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Item 8. Financial Statements and Supplementary Data

2025-02-28 compared with 2024-02-28 · 534 added, 298 removed, 1801 unchanged (32% of the section changed)

20 unchanged sentences

We have audited the accompanying consolidated statements of financial condition of Provident Financial Services, Inc.

and subsidiary (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S.

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

Critical Audit Matter

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

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

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

Critical Audit Matters

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

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

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

Fair value measurement of acquired loans in the Lakeland Bancorp, Inc.

As discussed in Note 2 to the consolidated financial statements, the Company completed its merger with Lakeland Bancorp, Inc.

on May 16, 2024.

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

Accordingly, the assets acquired and liabilities assumed were measured at fair value at the date of acquisition, including acquired loans with a fair value of $7.91 billion.

The fair value of these acquired loans was based on a discounted cash flow methodology.

Monthly principal and interest cash flows, adjusted for prepayments, were discounted to present value using a discount rate based on the relative risk of the cash flows.

A qualitative adjustment for expected credit losses was also applied to these discounted cash flows to arrive at the calculated fair value of the loans.

We identified the fair value measurement of the acquired loans at the date of acquisition as a critical audit matter.

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

Specifically, the

assessment of the fair value measurement encompassed the evaluation of the fair value methodology and the discount rate used in the discounted cash flow methodology.

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

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s fair value measurement of the acquired loans at the date of acquisition, including controls related to (1) the development of the fair value methodology for acquired loans, and (2) the determination of the discount rate used in the fair value estimate.

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

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

generally accepted accounting principles

• developing an independent assumption of the discount rates for these acquired loans using implied rating by vintage and coupon of the acquired loans and yields from market research, and

• developing an independent estimate of the fair value for these acquired loans using the independently developed assumption of the discount rates and additional assumptions from market research, and comparing the results to the Company's fair value estimate.

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

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Historical credit loss experience for both the Company and peers provides the basis for the estimation of expected credit losses, where observed credit losses are converted to probability of default rate curves using segment-specific loss given default risk factors that convert default rates to loss severity based on industry-level, observed relationships between the two variables for each segment.

Using the historical relationship between the economic conditions and loan performance, management’s expectation of future loan performance is

incorporated using an externally developed economic forecast that is applied over a period that has been determined to be reasonable and supportable.

Using the historical relationship between the economic conditions and loan performance, management’s expectation of future loan performance is incorporated using an externally developed economic forecast that is applied over a period that has been determined to be reasonable and supportable.

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

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

• evaluation of the collective ACL on loans methodology

• continued use and appropriateness of changes made to the collective ACL on loans methodology

• performance monitoring of the PD and LGD models

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however, we are aware that we have served as the Company’s auditor since at least 1997.

Short Hills, New Jersey

New York, New York

February 28, 2025

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We have audited Provident Financial Services, Inc.

and subsidiary's (the Company) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Short Hills, New Jersey

New York, New York

February 28, 2025

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Available for sale debt securities, at fair value 2,768,915 1,690,112

Held to maturity debt securities, net (fair value of $ 352,601 and $ 373,468 as of December 31, 2023 and December 31, 2022, respectively).

Held to maturity debt securities, (net of $ 14,000 allowance as of December 31, 2024 and $ 31,000 as of December 31, 2023, respectively)

327,623 363,080

Equity securities, at fair value 19,110 1,270

Federal Home Loan Bank stock 79,217 68,554

Loans 10,873,701 10,248,883

Federal Home Loan Bank and other stock 112,767 79,217

Loans held for sale 162,453 1,785

Loans held for investment 18,659,370 10,871,916

Less allowance for credit losses 193,432 107,200

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Accrued interest receivable 91,160 58,966

Intangible assets 457,942 460,892

Goodwill and other intangible assets 819,230 457,942

Bank-owned life insurance 405,893 243,050

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Net interest income 600,614 399,454 417,552

Provision charge (benefit) for credit losses 27,904 8,388 ( 24,339 )

Provision charge for credit losses 87,564 28,168 5,004

Net interest income after provision for credit losses 513,050 371,286 412,548

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Bank-owned life insurance 11,709 6,482 5,988

Net gain on securities transactions 30 181 255

Net (loss) gain on securities transactions ( 2,986 ) 30 181

Other income 4,542 7,318 14,182

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Advertising and promotion expense 5,146 4,822 5,191

Credit loss expense (benefit) for off-balance sheet credit exposures 264 ( 3,384 ) 1,515

Amortization of intangibles 28,931 2,952 3,292

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Net income $ 115,525 $ 128,398 $ 175,648

Other comprehensive (loss) income, net of tax:

Other comprehensive income, net of tax:

Unrealized gains and losses on available for sale debt securities:

Net unrealized (losses) gains arising during the period 32,125 ( 186,361 ) ( 23,730 )

Reclassification adjustment for gains included in net income — ( 42 ) ( 171 )

Net unrealized gains (losses) arising during the period 7,841 32,125 ( 186,361 )

Reclassification adjustment for losses (gains) included in net income 2,087 — ( 42 )

Total 9,928 32,125 ( 186,403 )

Unrealized gains (losses) on derivatives designated as cash flow hedges:

Net unrealized (losses) gains arising during the period 2,388 19,201 6,169

Unrealized (losses) on derivatives designated as cash flow hedges:

Net unrealized gains arising during the period 3,179 2,388 19,201

Reclassification adjustment for gains included in net income ( 9,557 ) ( 12,948 ) ( 3,297 )

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Amortization related to post-retirement obligations 2,210 2,365 ( 1,409 )

Total other comprehensive (loss) income, net of tax 23,930 ( 171,908 ) ( 10,792 )

Total other comprehensive income (loss), net of tax 5,760 23,930 ( 171,908 )

Total comprehensive income $ 121,285 $ 152,328 $ 3,740

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Other comprehensive loss, net of tax — — — 23,930 — — — — 23,930

Cumulative effect of adopting Accounting Standards Update ("ASU") No.

2022-02, net of tax — — 433 — — — — — 433

Cash dividends paid ($ 0.96 per share)

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— — ( 100,956 ) — — — — — ( 100,956 )

Cumulative effect of adopting Accounting Standards Update ("ASU") No.

2022-02, net of tax — — 433 — — — — — 433

Distributions from deferred comp plans — 102 — — — — 2,694 ( 2,694 ) 102

Purchases of treasury stock — — — — — — — — —

Reclass of stock award shares — ( 40,728 ) — — 40,728 — — — —

Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 1,323 ) — — — ( 1,323 )

Shares issued due to acquisition 544 876,234 — — — — — — 876,778

Option exercises — — — — — — — — —

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Depreciation and amortization expense 41,499 11,695 13,076

Provision charge (benefit) for credit losses on loans and securities 27,904 8,388 ( 24,339 )

Provision charge (benefit) for credit losses on off-balance sheet credit exposures 264 ( 3,384 ) 1,515

Deferred tax expense 2,725 2,220 12,413

Provision charge for credit losses 87,564 28,168 5,004

Deferred tax (benefit) expense ( 12,271 ) 2,725 2,220

Amortization of operating lease right-of-use assets 13,088 10,495 10,617

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Originations of loans held for sale ( 70,045 ) ( 19,371 ) ( 22,295 )

Loans transferred to held for sale 151,281 — —

Proceeds from sales of loans originated for sale 62,416 22,895 20,521

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Net gain on sale of loans ( 1,758 ) ( 2,019 ) ( 1,515 )

Net gain on securities transactions ( 30 ) ( 181 ) ( 255 )

Net loss (gain) on securities transactions 2,986 ( 30 ) ( 181 )

Net loss (gain) on sale of premises and equipment — 154 ( 22 )

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Net change in balance sheet:

(Increase) decrease in accrued interest receivable ( 7,063 ) ( 9,913 ) 4,460

Increase in accrued interest receivable ( 4,953 ) ( 7,063 ) ( 9,913 )

Decrease (increase) in other assets 23,214 25,085 ( 56,291 )

(Decrease) increase in other liabilities ( 29,007 ) 60,544 ( 48,113 )

Increase (decrease) in other liabilities 17,315 ( 29,007 ) 60,544

Net cash provided by operating activities 426,381 173,396 200,310

Cash flows from investing activities:

Net (increase) decrease in loans ( 625,691 ) ( 649,216 ) 253,221

Net increase in loans ( 193,990 ) ( 625,691 ) ( 649,216 )

Proceeds from sales of loans held for investment — 2,017 —

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Purchases of Federal Home Loan Bank stock ( 237,964 ) ( 223,190 ) ( 197,251 )

Cash received, net of cash consideration paid for acquisition 194,548 — —

BOLI claim benefits received 8,995 3,873 970

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Purchases of premises and equipment ( 1,307 ) ( 7,488 ) ( 9,411 )

Net cash used in investing activities ( 469,600 ) ( 647,564 ) ( 716,568 )

Net cash provided by (used in) investing activities 507,674 ( 469,600 ) ( 647,564 )

Cash flows from financing activities:

Net (decrease) increase in deposits ( 270,510 ) ( 670,988 ) 1,396,183

Increase in mortgage escrow deposits 1,133 1,265 142

Net decrease in deposits ( 291,625 ) ( 270,510 ) ( 670,988 )

(Decrease) increase in mortgage escrow deposits ( 122 ) 1,133 1,265

Purchase of treasury stock — — ( 46,530 )

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Net increase (decrease) in short-term borrowings 18,603 156,299 ( 18,948 )

Repayment of subordinated debentures — — ( 15,000 )

Net cash provided by (used in) financing activities 289,951 ( 78,701 ) 739,864

Net (decrease) increase in cash and cash equivalents ( 6,253 ) ( 525,955 ) 180,110

Proceeds from subordinated debentures 221,180 — —

Net cash (used in) provided by financing activities ( 908,371 ) 289,951 ( 78,701 )

Net increase (decrease) in cash and cash equivalents 25,684 ( 6,253 ) ( 525,955 )

Cash and cash equivalents at beginning of period 180,185 186,438 685,163

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Non cash investing activities:

Initial recognition of operating lease right-of-use assets $ 14,742 — —

Initial recognition of operating lease liabilities $ 14,742 — —

Transfer of loans receivable to foreclosed assets $ — 15,131 1,208

Acquisitions:

Non-cash assets acquired at fair value:

Investment securities $ 1,632,106 — —

Loans held for sale 1,494 — —

Loans held for investment 7,889,138 — —

Bank-owned life insurance 160,646 — —

Goodwill and other intangible assets 390,361 — —

Bank premises and equipment 60,578 — —

Other assets 263,722 — —

Total non-cash assets acquired at fair value $ 10,398,045 — —

Liabilities assumed:

Deposits 8,622,924 — —

Borrowings and subordinated debt 785,927 — —

Subordinated debentures 166,366 — —

Other liabilities 140,598 — —

Total liabilities assumed $ 9,715,815 — —

Common stock issued for acquisitions $ 876,779 $ — —

See accompanying notes to consolidated financial statements.

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These estimates and the underlying assumptions affect the reported amounts of assets and liabilities and disclosures about contingent assets and liabilities as of the dates of the consolidated statements of financial condition, and revenues and expenses for the periods then ended.

Such estimates are used in connection with the determination of the allowance for credit losses, evaluation of goodwill for impairment, evaluation of the need for valuation allowances on deferred tax assets, and determination of liabilities related to retirement and other post-retirement benefits, among others.

Such estimates are used in connection with the determination of the allowance for credit losses, evaluation of goodwill for impairment, evaluation of the need for valuation allowances on deferred tax assets, determination of liabilities related to retirement and other post-retirement benefits, and valuation estimates of assets acquired and liabilities assumed in connection with the merger with Lakeland, among others.

These estimates and assumptions are based on management’s best estimates and judgment.

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

Segment Reporting

We conduct our operations through a single business segment.

Substantially all of our interest and fees on loans and long-lived assets relate to our operations.

Pursuant to FASB ASC 280, Segment Reporting, operating segments represent components of an enterprise for which separate financial information is available that is regularly evaluated by the chief operating decision maker in determining how to allocate resources and in assessing performance.

The chief operating decision maker uses a variety of measures to assess the performance of the business as a whole, depending on the nature of the activity.

The Company generates revenue from several business channels.

Those streams are organized by the types of partners we work with to reach our customers, with success principally measured based on interest and fees on loans, loan receivables, active accounts and other sales metrics.

Detailed profitability information of the nature that could be used to allocate resources and assess the performance and operations for each sales platform individually, however, is not used by our chief operating decision maker.

Expense activities, including funding costs, credit losses and operating expenses, are not measured for each platform but instead are managed for the Company as a whole.

Cash and Cash Equivalents

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Securities include held to maturity debt securities and available for sale debt securities.

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

The available for sale debt securities portfolio is carried at estimated fair value, with any unrealized gains or losses, net of taxes, reported as accumulated

other comprehensive income or loss in Stockholders’ Equity.

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

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Management classifies the held to maturity debt securities portfolio into the following security types:

• Agency obligations;

• Government-agency obligations;

• Mortgage-backed securities;

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government, are highly rated by major rating agencies and have a long history of no credit losses.

The majority of the state and municipal, and corporate obligations carry no lower than A ratings from the rating agencies as of December 31, 2023 and the Company had no securities rated BBB or worse by Moody’s Investors Service.

The majority of the state and municipal and corporate obligations carry credit ratings from the rating

agencies as of December 31, 2024 that were no lower than an A rating and the Company had no securities rated BBB or worse

by Moody’s Ratings ("Moody's").

Premiums on securities are amortized into income using a method that approximates the interest method over the remaining period to the earliest call date or contractual maturity, adjusted for anticipated prepayments.

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Accrued interest receivable on held to maturity debt securities are excluded from the estimate of credit losses.

See Note 3 for additional information on investment securities.

See Notes 3 and 4 for additional information on investment securities.

Equity Securities

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

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

Premiums and discounts, purchase accounting mark-to-market adjustments on loans purchased are amortized or accreted as an adjustment of yield over the contractual lives of the related loans, adjusted for prepayments when applicable, using the effective interest method.

Loans are generally placed on non-accrual status when they are past due 90 days or more as to contractual obligations or when other circumstances indicate that collection is questionable.

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The Company's current forecast period is six quarters, with a four-quarter reversion period to historical average macroeconomic factors.

The Company's economic forecast is approved by the Company's Allowance for Credit Loss ("ACL") Committee.

The Company's economic forecast is approved by the Company's ACL Committee.

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

3 unchanged sentences

The contractual term excludes expected extensions, renewals and modifications unless either of the following applies at the reporting date:

management has a reasonable expectation that a modification will be executed with an individual borrower;

management has a reasonable expectation that a modification will be executed with an individual

or when an extension or renewal option is included in the original contract and is not unconditionally cancellable by the Company.

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

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

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 December 31, 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.

This baseline outlook reflected a worsened economic forecast and related deterioration in the projected commercial property price index used in our CECL model.

The Company made qualitative adjustments to the projected commercial real estate property price index,

considering the differences in portfolio collateral composition versus the commercial property price index used in our CECL models.

This resulted in a total provision of $ 27.9 million for the year ended December 31, 2023, and an overall coverage ratio of 99 basis points.

If the Company used the unadjusted baseline outlooks for the commercial property price index over the expected lives of Commercial Real Estate Non-Owner Occupied and Owner-Occupied loan portfolios, the provision would have risen by $6.5 million, leading to an overall coverage ratio of 105 basis points.

The allowance estimation process resulted in a total provision on loans of $ 83.6 million for the year ended December 31, 2024, and an overall coverage ratio of 104 basis points.

Of the $ 83.6 million provision for the year, $ 60.1 million was recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

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.

If the Company used a more severe outlook, the provision would have risen by approximately $ 16.0 million, leading to an overall coverage ratio of approximately 112 basis points.

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

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

Management considers it important to maintain the ratio of the allowance for credit losses to total loans at an acceptable level given current and forecasted economic conditions, interest rates and the composition of the portfolio.

Management considers it important to maintain the ratio of the allowance for

credit losses to total loans at an acceptable level given current and forecasted economic conditions, interest rates and the composition of the portfolio.

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

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

Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods, and to the extent actual losses are higher than management estimates, additional provision for credit losses on loans could be required and could adversely affect our earnings

or financial position in future periods.

In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for credit losses as an integral part of their examination process.

3 unchanged sentences

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

For the year ended December 31, 2023, the increase in provision was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices used in our CECL model.

For the year ended December 31, 2024, the increase in provision was primarily attributable to an initial CECL provision for credit losses on lo ans of $ 60.1 million recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, combined with some economic forecast deterioration over the current twelve-month period within our CECL model, compared to last year.

Foreclosed Assets

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Such estimates are subject to management’s judgment.

A valuation reserve is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature and timing of these items.

A valuation reserve is established when management is unable to conclude that it is more likely than not that it will realize deferred tax assets based on the nature

and timing of these items.

The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes.

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

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

The Company completed its

annual qualitative assessment of goodwill as of July 1, 2023.

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

The Company completed its annual qualitative assessment of goodwill as of July 1, 2024.

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

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

Customer relationship premiums represent the intangible value of customer relationships assumed in the purchase acquisitions of Beacon Trust Company ("Beacon"), The MDE Group, Inc.

("MDE"), Tirschwell & Loewy, Inc.

("T&L"), and SB One Bank and are amortized on an accelerated basis over 12.0 years, 10.4 years, 10.0 years, and 13.0 years, respectively.

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

Customer relationship premiums represent the intangible value of customer relationships assumed in the purchase acquisitions of Beacon Trust Company, The MDE Group, Inc., Tirschwell & Loewy, Inc., and SB One Bank and are amortized on an accelerated basis over 12.0 years, 10.4 years, 10.0 years, and 13.0 years, respectively.

Mortgage servicing rights are recorded when purchased or when originated mortgage loans are sold, with servicing rights retained.

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and (c) recognize as a component of other comprehensive income, net of tax, the actuarial gains and losses and the prior service costs and credits that arise during the period.

The Bank has a 401(k) plan covering substantially all employees of the Bank.

The Bank may match a percentage of the first 6 % contributed by participants.

The Bank has a 401(k) plan, and in connection with the merger with Lakeland assumed the Lakeland Bancorp, Inc.

Salary Savings 401(k) and Trust Plan, both of which cover substantially all employees of the Bank.

The Bank may provide a matching contribution to eligible participants.

The Bank’s matching contribution, if any, is determined by the board of directors in its sole discretion.

In 2024, the board of directors approved a matching contribution of 25 % of the first 6 % of eligible compensation contributed by participants in the Provident Bank 401(k) plan.

The Bank has an Employee Stock Ownership Plan (“ESOP”).

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Compensation expense for the ESOP is based on the average price of the Company’s stock during each quarter and the amount of shares allocated during the quarter.

The Bank made the final repayment on borrowed funds in December 2024 and a final allocation of shares will be made to participants.

The Bank has an Equity Plan designed to provide competitive compensation for demonstrated performance and to align the interests of participants directly to increases in shareholder value.

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The Company recorded a deferred compensation equity instrument and corresponding contra-equity account for the value of the shares held by the DDFP at the July 14, 2004 acquisition date.

Effective November 1, 2023, the DDFP was terminated and final distributions are expected on or about November 1, 2024.

As of December 31, 2023, there were 65,744 shares held by the DDFP.

Effective November 1, 2023, the DDFP was terminated and final distributions were made on or about November 1, 2024.

As of December 31, 2024, there were no shares held by the DDFP.

The Bank maintains a non-qualified plan that provides supplemental benefits to certain executives who are prevented from receiving the full benefits contemplated by the 401(k) Plan’s and the ESOP’s benefit formulas under tax law limits for tax-qualified plans.

In addition, and in connection with the merger with Lakeland, the Bank assumed the Lakeland Bancorp, Inc.

Elective Deferral Plan (“LEDP”).

The LEDP was frozen effective December 31, 2024 and effective January 1, 2025, the board of directors approved the Provident Bank Non-Qualified Supplemental DC Plan, to allow certain Bank executives to defer a portion of their compensation.

Post-retirement Benefits Other Than Pensions

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Comprehensive income is presented in a separate Consolidated Statement of Comprehensive Income.

Segment Reporting

The Company’s operations are solely in the financial services industry and include providing traditional banking and other financial services to its customers.

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

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

Earnings Per Share

Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of shares outstanding for the period.

Diluted earnings per share reflects the potential dilution that could occur if

securities or other contracts to issue common stock (such as stock options) were exercised or resulted in the issuance of common stock.

Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock (such as stock options) were exercised or resulted in the issuance of common stock.

These potentially dilutive shares would then be included in the weighted average number of shares outstanding for the period using the treasury stock method.

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Impact of Recent Accounting Pronouncements

Accounting Pronouncements Adopted This Year

In March 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, "Financial Instruments-Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures," which addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model.

The amendments eliminate the accounting guidance for troubled debt restructurings by creditors that have adopted the CECL model and enhance the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing financial difficulty.

In addition, the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures.

For entities that have adopted ASU 2016-13, ASU 2022-02 was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption was permitted if an entity had adopted ASU 2016-13.

The Company adopted this ASU on January 1, 2023 using the modified retrospective method for all financial assets measured at amortized cost.

Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be recorded with previously applicable GAAP.

As a result, the Company recorded a $ 594,000 reduction to the allowance for credit losses, which resulted in a $ 433,000 cumulative effect adjustment increase, net of tax, to retained earnings.

In March 2022, the FASB issued Accounting Standards Update (ASU) 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging – Portfolio Layer Method .

The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities.

ASU 2022-01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period permitted.

The Company adopted this standard on January 1, 2023 on a prospective basis, with no impact to the consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848)," which provides optional expedients and exceptions for applying GAAP to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks.

For transactions that are modified because of reference rate reform and that meet certain scope guidance:

(i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized;

and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or re-measurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts.

ASU 2020-04 also provides numerous optional expedients for derivative accounting.

In addition, in January 2021, the FASB issued ASU No.

2021-01 “Reference Rate Reform — Scope,” which clarified the scope of ASC 848 relating to contract modifications.

The Company has reviewed all of its LIBOR-based products and all products have been adjusted to another index or are scheduled to be adjusted at their next repricing, as LIBOR ceased to be published after June 30, 2023.

The Company adjusted its processes and procedures related to the amendments and it did not have a material impact to the Company’s financial position and results and operations.

(2) Stockholders’ Equity

On January 15, 2003, the Bank completed its plan of conversion, and the Bank became a wholly owned subsidiary of the Company.

The Company sold 59.6 million shares of common stock (par value $ 0.01 per share) at $ 10.00 per share.

The Company received net proceeds in the amount of $ 567.2 million.

In connection with the Bank’s commitment to its community, the plan of conversion provided for the establishment of a charitable foundation.

The Bank donated $ 4.8 million in cash and 1.92 million of authorized but unissued shares of common stock to the foundation, which amounted to $ 24.0 million in aggregate.

The Company recognized an expense, net of income

tax benefit, equal to the cash and fair value of the stock during 2003.

Conversion costs were deferred and deducted from the proceeds of the shares sold in the offering.

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

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

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

This distribution would be based upon each eligible account holder's and supplemental eligible account holder’s proportionate share of the then total remaining qualifying deposits.

As of December 31, 2023, the liquidation account, which is an off-balance sheet memorandum account, amounted to $ 7.2 million.

Accounting Pronouncements Adopted in 2024

In November 2023, FASB issued ASU No.

2023-07, "Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The amendments in this ASU require public entities to disclose detailed information about a reportable segment’s expenses on both an annual and interim basis.

2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption in the interim period permitted.

The amendments in ASU No.

2023-07 should be applied retrospectively to all periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The adoption of ASU No.

2023-07 did not have a significant impact on the Company's consolidated financial statements, other than enhanced disclosures.

Accounting Pronouncements Not Yet Adopted

In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures”.

The amendments in this ASU require improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures.

This update will be effective for financial statements issued for fiscal years beginning after December 15, 2024, with early adoption in the interim period permitted.

The Company does not expect the adoption of this guidance to have a significant impact on the Company’s consolidated financial statements.

In November 2024, FASB issued ASU 2024-03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures".

This ASU requires disaggregated information about certain income statement line items in a tabular format in the notes to the financial statements.

This update will be effective for financial statements issued for fiscal years beginning after December 15, 2026, with early adoption in the interim period permitted.

The Company does not expect the adoption of this guidance to have a significant impact on the Company’s consolidated financial statements.

(2) Business Combinations

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Merger Agreement

On September 26, 2022, the Company, NL 239 Corp., a direct, wholly owned subsidiary of the Company (“Merger Sub”), and Lakeland Bancorp, Inc.

entered into an Agreement and Plan of Merger (as may be amended, modified or supplemented from time to time in accordance with its terms, the “merger agreement”), pursuant to which the Company and Lakeland have agreed to combine their respective businesses.

Under the merger agreement, Merger Sub will merge with and into Lakeland, with Lakeland as the surviving entity (the “merger”), and as soon as reasonably practicable following the merger, Lakeland will merge with and into the Company, with the Company as the surviving entity (the “holdco merger”).

At a date and time following the holdco merger as determined by the Company, Lakeland Bank, a New Jersey state-charted commercial bank and a wholly owned subsidiary of Lakeland (“Lakeland Bank”), will merge with and into the Bank, with the Bank as the surviving bank (the “bank merger” and, together with the merger and the holdco merger, the “mergers”).

The Company as the surviving institution will have approximately $ 25 billion in total assets, $ 18 billion in total loans and $ 20 billion in total deposits with banking locations across northern and central New Jersey and in surrounding areas of New York and Pennsylvania.

In the merger, Lakeland shareholders will receive 0.8319 of a share of the Company’s common stock for each share of Lakeland common stock they own.

Upon completion of the transaction, which remains subject to regulatory approvals and other closing conditions, Company shareholders will own approximately 58 % and Lakeland shareholders will own approximately 42 % of the combined company.

The Company has received stockholder approval to proceed with the merger at a special meeting of stockholders held on February 1, 2023.

Lakeland has received shareholder approval to proceed with the merger at a special meeting of shareholders held on February 1, 2023.

On December 20, 2023, the Company, along with Lakeland, agreed to extend their merger agreement to March 31, 2024, to provide additional time to obtain the required regulatory approvals.

(4) Restrictions on Cash and Due from Banks

Included in cash on hand and due from banks as of December 31, 2023 and 2022 was $ 70,000 , which represents cash collateral pledged to secure loan level swaps and risk participation agreements.

On May 16, 2024, the Company completed its merger with Lakeland Bancorp, Inc.

("Lakeland"), which added $ 10.59 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 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.

The total consideration paid for the acquisition of Lakeland was $ 876.8 million.

In connection with the acquisition, Lakeland Bank, a wholly owned subsidiary of Lakeland, was merged with and into the Bank.

The acquisition was accounted for under the acquisition method of accounting.

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

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

In accordance with ASC 805, the Company recorded a measurement period adjustment and decreased goodwill by $ 10.5 million related to finalizing the valuation.

After this adjustment, goodwill totaled $ 180.4 million.

The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the merger date, net of cash consideration paid (in thousands):

As of May 16, 2024

Assets acquired:

Cash and cash equivalents, net $ 194,548

Available for sale debt securities 1,585,993

Federal Home Loan Bank stock 46,113

Loans held for sale 1,494

Loans held for investment 7,906,326

Allowance for credit losses on PCD loans ( 17,188 )

Loans, net 7,889,138

Bank-owned life insurance 160,646

Banking premises and equipment 60,578

Accrued interest receivable 27,241

Goodwill 180,446

Other intangibles assets 209,915

Other assets 236,481

Total assets acquired $ 10,592,593

Liabilities assumed:

Deposits $ 8,622,924

Mortgage escrow deposits 5,532

Borrowed funds 785,927

Subordinated debentures 166,366

Other liabilities 135,066

Total liabilities assumed $ 9,715,815

Net assets acquired $ 876,779

The Company finalized its review of the acquired assets and liabilities, as a result of which certain adjustments to the recorded carrying values and goodwill were made.

Fair Value Measurement of Assets Assumed and Liabilities Assumed

The methods used to determine the fair value of the assets acquired and liabilities assumed in the Lakeland acquisition were as follows:

Securities Available for Sale

The estimated fair values of the available for sale debt securities, primarily comprised of U.S.

government agency mortgage-backed securities and U.S.

government agency and municipal bonds carried on Lakeland's balance sheet was confirmed using open market pricing provided by multiple independent securities brokers.

Management reviewed trade prices and open market quotes used in pricing the securities and a fair value discount of $ 249.7 million was recorded on the investments.

Loans acquired from Lakeland were recorded at fair value, and there was no carryover related allowance for loan and lease losses.

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

Monthly principal and interest cash flows, adjusted for prepayments, were then discounted to present value using a discount rate based on the relative risk of the cash flows.

A qualitative adjustment for expected credit losses was also applied to these discounted cash flows to arrive at the calculated fair value of the loans.

The fair value of the acquired loans, not including allowance for credit losses on PCD loans, totaled $ 7.91 billion.

For loans acquired without evidence of more-than-insignificant deterioration in credit quality since origination ("Non-PCD" loans), the Company recorded interest rate loan fair value and credit fair value adjustments.

Loans were grouped into pools based on similar characteristics, such as loan type, fixed or adjustable interest rates, payment type, index rate and caps/floors, and non-accrual status.

The loans were valued at the sub-pool level and were pooled at the summary level based on loan type.

Market rates for similar loans were obtained from various internal and external data sources and reviewed by management for reasonableness.

The average of these market rates was used as the fair value interest rate that a market participant would utilize.

A present value approach was utilized to calculate the interest rate fair value discount of $ 297.2 million.

The Company used historical annual average charge-off percentages for banking institutions identified as peers of the Company and Lakeland combined as a market-participant proxy to develop the life-of-loan loss rates per loan type for the Non-PCD loans.

The loss rates were then applied to the principal balance to arrive at the projected credit losses for each period, which resulted in a credit fair value discount of $ 82.4 million.

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

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

(1) non-accrual status;

(2) modifications for borrowers experiencing financial difficulty;

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

and (4) loans greater than 59 days past due.

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

This estimate of credit losses was calculated using management's best estimate of projected losses over the remaining life of the loans.

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

The expected lifetime losses were calculated using historical losses observed at the Bank, Lakeland and peer banks.

A $ 17.2 million allowance for credit losses was recorded on PCD loans.

The interest rate fair value adjustment related to PCD loans will be substantially recognized as interest income on a level yield amortization or straight line method over the expected life of the loans.

The table below illustrates the fair value adjustments made to the amortized cost basis in order to present the fair value of the loans acquired (in thousands):

Gross amortized cost basis as of May 16, 2024 $ 8,323,589

Interest rate fair value adjustment on all loans ( 330,540 )

Credit fair value adjustment on non-PCD loans ( 82,359 )

Charge-offs on PCD Loans at acquisition ( 4,364 )

Allowance for credit losses on PCD loans ( 17,188 )

Fair value of acquired loans, net, as of May 16, 2024 $ 7,889,138

The table below is a summary of the PCD loans that were acquired from Lakeland as of the closing date (in thousands):

Gross amortized cost basis as of May 16, 2024 $ 564,147

Charge-offs on PCD Loans at acquisition ( 4,364 )

Interest component of expected cash flows (accretable difference) ( 33,365 )

Allowance for credit losses on PCD loans ( 17,188 )

Net PCD loans $ 509,230

Banking Premises and Equipment

The Company acquired 68 branches from Lakeland, 29 of which were owned premises.

The Company closed 13 of the acquired banking offices in the third quarter of 2024.

The fair value of Lakeland’s premises was determined based upon independent third-party appraisals performed by licensed appraisers in the market in which the premises are located.

Core Deposit Intangible

The fair value of the core deposit intangible was measured using a discounted cash flow approach by comparing the all-in cost of less rate sensitive deposits against an alternative funding source.

The discounted cash flow approach is used because there is no reliable market participant data to support a market approach nor is there an effective measure to utilize the cost approach.

To calculate the value of core deposits, deposit account servicing costs (net of deposit fee income) and interest expense on deposits were compared to the cost of alternative funding sources by using an average of Federal Home Loan Bank of New York ("FHLBNY") advance rates and brokered CD rates as disclosed by market sources.

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

The discount rate was calculated using the Capital Assets Pricing Model.

The core deposit intangible totaled $ 209.2 million and is being amortized over its estimated life of approximately 10 years based on dollar weighted deposit runoff on an annualized basis.

The core deposit intangible is evaluated annually for impairment.

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

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

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

ASC 805 provides for a period of time during which the acquirer may adjust provisional amounts recognized at the acquisition date to their subsequently determined acquisition-date fair values, referred to as the "measurement period." Adjustments during the measurement period are not limited to just those relating to assets acquired and liabilities assumed but apply to all aspects of business combination accounting (e.g., the consideration transferred).

Measurement-period adjustments are calculated as if they were known at the acquisition date, but are recognized in the reporting period in which they are determined.

Prior period information is not revised, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date.

In accordance with ASC 805, the Company recorded a measurement period adjustment which decreased goodwill by $ 10.5 million to $ 180.4 million related to finalizing the valuation of subordinated debentures and taxes.

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

Bank Owned Life Insurance ("BOLI")

Lakeland's BOLI cash surrender value was $ 160.6 million with no fair value adjustment required.

Time Deposits

The fair value adjustment for time deposits represents a discount from the value of the contractual repayments of fixed-maturity deposits using prevailing market interest rates for similar-term time deposits.

The time deposit discount of approximately $ 1.2 million is being amortized into income on a straight-line method over the contractual life of the deposits.

The fair value of FHLBNY advances was determined based on a discounted cash flow analysis using a discount rate derived from FHLBNY rates as of May 16, 2024.

The cash flows of the advances were projected based on the scheduled payments of each advance.

The borrowings discount of approximately $ 5.1 million is being amortized into income on a straight-line method over the contractual life of the borrowings.

Subordinated Debentures

At the valuation date, Lakeland had three outstanding trust preferred issuances and a subordinated debt issuance with an initial aggregate balance of $ 180.2 million, all of which was assumed by the Company on May 16, 2024.

The fair value of trust preferred and subordinated debt issuances was determined based on a discounted cash flow analysis using a discount rate commensurate with yields and terms of comparable issuances.

The valuation was based on the probability of paying cash flows through the remaining contractual term of the trust preferred issuance and the cash flows through the exercise of the call option date.

In accordance with ASC 805, the Company recorded a measurement period adjustment which decreased subordinated debt by $ 13.8 million to $ 166.4 million, related to finalizing the valuation.

related to finalizing the valuation of subordinated debentures.

Merger-Related Expenses

Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $ 56.9 million, for the year ended December 31, 2024, compared with transaction costs of $ 4.1 million for the respective 2023 period.

(3) Held to Maturity Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities as of December 31, 2023 and 2022 (in thousands):

Treasury Obligations $ 5,146 1 — 5,147

Agency-sponsored obligations 11,058 — ( 652 ) 10,406

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities, excluding allowances for credit losses of $ 14,000 and $ 31,000 , as of December 31, 2024 and 2023 (in thousands):

Government-agency obligations $ 9,999 — ( 292 ) 9,707

State and municipal obligations 311,118 689 ( 14,133 ) 297,674

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$ 327,637 689 ( 14,593 ) 313,733

Agency-sponsored obligations $ 9,997 — ( 1,033 ) 8,964

Treasury obligations $ 5,146 1 — 5,147

Government-agency obligations 11,058 — ( 652 ) 10,406

State and municipal obligations 339,816 244 ( 9,700 ) 330,360

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Accrued interest on held to maturity debt securities, which is excluded from the amortized cost, totaled $ 2.9 million and $ 3.1 million as of December 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

The amortized cost and fair value of held to maturity debt securities as of December 31, 2023 by contractual maturity are shown below (in thousands).

The amortized cost and fair value of held to maturity debt securities as of December 31, 2024 by contractual maturity, excluding allowances for credit losses of $ 14,000 , as of December 31, 2024 are shown below (in thousands).

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

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$ 327,637 313,733

The allowance for credit losses on held to maturity debt securities as of December 31, 2023 and 2022 were $ 31,000 and $ 27,000 , respectively, and are excluded from amortized cost in the tables above.

Accrued interest receivable on held to maturity debt securities are excluded from the estimate of credit losses.

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

Held to maturity debt securities having a carrying value of $ 269.6 million and $ 317.6 million as of December 31, 2024 and 2023, respectively, were pledged to secure municipal deposits.

During 2023, the Company recognized gains of $ 45,000 and losses of $ 15,000 related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 11.6 million.

During 2024, the Company recognized no gross gains while losses totaled $ 1,200 related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 5.5 million.

There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2024.

For 2022, the Company recognized gains of $ 123,000 and no losses related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 39.2 million.

For 2023, the Company recognized gains of $ 45,000 and losses of $ 15,000 related to calls on securities in the held to maturity debt securities portfolio, with total proceeds from the calls totaling $ 11.6 million.

There were no sales of securities from the held to maturity debt securities portfolio for the year ended December 31, 2023.

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The number of securities in an unrealized loss position as of December 31, 2024 totaled 512 , compared with 372 as of December 31, 2023.

The decrease in the number of securities in an unrealized loss position as of December 31, 2023 was due to lower current market interest rates on the intermediate part of the curve compared to rates as of December 31, 2022.

The increase in the number of securities in an unrealized loss position as of December 31, 2024 was due to higher current market interest rates on the intermediate part of the curve compared to rates as of December 31, 2023.

Management measures expected credit losses on held to maturity debt securities on a collective basis by security type.

Management classifies the held to maturity debt securities portfolio into the following security types:

• Agency-sponsored obligations;

• Government-agency obligations;

• Mortgage-backed securities;

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government, are highly rated by major rating agencies and have a long history of no credit losses.

The majority of the state and municipal and corporate obligations carry credit ratings from the rating agencies as of December 31, 2023 no lower than A and the Company had no securities rated BBB or worse by Moody’s Investors Service.

The majority of the state and municipal and corporate obligations carry credit ratings from the rating agencies as of December 31, 2024 that were no lower than an A rating and the Company had no securities rated BBB or worse by Moody’s.

Credit Quality Indicators.

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Total Portfolio AAA AA A BBB Not Rated Total

Treasury obligations $ 5,146 — — — — 5,146

Agency-sponsored obligations 11,058 — — — — 11,058

Government-agency obligations $ 9,999 — — — — 9,999

State and municipal obligations 44,821 234,212 28,735 — 3,350 311,118

3 unchanged sentences

Total Portfolio AAA AA A BBB Not Rated Total

Agency-sponsored obligations $ 9,997 — — — — 9,997

Treasury obligations $ 5,146 — — — — 5,146

Government-agency obligations 11,058 — — — — 11,058

State and municipal obligations 43,749 156,438 137,231 — 2,398 339,816

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Securities not explicitly rated, such as U.S.

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

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

(4) Available for Sale Debt Securities

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Treasury obligations $ 348,621 317 ( 18,340 ) 330,598

Agency guaranteed obligations 26,310 1,188 — 27,498

Government-agency obligations 105,965 1,461 ( 191 ) 107,235

Mortgage-backed securities 2,243,725 4,982 ( 186,548 ) 2,062,159

4 unchanged sentences

Treasury obligations $ 276,618 — ( 22,740 ) 253,878

Government-agency obligations 26,310 1,188 — 27,498

Mortgage-backed securities 1,462,159 377 ( 176,927 ) 1,285,609

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Accrued interest on available for sale debt securities, which is excluded from the amortized cost, totaled $ 9.7 million and $ 4.9 million as of December 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

Available for sale debt securities having a carrying value of $ 1.13 billion and $ 1.25 billion as of December 31, 2023 and 2022, respectively, were pledged as collateral for municipal deposits and repurchase agreements.

Available for sale debt securities having a carrying value of $ 863.9 million and $ 1.13 billion as of December 31, 2024 and 2023, respectively, were pledged as collateral for municipal deposits and repurchase agreements.

The amortized cost and fair value of available for sale debt securities as of December 31, 2024, by contractual maturity, are shown below (in thousands).

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$ 638,431 611,682

Investments which pay principal on a periodic basis totaling $ 1.52 billion at amortized cost and $ 1.35 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

During 2023, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 2.3 million with no gains and no losses recognized.

For 2022, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 5.4 million, with gains of $ 58,000 and no losses recognized.

Investments which pay principal on a periodic basis, which are primarily related to mortgage-backed securities, totaling $ 2.34 billion at amortized cost and $ 2.16 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

During 2024, proceeds from sales on securities in the available for sale debt securities portfolio totaled $ 569.9 million with no gains and $ 3.0 million of losses recognized, of which $ 2.8 million was related to the sale of subordinated debt issued by Lakeland from its investment portfolio.

There were no sales of securities from the available for sale debt securities portfolio for the year ended December 31, 2023.

During 2024, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 780,000 with no gains and no losses recognized.

For 2023, proceeds from calls on securities in the available for sale debt securities portfolio totaled $ 2.3 million with no gains and no losses recognized.

The number of securities in an unrealized loss position as of December 31, 2024 totaled 646 , compared with 436 as of December 31, 2023.

The increase in the number of securities in an unrealized loss position as of December 31, 2024 was primarily due to the addition of Lakeland securities, combined with higher current market interest rates on the intermediate part of the curve compared to rates as of December 31, 2023.

(5) Loans Receivable and Allowance for Credit Losses

Loans receivable as of December 31, 2023 and 2022 are summarized as follows (in thousands):

Loans held for investment as of December 31, 2024 and 2023 are summarized as follows (in thousands):

Mortgage loans:

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Total loans $ 18,659,370 10,871,916

As of December 31, 2024 and December 31, 2023, the Company had loans held for sale of $ 162.5 million and $ 1.8 million, respectively.

In December of 2024, $ 151.3 million of the Bank's commercial loan portfolio was reclassified from loans held for investment into the held for sale portfolio as a result of a decision to exit the non-relationship equipment lease financing business.

Accrued interest on loans totaled $ 78.5 million and $ 50.9 million as of December 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

The Bank does not, as a general practice, make loans to its directors, or to their immediate family members and related interests.

As of December 31, 2023, As of December 31, 2023, the Bank had aggregate loans and loan commitments totaling $ 3.6 million to its executive officers or their related entities.

As of December 31, 2024, the Bank had aggregate loans and loan commitments of $ 98.8 million to its directors, or to its immediate family members and related interests.

These loans and loan commitments were made on substantially the same terms, including interest rates and collateral, as those prevailing for comparable transactions with the general public and do not involve more than the normal risk of repayment or present other unfavorable features.

It is the policy of the Bank that no loan or extension of credit of any type shall be made to any member of the board of directors or their immediate family, or to any entity which is controlled by a member of the board of directors or their immediate family and none existed as of December 31, 2023.

As of December 31, 2024, the Bank had aggregate loans and loan commitments totaling $ 3.5 million to its executive officers or their related entities.

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

1 unchanged sentence

For the years ended December 31, 2024, 2023 and 2022, as a result of prepayments and normal amortization, interest income decreased $ 314,000 , $ 206,000 and $ 270,000 , respectively.

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

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

As of December 31, 2024

35 unchanged sentences

Balance at beginning of period $ 107,200 88,023 80,740

Initial allowance related to PCD loans 17,188 — —

Provision charge for credit losses on loans (1)

83,604 27,900 8,400

Cumulative effect of adopting ASU 2022-02 — ( 594 ) —

Provision charge (benefit) for credit losses on loans 27,900 8,400 ( 24,300 )

Recoveries of loans previously charged off 3,263 2,292 5,431

1 unchanged sentence

Balance at end of period $ 193,432 107,200 88,023

(1) The provision charge for credit losses on loans for the year ended December 31, 2024 includes a $ 60.1 million charge recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

The activity in the allowance for credit losses by portfolio segment for the years ended December 31, 2024 and 2023 are as follows (in thousands):

1 unchanged sentence

Balance at beginning of period $ 73,407 31,475 2,318 107,200

Cumulative effect of adopting ASU 2022-02 ( 510 ) ( 43 ) ( 41 ) ( 594 )

Provision charge (benefit) for credit losses on loans 16,877 11,159 ( 136 ) 27,900

Initial allowance related to PCD loans 10,628 6,070 490 17,188

Provision charge for credit losses on loans 61,274 20,011 2,319 83,604

Recoveries of loans previously charged off 86 2,621 556 3,263

1 unchanged sentence

Balance at end of period $ 144,587 43,642 5,203 193,432

(1) The provision charge for credit losses on loans for the year ended December 31, 2024 includes a $ 2.8 million benefit to the allowance as a result of the $ 151.3 transfer from the commercial loans loans held for investment portfolio into the loans held for sale portfolio.

For the Year Ended December 31, 2023

Balance at beginning of period $ 58,218 27,413 2,392 88,023

Cumulative effect of adopting ASU 2022-02 ( 510 ) ( 43 ) ( 41 ) ( 594 )

Provision charge (benefit) for credit losses on loans 16,877 11,159 ( 136 ) 27,900

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For the year ended December 31, 2024, the Company recorded an $ 83.6 million provision for credit losses on loans, compared with a provision for credit losses of $ 27.9 million for the year ended December 31, 2023.

The increase in the year-over-year provision for credit losses was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices used in our CECL model.

The increase in the year-over-year provision for credit losses was primarily attributable to an initial CECL provision for credit losses on loans of $ 60.1 million recorded as p art of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations, combined with some economic forecast deterioration over the current twelve-month period within our CECL model, compared to last year.

The following table summarizes the Company's gross charge-offs recorded for the year ended December 31, 2024 by year of origination (in thousands):

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(1) During the year ended December 31, 2024, charge-offs on consumer overdraft accounts totaled $ 398,000 , which are not included in the table above.

The following table summarizes the Company's gross charge-offs recorded for the year ended December 31, 2023 by year of origination (in thousands):

2023 2022 2021 2020 2019 Prior to 2019 Total Loans

Mortgage loans:

Commercial $ — — — — — 1,700 1,700

Residential — — — — — 24 24

Total mortgage loans — — — — — 1,724 1,724

Commercial loans — — — 5,000 — 3,363 8,363

Consumer loans (1)

24 — — — — 13 37

Total gross loans $ 24 — — 5,000 — 5,100 10,124

(1) During the year ended December 31, 2023, charge-offs on consumer overdraft accounts totaled $ 297,000 , which are not included in the table above.

The Company defines an impaired loan as a non-accrual, non-homogeneous loan greater than $ 1.0 million, or which, based on current information, it is not expected to collect all amounts due under the contractual terms of the loan agreement.

As of December 31, 2023, there were 17 impaired loans totaling $ 42.3 million that were individually evaluated for impairment.

As of December 31, 2024, there were 26 impaired loans totaling $ 55.4 million, with related specific reserves of $ 7.5 million that were individually evaluated for impairment.

A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral.

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A specific allocation of the allowance for credit losses is established for each collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated selling costs.

In most cases, the Company records a partial charge-off to reduce

the loan’s carrying value to the collateral’s fair value less estimated selling costs.

In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less estimated selling costs.

The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral-dependent loans.

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Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value and evaluated for charge offs.

The Company believes there have been no significant time lapses resulting from this process.

As of December 31, 2023, impaired loans totaled $ 42.3 million with related specific reserves of $ 2.9 million.

The Company believes there have not been any significant time lapses since the receipt of the most recent appraisals.

As of December 31, 2024, the Company had collateral-dependent impaired loans with a fair value of $ 11.0 million secured by commercial real estate.

As of December 31, 2022, the Company had collateral-dependent loans with a fair value of $ 21.3 million secured by commercial real estate, $ 1.9 million secured by business assets and $ 800,000 secured by residential real estate.

As of December 31, 2023, the Company had collateral-dependent impaired loans with a fair value of $ 24.1 million secured by commercial real estate.

Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral.

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Year Ended December 31, 2024

Term Extension Interest Rate Change Interest Rate Change and Term Extension Change in Payment Type (1)

Total % of Total Class of Loans and Leases

Mortgage loans:

Commercial $ — — 3,072 2,852 5,924 0.08 %

Multi-family — 1,297 — — 1,297 0.04

Total mortgage loans — 1,297 3,072 2,852 7,221 0.05

Commercial loans — 12,814 8,466 — 21,280 0.46

Total gross loans $ — 14,111 11,538 2,852 28,501 0.15 %

(1) The change in payment type reflects a change from monthly principal and interest payments to interest only monthly payments.

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023 (in thousands):

Year Ended December 31, 2023

Term Extension Interest Rate Change Interest Rate Change and Term Extension Total % of Total Class of Loans and Leases

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The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2024 (in thousands):

Weighted Average Months of Term Reduction Weighted Average Rate Increase

Mortgage loans:

Commercial 2 2.40 %

Multi-family 0 5.00 %

Total mortgage loans 1 5.00

Commercial loans 2 2.22

Total gross loans 3 3.03 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023 (in thousands):

Weighted Average Months of Term Extension Weighted Average Rate Increase

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Total gross loans 9 0.61 %

There were no loan modifications made to borrowers experiencing financial difficulty for year ended December 31, 2023, that subsequently defaulted.

There were no loan modifications made to borrowers experiencing financial difficulty that subsequently defaulted during the years ended December 31, 2024 and December 31, 2023, respectively.

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2024 (in thousands):

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Mortgage loans:

Commercial $ 5,924 — — — — 5,924

Multi-family 481 94 — 320 402 1,297

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Total gross loans $ 21,745 94 — 408 6,254 28,501

Prior to our adoption of ASU 2022-02, we accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR.

However, our TDR accounting described herein was suspended for most of our loss mitigation activities through our election to account for certain eligible loss mitigation activities occurring between March 2020 and January 1, 2022 under the COVID-19 relief granted pursuant to the CARES Act and the Consolidated Appropriations Act of 2021.

Effective January 1, 2023, we adopted ASU 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023.

The following table presents the number of loans modified as TDRs during the year ended December 31, 2022 and their balances immediately prior to the modification date and post-modification as of December 31, 2022:

Year Ended December 31, 2022

Troubled Debt Restructurings Number of

Pre-Modification

Post-Modification

($ in thousands)

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty for the year ended December 31, 2023 (in thousands):

Current 30-59 Days Past Due 60-89 Days Past Due 90 days or more Past Due Non- Accrual Total

Mortgage loans:

Multi-family $ 1,508 — — — — 1,508

Residential 2 265 198

Total mortgage loans 1,508 — — — — 1,508

Commercial loans 5,021 — — — — 5,021

Consumer loans 1 108 85

Total restructured loans 5 $ 2,200 1,992

During the year ended December 31, 2022, $ 5.5 million of charge-offs were recorded on collateral dependent impaired loans.

There was one loan totaling $ 143,000 which had a payment default (90 days or more past due) for a loan modified as a TDR within the 12-month period ending December 31, 2022.

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

As allowed by CECL, loans acquired by the Company that experience more-than-insignificant deterioration in credit quality after origination, are classified as PCD loans.

Total gross loans $ 6,529 — — — — 6,529

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

As of December 31, 2024, the balance of PCD loans totaled $ 620.4 million with a related allowance for credit losses of $ 15.2 million.

The balance of PCD loans as of December 31, 2023, was $ 165.1 million with a related allowance for credit losses of $ 1.7 million.

In connection with the Lakeland merger, the Company evaluated acquired loans for deterioration in credit quality based on any of, but not limited to, the following:

(1) non-accrual status;

(2) modifications for borrowers experiencing financial difficulty;

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

and (4) loans greater than 59 days past due.

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

Additionally for PCD loans, an allowance for credit losses was calculated using management's best estimate of projected losses over the remaining life of the loans.

This represents the portion of the loan balances that has been deemed uncollectible based on the Company’s expectations of future cash flows for each respective PCD loan pool, given the outlook and forecasts inclusive of related fiscal and regulatory interventions.

The expected lifetime losses were calculated using historical losses observed at the Bank, Lakeland and peer banks.

A $ 17.2 million allowance for credit losses was recorded on PCD loans acquired from Lakeland.

The interest rate fair value adjustment related to PCD loans will be substantially recognized as interest income on a level yield or straight line method over the expected life of the loans.

The table below is a summary of the PCD loans that were acquired from Lakeland as of the closing date (in thousands):

Gross amortized cost basis as of May 16, 2024 $ 564,147

Charge-offs on PCD Loans at acquisition ( 4,364 )

Interest component of expected cash flows (accretable difference) ( 33,365 )

Allowance for credit losses on PCD loans ( 17,188 )

Net PCD loans $ 509,230

Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics.

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

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

Reports by the independent third-party are presented to the Audit Committee of the board of directors.

The Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration.

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

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

Eligibility ended for this program in May of 2021.

PPP loans are included in our commercial loan portfolio.

As of December 31, 2023, the Company secured 2,067 PPP loans for its customers totaling $ 682.0 million, which includes both the initial round and the second round of PPP.

As of December 31, 2023, 2,054 PPP loans totaling $ 679.4 million were forgiven.

The balance as of December 31, 2023 for PPP loans was $ 2.5 million.

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

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

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

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Doubtful — — — — — — — — —

Gross Loans Held for Investment by Year of Origination

as of December 31, 2024

2024 2023 2022 2021 2020 Prior to 2020 Revolving Loans Revolving loans to term loans Total Loans

Loss — — — — — — — — —

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Doubtful — — — — — — — — —

Gross Loans Held for Investment by Year of Origination

as of December 31, 2023

2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Revolving loans to term loans Total Loans

Loss — — — — — — — — —

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Pass/Watch 1,804,910 2,513,685 3,771,749 2,332,737 1,911,030 4,184,728 1,552,993 94,558 18,166,390

Total gross loans $ 1,506,562 1,910,013 1,615,910 1,181,963 963,225 2,870,710 716,838 119,462 10,884,683

Total Loans $ 1,815,804 2,530,609 3,858,999 2,390,393 1,979,397 4,380,357 1,610,946 101,065 18,667,570

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

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Total Residential $ 96,259 141,683 200,111 195,964 89,654 441,285 — — 1,164,956

Total Mortgage

Gross Loans Held for Investment by Year of Origination

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2023 2022 2021 2020 2019 Prior to 2019 Revolving Loans Revolving loans to term loans Total Loans

Total Mortgage

Special mention $ — 10,926 3,048 28,511 10,558 35,306 4,500 — 92,849

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Pass/Watch 1,494,680 1,882,079 1,583,262 1,141,808 950,472 2,787,656 677,268 118,177 10,635,402

Total gross loans $ 1,821,537 1,705,874 1,343,025 1,127,368 689,938 2,784,277 726,874 62,752 10,261,645

Total Loans $ 1,506,562 1,910,013 1,615,910 1,181,963 963,225 2,868,925 716,838 119,462 10,882,898

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

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Depreciation expense for the years ended December 31, 2024, 2023 and 2022 amounted to $ 12.6 million, $ 8.7 million and $ 9.8 million, respectively.

(9) Intangible Assets

Intangible assets as of December 31, 2023 and 2022 are summarized as follows (in thousands):

(7) Goodwill and Other Intangible Assets

Goodwill and other intangible assets as of December 31, 2024 and 2023 are summarized as follows (in thousands):

Goodwill $ 624,069 443,623

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Mortgage servicing rights 1,104 551

Total intangible assets $ 457,942 460,892

Total goodwill and other intangible assets $ 819,230 457,942

Amortization expense of intangible assets for the years ended December 31, 2024, 2023 and 2022 is as follows (in thousands):

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Year ended December 31, Scheduled Amortization

(10) Deposits

2025 $ 37,140

Deposits as of December 31, 2024 and 2023 are summarized as follows (in thousands):

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Total deposits $ 18,623,813 $ 10,292,514

(1) Our insured cash sweep ("ICS") product totaled $ 520.2 million as of December 31, 2023 and are located within NOW accounts.

(1) The Bank's insured cash sweep product totaled $ 1.16 billion and $ 520.2 million as of December 31, 2024 and December 31, 2023, respectively, and are reported within NOW accounts.

(2) Time deposits equal to or in excess of $250,000 were $ 789.0 million and $ 218.5 million as of December 31, 2024 and December 31, 2023, respectively.

Additionally, our Certificate of Deposit Account Registry Service ("CDARS") product totaled $ 163.9 million as of December 31, 2023.

Within total deposits, brokered deposits totaled $ 689.3 million as of December 31, 2023.

Our brokered deposits are made up primarily of ICS deposits and CDARS.

Both of these services are provided by the bank to increase the level of customers' deposit insurance.

Additionally, the Bank's reciprocal Certificate of Deposit Account Registry Service product totaled $ 3.5 million and $ 3.3 million as of December 31, 2024 and December 31, 2023, respectively.

Within total deposits, brokered deposits totaled $ 251.5 million and $ 165.7 million as of December 31, 2024 and December 31, 2023, respectively.

Scheduled maturities of certificates of deposit accounts as of December 31, 2024 and 2023 are as follows (in thousands):

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Securities sold under repurchase agreements $ 113,224 72,161

FHLB line of credit 148,000 486,000

FHLB advances 1,299,872 753,370

FED Bank Term Funding Program ("BTFP") Borrowing 450,000 —

FHLBNY line of credit 385,000 148,000

FHLBNY advances

1,518,497 1,299,836

FRBNY BTFP borrowing — 450,000

Purchase accounting adjustment ("PAA") on borrowed funds 3,714 36

Total borrowed funds $ 2,020,435 1,970,033

Total long-term borrowings totaled $ 513.9 million and $ 534.8 million as of December 31, 2024 and December 31, 2023, respectively, while total short-term borrowings totaled $ 1.51 billion and $ 1.44 billion for the same periods.

As of December 31, 2023, FHLB advances were at fixed rates and mature between January 2024 and September 2027, and as of December 31, 2022, FHLB advances were at fixed rates and mature between January 2023 and July 2025.

As of December 31, 2024, FHLBNY advances were at fixed rates and mature between January 2025 and September 2027, and as of December 31, 2023, FHLBNY advances were at fixed rates and mature between January 2024 and September 2027.

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

In March 2023, the Bank established a facility under the BTFP with the Federal Reserve Bank of New York.

The Bank pledged approximately $ 589.1 million in security collateral to the facility improving its access to immediate funding.

Advances under the Program can be requested until March 11, 2024.

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

In March 2023, the Company established a facility under the Bank Term Funding Program ("BTFP" or "Program") with the Federal Reserve Bank of New York ("FRBNY").

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

The funding was used to pay off existing wholesale borrowings.

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

Scheduled maturities of FHLB advances and lines of credit as of December 31, 2023 are as follows (in thousands):

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

The balance was fully paid off in November of 2024.

Scheduled maturities of FHLBNY advances, FRBNY BTFP borrowings and lines of credit, including purchase accounting adjustments resulting from the Lakeland acquisition as of December 31, 2024 are as follows (in thousands):

Due in one year or less $ 1,268,262

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Due after four years through five years —

Total FHLB advances and lines of credit $ 1,897,872

Purchase accounting adjustment on borrowed funds 3,714

Total FHLBNY advances, FRBNY BTFP borrowings and overnight borrowings $ 1,907,211

Scheduled maturities of securities sold under repurchase agreements as of December 31, 2024 are as follows (in thousands):

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Securities sold under repurchase agreements $ 117,323 102,043 2.03 %

FHLB line of credit 500,000 262,289 5.29

FHLB advances 1,592,277 1,282,124 3.14

FED BTFP Borrowing 450,000 4,932 4.83

FHLBNY overnight borrowings 567,000 115,902 5.45

FHLBNY advances 1,518,497 1,290,836 3.41

FRBNY BTFP Borrowing 550,000 472,077 4.78

Securities sold under repurchase agreements $ 99,669 87,227 1.69 %

FHLB line of credit 486,000 139,012 3.32

FHLB advances 753,370 503,713 0.85

FHLBNY overnight borrowings 500,000 262,289 5.29

FHLBNY advances 1,592,277 1,282,124 3.14

FRBNY BTFP Borrowing 450,000 4,932 4.83

Securities sold under repurchase agreements include arrangements with deposit customers of the Bank to sweep funds into short-term borrowings.

The Bank uses available for sale debt securities to pledge as collateral for the repurchase agreements.

As of December 31, 2023 and December 31, 2022, the fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit, FHLB advances and other purposes required by law, totaled $ 924.6 million and $ 1.59 billion, respectively.

Additionally, as of December 31, 2023, the par value of securities pledged to secure the BTFP was $ 589.1 million.

Interest expense on borrowings for the years ended December 31, 2023, 2022 and 2021 amounted to $ 55.9 million, $ 9.3 million and $ 8.6 million, respectively.

As of December 31, 2024 and December 31, 2023, the fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit and FHLB advances, totaled $ 1.12 billion and $ 924.6 million, respectively.

Additionally, as of December 31, 2024, there was no par value of securities pledged to secure BTFP, since the plan was fully paid off in November of 2024, compared to a par value of securities pledged to secure BTFP of $ 589.1 million as of December 31, 2023.

Interest expense on borrowings for the years ended December 31, 2024, 2023 and 2022 amounted to $ 74.9 million, $ 56.0 million and $ 9.5 million, respectively, while amortization expense related to purchase accounting for the years ended December 31, 2024, 2023 and 2022 amounted to a benefit of $ 1.4 million, $ 105,000 and $ 188,000 , respectively.

(10) Subordinated Debentures

On May 9, 2024, the Company issued $ 225.0 million of 9.00 % Fixed-to-Floating Rate subordinated notes (the "Notes") due 2034, resulting in net proceeds of $ 221.2 million.

The Notes bear interest at an initial rate of 9.00 % per annum, payable semi-annually in arrears on May 15 and November 15 of each year, commencing on November 15, 2024.

The last interest payment date for the fixed rate period will be May 15, 2029.

From and including May 15, 2029 to, but excluding May 15, 2034 or the date of earlier redemption, the Notes will bear interest at a floating rate per annum equal to the Benchmark rate (which is expected to be three-month term Secured Overnight Financing Rate ("SOFR")), each as defined in and subject to the provisions of the Indenture, plus 476.5 basis points, payable quarterly in arrears on February 15, May 15, August 15, and November 15 of each year, commencing on August 15, 2029.