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Item 1A. Risk Factors

2025-02-28 compared with 2024-02-28 · 113 added, 136 removed, 211 unchanged (54% of the section changed)

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The following discusses the significant risk factors that could affect our business and operations.

If any of the following conditions or events actually occur, our business, financial condition or results of operations could be negatively

affected, the market price of your investment in the Company’s common stock could decline, and you could lose all or a part of your investment in the Company’s common stock.

If any of the following conditions or events actually occur, our business, financial condition or results of operations could be negatively affected, the market price of your investment in the Company’s common stock could decline, and you could lose all or a part of your investment in the Company’s common stock.

The Company's risk factors are categorized as follows:

• Risks Related to the Pending Merger with Lakeland

• Risks Related to the Recent Merger with Lakeland

• Risks Related to the Economy, Financial Markets, and Interest Rates

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• Risks Related to Technology and Security

Risks Related to the Pending Merger with Lakeland

Receipt of regulatory approvals has taken longer than expected and may not be received in the future, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company that results from the merger of the Company and Lakeland.

Before the merger and bank merger may be completed, various approvals, consents and non-objections must be obtained from the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC, the New Jersey Department of Banking and Insurance (the “NJDOBI”) and other regulatory authorities in the United States.

In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each company.

Receipt of these approvals has taken longer than expected and, as a result, the Company and Lakeland have extended the merger deadline to March 31, 2024 to allow additional time to obtain the necessary regulatory approvals.

These approvals could continue to be delayed or not obtained at all, including due to an adverse development in either company’s regulatory standing or in any other factors considered by regulators when granting such approvals;

governmental, political or community group inquiries, investigations or opposition;

or changes in legislation or the political environment generally.

The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the merger agreement between the Company and Lakeland.

There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the merger or otherwise reducing the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe.

In addition, there can be no assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger.

Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.

In addition, despite the companies’ commitments to using their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the merger agreement, neither the Company nor Lakeland, nor any of their respective subsidiaries, is permitted (without the written consent of the other party), to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the required permits, consents, approvals and authorizations of governmental entities that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the merger and the bank merger.

The Company will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on the Company.

These uncertainties may impair the Company’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with the Company to seek to change existing business relationships with the Company.

In addition, subject to certain exceptions, the Company has agreed to operate its business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect its ability to consummate the transactions contemplated by the merger agreement on a timely basis without the consent of Lakeland.

These restrictions may prevent the Company from pursuing attractive business opportunities that may arise prior to the completion of the merger.

The merger agreement may be terminated in accordance with its terms and the merger may not be completed.

The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger.

Those conditions include, among other things:

(i) authorization for listing on the New York Stock Exchange of the shares of the Company’s common stock to be issued in the merger, subject to official notice of issuance;

(ii) the receipt of required regulatory approvals, including the approval of the Federal Reserve Board, the FDIC and the NJDOBI, and (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the merger, the bank merger or any of the

other transactions contemplated by the merger agreement or making the completion of the merger, the bank merger or any of the other transactions contemplated by the merger agreement illegal.

Each party’s obligation to complete the merger is also subject to certain additional customary conditions, including (a) subject to applicable materiality standards, the accuracy of the representations and warranties of the other party;

(b) the performance in all material respects by the other party of its obligations under the merger agreement;

(c) the receipt by each party of an opinion from its counsel to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986 and (d) the execution and delivery of the bank merger agreement in respect of the bank merger.

On December 20, 2023, the Company and Lakeland agreed to extend the merger agreement’s termination date to March 31, 2024 to provide additional time to fulfill merger conditions, especially those related to regulatory approvals.

Regardless of the extension, these conditions to the closing may not be fulfilled in a timely manner or at all, the parties may not agree to additional extensions, and, accordingly, the merger may not be completed by the updated termination date.

In addition, the parties can mutually decide to terminate the merger agreement at any time, even after the requisite stockholder and shareholder approvals.

Also, the Company or Lakeland may elect to terminate the merger agreement in certain other circumstances, including by either Lakeland or the Company if the merger has not completed on or before March 31, 2024, unless the failure of the merger to be completed by such date is due to the failure of the party seeking to terminate the merger agreement to perform or observe its obligations, covenants and agreements under the merger agreement.

In connection with the merger, the Company will assume Lakeland’s outstanding debt obligations and may need to issue additional debt in order to comply with capital requirements, and the combined company’s level of indebtedness following the completion of the merger could adversely affect the combined company’s ability to raise additional capital and to meet its obligations under its existing indebtedness.

In connection with the merger, the Company will assume Lakeland’s outstanding indebtedness and may need to issue additional debt in order to raise capital.

The Company’s existing debt, together with any future incurrence of additional indebtedness, and the assumption of Lakeland’s outstanding indebtedness, could have important consequences for the combined company’s creditors and the combined company’s stockholders.

For example, it could:

• limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes;

• restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;

• restrict the combined company from paying dividends to its stockholders;

• increase the combined company’s vulnerability to general economic and industry conditions;

• require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing the combined company’s ability to use cash flows to fund its operations, capital expenditures and future business opportunities.

The Company has incurred and is expected to incur substantial costs related to the merger and integration.

The Company has incurred and expects to incur a number of non-recurring costs associated with the merger.

These costs include legal, financial advisory, accounting, consulting and other advisory fees, retention, severance and employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs, and closing, integration and other related costs.

Some of these costs are payable by the Company regardless of whether or not the merger is completed.

The Company may have to rely on Lakeland's models post-closing until Lakeland's data can be integrated into the Company's models.

Lakeland depends on models for the allowance for credit losses, among other things, and we may have to rely on Lakeland's models post-closing prior to integrating Lakeland's data into our models.

These models may be designed or implemented in a manner different than the models used by the Company.

As a result, incorporation of Lakeland's data into our models could materially impact our results of operations or financial position to the extent that our estimates based on Lakeland's models prove to be inaccurate.

Failure to complete the merger could negatively impact the Company.

If the merger is not completed for any reason, there may be various adverse consequences and the Company may experience negative reactions from the financial markets and from its customers and employees.

For example, the Company’s business may have been impacted adversely by the failure to pursue other beneficial opportunities due to the focus of management on the merger or the financial impact of complying with requirements imposed by regulatory agencies, without realizing any of the anticipated benefits of completing the merger.

Additionally, if the merger agreement is terminated, the market price of the Company’s common stock could decline to the extent that current market prices reflect a market assumption

that the merger would have been beneficial and should have been completed.

The Company also could be subject to litigation related to any failure to complete the merger or to proceedings commenced against the Company to perform its obligations under the merger agreement.

If the merger agreement is terminated under certain limited circumstances, the Company may be required to pay a termination fee of $50 million to Lakeland.

Additionally, the Company has incurred and will incur additional substantial expenses in connection with the negotiation and completion of the transactions contemplated by the merger agreement, compliance with requests or requirements from the regulatory agencies, the preparing, filing, printing and mailing of a joint proxy statement/prospectus in connection with the merger, and all filing and other fees paid in connection with the merger.

If the merger is not completed, the Company would have to pay these expenses without realizing the expected benefits of the merger.

Combining the Company and Lakeland may be more difficult, costly or time-consuming than expected, and the Company may fail to realize the anticipated benefits of the merger.

The success of the merger will depend, in part, on the ability to realize the anticipated cost savings from combining the businesses of the Company and Lakeland.

To realize the anticipated benefits and cost savings from the merger, the Company and Lakeland must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized without adversely affecting current revenues and future growth.

If the Company and Lakeland are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected.

In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses, including costs related to requests or requirements issued by regulatory agencies.

An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company following the completion of the merger, which may adversely affect the value of the common stock of the combined company following the completion of the merger.

The Company and Lakeland have operated and, until the completion of the merger, must continue to operate, independently.

It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.

Integration efforts between the companies may also divert management attention and resources.

These integration matters could have an adverse effect on the Company during this transition period and for an undetermined period after completion of the merger on the combined company.

Furthermore, the board of directors and executive leadership of the combined company will consist of former directors and executive officers from each of the Company and Lakeland.

Combining the boards of directors and management teams of each company into a single board and a single management team could require the reconciliation of differing priorities and philosophies.

As a result of the mergers, the combined company will become subject to additional requirements and restrictions imposed by the DOJ.

On September 28, 2022, Lakeland Bank entered into a consent order with the DOJ to resolve allegations of violations of the Fair Housing Act and Equal Credit Opportunity Act within the Newark, NJ-PA Metro Division, as constituted in 2015 (the “DOJ Consent Order”).

The DOJ Consent Order was approved by the U.S.

District Court for the District of New Jersey on September 29, 2022.

The DOJ Consent Order requires Lakeland Bank to, among other things, invest $12 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic census tracts in Essex, Morris, Somerset, Sussex and Union Counties, New Jersey (the “Newark Lending Area”), and devote a minimum of $400,000 over five years toward community development partnership contributions in the Newark Lending Area, and $150,000 per year over five years toward advertising, community outreach, and credit repair and education in the Newark Lending Area.

Pursuant to the terms of the consent order, Lakeland Bank will also establish two new full-service branches in majority-Black and Hispanic census tracts:

• Risks Related to Our Common Stock

Risks Related to the Recent Merger with Lakeland

The ongoing integration of Lakeland with the Company may be more difficult, costly or time-consuming than expected, and the Company may fail to realize the anticipated benefits of the merger.

The Company completed its acquisition of Lakeland on May 16, 2024.

To realize the anticipated benefits and cost savings from the merger, the Company must successfully integrate and combine the Company’s and Lakeland’s businesses in a manner that permits those cost savings to be realized without adversely affecting current revenues and future growth.

If the Company is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected.

It is possible that the integration process could result in the loss of key employees, the disruption of the Company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the Company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.

If the Company is unable to retain key employees, including management, who are critical to the successful integration and future operations of the Company, the Company could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.

The Company’s integration efforts may also divert management attention and resources.

An inability to realize the full extent of the anticipated benefits of the merger, as well as any delays encountered in the integration process, could have an adverse effect upon the business, financial condition and results of operations of the Company.

The regulatory approvals received for the merger of the Company and Lakeland include conditions and commitments that could in the future have adverse effects on the Company.

The approvals received by the Company and the Bank from the bank regulatory authorities to consummate the merger with Lakeland were subject to certain regulatory conditions which continue to apply following the closing of the merger.

The regulatory conditions include, but are not limited to:

for three years following consummation of the merger, the Bank must maintain regulatory capital ratios at or above 8.50% for Tier 1 Leverage Capital and 11.25% for Total Risk Based Capital;

and the Bank must maintain its commercial real estate concentrations (as a percent of capital and reserves) at levels at or below those forecasted in the pro forma financial projections that the Bank submitted to the FDIC.

The failure to continue to comply with the regulatory conditions could result in supervisory and enforcement actions against the Company and the Bank, including the issuance of a cease and desist order or the imposition of civil money penalties, and could constrain the Company’s business operations, which could materially and adversely affect our business, financial condition, results of operations and prospects.

As a result of the merger, the Bank has become subject to additional requirements imposed by the DOJ.

On September 29, 2022, the U.S.

District Court for the District of New Jersey approved a consent order entered into by Lakeland Bank with the DOJ to resolve allegations of violations of the Fair Housing Act and Equal Credit Opportunity Act within the Newark, New Jersey-Pennsylvania Metro Division, as constituted in 2015 (the “DOJ Consent Order”).

The DOJ Consent Order required Lakeland Bank to, among other things, invest $12 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic census tracts in Essex, Morris, Somerset, Sussex and Union Counties, New Jersey (the “Newark Lending Area”), and devote a minimum of $400,000 over five years toward community development partnership contributions in the Newark Lending Area, and $150,000 per year over five years toward advertising, community outreach, and credit repair and education in the Newark Lending Area.

The DOJ Consent Order also required Lakeland Bank to establish two new full-service branches in majority-Black and Hispanic census tracts:

one in Newark, New Jersey and one in the Newark Lending Area.

In addition, Lakeland Bank must continue to maintain its full-time Community Development Officer position to oversee these efforts throughout the term of the consent order.

As required by the terms of the DOJ Consent Order, the Bank, as the resulting institution in the bank merger, has agreed to and will assume all obligations under the DOJ Consent Order in connection with the bank merger.

Although both the Bank and Lakeland Bank are committed to full compliance with the DOJ Consent Order, achieving such compliance will require significant management attention from Lakeland Bank and, following the mergers, the combined bank and may cause Lakeland

Bank and, following the mergers, the combined bank to incur unanticipated costs and expenses.

Actions taken to achieve compliance with the DOJ Consent Order may affect Lakeland Bank’s and the combined bank’s business or financial performance and may require Lakeland Bank or the combined bank to reallocate resources away from existing businesses or to undertake significant changes to their respective businesses, operations, products and services and risk management practices.

In addition, although the DOJ Consent Order resolved all claims by the DOJ against Lakeland Bank, Lakeland and its subsidiaries or, following the mergers, the combined company and its subsidiaries could be subject to other enforcement actions relating to the alleged violations resolved by the DOJ Consent Order.

The combined company's human capital may be affected by inability to retain personnel of the Company and/or Lakeland successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to manage its human capital and retain the talent and dedication of key employees currently employed by the Company and Lakeland.

It is possible that these employees may decide not to remain with the Company or Lakeland, as applicable, while the merger is pending or with the combined company after the merger is consummated.

If the Company and Lakeland are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, the Company and Lakeland could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.

In addition, following the merger, if key employees terminate their employment, the combined company’s human capital and business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business to suffer.

The Company and Lakeland also may not be able to locate or retain suitable replacements for any key employees who leave either company.

Although previously filed litigation related to the merger against the Company, the Company’s board of directors, the Bank, and the Bank’s board of directors has been settled, additional litigation may be filed against the Company, the Company’s board of directors, the Bank, and the Bank’s board of directors in the future, which could prevent or delay the completion of the merger, result in the payment of damages, or otherwise negatively impact the business and operations of the Company and the Bank.

Although litigation related to the merger was previously filed against the Company, the Company’s board of directors, the Bank, and the Bank’s board of directors and subsequently dismissed or settled, additional litigation may be filed against the Company, the Company’s board of directors, the Bank, and the Bank’s board of directors in the future.

The outcome of any litigation is uncertain.

One of the conditions to the closing is that there must be no order, injunction, or decree issued by any court or governmental entity of competent jurisdiction or other legal restraint preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement.

If any plaintiff were successful in obtaining an injunction prohibiting the Company or the Bank from completing the merger or any of the other transactions contemplated by the merger agreement, then such injunction may delay or prevent the effectiveness of the merger and could result in significant costs to the Company and/or the Bank, including costs associated with the indemnification of directors and officers of each entity.

The Company and the Bank may incur costs in connection with the defense or settlement of any stockholder or shareholder lawsuits filed in connection with the merger.

Further, such lawsuits and the defense or settlement of any such lawsuits may have an adverse effect on the financial condition and results of operations of the Company and the Bank and could prevent or delay the completion of the merger.

In addition, Lakeland Bank was required to continue to maintain its full-time Community Development Officer position to oversee these efforts throughout the term of the consent order.

As required by the terms of the DOJ Consent Order, the Bank, as the resulting institution in the bank merger, assumed all obligations of Lakeland Bank under the DOJ Consent Order.

Although the Bank is committed to full compliance with the DOJ Consent Order, achieving such compliance has required and will require significant management attention from the Bank and has caused and may continue to cause the Bank to incur significant costs and expenses.

Actions taken to achieve compliance with the DOJ Consent Order may affect the Bank’s business or financial performance and may require the Bank to reallocate resources away from existing businesses or to undertake significant changes to its business, operations, products and services and risk management practices.

In addition, although the DOJ Consent Order resolved all claims by the DOJ against Lakeland Bank, the Company and the Bank could be subject to other enforcement actions relating to the alleged violations resolved by the DOJ Consent Order as well as relating to any failure or delay to comply with one or more of the terms of the DOJ Consent Order.

The combined company's human capital may be affected by inability to retain personnel successfully.

The success of the merger will depend in part on the combined company’s ability to manage its human capital and retain the talent and dedication of key employees.

It is possible that these employees may decide not to remain with the Company going forward.

In addition, if key employees terminate their employment, the Company’s human capital and business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the Company’s business to suffer.

The Company also may not be able to locate or retain suitable replacements for any key employees who leave.

Risks Related to the Economy, Financial Markets, and Interest Rates

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Our results of operations substantially depend on our net interest income, which is the difference between the interest income we earn on our interest earning assets and the interest expense we pay on our interest-bearing liabilities.

An inverted yield curve, which has persisted throughout 2023, has and may continue to negatively impact our net interest margin and earnings.

As the Federal Reserve raised and has maintained higher interest rates, our interest-bearing liabilities may continue to be subject to repricing or maturing more quickly than our interest-earning assets.

A flattening yield curve, or one that inverts, could negatively impact our net interest margin and earnings.

As the Federal Reserve has maintained higher interest rates, our interest-bearing liabilities may continue to be subject to repricing or maturing more quickly than our interest-earning assets.

Persistent elevated short-term rates continue to require us to increase the rates we pay on our deposits and borrowed funds more quickly than we can increase the interest rates we earn on our loans and investments, resulting in a negative effect on interest spreads and net interest income.

In addition, the effect of high rates continue to be compounded as deposit customers move funds into higher yielding accounts or are lost to competitors offering higher rates on their deposit products.

As the Federal Reserve has maintained steady interest rates since August 2023, we are unable to predict whether current rates will persist or if the Federal Reserve will cut interest rates going

We are unable to predict whether current rates will persist or if the Federal Reserve will cut interest rates going forward.

Should market interest rates fall below current levels, our net interest income could also be negatively affected if competitive pressures prevent us from reducing rates on our deposits, while the yields on our assets decrease through loan prepayments and interest rate adjustments.

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As of December 31, 2024, our available for sale debt securities portfolio totaled $2.77 billion.

Unrealized gains and losses on securities available for sale are reported as a separate component of stockholders’ equity.

Unrealized gains and losses on securities available for sale are reported as a

separate component of stockholders’ equity.

Therefore, decreases in the fair value of securities available for sale resulting from increases in interest rates could have an adverse effect on our stockholders’ equity.

Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and consumers and potentially contribute to poor business and economic conditions generally, may also enhance or contribute to some of the risks discussed herein.

For example, higher inflation, or volatility and uncertainty related to inflation, could reduce demand for the Company’s products, adversely affect the creditworthiness of the Company’s borrowers or result in lower values for the Company’s investment securities and other interest-earning assets.

Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and consumers and potentially contribute to poor business and economic conditions generally, may also heighten or contribute to some of the risks discussed herein.

For example, higher inflation, or volatility and uncertainty related to inflation, could increase operating costs for the Company and reduce profitability, reduce demand for the Company’s products, adversely affect the creditworthiness of the Company’s borrowers or result in lower values for the Company’s investment securities and other interest-earning assets.

A general economic slowdown or uncertainty that produces either reduced returns or excessive market volatility could adversely impact our overall profitability, including our wealth management fee income and our access to capital and liquidity.

A general economic slowdown could affect our core banking business.

During 2023, headwinds facing the U.S.

economy continued despite improvements relative to 2022, as the Federal Reserve continued tightening monetary policy through a series of interest rate hikes through the first half of the year and maintained high levels thereafter.

The economy as a whole grew in 2023 and the consensus forecast has the economy maintaining growth and avoiding recession in 2024.

Certain sectors of the economy, notably residential housing, have already been impacted by high interest rates, although conditions have improved as interest rates declined slightly in the latter half of 2023.

As of December 31, 2024, various economic indicators suggested that real gross domestic product had expanded throughout 2024.

The unemployment rate had increased, on net, but remained low relative to historic levels.

Consumer price inflation, as measured by the 12-month change in the price index for personal consumption expenditures, had moved lower compared to its peak level in 2023.

Despite improved projections, unforeseen adverse changes in the economy and a possible recession could negatively affect the ability of our borrowers to repay their loans or force us to offer lower interest rates to encourage new borrowing activity.

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Payments on loans secured by commercial real estate also often depend on the successful operation and management of the businesses that occupy these properties or the financial stability of tenants occupying the properties.

Furthermore, these loans may be affected

by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy, declining rents, tenant defaults, or changes in government regulation.

Furthermore, these loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy, declining rents, tenant defaults, or changes in government regulation.

As of December 31, 2024, our CRE office portfolio totaled $884.1 million dollars, with approximately 13% being loans in New York.

In our CRE Multi-family portfolio, we hold loans collateralized by rent stabilized properties that totaled $117.4 million as of December 31, 2023.

In our CRE multi-family portfolio,loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.

In the case of commercial and industrial loans, although we strive to maintain high credit standards and limit exposure to any one borrower, the collateral for these loans often consists of accounts receivable, inventory and equipment.

This type of collateral typically does not yield substantial recovery in the event we need to foreclose on it and may rapidly deteriorate, disappear, or be misdirected in advance of foreclosure.

This adds to the potential that our charge-offs will be volatile, which could significantly negatively affect our earnings in any quarter.

This adds to the potential that our charge-offs will be volatile, which could significantly

negatively affect our earnings in any quarter.

In addition, some of our construction loans may pose higher risk than the levels expected at origination, as projects may stall, interest reserves may be inadequate, absorption may be slower than projected or sales prices or rents may be lower than forecasted.

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government issued or guaranteed investments will not occur.

As of December 31, 2023, we had approximately $259.0 million, $70.8 million and $1.29 billion invested in U.S.

Treasury securities, U.S.

government agency securities, and residential mortgage-backed securities issued or guaranteed by government-sponsored enterprises and programs, respectively.

Downgrades to the U.S.

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While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations may have on us, these changes could be material.

Bank regulators have signaled further review of regulatory requirements and the potential for changes to laws or regulations governing banks and bank holding companies.

Changes resulting from these events could include increased regulatory oversight, higher capital requirements or changes in the way regulatory capital is calculated, and the impositions of additional restrictions through regulatory changes or supervisory or enforcement activities, each of which could have a material impact on our business.

Changes resulting from updated regulations and laws could include increased regulatory oversight, higher capital requirements or changes in the way regulatory capital is calculated, and the impositions of additional restrictions through regulatory changes or supervisory or enforcement activities, each of which could have a material impact on our business.

The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect on our results of operations.

In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB.

An important function of the FRB is to regulate the money supply and credit environment.

Among the instruments used by the FRB to implement these objectives are open market purchases and sales of U.S.

Government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits.

These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.

Their use also affects interest rates charged on loans or paid on deposits.

The FRB’s policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect our net interest margin.

Its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans.

The monetary policies and regulations of the FRB have had a significant effect on the overall economy and the operating results of financial institutions in the past and are expected to continue to do so in the future.

Additionally, Congress and the administration through executive orders controls fiscal policy through decisions on taxation and expenditures.

Depending on industries and markets involved, changes to tax law and increased or reduced public expenditures could affect us directly or the business operations of our customers.

Changes in FRB and other governmental policies, fiscal policy, and our regulatory environment generally are beyond our control, and we are unable to predict what changes may occur or the manner in which any future changes may affect our business, financial condition and results of operations.

We face regulatory scrutiny based on our commercial real estate lending.

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Although the CRE Guidance does not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure may receive increased supervisory scrutiny where total non-owner occupied commercial real estate loans, including loans secured by multi-family buildings, investor commercial real estate and construction and land loans (“CRE Loans”), represent 300% or more of an institution’s total risk-based capital and the outstanding balance of the CRE Loan portfolio has increased by 50% or more during the preceding 36 months.

Our level of CRE Loans equaled 489.6% of total risk-based capital as of December 31, 2023, while our CRE Loan portfolio has increased by 30.4% during the preceding 36 months.

Our level of CRE Loans equaled 460.2% of total risk-based capital as of December 31, 2024, while our CRE Loan portfolio has increased by 72.2% during the preceding 36 months, primarily as a result of the addition of Lakeland.

Based on the size of our CRE Loan portfolio as a percentage of capital, regulatory oversight of our management of this CRE concentration is elevated.

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Future acquisitions by the Company, particularly those of financial institutions, are subject to approval by a variety of federal and state regulatory agencies (collectively, "regulatory approvals").

Regulatory approvals could be delayed, impeded, restrictively conditioned or denied due to existing or new issues the Company has, or may have, with regulatory agencies, including, without limitation, issues related to BSA/AML compliance, CRA compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, and other similar laws and regulations.

consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, and other similar laws and regulations.

We may fail to pursue or complete strategic and competitively significant acquisition opportunities as a result of our inability, or perceived or anticipated inability, to obtain regulatory approvals in a timely manner, under reasonable conditions or at all.

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As of December 31, 2024, our consolidated balance sheet included goodwill of $624.1 million and other intangible assets of $195.2 million.

Our business acquisitions typically result in goodwill and other intangible assets, which affect the amount of future amortization expense and potential impairment expense.

Our business acquisitions, including our acquisition of Lakeland, typically result in goodwill and other intangible assets, which affect the amount of future amortization expense and potential impairment expense.

We make estimates and assumptions in valuing such intangible assets that affect our consolidated financial statements.

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The effects of climate change continue to create a level of concern for the state of the global environment.

As a result, the global community has increased its political and social awareness surrounding the issue and have entered into international agreements in an effort to reduce global temperatures such as the Paris Agreement, which the United States re-joined as of February 19, 2021.

Further, the U.S.

Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives, legislation, and regulations to supplement the global effort to combat climate change.

State legislatures and federal and state regulatory agencies have proposed, and may propose in the future, initiatives, legislation, and regulations to supplement the global effort to combat climate change.

Similar and even more expansive initiatives are expected, including potentially increasing supervisory expectations with respect to banks’ risk management practices, accounting for the effects of climate change in stress testing scenarios and systemic risk assessments, revising expectations for credit portfolio concentrations based on climate-related factors, and encouraging investment by banks in climate-related initiatives and lending to communities disproportionately impacted by the effects of climate change.

For instance, the SEC is expected to issue a final rule in 2024 requiring public companies to disclose the amount of greenhouse gases they generate and how climate change is expected to affect business.

The lack of empirical data surrounding the credit and other financial risks posed by climate change render it impossible to predict specifically how climate change may impact the financial condition and operations of the Company;

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The effects of changing strategies, policies, and investments as the global community transitions to a lower-carbon economy will impose additional operational and compliance burdens, and may result in market trends that alter business opportunities.

Compliance with expected disclosure rules will require additional resources.

Compliance with any additional disclosure rules will require additional resources.

Overall, climate change, its effects, and the resulting unknown impact could have a material adverse impact on our financial condition and results of operations.

Risks Related to Business Environment and Operations.

Risks Related to Business Environment, Operations and Strategy.

We have incurred, and may incur in the future, significant costs related to acquisitions by merger and subsequent integration activities.

We have incurred and expect to incur certain non-recurring costs associated with mergers.

These costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs, and other related costs.

We may incur substantial costs in connection with the integration of acquired companies.

There are many processes, policies, procedures, operations, technologies, and systems that may need to be integrated, including purchasing, accounting and finance, payroll, compliance, treasury management, branch operations, vendor management, risk management, lines of

business, pricing, and benefits.

While we have assumed that a certain level of costs will be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration costs.

Moreover, many of the costs that may be incurred are, by their nature, difficult to estimate accurately.

These integration costs may result in us taking charges against earnings, the amount and timing of which are uncertain at present.

Our continuing concentration of business in a relatively confined region may increase our risk .

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Acts of terrorism, severe weather, natural disasters, public health issues, geopolitical and other external events could impact our ability to conduct business.

Our business is subject to risk from external events that could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, and/or cause us to incur additional expenses.

For example, financial institutions have been, and continue to be, targets of terrorist threats aimed at compromising their operating and communication systems.

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These laws and regulations have become increasingly complex and detailed, require improved systems and sophisticated monitoring and compliance personnel and have become the subject of enhanced government supervision.

While we have adopted policies and procedures aimed at detecting and preventing the use of our banking network for money laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities.

While we have adopted policies, procedures and systems aimed at detecting and preventing the use of our banking network for money laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities.

To the extent we fail to fully comply with applicable laws and regulations, the FDIC, along with other banking agencies, has the authority to impose fines and other penalties and sanctions on us, including restricting our ability to grow through acquisition.

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While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area.

Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.

Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers' disposable income, the monetary policy of the Federal Reserve or regulatory actions that decrease customer access to particular products.

Additionally, deposit balances can

decrease if customers perceive alternative investments as providing a better risk/return tradeoff.

Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers' disposable income, the monetary policy of the FRB or regulatory actions that decrease customer access to particular products.

Accordingly, as a part of our liquidity management, we must use several funding sources in addition to deposits and repayments and maturities of loans and investments.

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Alternatively, we may need to sell a portion of our investment and/or loan portfolio to raise funds, which, depending upon market conditions, could result in us realizing a loss on the sale of such assets.

have a material adverse impact on our liquidity, business, financial condition and results of operations.

Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.

A lack of liquidity could also result in increased regulatory scrutiny and potential restrictions imposed on us by regulators.

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We rely on historical data to help build models.

We seek to incorporate appropriate historical data in our models, but the range of market values and behaviors reflected in any period of historical data we incorporate into our models may turn out to be inappropriate for the future period being modeled.

for the future period being modeled.

In such case, our ability to manage risk would be limited and our risk exposure and losses could be significantly greater than our models indicated.

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Some of the decisions that our regulators make, including those related to capital distributions to our stockholders, could be adversely affected due to their perception that the quality of the models used to generate the relevant information is insufficient.

We may need to raise additional capital in the future and such capital may not be available when needed or at all.

Federal regulatory agencies have the authority to change the Company’s and Bank’s capital requirements and new accounting rules could have a negative impact on our regulatory capital ratios.

Accordingly, we may need to raise additional capital in the future to provide us with sufficient capital resources to meet our commitments and business needs.

We may also need to raise additional capital to support our continued growth.

If we raise capital through the issuance of additional shares of our common stock or other securities, it would dilute the ownership interests of existing shareholders and may dilute the per share book value of our common stock.

New investors may also have rights, preferences and privileges senior to our current shareholders, which may adversely impact our current shareholders.

Our ability to raise additional capital, if needed, or at attractive prices, will depend on, among other things, conditions in the capital markets at that time, which are outside of our control, and our financial performance.

An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Technology and Security

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Our business is highly dependent on the security and efficacy of our infrastructure, computer and data management systems to provide secure processing, transmission, storage and retrieval of confidential and proprietary information.

Cyber security risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of technologies to conduct financial transactions, and coordinated efforts by nation-states to use cyber-attacks to obtain information or disrupt financial institutions in rival states.

Cyber security risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, including artificial intelligence, the use of technologies to conduct financial transactions, and coordinated efforts by nation-states to use cyber-attacks to obtain information or disrupt financial institutions in rival states.

Financial institutions have been subject to, and are likely to continue to be the target of, cyber-attacks and supply chain attacks which could materially disrupt network access or business operations or create regulatory compliance risks.

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Our financial, accounting, data processing, check processing, electronic funds transfer, loan processing, online and mobile banking, automated teller machines, or ATMs, backup or other operating or security systems and infrastructure may fail to operate properly or become disabled or damaged because of a number of factors including events that are wholly or partially beyond our control.

We have taken measures to implement backup systems and other safeguards to support our operations, but our ability to conduct business may be adversely affected by any significant disruptions to third-parties with whom we interact.

We have taken measures to implement data backups of our systems and other safeguards to support our operations, but our ability to conduct business may be adversely affected by any significant disruptions to third-parties with whom we interact.

In addition, our ability to implement backup systems and other safeguards with respect to third-party systems is more limited than with our own systems.

If these third-parties were to discontinue providing services to us, we may experience significant disruption to

our business.

If these third-parties were to discontinue providing services to us, we may experience significant disruption to our business.

In addition, each of these third-parties faces the risk of cyber-attack, information breach or loss, or technology failure.

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Failure to successfully keep pace with technological change affecting the financial services industry and sustain a robust information security program through talent and human capital could have a material adverse impact on our business and, in turn, our financial condition and results of operations.

Risks Related to Our Common Stock

Anti-takeover provisions could negatively impact our shareholders.

Certain provisions in the Company's Certificate of Incorporation and Bylaws, as well as federal banking laws, regulatory approval requirements, and Delaware law, could make it more difficult for a third party to acquire the Company, even if doing so would be perceived to be beneficial to our shareholders.

There may be future sales or other dilution of the Company's equity, which may adversely affect the market price of our common stock.

The Company is generally not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive, common stock.

The issuance of any additional shares of common stock or preferred stock or securities convertible into, exchangeable for or that represent the right to receive common stock or the exercise of such securities could be substantially dilutive to shareholders of our common stock.

Holders of our shares of common stock have no preemptive rights that entitle holders to purchase their pro rata share of any offering of shares of any class or series.

The market price of our common stock could decline as a result of offerings or because of sales of shares of our common stock made after offerings or the perception that such sales could occur.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

Thus, our shareholders bear the risk of our future offerings reducing the market price of our common stock and diluting their stock holdings in us.

The Company relies on dividends from our subsidiaries for most of our revenue.

The Company is a bank holding company and our operations are conducted by our subsidiaries from which we receive dividends.

The ability of our subsidiaries to pay dividends is subject to legal and regulatory limitations, profitability, financial condition, capital expenditures and other cash flow requirements.

The ability of the Bank to pay cash dividends to the Company is limited by its obligation to maintain sufficient capital and by other restrictions on its cash dividends that are applicable to state member banks in the Federal Reserve System.

If the Bank is not permitted to pay cash dividends to the Company, it is unlikely that we would be able to pay cash dividends on our common stock.

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 1A. Risk Factors