forecast related to the COVID-19 pandemic, as well as the impact of unprecedented fiscal, monetary and regulatory interventions.

The largest increase in the provision for credit losses on loans for the year ended December 31, 2020 was in the commercial real estate portfolio.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on the allowance for credit losses related to the loan portfolio (in thousands):

40 unchanged sentences

Residential 7 $ 1,274 1,142

Commercial 3 3,086 2,902

Total mortgage loans 10 4,360 4,044

8 unchanged sentences

Residential 2 $ 434 360

Commercial 1 $ 14,010 14,010

Total mortgage loans 2 434 360

Commercial loans 4 2,715 2,646

Consumer loans 4 421 402

Total restructured loans 6 $ 3,149 3,006

All TDRs are impaired loans, which are individually evaluated for impairment, as previously discussed.

Estimated collateral values of collateral dependent impaired loans modified during the years ended December 31, 2020 and 2019 exceeded the carrying amounts of such loans.

During the year ended December 31, 2020, there were $ 7.3 million of charge-offs recorded on collateral dependent impaired loans.

There were $ 11.6 million of charge-offs recorded on collateral dependent impaired loans for the year ended December 31, 2019.

The allowance for credit losses associated with the TDRs presented in the preceding tables totaled $ 362,000 and $ 177,130 at December 31, 2020 and 2019, respectively, and were included in the

allowance for credit losses for loans individually evaluated for impairment.

(See page 109 for further discussion related to COVID-19 loan modifications)

During the years ended December 31, 2021 and 2020, there were $ 3.8 million and $ 7.3 million of charge-offs recorded on collateral dependent impaired loans, respectively.

The allowance for credit losses associated with the TDRs presented in the preceding tables totaled $ 80,000 and $ 362,000 at December 31, 2021 and 2020, respectively, and were included in the allowance for credit losses for loans individually evaluated for impairment.

The TDRs presented in the preceding tables had a weighted average modified interest rate of approximately 4.12 % and 5.43 %, compared to a yield of 5.74 % and 5.44 % prior to modification for the years ended December 31, 2021 and 2020, respectively.

The following table presents loans modified as TDRs within the previous 12 months from December 31, 2020 and 2019, and for which there was a payment default (90 days or more past due) at the quarter ended December 31, 2020 and 2019.

December 31, 2020 December 31, 2019

Troubled Debt Restructurings Subsequently Defaulted Number of Loans Outstanding

Recorded Investment Number of Loans Outstanding Recorded Investment

($ in thousands) ($ in thousands)

Mortgage loans:

Residential — $ — 1 $ 578

Total mortgage loans — — 1 578

Total restructured loans — $ — 1 $ 578

No loans which were modified as TDRs within the 12 month period ending December 31, 2020 had a payment default (90 days or more past due).

There was one payment default (90 days or more past due) for loans modified as TDRs within the 12 month period ending December 31, 2019.

There were no payment defaults (90 days or more past due) for loans modified as TDRs within the 12 month periods ending December 31, 2021 and December 31, 2020.

For TDRs that subsequently default, the Company determines the amount of the allowance for the respective loans in accordance with the accounting policy for the allowance for credit losses on loans individually evaluated for impairment.

As allowed by CECL, the Company elected to maintain pools of loans accounted for under ASC 310-30.

2 unchanged sentences

Loans considered to be PCI prior to January 1, 2020 were converted to PCD loans on that date.

Loans acquired by the Company after January 1, 2020, that experience more-than-insignificant deterioration in credit quality after origination are classified as PCD loans.

For loans acquired by the Company after January 1, 2020, that experience more-than-insignificant deterioration in credit quality after origination are classified as PCD loans.

The table below is a summary of the PCD loans accounted for in accordance with ASC 310-26 that were acquired in the SB One acquisition at the July 31, 2020 closing date (in thousands):

4 unchanged sentences

Net PCD loans $ 294,210

At December 31, 2021, the balance of PCD loans totaled $ 246.9 million with a related allowance for credit losses of $ 2.8 million.

The balance of PCD loans at December 31, 2020 was $ 296.6 million with a related allowance for credit losses of $ 13.1 million.

The following table presents loans individually evaluated for impairment by class and loan category (in thousands):

29 unchanged sentences

Total loans $ 59,280 52,254 4,284 53,352 1,265 $ 97,127 86,046 8,974 66,763 1,875

At December 31, 2020, impaired loans consisted of 169 residential, commercial and commercial mortgage loans totaling $ 86.0 million, of which 55 loans totaling $ 61.4 million were included in nonaccrual loans.

At December 31, 2019, impaired loans consisted of 158 residential, commercial and commercial mortgage loans totaling $ 70.6 million, of which 25 loans totaling $ 27.9 million were included in nonaccrual loans.

At December 31, 2021, impaired loans consisted of 155 residential, commercial, commercial mortgage and consumer loans totaling $ 52.3 million, of which 40 loans totaling $ 30.3 million were included in non-accrual loans.

At December 31, 2020, impaired loans consisted of 169 residential, commercial, commercial mortgage and consumer loans totaling $ 86.0 million, of which 55 loans totaling $ 61.4 million were included in non-accrual loans.

Specific allocations of the allowance for credit losses attributable to impaired loans totaled $ 4.3 million and $ 9.0 million at December 31, 2021 and 2020, respectively.

At December 31, 2020 and 2019, impaired loans for which there was no related allowance for credit losses totaled $ 43.7 million and $ 16.0 million, respectively.

At December 31, 2021 and 2020, impaired loans for which there was no related allowance for credit losses totaled $ 34.2

million and $ 43.7 million, respectively.

The average balances of impaired loans during the years ended December 31, 2021 and 2020 were $ 53.4 million and $ 66.8 million, respectively.

19 unchanged sentences

These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department.

The risk ratings are also confirmed through periodic loan review examinations which are currently performed by an independent third-party.

The risk ratings are also reviewed periodically through loan review examinations which are currently performed by an independent third-party.

Reports by the independent third-party are presented directly to the Audit Committee of the Board of Directors.

In response to the COVID-19 pandemic and its adverse economic impact on both our commercial and retail borrowers, the Company implemented a modification program to defer principal or principal and interest payments for borrowers directly impacted by the pandemic and who were not more than 30 days past due as of December 31, 2019, all in accordance with the Coronavirus Aid, Relief, and Economic Security ("CARES") Act.

In addition, the Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration ("SBA").

As of December 31, 2020, the Company secured 1,287 PPP loans for its customers totaling $ 473.2 million.

The PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan was made as long as certain conditions are met regarding employee retention and compensation levels.

PPP loans are fully guaranteed by the SBA and may be eligible for forgiveness by the SBA to the extent that the proceeds are used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up to 24 weeks after the loan was made as long as certain conditions are met regarding employee retention and compensation levels.

PPP loans deemed eligible for forgiveness by the SBA will be repaid by the SBA to the Company.

PPP loans are included in the commercial loan portfolio.

As of December 31, 2021, the Company secured 2,067 PPP loans for its customers totaling $ 682.0 million, which includes both the initial round and the second round of PPP.

As of December 31, 2021, 1,823 PPP loans totaling $ 587.0 million were forgiven.

The balance at December 31, 2021 for PPP loans was $ 94.9 million.

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades (in thousands):

Gross Loans Held by Investment by Year of Origination

at December 31, 2021

Total portfolio Residential Commercial mortgage Multi-family Construction Total

mortgages Commercial Consumer Total Loans (1)

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Special mention $ — — — — 697 434 — — 1,131

2 unchanged sentences

Loss — — — — — — — — —

Gross Loans Held by Investment by Year of Origination

at December 31, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Total criticized and classified — — — 280 863 9,003 — — 10,146

Pass/Watch 229,106 235,949 113,206 67,493 75,906 470,832 — — 1,192,492

Total $ 1,294,702 3,458,666 1,484,515 541,939 6,779,822 2,567,470 492,566 9,839,858

Total residential $ 229,106 235,949 113,206 67,773 76,769 479,835 — — 1,202,638

Commercial Mortgage

Special mention $ — 2,624 28,706 22,296 9,657 26,668 1,094 — 91,045

4 unchanged sentences

Pass/Watch 655,105 600,030 589,578 298,665 430,947 952,746 101,618 30,851 3,659,540

Total gross loans $ 272,022 653,276 293,188 95,115 1,313,601 787,865 62,741 2,164,207

Total commercial mortgage $ 655,105 602,654 618,302 355,221 447,956 1,013,770 103,511 30,851 3,827,370

Special mention $ — — — — 3,053 271 — — 3,324

4 unchanged sentences

Pass/Watch 154,419 294,716 166,558 173,583 117,654 448,710 2,880 1,169 1,359,689

Total gross loans $ 155,492 644,912 180,998 250,529 1,231,931 291,810 70,071 1,593,812

Total multi-family $ 154,419 295,155 166,558 173,583 120,707 449,926 2,880 1,169 1,364,397

Special mention $ — 1,125 — — — — — — 1,125

4 unchanged sentences

Pass/Watch 173,843 176,182 219,331 94,363 9,604 103 6,250 679,676

Total gross loans $ 95,257 433,620 209,017 150,376 888,270 245,856 64,537 1,198,663

Total construction $ 173,843 177,307 219,331 96,728 9,604 103 — 6,250 683,166

Total Mortgage

Special mention $ — 3,749 28,706 22,296 13,407 27,373 1,094 — 96,625

4 unchanged sentences

Pass/Watch 1,212,473 1,306,877 1,088,673 634,104 634,111 1,872,391 104,498 38,270 6,891,397

Total gross loans $ 104,164 480,896 173,385 43,839 802,284 243,894 55,838 1,102,016

2016 and prior

Gross Loans Held by Investment by Year of Origination

at December 31, 2021

2021 2020 2019 2018 2017 Prior to 2017 Revolving Loans Revolving loans to term loans Total Loans

Total Mortgage $ 1,212,473 1,311,065 1,117,397 693,305 655,036 1,943,634 106,391 38,270 7,077,571

Special mention $ 1,232 2,662 2,816 3,263 24,418 40,561 8,389 2,155 85,496

4 unchanged sentences

Pass/Watch 415,924 222,132 179,193 154,440 149,567 489,051 355,097 39,856 2,005,260

Total commercial $ 417,156 225,530 187,526 163,563 179,732 594,419 377,108 43,832 2,188,866

Special mention $ — — — — — 109 25 94 228

Substandard — — — 116 2 1,514 6 — 1,638

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified — — — 116 2 1,623 31 94 1,866

Pass/Watch 25,140 4,503 24,272 21,046 15,804 99,106 119,347 16,358 325,576

Total consumer $ 25,140 4,503 24,272 21,162 15,806 100,729 119,378 16,452 327,442

Special mention $ 1,232 6,411 31,522 25,559 37,825 68,044 9,508 2,249 182,350

Substandard — 1,175 5,535 42,881 13,267 110,191 14,427 1,821 189,297

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified 1,232 7,586 37,057 68,440 51,092 178,235 23,935 4,070 371,647

Pass/Watch 1,653,537 1,533,512 1,292,138 809,590 799,482 2,460,547 578,942 94,484 9,222,232

Total gross loans $ 1,654,769 1,541,098 1,329,195 878,030 850,574 2,638,782 602,877 98,554 9,593,879

(1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.

Gross Loans Held by Investment by Year of Origination

at December 31, 2020

Residential Commercial mortgage Multi-family Construction Total

mortgages Commercial Consumer Total loans

2020 2019 2018 2017 2016 Prior to 2016 Revolving Loans Revolving loans to term loans Total Loans

Special mention $ — — — — 123 2,759 — — 2,882

1 unchanged sentence

Doubtful — — — — — — — — —

Gross Loans Held by Investment by Year of Origination

at December 31, 2020

2020 2019 2018 2017 2016 Prior to 2016 Revolving Loans Revolving loans to term loans Total Loans

Loss — — — — — — — — —

1 unchanged sentence

Pass/Watch 271,858 152,117 93,588 101,943 119,563 526,099 — — 1,265,168

Total $ 1,077,689 2,578,393 1,225,551 429,812 5,311,445 1,634,759 391,360 7,337,564

(1) Contained within criticized and classified loans at December 31, 2020 are loans that were granted payment deferrals related to COVID-19 totaling $ 207.4 million.

Total residential $ 272,022 155,492 95,257 104,164 121,870 545,897 — — 1,294,702

Commercial Mortgage

Special mention $ — 29,268 33,446 22,838 3,041 34,992 — 1,045 124,630

Substandard — 1,905 3,687 21,095 10,185 61,441 — — 98,313

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified — 31,173 37,133 43,933 13,226 96,433 — 1,045 222,943

Pass/Watch 596,364 600,904 395,280 432,590 302,034 809,779 68,650 30,122 3,235,723

Total commercial mortgage $ 596,364 632,077 432,413 476,523 315,260 906,212 68,650 31,167 3,458,666

Special mention $ — 682 19,837 3,117 5,558 300 — 288 29,782

Substandard — — — — — 1,568 — — 1,568

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified — 682 19,837 3,117 5,558 1,868 — 288 31,350

Pass/Watch 291,995 180,271 187,880 169,310 131,297 486,649 3,418 2,346 1,453,165

Total multi-family $ 291,995 180,953 207,717 172,427 136,855 488,517 3,418 2,633 1,484,515

Special mention $ 1,991 14,508 7,877 — — — — — 24,376

Substandard — — 4,309 615 — — — — 4,924

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified 1,991 14,508 12,186 615 — — — — 29,300

Pass/Watch 88,777 236,021 138,190 43,224 1,568 512 — 4,347 512,639

Total construction $ 90,768 250,529 150,376 43,839 1,568 512 — 4,347 541,939

Total Mortgage

Special mention $ 1,991 44,458 61,160 25,955 8,722 38,051 — 1,333 181,670

Substandard 164 5,280 9,665 23,931 12,369 80,048 — — 131,457

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified 2,155 49,738 70,825 49,886 21,091 118,099 — 1,333 313,127

Gross Loans Held by Investment by Year of Origination

at December 31, 2020

2020 2019 2018 2017 2016 Prior to 2016 Revolving Loans Revolving loans to term loans Total Loans

Pass/Watch 1,248,994 1,169,313 814,938 747,067 554,462 1,823,039 72,067 36,815 6,466,695

Total Mortgage $ 1,251,149 1,219,051 885,763 796,953 575,553 1,941,138 72,067 38,148 6,779,822

Special mention $ — 6,295 6,038 27,251 9,779 81,355 22,745 3,617 157,080

Substandard — 7,324 2,527 16,139 40,512 41,831 16,738 2,018 127,090

Doubtful — — — — — — 52 — 52

Loss — — — — — — — — —

Total criticized and classified — 13,619 8,565 43,390 50,291 123,186 39,536 5,635 284,222

Pass/Watch 695,125 207,400 205,892 179,068 141,925 415,729 397,408 40,700 2,283,247

Total commercial $ 695,125 221,019 214,457 222,458 192,216 538,915 436,944 46,335 2,567,470

Special mention $ — 3 — 70 28 299 1,304 163 1,867

Substandard 25 49 14 — 2,912 1,230 1,236 1,278 6,744

Doubtful — — — — — — — — —

Loss — — — — — — — — —

Total criticized and classified 25 52 14 70 2,940 1,529 2,540 1,441 8,611

Pass/Watch 12,746 50,605 54,962 45,698 25,539 143,685 135,839 14,881 483,955

Total consumer $ 12,771 50,657 54,976 45,768 28,479 145,214 138,378 16,323 492,566

Special mention $ 1,991 50,756 67,198 53,276 18,529 119,705 24,049 5,113 340,617

Substandard 189 12,653 12,206 40,070 55,793 123,109 17,975 3,296 265,291

Doubtful — — — — — — 52 — 52

Loss — — — — — — — — —

Total criticized and classified 2,180 63,409 79,404 93,346 74,322 242,814 42,076 8,410 605,960

Pass/Watch 1,956,865 1,427,318 1,075,792 971,833 721,926 2,382,453 605,314 92,396 9,233,898

Total gross loans $ 1,959,045 1,490,727 1,155,196 1,065,179 796,248 2,625,267 647,390 100,806 9,839,858

(1) For consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.

(8) Banking Premises and Equipment

16 unchanged sentences

Total intangible assets $ 464,183 466,212

The Company updated certain estimates used in the purchase price allocation related to the SB One acquisition, primarily with respect to the marginal tax rate of deferred tax assets (“DTA”).

As a result, the fair value of the net assets acquired decreased by $ 1.4 million and the impact of these measurement period adjustments increased goodwill to $ 23.9 million.

Amortization expense of intangible assets for the years ended December 31, 2021, 2020 and 2019 is as follows (in thousands):

37 unchanged sentences

Total borrowed funds $ 626,774 1,175,972

At December 31, 2020, FHLB advances were at fixed rates and mature between January 2020 and May 2022, and at December 31, 2019, FHLB advances were at fixed rates and mature between January 2019 and April 2022.

At December 31, 2021, FHLB advances were at fixed rates and mature between January 2022 and July 2025, and at December 31, 2020, FHLB advances were at fixed rates and mature between January 2020 and May 2022.

These advances are secured by loans receivable under a blanket collateral agreement.

7 unchanged sentences

Due in one year or less $ 116,760

Due after one year through two years —

Due after two years through three years —

Due after three years through four years —

Due after four years through five years —

Total securities sold under repurchase agreements $ 116,760

15 unchanged sentences

The outstanding balance consisted of $ 12.9 million of subordinated deferrable interest debentures sold by the former SB One Bancorp to Sussex Capital Trust II (the “Trust”) and $ 15 million of private placement of fixed to-floating rate subordinated notes to an institutional investor.

Sussex Capital Trust II, a non-consolidated subsidiary of the Company acquired as part of the SB One acquisition and a Delaware statutory business trust established on June 28, 2007, issued $ 12.5 million of variable rate capital trust pass-through

securities to investors.

Concurrently, the Trust purchased $ 12.9 million of variable rate subordinated deferrable interest debentures from the former SB One Bancorp and issued $ 387,000 of Common Securities in consideration for payment of the assets of the Trust in the same amount.

The subordinated debentures are the sole asset of the Trust and their terms are the same as the terms of the capital securities.

The Company has also fully and unconditionally guaranteed the obligations of the Trust under the capital securities.

The interest rate is based on the three-month LIBOR plus 144 basis points and adjusts quarterly.

The rate at December 31, 2020 was 1.66 %.

The capital trust pass-through securities are currently redeemable by the Company at par in whole or in part.

These capital trust pass-through securities must be redeemed upon final maturity on September 15, 2037.

The proceeds of these trust preferred securities, which have been contributed to the Bank, are included in the Bank’s capital ratio calculations and treated as Tier I capital.

In accordance with FASB ASC 810, Consolidation, Sussex Capital Trust II, is not included in our consolidated financial statements.

For regulatory reporting purposes, capital trust pass-through securities qualify as Tier I capital subject to specified limitations.

As part of the acquisition of SB One, the Company assumed a $ 15.0 million private placement of fixed to-floating rate subordinated notes to an institutional investor on December 22, 2016.

The subordinated notes have a maturity date of December 22, 2026 and bear interest at the rate of 5.75 % per annum, payable quarterly, for the first five years of the term, and then at a variable rate that will reset quarterly to a level equal to the then current 3-month LIBOR plus 350 basis points over the remainder of the term.

Subordinated debentures at December 31, 2020 totaled 25.1 million, while interest expense on these subordinated debentures for the year ended December 31, 2020 totaled $ 512,000 .

In addition, the Company assumed a $ 15.0 million private placement of fixed to-floating rate subordinated notes to an institutional investor on December 22, 2016.

The proceeds of these trust preferred securities, which have been contributed to the Bank, are included in the Bank’s capital ratio calculations and treated as Tier I capital.

The subordinated notes had an initial call date at par of December 22, 2021 which the Company exercised.

Subordinated debentures at December 31, 2021 and 2020 totaled $ 10.3 million and $ 25.1 million, respectively, while interest expense on these subordinated debentures for the year ended December 31, 2021 and 2020 totaled $ 1.2 million and $ 512,000 , respectively.

(13) Benefit Plans

16 unchanged sentences

Interest cost 790 1,000 1,198 424 712 837

Actuarial loss 381 63 — ( 169 ) — 18

Actuarial (gain) loss ( 294 ) 381 63 ( 412 ) ( 169 ) —

Benefits paid ( 1,656 ) ( 1,630 ) ( 1,493 ) ( 584 ) ( 627 ) ( 600 )

99 unchanged sentences

The contribution percentage is determined by the Board of Directors in its sole discretion.

The Bank’s aggregate contributions to the 401(k) Plan for 2020, 2019 and 2018 were $ 1.0 million, $ 981,000 and $ 973,000 , respectively.

The Bank’s aggregate contributions to the 401(k) Plan for 2021, 2020 and 2019 were $ 1.2 million, $ 1.0 million and $ 981,000 , respectively.

Supplemental Executive Retirement Plan

The Bank maintains a non-qualified supplemental retirement plan for certain senior officers of the Bank.

This unfunded plan, which was frozen as of April 1, 2003 provides benefits in excess of the benefits permitted to be paid by the pension plan

under provisions of the tax law.

This unfunded plan, which was frozen as of April 1, 2003 provides benefits in excess of the benefits permitted to be paid by the pension plan under provisions of the tax law.

Amounts expensed under this supplemental retirement plan amounted to $ 74,000 , $ 80,000 and $ 85,000 for the years 2021, 2020 and 2019, respectively.

At December 31, 2021 and 2020, $ 1.8 million and $ 1.8 million, respectively, were recorded in other liabilities on the Consolidated Statements of Financial Condition for this supplemental retirement plan.

In connection with this supplemental retirement plan, an increase of $ 89,000 , an increase of $ 187,000 , and a decrease of $ 119,000 , net of tax, were recorded in other comprehensive (loss) income for 2020, 2019 and 2018, respectively.

In connection with this supplemental retirement plan, an increase of $ 68,000 , an increase of $ 89,000 , and an increase of $ 187,000 , net of tax, were recorded in other comprehensive income (loss) for 2021, 2020 and 2019, respectively.

Retirement Plan for the Board of Directors of Provident Bank

7 unchanged sentences

At December 31, 2021 and 2020, $ 123,000 and $ 127,000 , respectively, were recorded in other liabilities on the Consolidated Statements of Financial Condition for this retirement plan.

An increase of $ 6,334 , an increase of $ 730 , and an increase of $ 3,000 , net of tax, were recorded in other comprehensive (loss) income for 2020, 2019 and 2018, respectively, in connection with this plan.

Increases of $ 689 , $ 6,334 and $ 730 , net of tax, were recorded in other comprehensive income (loss) for 2021, 2020 and 2019, respectively, in connection with this plan.

Employee Stock Ownership Plan

14 unchanged sentences

Treasury securities.

Under the Supplemental ESOP provision, the estimated expense for the years ending December 31, 2020, 2019 and 2018 was $ 180,000 , $ 140,000 and $ 121,000 ,

respectively.

Under the Supplemental ESOP provision, the estimated expense for the years ending December 31, 2021, 2020 and 2019 was $ 180,000 , $ 180,000 and $ 140,000 , respectively.

The phantom equity is treated as equity awards (expensed at the time of allocation) and not liability awards which would require periodic adjustment to market, as participants do not have an option to take their distribution in cash.

6 unchanged sentences

Awards outstanding generally vest in three annual installments, commencing one year from the date of the award.

Additionally, certain awards are three -year performance-vesting awards, which may or may not vest depending upon the attainment of certain corporate financial targets.

Additionally, certain awards are three-year performance-vesting awards, which may or may not vest depending upon the attainment of certain

corporate financial targets.

Expense attributable to stock awards amounted to $ 5.5 million, $ 5.4 million and $ 6.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

30 unchanged sentences

291,511 7.5 $ 23.15 149,518 $ 24.91

The stock options outstanding and stock options exercisable at December 31, 2020 have an aggregate intrinsic value of $ 553,000 .

The stock options outstanding and stock options exercisable at December 31, 2021 have an aggregate intrinsic value of $ 2.0 million and $ 2.5 million, respectively.

The expense related to stock options is based on the fair value of the options at the date of the grant and is recognized ratably over the vesting period of the options.

16 unchanged sentences

(14) Income Taxes

The Tax Cuts and Jobs Act ("Tax Act") was signed into law on December 22, 2017.

Included as part of the law, was a permanent reduction in the federal corporate income tax rate from 35% to 21% effective January 1, 2018.

Based upon the change in the tax rate, the Company revalued its net deferred tax asset at December 31, 2017.

The current and deferred amounts of income tax expense (benefit) for the years ended December 31, 2021, 2020 and 2019 are as follows (in thousands):

8 unchanged sentences

$ 59,197 30,603 34,455

The Company recorded a deferred tax expense (benefit) of $ 5.2 million, $ 6.6 million and ($ 2.4 ) million during 2020, 2019 and 2018, respectively, related to the unrealized gains (losses) on available for sale debt securities, which is reported in accumulated other comprehensive income (loss), net of tax.

Additionally, the Company recorded a deferred tax expense (benefit) of $ 1.4 million, ($ 463,000 ) and $ 379,000 in 2020, 2019 and 2018, respectively, related to the amortization of post-retirement benefit obligations, which is reported in accumulated other comprehensive income (loss), net of tax.

The Company recorded a deferred tax (benefit) expense of ($ 8.3 ) million, $ 5.2 million and $ 6.6 million during 2021, 2020 and 2019, respectively, related to the unrealized gains (losses) on available for sale debt securities, which is reported in accumulated other comprehensive income (loss), net of tax.

Additionally, the Company recorded a deferred tax expense (benefit) of $ 1.4 million, $ 1.4 million and ($ 561,000 ) in 2021, 2020 and 2019, respectively, related to the amortization of post-retirement benefit obligations, which is reported in accumulated other comprehensive income (loss), net of tax.

A reconciliation between the amount of reported total income tax expense and the amount computed by multiplying the applicable statutory income tax rate is as follows (in thousands):

12 unchanged sentences

Allowance for credit losses on loans $ 21,640 26,156

Allowance for credit loss OBS 1,295 —

Allowance for credit loss on off-balance sheet ("OBS") credit exposure 1,763 1,295

Post-retirement benefit 6,908 6,924

3 unchanged sentences

Depreciation 425 331

SERP 1,013 733

ESOP 1,145 1,377

3 unchanged sentences

Federal Net Operating Loss ("NOL") 239 280

Unrealized loss on securities 501 —

Net unrealized loss on hedging activities — 1,717

Pension liability adjustments — 376

Lease liability 13,464 10,838

Other 1,196 693

2 unchanged sentences

Pension expense 8,158 7,340

Contingent consideration 56 —

Deferred loan costs 7,104 4,532

3 unchanged sentences

Unrealized gain on available for sale debt securities — 7,802

Pension liability adjustments 1,036 —

Net unrealized gain on hedging activities 788 —

Lease right-of-use asset 13,082 10,606

Total gross deferred tax liabilities 32,623 32,242

6 unchanged sentences

There are approximately $ 1.1 million of NOL carryforwards available to offset future taxable income as of December 31, 2021.

If not utilized, these carryforwards will expire in 2031.

Pursuant to the Tax Act, NOLs created after December 31, 2017 may be carried forward indefinitely and utilization is subject to 80% of taxable income.

utilized, these carryforwards will expire in 2031.

The federal NOLs are subject to a combined annual Code Section 382 limitation in the amount of approximately $ 197,000 .

11 unchanged sentences

The Company, through its bank subsidiary, files a Pennsylvania Mutual Thrift Institution Tax return.

The Company's Federal and New York State income tax returns are open for examination from 2017, the New Jersey State income tax returns are open for examination from 2016, and the Pennsylvania Mutual Thrift Institutions return is open from 2017.

During the fourth quarter of 2017, the Internal Revenue Service completed its examination of the Company's 2014 Federal tax return.

Th e completion of the examination did not have a material impact on the Company's effective income tax rate.

The examination of the Company's 2016 and 2015 New York State tax returns was completed in the first quarter of 2019, and did not have a material impact on the Company's effective income tax rate.

The Company's 2017 and 2018 New York State returns are currently under audit.

The Company's 2015 thru 2018 New Jersey State returns are currently under audit.

The Company's Federal and Pennsylvania Mutual Thrift Institutions tax returns are open for examination from 2018.

The Company's 2017 and 2018 New York State returns are currently under audit and tax years after 2018 are still subject to examination for New York State.

The Company's 2015 through 2018 New Jersey State returns are currently under audit and tax years after 2018 are still subject to examination for New Jersey.

(15) Commitments, Contingencies and Concentrations of Credit Risk

23 unchanged sentences

In the first quarter of 2020, U.S.

federal regulatory authorities issued an interim final rule providing banking institutions that adopt CECL during the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five year transition in total).

during the initial two-year delay (i.e., a five year transition in total).

In connection with its adoption of CECL on January 1, 2020, the Company elected to utilize the five-year CECL transition.

66 unchanged sentences

For purposes of estimating the allowance for credit losses for off-balance sheet credit exposures, the exposure at default includes an estimated drawdown of unused credit based on historical credit utilization factors and current loss factors, resulting in a proportionate amount of expected credit losses.

The following table illustrates the impact of the January 1, 2020 adoption of CECL on off-balance sheet credit exposures (dollars in thousands):

The following table illustrates the impact of the January 1, 2020 adoption of CECL on OBS credit exposures (dollars in thousands):

January 1, 2020

1 unchanged sentence

Allowance for credit losses on off-balance sheet credit exposure $ 3,206 — 3,206

The provision for credit losses for off-balance sheet credit exposures totaled 1.8 million for the year ended December 31, 2020.

The allowance for credit losses for off-balance sheet credit exposures was $ 5.0 million at December 31, 2020, included in other liabilities on the Consolidated Statements of Financial Condition.

For the years ended December 31, 2021 and 2020, the provision for credit losses for off-balance sheet credit exposures totaled $ 1.5 million and $ 1.8 million.

The allowance for credit losses for OBS credit exposures was $ 6.5 million and $ 5.0 million at December 31, 2021 and 2020, respectively, and included in other liabilities on the Consolidated Statements of Financial Condition.

(18) Fair Value Measurements

34 unchanged sentences

These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings.

These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.

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Available for sale debt securities:

Agency obligations $ 1,009 1,009 — —

Treasury obligations $ 196,329 $ 196,329 — —

Mortgage-backed securities 1,708,831 — 1,708,831 —

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Available for sale debt securities:

Agency obligations $ 1,009 1,009 — —

Mortgage-backed securities 938,413 — 938,413 —

Asset-backed securities 53,830 53,830

State and municipal obligations 71,258 — 71,258 —

51 unchanged sentences

For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.

The Company classifies these commitments as Level 3 within the fair value hierarchy.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument.

18 unchanged sentences

Available for sale debt securities:

Agency obligations $ 1,009 1,009 1,009 — —

Treasury obligations 196,329 196,329 196,329 — —

Mortgage-backed securities 1,708,831 1,708,831 — 1,708,831 —

30 unchanged sentences

Available for sale debt securities:

Agency obligations 1,009 1,009 1,009 — —

Mortgage-backed securities 938,413 938,413 — 938,413 —

Asset-backed securities 53,830 53,830 — 53,830 —

State and municipal obligations 71,258 71,258 — 71,258 —

6 unchanged sentences

Corporate obligations 9,714 9,825 — 9,825 —

Total held to maturity debt securities $ 453,629 467,966 6,601 461,365 —

Total held to maturity debt securities, net of allowance for credit losses $ 450,965 472,529 7,601 464,928 —

FHLBNY stock 59,489 59,489 59,489 — —

7 unchanged sentences

Borrowings 1,175,972 1,193,024 — 1,193,024 —

Subordinated Debentures 25,135 24,375 — 24,375 —

Derivative liabilities 109,148 109,148 — 109,148 —

(19) Selected Quarterly Financial Data (Unaudited)

The following tables are a summary of certain quarterly financial data for the years ended December 31, 2020 and 2019.

2020 Quarters Ended

March 31 June 30 September 30 December 31

(In thousands, except per share data)

Interest income $ 88,169 81,537 93,453 100,150

Interest expense 16,148 11,709 11,468 11,412

Net interest income 72,021 69,828 81,985 88,738

Provision for credit losses 14,717 10,900 6,400 ( 2,298 )

Net interest income after provision for loan losses 57,304 58,928 75,585 91,036

Non-interest income 16,991 14,365 20,626 20,448

Non-interest expense 54,107 55,267 59,783 58,571

Income before income tax expense 20,188 18,026 36,428 52,913

Income tax expense 5,257 3,715 9,285 12,346

Net income $ 14,931 14,311 27,143 40,567

Basic earnings per share $ 0.23 0.22 0.37 0.53

Diluted earnings per share 0.23 0.22 0.37 0.53

2019 Quarters Ended

March 31 June 30 September 30 December 31

(In thousands, except per share data)

Interest income $ 92,411 95,648 93,026 90,385

Interest expense 17,404 19,093 19,498 17,502

Net interest income 75,007 76,555 73,528 72,883

Provision for credit losses 200 9,500 500 2,900

Net interest income after provision for loan losses 74,807 67,055 73,028 69,983

Non-interest income 12,188 15,834 18,047 17,725

Non-interest expense 48,416 49,694 49,738 53,731

Income before income tax expense 38,579 33,195 41,337 33,977

Income tax expense 7,689 8,802 9,938 8,026

Net income $ 30,890 24,393 31,399 25,951

Basic earnings per share $ 0.48 0.38 0.49 0.40

Diluted earnings per share 0.48 0.38 0.49 0.40

(19) Earnings Per Share

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Investment in subsidiary 1,631,554 1,561,769

Due from subsidiary—SAP 38,286 42,347

ESOP loan 19,615 25,555

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Liabilities and Stockholders’ Equity

Due to subsidiary—SAP $ — 11,741

Other liabilities 355 367

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(Decrease) increase in other liabilities ( 12 ) ( 4,493 ) ( 734 )

Net cash (used in) provided by operating activities ( 15,234 ) 108,803 51,941

Net cash provided by (used in) operating activities 103,188 ( 15,234 ) 108,803

Cash flows from investing activities:

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Cash dividends paid ( 71,478 ) ( 65,823 ) ( 72,809 )

Repayment of subordinated debentures ( 15,000 ) — —

Shares issued dividend reinvestment plan — 451 2,230

10 unchanged sentences

Unrealized losses on available for sale debt securities:

Net gains (losses) arising during the period $ 20,134 ( 5,190 ) 14,944 24,987 ( 6,636 ) 18,351 ( 8,425 ) 2,296 ( 6,129 )

Net (losses) gains arising during the period $ ( 31,972 ) 8,242 ( 23,730 ) 20,134 ( 5,190 ) 14,944 24,987 ( 6,636 ) 18,351

Reclassification adjustment for gains included in net income ( 230 ) 59 ( 171 ) — — — — — —

Total ( 32,202 ) 8,301 ( 23,901 ) 20,134 ( 5,190 ) 14,944 24,987 ( 6,636 ) 18,351

Unrealized (losses) gains on derivatives (cash flow hedges) ( 7,099 ) 1,830 ( 5,269 ) ( 780 ) 201 ( 579 ) 304 ( 83 ) 221

Unrealized gains (losses) on derivatives (cash flow hedges) 12,189 ( 3,142 ) 9,047 ( 7,099 ) 1,830 ( 5,269 ) ( 780 ) 201 ( 579 )

Amortization related to post-retirement obligations 5,474 ( 1,412 ) 4,062 5,604 ( 1,445 ) 4,159 ( 2,176 ) 561 ( 1,615 )

Total other comprehensive income (loss) $ 18,639 ( 4,805 ) 13,834 22,031 ( 5,874 ) 16,157 ( 6,443 ) 1,756 ( 4,687 )

Total other comprehensive (loss) income $ ( 14,539 ) 3,747 ( 10,792 ) 18,639 ( 4,805 ) 13,834 22,031 ( 5,874 ) 16,157

The following table presents the changes in the components of accumulated other comprehensive loss, net of tax, for the years ended December 31, 2021 and 2020 (in thousands):

1 unchanged sentence

For the Years Ended December 31,

(Losses) Gains on

Available for Sale Debt Securities

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Comprehensive

Income Unrealized

Gains (Losses) on

Income (Loss) Unrealized

Available for Sale Debt Securities

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Comprehensive

Income (Loss)

Balance at the beginning of the period $ 23,690 ( 1,081 ) ( 4,954 ) 17,655 8,746 ( 5,240 ) 315 3,821

Current period change in other comprehensive income (loss) 14,944 4,159 ( 5,269 ) 13,834 18,351 ( 1,615 ) ( 579 ) 16,157

Current period change in other comprehensive (loss) income ( 23,901 ) 4,062 9,047 ( 10,792 ) 14,944 4,159 ( 5,269 ) 13,834

Balance at the end of the period $ ( 211 ) 2,981 4,093 6,863 23,690 ( 1,081 ) ( 4,954 ) 17,655

10 unchanged sentences

( 171 ) — — Net of tax

Cash flow hedges:

Unrealized losses (gains) on derivatives 3,878 1,741 ( 624 ) Interest expense

( 1,000 ) ( 449 ) 161 Income tax expense

2,878 1,292 ( 463 )

Post-retirement obligations:

Amortization of actuarial losses 448 189 399 Compensation and employee benefits (1)

Amortization of actuarial (gains) losses ( 598 ) 448 190 Compensation and employee benefits (1)

154 ( 115 ) ( 50 ) Income tax expense

25 unchanged sentences

During the years ended December 31, 2020, 2019 and 2018, such derivatives were used to hedge the variable cash outflows associated with Federal Home Loan Bank borrowings.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings.

During the years ended December 31, 2021, 2020 and 2019, such derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.

Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings and brokered demand deposits.

During the next twelve months, the Company estimates that $ 1.3 million will be reclassified as an increase to interest expense.

As of December 31, 2021, the Company had 14 outstanding interest rate derivatives with an aggregate notional amount of $ 600.0 million that was designated as a cash flow hedge of interest rate risk.

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statements of Financial Condition as of December 31, 2020 and 2019 (in thousands):

At December 31, 2020

Assets and liabilities relating to certain financial instruments, including derivatives, may be eligible for offset in the Consolidated Statements of Condition and/or subject to enforceable master netting arrangements or similar agreements.

The Company does not offset asset and liabilities under such arrangements in the Consolidated Statements of Condition.

The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Condition at December 31, 2021 and December 31, 2020 (in thousands).

Fair Values of Derivative Instruments as of December 31, 2021

Asset Derivatives Liability Derivatives

Consolidated Statements of Financial Condition Fair

Derivatives not designated as hedging instruments:

Notional Amount Consolidated Statements of Financial Condition Fair

Derivatives not designated as a hedging instrument:

Interest rate products $ 1,188,703 Other assets $ 59,110 $ 1,188,703 Other liabilities $ 60,163

Credit contracts 33,683 Other assets 76 97,213 Other liabilities 46

Total derivatives not designated as hedging instruments $ 107,749 $ 109,148

Derivatives designated as hedging instruments:

Total derivatives not designated as a hedging instrument 59,186 60,209

Derivatives designated as a hedging instrument:

Interest rate products 250,000 Other assets 7,278 350,000 Other liabilities 2,263

Total derivatives designated as hedging instruments $ ( 6,671 ) $ —

At December 31, 2019

Total gross derivative amounts recognized on the balance sheet 66,464 62,472

Gross amounts offset on the balance sheet — —

Net derivative amounts presented on the balance sheet $ 66,464 $ 62,472

Gross amounts not offset on the balance sheet:

Financial instruments - institutional counterparties $ 18,618 $ 18,618

Cash collateral - institutional counterparties (1)

Net derivatives not offset $ 47,846 $ 17,288

Fair Values of Derivative Instruments as of December 31, 2020

Asset Derivatives Liability Derivatives

Consolidated Statements of Financial Condition Fair

Derivatives not designated as hedging instruments:

Notional Amount Consolidated Statements of Financial Condition Fair

Derivatives not designated as a hedging instrument:

Interest rate products $ 1,316,163 Other assets $ 108,519 $ 1,316,163 Other liabilities $ 109,957

Credit contracts 47,745 Other assets 97 73,954 Other liabilities 58

Total derivatives not designated as hedging instruments $ 38,877 $ 39,356

Derivatives designated as hedging instruments:

Total derivatives not designated as a hedging instrument 108,616 110,015

Derivatives designated as a hedging instrument:

Interest rate products 175,000 Other assets 498 425,000 Other liabilities 7,582

Total derivatives designated as hedging instruments $ 428 $ —

Total gross derivative amounts recognized on the balance sheet 109,114 117,597

Gross amounts offset on the balance sheet — —

Net derivative amounts presented on the balance sheet $ 109,114 $ 117,597

Gross amounts not offset on the balance sheet:

Financial instruments - institutional counterparties $ 928 $ 928

Cash collateral - institutional counterparties (1)

Net derivatives not offset $ 108,186 $ 3,049

(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance.

The application of the cash collateral cannot reduce the net derivative position below zero.

Therefore, excess cash collateral, if any, is not reflected above.

(2) The fair values related to interest rate products in the above net derivative tables show the total value of assets and liabilities, which include accrued interest receivable and accrued interest payable for the periods ended December 31, 2021 and December 31, 2020.

The table below presents the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 (in thousands).

13 unchanged sentences

As of December 31, 2021, the Company had four dealer counterparties.

The Company had a net liability position with respect to all four of the counterparties.

The Company had a net liability position with respect to three of the counterparties.

The termination value for this net liability position, which includes accrued interest, was $ 26.0 million at December 31, 2021.

77 unchanged sentences

Operating cash flows from operating leases $ 9,255 8,863

For the year ended December 31, 2020, the Company added nine lease obligations related to the SB One acquisition.

The Company recorded a $ 3.8 million right-of-use asset and lease liability for these lease obligations.

For the year ended December 31, 2021, the Company added one new lease obligation related to the Company's new operations office located in Woodbridge, New Jersey.

The Company recorded a $ 10.0 million right-of-use asset and lease liability for this lease obligation.

Future minimum payments for operating leases with initial or remaining terms of one year or more as of December 31, 2021 were as follows (in thousands):

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data