What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 166 added, 160 removed, 303 unchanged (52% of the section changed)

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Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and those related to the economic environment, particularly in the market areas in which the Company operates, inflation and unemployment, competitive products and pricing, real estate values, fiscal and monetary policies of the U.S.

government, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, any failure to realize the anticipated benefits of the merger transaction when expected or at all;

and the possibility that the transaction may be more expensive to complete than anticipated, including those resulting from the completion of the merger and integration of the companies.

government, the effects of any turmoil or negative news in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, any failure to realize the anticipated benefits of the merger transaction when expected or at all;

and the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected conditions, factors or events, potential adverse reactions or changes to business, employee, customer and/or counterparty relationships, including those resulting from the completion of the merger and integration of the companies;

and the impact of a potential shutdown of the federal government.

The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made.

The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements.

statements expressed with respect to future periods in any current statements.

The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.

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("Lakeland"), which added $10.91 billion to total assets, $7.91 billion to total loans, $8.62 billion to total deposits and 68 full-service banking offices in New Jersey and New York.

The Company expects to close 13 of the acquired Lakeland banking offices and nine legacy Bank branches in the third quarter of 2024 due to geographic overlap.

The Company closed 13 of the acquired Lakeland banking offices and nine legacy Bank branches in the third quarter of 2024 due to geographic overlap.

Under the merger agreement, each share of Lakeland common stock was converted into the right to receive 0.8319 shares of the Company's common stock, a total of 54,356,954 shares converted, plus cash in lieu of fractional shares.

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The excess of consideration paid over the estimated fair value of the net assets acquired totaled $190.9 million and was recorded as goodwill.

Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $18.9 million and $21.1 million and for the three and six months ended June 30, 2024, respectively.

Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $15.6 million and $36.7 million and for the three and nine months ended September 30, 2024, respectively.

Critical Accounting Policies

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The respective quantitative allowance for each loan 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.

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.

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 effective interest rate.

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One of the most significant judgments involved in estimating the Company’s allowance for credit losses on loans relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period.

As of June 30, 2024, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.

The allowance estimation process resulted in a total provision of $66.1 million and $66.3 million for the three and six months ended June 30, 2024, and an overall coverage ratio of 100 basis points.

As of September 30, 2024, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.

The allowance estimation process resulted in a total provision of $9.6 million and $75.9 million for the three and nine months ended September 30, 2024, and an overall coverage ratio of 102 basis points.

Management believes the allowance for credit losses accurately represents the estimated inherent losses, factoring in the qualitative adjustment and other assumptions, including the selection of the baseline forecast within the model.

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

As of June 30, 2024, the portfolio and class segments for the Company’s loan portfolio were:

As of September 30, 2024, the portfolio and class segments for the Company’s loan portfolio were:

• Mortgage Loans – Residential, Commercial Real Estate, Multi-Family and Construction

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

For the three and six months ended June 30, 2024, the provision for credit losses on loans totaled $66.1 million and $66.3 million, compared to an $9.8 million and a $16.4 million provision for credit losses for the three and six months ended June 30, 2023, respectively.

The increases in provision for both periods was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million, recorded as part of the Lakeland merger.

COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

Total assets as of June 30, 2024 were $24.07 billion, a $9.86 billion increase from December 31, 2023.

For the three and nine months ended September 30, 2024, the provision for credit losses on loans totaled $9.6 million and $75.9 million, compared to an $12.5 million and a $27.4 million provision for credit losses for the three and nine months ended September 30, 2023, respectively.

The increases in provision for both periods were primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million, recorded as part of the Lakeland merger.

COMPARISON OF FINANCIAL CONDITION AS OF SEPTEMBER 30, 2024 AND DECEMBER 31, 2023

Total assets as of September 30, 2024 were $24.04 billion, a $9.83 billion increase from December 31, 2023.

The increase in total assets was primarily due to the addition of Lakeland.

The Company’s loan portfolio totaled $18.76 billion as of June 30, 2024 and $10.87 billion as of December 31, 2023.

The Company’s loan portfolio totaled $18.79 billion as of September 30, 2024 and $10.87 billion as of December 31, 2023.

The loan portfolio consisted of the following:

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Loans held for sale $ 5,757 1,785

Mortgage loans:

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Net deferred fees and unearned discounts (16,617) (12,456)

Total loans $ 18,759,330 10,871,916

Total loans held for investment $ 18,794,609 10,871,916

(1) Commercial loans consist of owner-occupied real estate and commercial & industrial loans.

As part of the merger with Lakeland, we acquired $7.91 billion in loans, net of purchase accounting adjustments.

As of June 30, 2024, the acquired Lakeland loan portfolio, net of fair value marks, totaled $7.97 billion, which included $3.02 billion in commercial mortgage loans, $1.49 billion in commercial loans, $1.36 billion in multi-family loans, $878.2 million in residential loans, $564.5 million in specialty lending, $327.3 million in construction loans and $327.2 million in consumer loans.

Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of June 30, 2024, compared to 86.5% as of December 31, 2023.

Compared to the prior quarter, during the three months ended September 30, 2024, the loan portfolio had net increases of $93.4 million of commercial loans, $37.1 million of multi-family loans, $8.6 million of residential mortgage loans, and $4.7 million of commercial mortgage loans, partially offset by net decreases of $96.7 million of construction loans and $2.3 million of consumer loans.

Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio as of September 30, 2024, compared to 86.5% as of December 31, 2023.

The Bank’s lending activities, though concentrated in the communities surrounding its offices, extend predominantly throughout New Jersey, eastern Pennsylvania and Orange, Nassau and Queens Counties, New York.

This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within these states.

The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses.

The risks created by this concentration are evaluated by management as part of its risk management program.

We consider our commercial real estate loans to be higher risk categories in our loan portfolio.

These loans are particularly sensitive to economic conditions.

As of June 30, 2024, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $11.50 billion, or 61.3% of total gross loans.

As of September 30, 2024, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $11.44 billion, or 60.8% of total gross loans.

The Company believes the CRE loans it originates are appropriately collateralized under its credit standards.

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As a result, the performance of these loans is generally impacted by fluctuations in collateral values, the ability of the borrower to obtain permanent financing, and, in the case of loans to residential builder/developers, volatility in consumer demand.

The table below summarizes the concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments, based on the collateral securing the loans, as of June 30, 2024 (in thousands):

Amount Percentage of Total

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Total CRE, multi-family and construction loans $ 11,616,837 100.0 %

(1) As of June 30, 2024, multi-family CRE loans on New York City properties totaled $227.7 million.

(1) As of September 30, 2024, multi-family CRE loans on New York City properties totaled $226.6 million.

This portfolio constitutes only 1.2% of total loans and has an average loan size of $2.6 million.

Approximately $113.6 million of these loans are collateralized by rent stabilized apartments and all are performing.

Loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.

The determination of collateral value is critically important when financing real estate.

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If differences arise, management addresses those with the reviewer and determines an appropriate resolution in accordance with its lending policy.

Both the appraisal process and the appraisal review process can be less reliable in establishing accurate collateral values during and following periods of economic weakness due to the lack of comparable sales and the limited availability of financing to support an active market of potential purchasers.

The table below summarizes the Company’s commercial real estate portfolio, including multi-family and construction loans on a gross basis, not including any purchase accounting adjustments as of June 30, 2024, as segregated by the geographic region in which the property is located (dollars in thousands):

Both the appraisal process and the appraisal review process can be less reliable in

establishing accurate collateral values during and following periods of economic weakness due to the lack of comparable sales and the limited availability of financing to support an active market of potential purchasers.

The table below summarizes the Company’s commercial real estate portfolio, including multi-family and construction loans on a gross basis, not including any purchase accounting adjustments as of September 30, 2024, as segregated by the geographic region in which the property is located (dollars in thousands):

Amount Percentage of Total

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The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”).

The Company’s gross commitments and outstanding balances as a participant in SNCs were $202.0 million and $109.1 million, respectively, as of June 30, 2024, compared to $140.5 million and $54.9 million, respectively, as of December 31, 2023.

One SNC relationship, with an outstanding balance of $6.8 million (which represents approximately a 10.4% share of the total facility commitment) was 90 days or more delinquent as of June 30, 2024.

The Company had outstanding junior lien mortgages totaling $334.7 million as of June 30, 2024.

Of this total, two loans totaling $667,000 were 90 days or more delinquent.

The following table sets forth information regarding the Company’s non-performing assets as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The Company’s gross commitments and outstanding balances as a participant in SNCs were $585.7 million and $480.3 million, respectively, as of September 30, 2024, compared to $140.5 million and $54.9 million, respectively, as of December 31, 2023.

The Company had outstanding junior lien mortgages totaling $342.2 million as of September 30, 2024.

Of this total, nine loans totaling $708,000 were 90 days or more delinquent.

The following table sets forth information regarding the Company’s non-performing assets as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Mortgage loans:

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Total non-performing assets $ 99,735 61,290

The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of June 30, 2024 and December 31, 2023 (in thousands):

June 30, 2024 December 31, 2023

The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024 December 31, 2023

Mortgage loans:

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Total 60-89 day delinquent loans $ 4,478 3,316

As of June 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.00% of total loans, compared to 0.97% as of December 31, 2023 and June 30, 2023, respectively.

The Company recorded provisions for credit losses on loans of $66.1 million and $66.3 million for the three and six months ended June 30, 2024, compared with provisions of $10.4 million and $16.4 million for the three and six months ended June 30, 2023, respectively.

For the three and six months ended June 30, 2024, the Company had net charge-offs of $1.3 million and $2.3 million, respectively, compared to net charge-offs of $1.1 million and $1.8 million, respectively, for the same periods in 2023.

The allowance for credit losses increased $81.1 million to $188.3 million as of June 30, 2024 from $107.2 million as of December 31, 2023.

The increases in provision for both periods were primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

Total non-performing loans were $67.9 million, or 0.36% of total loans as of June 30, 2024, compared to $49.6 million, or 0.46% of total loans as of December 31, 2023.

The $18.2 million increase in non-performing loans, which was primarily attributable to the addition of Lakeland, consisted of a $10.9 million increase in non-performing construction loans, a $6.5 million increase in non-performing multi-family loans, a $3.6 million increase in non-performing residential mortgage loans and a $511,000 increase in non-performing consumer loans, partially offset by a $1.8 million decrease in non-performing commercial loans and a $1.6 million decrease in non-performing commercial mortgage loans.

As of June 30, 2024 and December 31, 2023, the Company held foreclosed assets of $11.1 million and $11.7 million, respectively.

During the six months ended June 30, 2024, there were three properties sold with an aggregate carrying value of $532,000.

Foreclosed assets as of June 30, 2024 consisted primarily of commercial real estate.

Total non-performing assets as of June 30, 2024 increased $17.7 million to $79.0 million, or 0.33% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

Total investment securities were $3.10 billion as of June 30, 2024, a $963.0 million increase from December 31, 2023.

As of September 30, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.02% of total loans, compared to 0.99% and 1.01% as of December 31, 2023 and September 30, 2023, respectively.

The Company recorded provisions for credit losses on loans of $9.6 million and $75.9 million for the three and nine months ended September 30, 2024,

compared with provisions of $11.0 million and $27.4 million for the three and nine months ended September 30, 2023, respectively.

For the three and nine months ended September 30, 2024, the Company had net charge-offs of $6.8 million and $9.1 million, respectively, compared to net charge-offs of $5.5 million and $7.3 million, respectively, for the same periods in 2023.

The allowance for credit losses increased $84.0 million to $191.2 million as of September 30, 2024 from $107.2 million as of December 31, 2023.

The increase in provision for the three months ended September 30, 2024 was attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration, while the increase in provision for credit losses on loans for the nine months ended September 30, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by an improved economic forecast for the current nine-month period within our CECL model, compared to the same period last year.

Total non-performing loans were $89.9 million, or 0.47% of total loans as of September 30, 2024, compared to $49.6 million, or 0.46% of total loans as of December 31, 2023.

The $40.3 million increase in non-performing loans, which was primarily attributable to the addition of Lakeland, consisted of a $12.4 million increase in non-performing construction loans, a $8.8 million increase in non-performing commercial mortgage loans, a $7.1 million increase in non-performing commercial loans, a $6.8 million increase in non-performing multi-family loans, a $4.4 million increase in non-performing residential mortgage loans and a $800,000 increase in non-performing consumer loans.

As of September 30, 2024 and December 31, 2023, the Company held foreclosed assets of $9.8 million and $11.7 million, respectively.

During the nine months ended September 30, 2024, there were three properties sold with an aggregate carrying value of $532,000 and one write-down of a foreclosed commercial property of $1.3 million.

Foreclosed assets as of September 30, 2024 consisted primarily of commercial real estate.

Total non-performing assets as of September 30, 2024 increased $36.6 million to $97.9 million, or 0.41% of total assets, from $61.3 million, or 0.43% of total assets as of December 31, 2023.

Total investment securities were $3.17 billion as of September 30, 2024, a $1.04 billion increase from December 31, 2023.

This increase was primarily due to the addition of Lakeland.

Total deposits increased $8.06 billion during the six months ended June 30, 2024, to $18.35 billion, due to the addition of Lakeland.

Total savings and demand deposit accounts increased $6.07 billion to $15.27 billion as of June 30, 2024, while total time deposits increased $1.99 billion to $3.08 billion as of June 30, 2024.

Total deposits increased $8.08 billion during the nine months ended September 30, 2024, to $18.38 billion, due primarily to the addition of Lakeland.

Total savings and demand deposit accounts increased $6.02 billion to $15.22 billion as of September 30, 2024, while total time deposits increased $2.06 billion to $3.16 billion as of September 30, 2024.

The increase in savings and demand deposits was largely attributable to a $2.92 billion increase in interest bearing demand deposits, a $1.58 billion increase in non-interest bearing demand deposits, a $1.03 billion increase in money market deposits and a $495.5 million increase in savings deposits.

The Company's Insured Cash Sweep deposits increased $619.8 million to $1.14 billion as of June 30, 2024, from $520.2 million as of December 31, 2023.

The increase in time deposits consisted of a $2.09 billion increase in retail time deposits, partially offset by a $100.5 million decrease in brokered time deposits.

Within total deposits, brokered deposits totaled $149.8 million and $165.7 million as of June 30, 2024 and December 31, 2023, respectively.

Our estimated uninsured and uncollateralized deposits as of June 30, 2024 totaled $4.98 billion, or 27.1% of deposits.

Our total estimated uninsured deposits, including collateralized deposits, as of June 30, 2024, were $6.34 billion.

Within time deposits, approximately $414.7 million, or 13.5% was uninsured as of June 30, 2024.

Borrowed funds increased $332.0 million during the six months ended June 30, 2024, to $2.30 billion.

The increase in time deposits consisted of a $2.01 billion increase in retail time deposits and a $46.5 million increase in brokered time deposits.

Within total deposits, brokered deposits totaled $207.0 million and $165.7 million as of September 30, 2024 and December 31, 2023, respectively.

Our total estimated uninsured and uncollateralized deposits as of September 30, 2024, were $4.52 billion.

Borrowed funds increased $244.5 million during the nine months ended September 30, 2024, to $2.21 billion.

The increase in deposits and borrowings was largely due to the addition of Lakeland.

Borrowed funds represented 9.6% of total assets as of June 30, 2024, a decrease from 13.9% as of December 31, 2023.

Stockholders’ equity increased $865.1 million during the six months ended June 30, 2024, to $2.56 billion, primarily due to common stock issued for the purchase of Lakeland and net income earned for the period, partially offset by an increase in unrealized losses on available for sale debt securities and cash dividends paid to stockholders.

For the three and six months ended June 30, 2024, common stock repurchases totaled 527 shares at an average cost of $15.17 per share and 86,852 shares at an average cost of $14.84 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation.

As of June 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization.

Borrowed funds represented 9.2% of total assets as of September 30, 2024, a decrease from 13.9% as of December 31, 2023.

Stockholders’ equity increased $930.5 million during the nine months ended September 30, 2024, to $2.62 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and an improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.

For the three and nine months ended September 30, 2024, common stock repurchases totaled 1,969 shares at an average cost of $16.36 per share and 88,821 shares at an average cost of $14.87 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation.

As of September 30, 2024, approximately 1.0 million shares remained eligible for repurchase under the current stock repurchase authorization.

Liquidity and Capital Resources.

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Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit flows.

For the six months ended June 30, 2024 and 2023, loan repayments totaled $1.54 billion and $1.50 billion, respectively.

The Company has continued to monitor and focus on depositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $3.46 billion and $1.30 billion, respectively, as of June 30, 2024.

Our estimated uninsured and uncollateralized deposits as of June 30, 2024 totaled $4.98 billion, or 27.1% of deposits.

Our total estimated uninsured deposits, including collateralized deposits as of June 30, 2024, were $6.34 billion.

For the nine months ended September 30, 2024 and 2023, loan repayments totaled $1.21 billion and $2.09 billion, respectively.

The Company has continued to monitor and focus on depositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $2.51 billion and $2.24 billion, respectively, as of September 30, 2024.

Our estimated uninsured and uncollateralized deposits as of September 30, 2024 totaled $4.52 billion, or 24.6% of deposits.

Our total estimated uninsured deposits, including collateralized deposits as of September 30, 2024, were $9.65 billion.

In March 2023, the Company established a facility under the BTFP with the FRBNY.

As of June 30, 2024, the Company had $550.0 million of advances under the Program.

As of September 30, 2024, the Company had $550.0 million of advances under the Program.

The Company elected to participate in the BTFP program due to significant cost savings compared to other wholesale funding sources.

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The ability to prepay at any time without penalty also enhances our ability to manage our interest rate risk position.

Total deposits increased $8.06 billion for the six months ended June 30, 2024, due to the addition of Lakeland.

Total deposits increased $8.08 billion for the nine months ended September 30, 2024, due to the addition of Lakeland.

Deposit activity is affected by changes in interest rates, competitive pricing and product offerings in the marketplace, local economic conditions, customer confidence and other factors such as stock market volatility.

Certificate of deposit accounts that are scheduled to mature within one year totaled $2.82 billion as of June 30, 2024.

Certificate of deposit accounts that are scheduled to mature within one year totaled $3.00 billion as of September 30, 2024.

Based on its current pricing strategy and customer retention experience, the Bank expects to retain a significant share of these accounts.

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

As of June 30, 2024, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:

June 30, 2024

As of September 30, 2024, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:

September 30, 2024

Required Required with Capital Conservation Buffer Actual

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(2) For a period of three years following completion of the merger, the Bank will be required to maintain a Tier 1 capital to total assets leverage ratio of at least 8.5% and a total capital to risk-based assets ratio of at least 11.25%.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023

The Company reported a net loss of $11.5 million, or $0.11 per basic and diluted share for the three months ended June 30, 2024, compared to net income of $32.0 million, or $0.43 per basic and diluted share, for the three months ended June

For the six months ended June 30, 2024, the Company reported net income of $20.6 million, or $0.23 per basic share and diluted share, compared to net income of $72.5 million, or $0.97 per basic and diluted share, for the six months ended June 30, 2023.

On May 16, 2024, the Company completed its merger with Lakeland, which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments.

The Company’s earnings for the three and six months ended June 30, 2024 were impacted by an initial CECL provision for credit losses on loans and commitments to extend credit of $65.2 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

The results of operations for the three and six months ended June 30, 2024 also included other transaction costs related to the merger with Lakeland totaling $18.9 million and $21.1 million, respectively, compared with transaction costs totaling $2.0 million and $3.1 million for the respective 2023 periods.

Additionally, the Company realized a $2.8 million loss related to the sale in the current quarter of subordinated debt issued by Lakeland from its investment portfolio.

The following tables sets forth certain information for the three and six months ended June 30, 2024.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023

The Company reported net income of $46.4 million, or $0.36 per basic and diluted share for the three months ended September 30, 2024, compared to a net loss of $11.5 million, or $0.11 per basic and diluted share, for the three months ended June 30, 2024 and net income of $28.5 million, or $0.38 per basic and diluted share, for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, net income totaled $67.0 million, or $0.65 per basic and diluted share, compared to $101.1 million, or $1.35 per basic and diluted share, for the nine months ended September 30, 2023.

The Company’s earnings for the three and nine months ended September 30, 2024 reflected the impact of the May 16, 2024 merger with Lakeland Bancorp, Inc.

(“Lakeland”), which added $10.91 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments.

The merger with Lakeland significantly impacted provisions for credit losses in the trailing quarter due to the initial CECL provisions recorded on acquired loans.

The results of operations for the three and nine months ended September 30, 2024 also included other transaction costs related to the merger with Lakeland, totaling $15.6 million and $36.7 million, respectively, compared with transaction costs totaling $2.3 million and $5.3 million for the respective 2023 periods.

Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the nine months ended September 30, 2024.

The following tables sets forth certain information for the three and nine months ended September 30, 2024.

For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities is expressed both in dollars and rates.

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For the three months ended

June 30, 2024 June 30, 2023

September 30, 2024 September 30, 2023

Average Balance Interest Average

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(3) Annualized net interest income divided by average interest-earning assets.

For the six months ended

June 30, 2024 June 30, 2023

For the nine months ended

September 30, 2024 September 30, 2023

Average Balance Interest Average

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Net Interest Income .

Net interest income increased $42.4 million to $141.5 million for the three months ended June 30, 2024, from $99.1 million for same period in 2023.

Net interest income increased $27.7 million to $235.2 million for the six months ended June 30, 2024, from $207.4 million for same period in 2023.

Net interest income for the three and six months ended June 30, 2024 were favorably impacted by the net assets acquired from Lakeland, partially offset by unfavorable repricing of both deposits and borrowings.

Additionally, the six months ended June 30, 2024 were further benefited by favorable repricing of adjustable rate loans and the originations of higher-yielding loans.

The net interest margin increased 10 basis points to 3.21% for the quarter ended June 30, 2024, compared to 3.11% for the quarter ended June 30, 2023.

The weighted average yield on interest-earning assets increased 94 basis points to 5.67% for the quarter ended June 30, 2024, compared to 4.73% for the quarter ended June 30, 2023, while the weighted average cost of interest-bearing liabilities increased 96 basis points for the quarter ended June 30, 2024, to 3.09%, compared to 2.13% for the quarter ended June 30, 2023.

The average cost of interest-bearing deposits for the quarter ended June 30, 2024, was 2.84%, compared to 1.85% for the same period last year.

Average non-interest-bearing demand deposits totaled $2.87 billion for the quarter ended June 30, 2024, compared to $2.37 billion for the quarter ended June 30, 2023.

The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the quarter ended June 30, 2024, compared with 1.42% for the quarter ended June 30, 2023.

The average cost of borrowed funds for the quarter ended June 30, 2024, was 3.83%, compared to 3.41% for the same period last year.

For the six months ended June 30, 2024, the net interest margin decreased 21 basis points to 3.08%, compared to 3.29% for the six months ended June 30, 2023.

The weighted average yield on interest-earning assets increased 75 basis points to 5.43% for the six months ended June 30, 2024, compared to 4.68% for the six months ended June 30, 2023, while the weighted average cost of interest-bearing liabilities increased 113 basis points to 2.97% for the six months ended June 30, 2024, compared to 1.84% for the same period last year.

The average cost of interest-bearing deposits increased 112 basis points to 2.74% for the six months ended June 30, 2024, compared to 1.62% for the same period last year.

Average non-interest-bearing demand deposits totaled $2.47 billion for the six months ended June 30, 2024, compared with $2.46 billion for the six months ended June 30, 2023.

The average cost of total deposits, including non-interest-bearing deposits, was 2.19% for the six months ended June 30, 2024, compared with 1.24% for the six months ended June 30, 2023.

The average cost of borrowings for the six months ended June 30, 2024, was 3.75%, compared to 3.01% for the same period last year.

Interest income on loans secured by real estate increased $57.0 million to $156.3 million for the three months ended June 30, 2024, from $99.3 million for the three months ended June 30, 2023.

Commercial loan interest income increased $27.1 million to $58.5 million for the three months ended June 30, 2024, from $31.4 million for the three months ended June 30, 2023.

Consumer loan interest income increased $3.9 million to $8.4 million for the three months ended June 30, 2024, from $4.4 million for the three months ended June 30, 2023.

For the three months ended June 30, 2024, the average balance of total loans increased $4.41 billion to $14.65 billion, compared to the same period in 2023.

The average yield on total loans for the three months ended June 30, 2024, increased 81 basis points to 6.05%, from 5.24% for the same period in 2023.

Interest income on loans secured by real estate increased $68.5 million to $263.8 million for the six months ended June 30, 2024, from $195.3 million for the six months ended June 30, 2023.

Commercial loan interest income increased $34.5 million to $94.6 million for the six months ended June 30, 2024, from $60.1 million for the six months ended June 30, 2023.

Consumer loan interest income increased $4.2 million to $12.9 million for the six months ended June 30, 2024, from $8.7 million for the six months ended June 30, 2023.

For the six months ended June 30, 2024, the average balance of total loans increased $2.49 billion to $12.66 billion, compared with $10.17 billion for the same period in 2023.

The average yield on total loans for the six months ended June 30, 2024, increased 65 basis points to 5.83%, from 5.18% for the same period in 2023.

Interest income on held to maturity debt securities totaled $2.4 million for the three months ended June 30, 2024, compared to the same period last year.

Average held to maturity debt securities decreased $27.7 million to $352.2 million for the three months ended June 30, 2024, from $380.0 million for the same period last year.

Interest income on held to maturity debt securities decreased $100,000 to $4.6 million for the six months ended June 30, 2024, compared to the same period in 2023.

Average held to maturity debt securities decreased $27.2 million to $354.7 million for the six months ended June 30, 2024, from $381.9 million for the same period last year.

Interest income on available for sale debt securities increased $7.4 million to $17.6 million for the three months ended June 30, 2024, from $10.3 million for the three months ended June 30, 2023.

The average balance of available for sale debt securities increased $443.7 million to $2.24 billion for the three months ended June 30, 2024, compared to the same period in 2023.

Interest income on available for sale debt securities increased $7.0 million to $27.7 million for the six months ended June 30, 2024, from $20.7 million for the same period last year.

The average balance of available for sale debt securities increased $154.7 million to $1.96 billion for the six months ended June 30, 2024.

Interest income on FHLBNY stock increased $1.6 million to $2.7 million for the three months ended June 30, 2024, from $1.14 million for the three months ended June 30, 2023.

The average balance of FHLBNY stock increased $6.7 million to $88.9 million for the three months ended June 30, 2024, compared to the same period in 2023.

Interest income on FHLBNY stock increased $9.9 million to $32.7 million for the six months ended June 30, 2024, from $22.9 million for the same period last year.

The average balance of FHLBNY stock increased $10.6 million to $81.3 million for the six months ended June 30, 2024.

The average yield on total securities increased to 3.40% for the three months ended June 30, 2024, compared with 2.53% for the same period in 2023.

For the six months ended June 30, 2024, the average yield on total securities increased to 3.14%, compared with 2.52% for the same period in 2023.

Interest expense on deposit accounts increased $44.6 million to $81.1 million for the three months ended June 30, 2024, compared with $36.4 million for the three months ended June 30, 2023.

For the six months ended June 30, 2024, interest expense on deposit accounts increased $69.6 million to $133.6 million, from $64.0 million for the same period last year.

The average cost of interest-bearing deposits increased to 2.84% and 2.74% for the three and six months ended June 30, 2024, respectively, from 1.85% and 1.62% for the three and six months ended June 30, 2023, respectively.

The average balance of interest-bearing core deposits, which consist of total savings and demand deposits, for the three months ended June 30, 2024, increased $2.46 billion to $9.39 billion.

For the six months ended June 30, 2024, average interest-bearing core deposits increased $1.18 billion, to $8.22 billion, from $7.05 billion for the same period in 2023.

Average time deposit account balances increased $1.12 billion to $2.09 billion for the three months ended June 30, 2024, from $968.3 million for the three months ended June 30, 2023.

For the six months ended June 30, 2024, average time deposit account balances increased $661.4 million to $1.58 billion, from $914.4 million for the same period in 2023.

Interest expense on borrowed funds increased $6.5 million to $20.6 million for the three months ended June 30, 2024, from $14.1 million for the three months ended June 30, 2023.

For the six months ended June 30, 2024, interest expense on borrowed funds increased $16.4 million to $37.9 million, from $21.6 million for the six months ended June 30, 2023.

The average cost of borrowings increased to 3.83% for the three months ended June 30, 2024, from 3.41% for the three months ended June 30, 2023.

The average cost of borrowings increased to 3.75% for the six months ended June 30, 2024, from 3.01% for the same period last year.

Average borrowings increased $499.4 million to $2.16 billion for the three months ended June 30, 2024, from $1.66 billion for the three months ended June 30, 2023.

For the six months ended June 30, 2024, average borrowings increased $606.8 million to $2.05 billion, compared to $1.44 billion for the six months ended June 30, 2023.

Net interest income increased $87.5 million to $183.7 million for the three months ended September 30, 2024, from $96.2 million for same period in 2023.

Net interest income increased $115.2 million to $418.9 million for the nine months ended September 30, 2024, from $303.7 million for same period in 2023.

Net interest income for the three months ended September 30, 2024 was favorably impacted by a full quarter of combined operations with Lakeland and accretion of purchase accounting adjustments, compared to a 45 days impact in the prior quarter.

Net interest income for the nine months ended September 30, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

The net interest margin increased 35 basis points to 3.31% for the quarter ended September 30, 2024, compared to 2.96% for the quarter ended September 30, 2023.

The weighted average yield on interest-earning assets increased 95 basis points to 5.84% for the quarter ended September 30, 2024, compared to 4.89% for the quarter ended September 30, 2023, while the weighted average cost of interest-bearing liabilities increased 69 basis points for the quarter ended September 30, 2024, to 3.19%, compared to 2.50% for the quarter ended September 30, 2023.

The average cost of interest-bearing deposits for the quarter ended September 30, 2024, was 2.96%, compared to 2.22% for the same period last year.

Average non-interest-bearing demand deposits totaled $3.74 billion for the quarter ended September 30, 2024, compared to $2.23 billion for the quarter ended September 30, 2023.

The average cost of total deposits, including non-interest-bearing deposits, was 2.36% for the quarter ended September 30, 2024, compared with 1.74% for the quarter ended September 30, 2023.

The average cost of borrowed funds for the quarter ended September 30, 2024, was 3.73%, compared to 3.74% for the same period last year.

For the nine months ended September 30, 2024, the net interest margin decreased one basis point to 3.18%, compared to 3.19% for the nine months ended September 30, 2023.

The weighted average yield on interest-earning assets increased 85 basis points to 5.61% for the nine months ended September 30, 2024, compared to 4.76% for the nine months ended September 30, 2023, while the weighted average cost of interest-bearing liabilities increased 99 basis points to 3.06% for the nine months ended September 30, 2024, compared to 2.07% for the same period last year.

The average cost of interest-bearing deposits increased 102 basis points to 2.84% for the nine months ended September 30, 2024, compared to 1.82% for the same period last year.

Average non-interest-bearing demand deposits totaled $2.90 billion for the nine months ended September 30, 2024, compared with $2.38 billion for the nine months ended September 30, 2023.

The average cost of total deposits, including non-interest-bearing deposits, was 2.27% for the nine months ended September 30, 2024, compared with 1.40% for the nine months ended September 30, 2023.

The average cost of borrowings for the nine months ended September 30, 2024, was 3.73%, compared to 3.29% for the same period last year.

Interest income on loans secured by real estate increased $93.3 million to $197.9 million for the three months ended September 30, 2024, from $104.5 million for the three months ended September 30, 2023.

Commercial loan interest income increased $47.4 million to $81.2 million for the three months ended September 30, 2024, from $33.8 million for the three months ended September 30, 2023.

Consumer loan interest income increased $8.2 million to $12.9 million for the three months ended September 30, 2024, from $4.7 million for the three months ended September 30, 2023.

For the three months ended September 30, 2024, the average balance of total loans increased $8.06 billion to $18.53 billion, compared to the same period in 2023.

The average yield on total loans for the three months ended September 30, 2024, increased 84 basis points to 6.21%, from 5.37% for the same period in 2023.

Interest income on loans secured by real estate increased $161.8 million to $461.6 million for the nine months ended September 30, 2024, from $299.8 million for the nine months ended September 30, 2023.

Commercial loan interest income increased $81.9 million to $175.8 million for the nine months ended September 30, 2024, from $93.9 million for the nine months ended September 30, 2023.

Consumer loan interest income increased $12.4 million to $25.8 million for the nine months ended September 30, 2024, from $13.4 million for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, the average balance of total loans increased $4.36 billion to $14.63 billion, compared with $10.27 billion for the same period in 2023.

The average yield on total loans for the nine months ended September 30, 2024, increased 74 basis points to 5.99%, from 5.25% for the same period in 2023.

Interest income on held to maturity debt securities totaled $2.1 million for the three months ended September 30, 2024, compared to the same period last year.

Average held to maturity debt securities decreased $31.5 million to $342.2 million for the three months ended September 30, 2024, from $373.7 million for the same period last year.

Interest income on held to maturity debt securities decreased $298,000 to $6.8 million for the nine months ended September 30, 2024, compared to the same period in 2023.

Average held to maturity debt securities decreased $28.6 million to $350.5 million for the nine months ended September 30, 2024, from $379.1 million for the same period last year.

Interest income on available for sale debt securities increased $14.8 million to $24.9 million for the three months ended September 30, 2024, from $10.1 million for the three months ended September 30, 2023.

The average balance of available for sale debt securities increased $919.4 million to $2.64 billion for the three months ended September 30, 2024, compared to the same period in 2023.

Interest income on available for sale debt securities increased $21.7 million to $52.6 million for the nine months ended September 30, 2024, from $30.8 million for the same period last year.

The average balance of available for sale debt securities increased $411.8 million to $2.19 billion for the nine months ended September 30, 2024.

Interest income on FHLBNY stock decreased $.7 million to $1.1 million for the three months ended September 30, 2024, from $1.76 million for the three months ended September 30, 2023.

The average balance of FHLBNY stock increased $.6 million to $91.8 million for the three months ended September 30, 2024, compared to the same period in 2023.

Interest income on FHLBNY stock increased $24.0 million to $58.7 million for the nine months ended September 30, 2024, from $34.7 million for the same period last year.

The average balance of FHLBNY stock increased $7.2 million to $84.8 million for the nine months ended September 30, 2024.

The average yield on total securities increased to 3.69% for the three months ended September 30, 2024, compared with 2.67% for the same period in 2023.

For the nine months ended September 30, 2024, the average yield on total securities increased to 3.33%, compared with 2.57% for the same period in 2023.

Interest expense on deposit accounts increased $65.1 million to $110.0 million for the three months ended September 30, 2024, compared with $44.9 million for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, interest expense on deposit accounts increased $134.7 million to $243.6 million, from $108.9 million for the same period last year.

The average cost of interest-bearing deposits increased to 2.96% and 2.84% for the three and nine months ended September 30, 2024, respectively, from 2.22% and 1.82% for the three and nine months ended September 30, 2023, respectively.

The average balance of interest-bearing core deposits, which consist of total savings and demand deposits, for the three months ended September 30, 2024, increased $4.67 billion to $11.65 billion.

For the nine months ended September 30, 2024, average interest-bearing core deposits increased $2.35 billion, to $9.38 billion, from $7.03 billion for the same period in 2023.

Average time deposit account balances increased $2.06 billion to $3.11 billion for the three months ended September 30, 2024, from $1.05 billion for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, average time deposit account balances increased $1130.8 million to $2.09 billion, from $961.0 million for the same period in 2023.

Interest expense on borrowed funds increased $3.2 million to $19.9 million for the three months ended September 30, 2024, from $16.8 million for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, interest expense on borrowed funds increased $19.5 million to $57.9 million, from $38.3 million for the nine months ended September 30, 2023.

The average cost of borrowings decreased to 3.73% for the three months ended September 30, 2024, from 3.74% for the three months ended September 30, 2023.

The average cost of borrowings increased to 3.73% for the nine months ended September 30, 2024, from 3.29% for the same period last year.

Average borrowings increased $344.5 million to $2.13 billion for the three months ended September 30, 2024, from $1.78 billion for the three months ended September 30, 2023.

For the nine months ended September 30, 2024, average borrowings increased $518.3 million to $2.07 billion, compared to $1.56 billion for the nine months ended September 30, 2023.

Provision for Credit Losses.

3 unchanged sentences

Management assesses the adequacy of the allowance for credit losses on a quarterly basis and makes provisions for credit losses as necessary.

The Company recorded provisions for credit losses on loans of a $66.1 million and $66.3 million for the three and six months ended June 30, 2024, respectively, compared with provisions of $10.4 million and $16.4 million for the three and six months ended June 30, 2023, respectively.

The increases in provisions for both periods were primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

The Company recorded provisions for credit losses on loans of $9.6 million and $75.9 million for the three and nine months ended September 30, 2024, respectively, compared with provisions of $11.0 million and $27.4 million for the three and nine months ended September 30, 2023, respectively.

The provision for credit losses on loans in the current quarter was primarily attributable to specific reserves required on individually analyzed loans, combined with some economic forecast deterioration, while the increased provision for credit losses on loans for the nine months ended September 30, 2024 was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, partially offset by an improved economic forecast for the current nine-month period within our CECL model, compared to the same period

Non-Interest Income.

Non-interest income totaled $22.3 million for the quarter ended June 30, 2024, an increase of $2.9 million, compared to the same period in 2023.

Fee income increased $2.9 million to $8.7 million for the three months ended June 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and commercial loan prepayment fees, resulting from the Lakeland merger.

BOLI income increased $1.8 million to $3.3 million for the three months ended June 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI.

Wealth management fees increased $850,000 to $7.8 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $641,000 to $4.5 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, largely due to an increase in business activity.

Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to a loss on the sale of subordinated debt issued by Lakeland from the Company investment portfolio prior to the merger.

Additionally, other income decreased $314,000 to $969,000 for the three months ended June 30, 2024, compared to the quarter ended June 30, 2023, primarily due to a decrease in gains on the sales of foreclosed real estate.

For the six months ended June 30, 2024, non-interest income totaled $43.1 million, an increase of $1.5 million, compared to the same period in 2023.

Fee income increased $2.4 million to $14.6 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit card related fee income and commercial loan prepayment fees, resulting from the Lakeland merger.

BOLI income increased $2.1 million to $5.1 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $1.4 million to $15.3 million for the six months ended June 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period.

Insurance agency income increased $1.3 million to $9.3 million for the six months ended June 30, 2024, compared to $8.0 million for the same period in 2023, largely due to increases in contingent commissions, retention revenue and new business activity.

Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the six months ended June 30, 2024, primarily due to a $2.8 million loss on the sale of subordinated debt issued by Lakeland from the Company investment portfolio prior to the merger.

Other income decreased $2.8 million to $1.8 million for the six months ended June 30, 2024, compared to $4.6 million for the same period in 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans.

Non-interest income totaled $26.9 million for the quarter ended September 30, 2024, an increase of $7.5 million, compared to the same period in 2023.

Fee income increased $3.7 million to $9.8 million for the three months ended

September 30, 2024, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and loan related fee income, resulting from the Lakeland merger.

BOLI income increased $2.5 million to $4.3 million for the three months ended September 30, 2024, compared to the prior year quarter, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI.

Wealth management fees increased $628,000 to $7.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, mainly due to an increase in the average market value of assets under management during the period, while insurance agency income increased $407,000 to $3.6 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, largely due to an increase in business activity.

Additionally, other income increased $339,000 to $1.5 million for the three months ended September 30, 2024, compared to the quarter ended September 30, 2023, primarily due to increases in gains on the sale of SBA and mortgage loans.

For the nine months ended September 30, 2024, non-interest income totaled $69.9 million, an increase of $9.1 million compared to the same period in 2023.

Fee income increased $6.1 million to $24.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in deposit fee income, debit and credit card related fee income and loan related fee income resulting from the Lakeland merger.

BOLI income increased $4.6 million to $9.4 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to an increase in benefit claims recognized, combined with an increase in income related to the addition of Lakeland's BOLI, while wealth management income increased $2.1 million to $22.9 million for the nine months ended September 30, 2024, compared to the same period in 2023, mainly due to an increase in the average market value of assets under management during the period.

Additionally, insurance agency income increased $1.7 million to $12.9 million for the nine months ended September 30, 2024, compared to $11.2 million for the same period in 2023, largely due to increases in contingent commissions, retention revenue and new business activity.

Partially offsetting these increases in non-interest income, net gains on securities transactions decreased $3.0 million for the nine months ended September 30, 2024, primarily due to a $2.8 million loss related to the sale from the Provident investment portfolio of subordinated debt issued by Lakeland prior to the merger.

Other income decreased $2.4 million to $3.2 million for the nine months ended September 30, 2024, compared to $5.7 million for the same period in 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property recorded in the prior year, combined with a decrease in gains on sales of SBA loans.

Non-Interest Expense .

For the three months ended June 30, 2024, non-interest expense totaled $115.4 million, an increase of $50.3 million, compared to the three months ended June 30, 2023.

Compensation and benefits expense increased $19.6 million to $54.9 million for three months ended June 30, 2024, compared to $35.3 million for the same period in 2023.

For the three months ended September 30, 2024, non-interest expense totaled $136.0 million, an increase of $70.4 million, compared to the three months ended September 30, 2023.

Compensation and benefits expense increased $27.8 million to $63.5 million for the three months ended September 30, 2024, compared to $35.7 million for the same period in 2023.

The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland.

Additionally, merger-related expenses increased $17.0 million to $18.9 million for the three months ended June 30, 2024, compared to the same period in 2023.

Amortization of intangibles increased $5.7 million to $6.5 million for the three months ended June 30, 2024, compared to $749,000 for the same period in 2023, largely due to purchase accounting adjustments.

Data processing expense increased $2.7 million to $8.4 million for three months ended June 30, 2024, compared to $5.7 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland.

Net occupancy expense increased $3.2 million to $11.1 million for three months ended June 30, 2024, compared to $7.9 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses because of the addition of Lakeland.

Non-interest expense totaled $187.2 million for the six months ended June 30, 2024, an increase of $53.4 million, compared to $133.9 million for the six months ended June 30, 2023.

Compensation and benefits expense increased $20.9 million to $94.9 million for the six months ended June 30, 2024, compared to $74.0 million for the six months ended June 30, 2023.

Additionally, merger-related expenses increased $13.3 million to $15.6 million for the three months ended September 30, 2024, compared to the same period in 2023.

Amortization of intangibles increased $11.5 million to $12.2 million for the three months ended September 30, 2024, compared to $720,000 for the same period in 2023, largely due to core deposit intangible amortization related to Lakeland in the current quarter.

Data processing expenses increased $5.2 million to $10.5 million for three months ended September 30, 2024, compared to $5.3 million for the same period in 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland.

Net occupancy expense increased $4.7 million to $12.8 million for three months ended September 30, 2024, compared to $8.1 million for the same period in 2023, primarily due to an increase in depreciation and maintenance expenses due to the addition of Lakeland.

Other operating expenses increased $5.0 million to $15.8 million for the three months ended September 30, 2024, compared to $10.7 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance increased $2.6 million to $4.2 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

Non-interest expense totaled $323.2 million for the nine months ended September 30, 2024, an increase of $123.7 million, compared to $199.5 million for the nine months ended September 30, 2023.

Compensation and benefits expense increased $48.7 million to $158.4 million for the nine months ended September 30, 2024, compared to $109.7 million for the nine months ended September 30, 2023.

The increase in compensation and benefits expense was primarily attributable to the addition of Lakeland.

Merger-related expenses increased $18.1 million to $21.1 million for the six months ended June 30, 2024, compared to $3.1 million for the six months ended June 30, 2023.

Amortization of intangibles increased $5.7 million to $7.2 million for the six months ended June 30, 2024, compared to $1.5 million for the six months ended June 30, 2023, largely due to purchase accounting adjustments related to Lakeland.

Additionally, net occupancy expense increased $3.3 million to $19.7 million for the six months ended June 30, 2024, compared to the same period in 2023, primarily due to increased depreciation and maintenance expenses because of the addition of Lakeland.

Merger-related expenses increased $31.3 million to $36.7 million for the nine months ended September 30, 2024, compared to $5.3 million for the nine months ended September 30, 2023.

Amortization of intangibles increased $17.2 million to $19.4 million for the nine months ended September 30, 2024, compared to $2.2 million for the nine months ended September 30, 2023, largely due to core deposit intangible amortization related to Lakeland.

Data processing expense increased $9.2 million to $25.7 million for the nine months ended September 30, 2024, compared to $16.5 million for the nine months ended September 30, 2023, primarily due to additional software and hardware expenses needed for the addition of Lakeland, while net occupancy expense increased $8.0 million to $32.5 million for the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland.

Other operating expenses increased $5.6 million to $37.4 million for the three months ended September 30, 2024, compared to $31.8 million for the same period in 2023, primarily due to increases in professional service expenses, while FDIC insurance

increased $3.9 million to $9.6 million for the three months ended September 30, 2024, primarily due to the addition of Lakeland.

Income Tax Expense.

For the three months ended June 30, 2024, the Company's income tax benefit was $9.8 million, compared with an income tax expense of $11.6 million for the three months ended June 30, 2023.

The decrease in tax expense for the three months ended June 30, 2024, compared with the same period last year was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income in the quarter as a result of additional expenses from the Lakeland merger.

For the six months ended June 30, 2024, the Company's income tax expense was $1.1 million, compared with $26.1 million for the six months ended June 30, 2023.

The decrease in tax expense for the six months ended June 30, 2024, compared with the same period last year was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of additional expenses from the Lakeland merger.

For the three months ended September 30, 2024, the Company's income tax expense was $18.9 million with an effective tax rate of 28.9%, compared with an income tax expense of $8.8 million with an effective tax rate of 23.7% for the three months ended September 30, 2023.

The increase in tax expense for the three months ended September 30, 2024, compared with the same period last year was largely due to an increase in taxable income in the quarter, as a result of the Lakeland merger and the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee in the prior quarter.

For the nine months ended September 30, 2024, the Company's income tax expense was $19.9 million with an effective tax rate of 22.9%, compared with $34.9 million with an effective tax rate of 25.7% for the nine months ended September 30, 2023.

The decrease in tax expense for the nine months ended September 30, 2024 compared with the same period last year was largely due to a $5.8 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

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-Q

Item 2. Management’s Discussion and Analysis