What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 263 added, 603 removed, 951 unchanged (48% of the section changed)

3 unchanged sentences

Consolidated Statements of Financial Condition

September 30, 2024 (Unaudited) and December 31, 2023

March 31, 2025 (Unaudited) and December 31, 2024

(Dollars in Thousands)

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

Cash and due from banks $ 234,076 $ 205,939

Short-term investments 25 14

Total cash and cash equivalents 244,089 180,255

Available for sale debt securities, at fair value 2,878,785 2,768,915

Held to maturity debt securities, (net of $ 15,000 allowance as of September 30, 2024 (unaudited) and $ 31,000 allowance as of December 31, 2023)

Held to maturity debt securities, (net of $ 17,000 allowance as of March 31, 2025 and $ 14,000 allowance as of December 31, 2024)

314,005 327,623

Equity securities, at fair value 19,219 19,110

Federal Home Loan Bank stock 96,219 79,217

Federal Home Loan Bank and other bank stock 126,923 112,767

Loans held for sale 149,961 162,453

22 unchanged sentences

Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, none issued

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,448,599 shares outstanding as of September 30, 2024 and 75,537,186 outstanding as of December 31, 2023

Common stock, $ 0.01 par value, 200,000,000 shares authorized, 137,565,966 shares issued and 130,663,184 shares outstanding as of March 31, 2025 and 130,489,493 outstanding as of December 31, 2024

Additional paid-in capital 1,836,665 1,834,495

Retained earnings 1,021,266 989,111

Accumulated other comprehensive (loss) income ( 93,049 ) ( 141,115 )

Accumulated other comprehensive loss ( 110,246 ) ( 135,355 )

Treasury stock ( 90,267 ) ( 88,420 )

Unallocated common stock held by the Employee Stock Ownership Plan ( 2,461 ) ( 4,896 )

Common stock acquired by deferred compensation plans ( 2,247 ) ( 2,694 )

Deferred compensation plans 2,247 2,694

Total stockholders’ equity 2,658,794 2,601,207

4 unchanged sentences

Consolidated Statements of Income

Three and nine months ended September 30, 2024 and 2023 (Unaudited)

Three months ended March 31, 2025 and 2024 (Unaudited)

(Dollars in Thousands, except per share data)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Three months ended March 31,

Interest and dividend income:

4 unchanged sentences

Held to maturity debt securities 1,996 2,268

Due from banks, Federal funds sold and other short-term investments 2,425 885 5,466 2,678

Total interest income 322,522 158,197 734,192 451,649

Deposits, Federal funds sold and other short-term investments 675 1,182

Total interest and dividend income 305,346 163,859

Interest expense:

4 unchanged sentences

Net interest income 181,728 93,670

Provision charge for credit losses 9,299 12,541 78,684 29,031

Provision charge (benefit) for credit losses 638 ( 320 )

Net interest income after provision charge for credit losses 181,090 93,990

28 unchanged sentences

Consolidated Statements of Comprehensive Income

Three and nine months ended September 30, 2024 and 2023 (Unaudited)

Three months ended March 31, 2025 and 2024 (Unaudited)

(Dollars in Thousands)

Three months ended September 30, Nine months ended September 30,

2024 2023 2024 2023

Three months ended March 31,

Net income $ 64,028 $ 32,082

Other comprehensive income, net of tax:

Other comprehensive income (loss), net of tax:

Unrealized gains and losses on available for sale debt securities:

Net unrealized gains (losses) arising during the period 26,786 ( 9,957 )

Reclassification adjustment for losses included in net income — — 2,056 —

Reclassification adjustment for gains included in net income ( 62 ) —

Total 26,724 ( 9,957 )

Unrealized gains and losses on derivatives:

Net unrealized (losses) gains arising during the period ( 3,395 ) 2,352 810 5,385

Net unrealized gains arising during the period 106 3,385

Reclassification adjustment for gains included in net income ( 1,391 ) ( 3,069 )

2 unchanged sentences

Total other comprehensive income (loss) 25,109 ( 10,470 )

Total comprehensive income (loss) $ 93,320 $ ( 4,016 ) $ 115,067 $ 71,075

Total comprehensive income $ 89,137 $ 21,612

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2024 (Unaudited)

Three months ended March 31, 2024 (Unaudited)

(Dollars in Thousands)

For the three months ended September 30, 2024

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE LOSS TREASURY STOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance as of June 30, 2024 $ 1,376 $ 1,868,643 $ 957,979 $ ( 139,964 ) $ ( 129,115 ) $ ( 3,273 ) $ ( 2,398 ) $ 2,398 $ 2,555,646

Net income — — 46,405 — — — — — 46,405

Other comprehensive loss, net of tax — — — 46,915 — — — — 46,915

Cash dividends paid — — ( 31,387 ) — — — — — ( 31,387 )

Distributions from deferred comp plans — 39 — — — — 151 ( 151 ) 39

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

Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 33 ) — — — ( 33 )

Stock option exercises — — — — — — — — —

Allocation of ESOP shares — 30 — — — 812 — — 842

Allocation of SAP shares — 2,614 — — — — — — 2,614

Shares issued due to acquisition — — — — — — — — —

Allocation of stock options — 17 — — — — — — 17

Balance as of September 30, 2024 $ 1,376 $ 1,871,343 $ 972,997 $ ( 93,049 ) $ ( 129,148 ) $ ( 2,461 ) $ ( 2,247 ) $ 2,247 $ 2,621,058

For the nine months ended September 30, 2024

COMMONSTOCK ADDITIONAL

CAPITAL RETAINED EARNINGS ACCUMULATED

COMPREHENSIVE

LOSS TREASURY

STOCK UNALLOCATED

SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2024

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME TREASURYSTOCK UNALLOCATED ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL STOCKHOLDERS’ EQUITY

Balance as of December 31, 2023 $ 832 $ 989,058 $ 974,542 $ ( 141,115 ) $ ( 127,825 ) $ ( 4,896 ) $ ( 2,694 ) $ 2,694 $ 1,690,596

Net income — — 32,082 — — — — — 32,082

Other comprehensive loss, net of tax — — — 48,066 — — — — 48,066

Other comprehensive income net of tax — — — ( 10,470 ) — — — — ( 10,470 )

Cash dividends paid — — ( 18,144 ) — — — — — ( 18,144 )

3 unchanged sentences

Allocation of ESOP shares — ( 58 ) — — — 811 — — 753

Allocation of SAP shares — 6,039 — — — — — — 6,039

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

Allocation of Stock Award Plan ("SAP") shares — 1,521 — — — — — — 1,521

Allocation of stock options — 28 — — — — — — 28

Balance as of September 30, 2024 $ 1,376 $ 1,871,343 $ 972,997 $ ( 93,049 ) $ ( 129,148 ) $ ( 2,461 ) $ ( 2,247 ) $ 2,247 $ 2,621,058

Balance as of March 31, 2024 $ 832 $ 990,582 $ 988,480 $ ( 151,585 ) $ ( 129,062 ) $ ( 4,085 ) $ ( 2,546 ) $ 2,546 $ 1,695,162

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Changes in Stockholders’ Equity

For the three and nine months ended September 30, 2023 (Unaudited)

Three months ended March 31, 2025 (Unaudited)

(Dollars in Thousands)

For the three months ended September 30, 2023

Balance as of June 30, 2023 $ 832 $ 986,150 $ 954,403 $ ( 162,493 ) $ ( 127,818 ) $ ( 8,603 ) $ ( 3,150 ) $ 3,150 $ 1,642,471

Net income — — 28,547 — — — — — 28,547

Other comprehensive loss, net of tax — — — ( 32,563 ) — — — — ( 32,563 )

Cash dividends paid — — ( 18,148 ) — — — — — ( 18,148 )

Distributions from deferred comp plans — 36 — — — — 137 ( 137 ) 36

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

Purchase of employee restricted shares to fund statutory tax withholding — — — — — — — — —

Stock option exercises — — — — — — — — —

Allocation of ESOP shares — ( 24 ) — — — 812 — — 788

Allocation of Stock Award Plan ("SAP") shares — 1,805 — — — — — — 1,805

Allocation of stock options — 34 — — — — — — 34

Balance as of September 30, 2023 $ 832 $ 988,001 $ 964,802 $ ( 195,056 ) $ ( 127,818 ) $ ( 7,791 ) $ ( 3,013 ) $ 3,013 $ 1,622,970

For the nine months ended September 30, 2023

COMMONSTOCK ADDITIONAL

PAID-IN CAPITAL RETAINEDEARNINGS ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) TREASURYSTOCK UNALLOCATED

ESOP SHARES COMMON STOCK ACQUIRED BY DEFERRED COMP PLANS DEFERRED COMPENSATION PLANS TOTAL

STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2025

COMMON STOCK ADDITIONAL PAID-IN CAPITAL RETAINED EARNINGS ACCUMULATED OTHER COMPREHENSIVE LOSS TREASURY STOCK TOTAL STOCKHOLDERS’ EQUITY

Balance as of December 31, 2024 1,376 1,834,495 989,111 ( 135,355 ) ( 88,420 ) 2,601,207

2 unchanged sentences

Cash dividends paid — — ( 31,873 ) — ( 31,873 )

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

2022-02, net of tax

— — 433 — — — — — 433

Distributions from deferred comp plans — 115 — — — — 414 ( 414 ) 115

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

Purchase of employee restricted shares to fund statutory tax withholding — — — — ( 1,847 ) ( 1,847 )

Stock option exercises — — — — — —

Allocation of ESOP shares — 219 — — — 2,435 — — 2,654

Allocation of SAP shares — 2,153 — — — 2,153

Allocation of stock options — 17 — — — 17

Balance as of September 30, 2023 $ 832 $ 988,001 $ 964,802 $ ( 195,056 ) $ ( 127,818 ) $ ( 7,791 ) $ ( 3,013 ) $ 3,013 $ 1,622,970

Balance as of March 31, 2025 $ 1,376 $ 1,836,665 $ 1,021,266 $ ( 110,246 ) $ ( 90,267 ) $ 2,658,794

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine months ended September 30, 2024 and 2023 (Unaudited)

Three months ended March 31, 2025 and 2024 (Unaudited)

(Dollars in Thousands)

Nine months ended September 30,

Three months ended March 31,

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization of intangibles 13,165 2,801

Provision charge for credit losses 78,684 29,031

Deferred tax benefit ( 1,020 ) ( 2,332 )

Provision charge (benefit) for credit losses on loans and securities 638 ( 320 )

Deferred tax expense 3,600 4,419

Amortization of operating lease right-of-use assets 3,544 2,627

9 unchanged sentences

Net gain on sale of loans ( 368 ) ( 45 )

Net loss (gain) on securities transactions 2,972 ( 37 )

Net (gain) loss on securities transactions ( 87 ) 1

Net gain on sale of premises and equipment ( 624 ) —

Net gain on sale of foreclosed assets — ( 42 )

Increase in accrued interest receivable ( 3,658 ) ( 3,838 )

Increase in other assets ( 10,591 ) ( 23,596 )

Increase in other liabilities 21,258 9,101

(Increase) decrease in accrued interest receivable ( 616 ) 289

Decrease (increase) in other assets 43,106 ( 13,379 )

(Decrease) increase in other liabilities ( 35,718 ) 14,007

Net cash provided by operating activities 88,515 41,409

Cash flows from investing activities:

Net increase in loans ( 28,540 ) ( 420,331 )

Net (increase) decrease in loans ( 112,317 ) 34,378

Purchases of loans ( 321 ) —

7 unchanged sentences

Purchases of Federal Home Loan Bank stock ( 91,086 ) ( 27,325 )

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

BOLI claim benefits received 906 820

1 unchanged sentence

Purchases of premises and equipment ( 1,142 ) ( 536 )

Net cash provided by (used in) investing activities 800,492 ( 337,430 )

Net cash (used in) provided by investing activities ( 176,477 ) 54,583

Cash flows from financing activities:

Net decrease in deposits ( 174,950 ) ( 193,622 )

PROVIDENT FINANCIAL SERVICES, INC.

AND SUBSIDIARY

Consolidated Statements of Cash Flows

Nine months ended September 30, 2024 and 2023 (Unaudited)

(Dollars in Thousands)

Nine months ended September 30,

Increase in mortgage escrow deposits 9,014 7,043

Cash dividends paid to stockholders ( 31,874 ) ( 18,144 )

Three months ended March 31,

Purchase of employee restricted shares to fund statutory tax withholding ( 1,847 ) ( 1,237 )

Stock options exercised — 790

Proceeds from subordinated debentures 221,181 —

Proceeds from long-term borrowings — —

Payments on long-term borrowings ( 254,600 ) —

Net (decrease) increase in short-term borrowings ( 541,448 ) 234,517

Net cash (use in) provided by financing activities ( 923,751 ) 213,112

Net increase in cash and cash equivalents 63,834 2,761

Net increase in short-term borrowings 570,356 88,065

Net cash provided by (used in) financing activities 116,099 ( 117,895 )

Net increase (decrease) in cash and cash equivalents 28,137 ( 21,903 )

Cash and cash equivalents at beginning of period 205,869 180,185

7 unchanged sentences

Income taxes $ 1,029 $ 1,317

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 $ — $ —

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 400,773 —

Bank premises and equipment 60,578 —

Other assets 269,252 —

Total non-cash assets acquired at fair value $ 10,413,987 $ —

Liabilities assumed

Deposits $ 8,622,924 $ —

Borrowings 785,927 —

Subordinated debentures 180,198 —

Other Liabilities 142,708 —

Total liabilities assumed $ 9,731,757 $ —

Common stock issued for acquisitions $ 876,778 $ —

See accompanying notes to unaudited consolidated financial statements.

10 unchanged sentences

The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented.

The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results of operations that may be expected for all of 2024.

The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results of operations that may be expected for all of 2025.

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S.

3 unchanged sentences

Earnings Per Share

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands, except per share amounts):

Three months ended September 30,

Income Weighted

Outstanding Per

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three months ended March 31, 2025 and 2024 (dollars in thousands, except per share amounts):

Three months ended March 31,

Income Weighted

Outstanding Per

Net income $ 46,405 $ 28,547

Basic earnings per share:

Income available to common stockholders $ 46,405 129,941,845 $ 0.36 $ 28,547 74,909,083 $ 0.38

Dilutive shares 63,025 5,122

Diluted earnings per share:

Income available to common stockholders $ 46,405 130,004,870 $ 0.36 $ 28,547 74,914,205 $ 0.38

Nine months ended September 30,

Income Weighted

Outstanding Per

Income Weighted

Common Shares Outstanding Per

Net income $ 64,028 $ 32,082

4 unchanged sentences

Income available to common stockholders $ 64,028 130,380,475 $ 0.49 $ 32,082 75,275,660 $ 0.43

Anti-dilutive stock options and awards as of September 30, 2024 and 2023, totaling 1.7 million shares and 1.2 million shares, respectively, were excluded from the earnings per share calculations.

Anti-dilutive stock options and awards totaling 1.4 million shares as of March 31, 2025 and 2024, were excluded from the earnings per share calculations.

Loans Receivable and Allowance for Credit Losses

1 unchanged sentence

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

For the three and nine months ended September 30, 2024, an initial CECL provision for credit losses on loans and commitments to extend credit of $ 65.2 million was recorded as part of the Lakeland merger in accordance with GAAP requirements for accounting for business combinations.

For the three months ended March 31, 2025, an increase in specific reserves on impaired credits led to a provision for credit losses,

while an increase in loans approved and awaiting closing led to a provision for credit losses on off-balance sheet credit exposures.

See Notes 4 and 10 to the Consolidated Financial Statements for more information on the allowance for credit losses on loans and off-balance sheet credit exposures.

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

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

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

Goodwill is analyzed for impairment at least once a year.

The Company prepares a qualitative assessment in determining whether goodwill may be impaired.

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 most recent annual goodwill impairment test as of July 1, 2024.

The Company performed a qualitative analysis of goodwill and concluded that no triggering events were identified and therefore a test for impairment between annual tests was not required.

As of March 31, 2025, the Company performed a qualitative analysis of goodwill and concluded that no triggering events were identified and therefore a test for impairment between annual tests was not required.

Business Combinations

2 unchanged sentences

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

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

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

("Lakeland").

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.

1 unchanged sentence

The excess of consideration paid over the estimated fair value of the net assets acquired totaled $ 180.4 million and was recorded as goodwill.

While there were no transaction costs related to our merger with Lakeland for the 2025 period, these costs totaled $ 2.2 million for the three months ended March 31, 2024.

Merger-related expense is a separate line in non-interest expense on the Consolidated Statements of Income.

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):

23 unchanged sentences

Net assets acquired $ 876,779

The Company is in the process of finalizing its review of the acquired assets and liabilities, as a result of which certain adjustments to the recorded carrying values and goodwill may be required.

There have been no adjustments to the recorded carrying values or goodwill made to-date.

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 the open market quotes used in pricing the securities and a fair value adjustment was not recorded on the investments.

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.

Cash flows were adjusted for expected losses and prepayments.

Projected cash flows were then discounted to present value based on:

the relative risk of the cash flows, taking into account the loan type, liquidity risk, the maturity of the loans, servicing costs, and a required return on capital;

and monthly principal and interest cash flows

were discounted to present value and summed to arrive at the calculated 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, 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 default and 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, given the outlook and forecasts.

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 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.

Subordinated Debentures

At the valuation date, Lakeland had three outstanding trust preferred issuances and a subordinated debt issuance with an 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 cash flows were projected through the remaining contractual term of the trust preferred issuance and based on the call date for the subordinated debt issuance.

Merger-Related Expenses

Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $ 15.6 million and $ 36.7 million for the three and nine months ended September 30, 2024, respectively, compared with $ 2.3 million and $ 5.3 million for the three and nine months ended September 30, 2023.

The Company finalized its review of the acquired assets and liabilities as of December 31, 2024.

No adjustments to the recorded carrying values or goodwill were made as of and for the quarter ended March 31, 2025.

Investment Securities

As of September 30, 2024, the Company had $ 2.73 billion and $ 332.0 million in available for sale debt securities and held to maturity debt securities, respectively.

The total number of available for sale and held to maturity debt securities in an unrealized loss position as of September 30, 2024 totaled 803 , compared with 808 as of December 31, 2023.

The decrease in the number of securities in an unrealized loss position as of September 30, 2024, was due to lower current market interest rates compared to rates as of December 31, 2023, offset by the addition of Lakeland securities.

As of March 31, 2025, the Company had $ 2.88 billion and $ 314.0 million in available for sale debt securities and held to maturity debt securities, respectively.

Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, changes in interest rates, regulatory actions, changes in the business environment or any changes in the competitive marketplace, could have an adverse effect on the Company’s investment portfolio.

Available for Sale Debt Securities

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Treasury obligations $ 330,547 339 ( 14,574 ) 316,312

13 unchanged sentences

$ 2,975,695 11,606 ( 218,386 ) 2,768,915

Accrued interest on available for sale debt securities, which is excluded from the amortized cost, totaled $ 9.1 million and $ 4.9 million as of September 30, 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 available for sale debt securities as of September 30, 2024, by contractual maturity, are shown below (in thousands).

Accrued interest on available for sale debt securities, which is excluded from the amortized cost, totaled $ 10.1 million and $ 9.7 million as of March 31, 2025 and December 31, 2024, respectively, and is presented within total accrued interest receivable on the Consolidated Statements of Financial Condition.

The amortized cost and fair value of available for sale debt securities as of March 31, 2025, by contractual maturity, are shown below (in thousands).

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

September 30, 2024

March 31, 2025

Due in one year or less $ 67,891 67,545

3 unchanged sentences

$ 553,961 532,189

Investments which pay principal on a periodic basis totaling $ 2.19 billion at amortized cost and $ 2.07 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.

For the three and nine months ended September 30, 2024, proceeds from sales on securities in the available for sale debt securities portfolio totaled $ 568.4 million, with no gains and $ 3.0 million of losses recognized.

For the three and nine months ended September 30, 2023, there were no sales of securities from the available for sale debt securities portfolio.

For the three and nine months ended September 30, 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 the three and nine months ended September 30, 2023, there were no proceeds from calls on securities in the available for sale debt securities portfolio.

The number of available for sale debt securities in an unrealized loss position as of September 30, 2024 totaled 438 , compared with 436 as of December 31, 2023.

The increase in the number of securities in an unrealized loss position as of September 30, 2024, was primarily due to the addition of Lakeland, offset by lower current market interest rates as of December 31, 2023.

All securities in an unrealized loss position were investment grade as of September 30, 2024.

Investments which pay principal on a periodic basis, and are primarily related to mortgage-backed securities totaling $ 2.49 billion at amortized cost and $ 2.35 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.

For the three months ended March 31, 2025 proceeds from sales on securities in the available for sale debt portfolio totaled $ 1.7 million with gross gains of $ 87,000 and no losses recognized, while calls from securities from the available for sale debt portfolio totaled $ 9.6 million with no gross gains and no losses recognized.

For March 31, 2024, no securities were sold or called from the available for sale debt securities portfolio.

The number of available for sale debt securities in an unrealized loss position as of March 31, 2025 totaled 502 , compared with 646 as of December 31, 2024.

The decrease in the number of securities in an unrealized loss position as of March 31, 2025 was due to lower current market interest rates compared to rates as of December 31, 2024.

All securities in an unrealized loss position were investment grade as of March 31, 2025.

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, excluding allowances for credit losses of $ 15,000 and $ 31,000 , as of September 30, 2024 and December 31, 2023, respectively (in thousands):

September 30, 2024

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 March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Government-agency obligations $ 9,999 — ( 198 ) 9,801

3 unchanged sentences

December 31, 2024

Treasury obligations $ 5,146 1 — 5,147

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

2 unchanged sentences

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

Accrued interest on held to maturity debt securities, which is excluded from the amortized cost, totaled $ 2.2 million and $ 3.1 million as of September 30, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

Accrued interest on held to maturity debt securities, which is excluded from the amortized cost, totaled $ 2.3 million and $ 2.9 million as of March 31, 2025 and December 31, 2024, respectively, and is presented within total accrued interest receivable on the Consolidated Statements of Financial Condition.

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

There were no sales of securities from the held to maturity debt securities portfolio for the three and nine months ended September 30, 2024 and 2023.

For the three and nine months ended September 30, 2024, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 2.1 million and $ 4.6 million, respectively.

For the three months ended September 30, 2024, there were no gross gains or gross losses, while for the nine months ended September 30, 2024, there were no gross gains, while gross losses totaled $ 1,200 related to these calls on securities.

For the three and nine months ended September 30, 2023, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $ 3.2 million and $ 9.8 million, respectively.

For the three months ended September 30, 2023, gross gains totaled $ 16,000 with gross losses of $ 3,000 , while for the nine months ended September 30, 2023, gross gains totaled $ 45,000 , with gross losses of $ 8,000 , related to calls on these securities.

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio by contractual maturity, excluding an allowance for credit losses of $ 15,000 , as of September 30, 2024 are shown below (in thousands).

There were no sales of securities from the held to maturity debt securities portfolio for the three months ended March 31, 2025 and 2024.

For the three months ended March 31, 2025, proceeds from calls of securities in the held to maturity debt securities portfolio totaled $ 5.0 million, with no gross gains and no gross losses.

For the three months ended March 31, 2024, proceeds from calls of securities in the held to maturity debt securities portfolio totaled $ 1.2 million with no gross gains and gross losses of $ 1,200 .

The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio as of March 31, 2025 by contractual maturity are shown below (in thousands).

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

September 30, 2024

March 31, 2025

Due in one year or less $ 48,529 48,232

3 unchanged sentences

$ 314,022 301,190

The number of held to maturity debt securities in an unrealized loss position as of September 30, 2024 totaled 365 , compared with 372 as of December 31, 2023.

The decrease in the number of securities in an unrealized loss position as of September 30, 2024, was due to lower current market interest rates as of December 31, 2023.

The allowance for credit losses on held to maturity debt securities as of March 31, 2025 and December 31, 2024 was $ 17,000 and $ 14,000 , respectively, and are excluded from amortized cost in the table above.

The number of held to maturity debt securities in an unrealized loss position as of March 31, 2025 totaled 479 , compared with 512 as of December 31, 2024.

The decrease in the number of securities in an unrealized loss position as of March 31, 2025, was due to lower current market interest rates compared to rates as of December 31, 2024.

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

8 unchanged sentences

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 September 30, 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").

The majority of the state and municipal and corporate obligations carry credit ratings from the rating agencies as of March 31, 2025, that were no lower than an A rating and the Company had no securities rated BBB or worse by Moody’s Ratings ("Moody's").

Credit Quality Indicators.

The following table provides the amortized cost of held to maturity debt securities by credit rating as of September 30, 2024 and December 31, 2023 (in thousands):

September 30, 2024

The following table provides the amortized cost of held to maturity debt securities by credit rating as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025

Total Portfolio AAA AA A BBB Not Rated Total

5 unchanged sentences

Total Portfolio AAA AA A BBB Not Rated Total

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

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

3 unchanged sentences

Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities.

As of September 30, 2024, the held to maturity debt securities portfolio was comprised of 17 % rated AAA, 73 % rated AA, 10 % rated A, and less than 1 % either below an A rating or not rated by Moody’s or Standard and Poor’s.

As of March 31, 2025, the held to maturity debt securities portfolio was comprised of 18 % rated AAA, 72 % rated AA, 9 % rated A, and less than 1 % either below an A rating or not rated by Moody’s or Standard and Poor’s.

Securities not explicitly rated, such as U.S.

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

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

Loans Receivable and Allowance for Credit Losses

Loans held for investment as of September 30, 2024 and December 31, 2023 are summarized as follows (in thousands):

September 30, 2024 December 31, 2023

Loans held for investment as of March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):

March 31, 2025 December 31, 2024

Mortgage loans:

9 unchanged sentences

Net deferred fees ( 10,922 ) ( 9,538 )

Total loans $ 18,794,609 10,871,916

As of September 30, 2024 and December 31, 2023, the Company had loans held for sale of $ 5.8 million and $ 1.8 million, respectively.

Accrued interest on loans totaled $ 78.8 million and $ 50.9 million as of September 30, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.

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

September 30, 2024

Total loans held for investment $ 18,791,371 18,659,370

Accrued interest on loans totaled $ 79.3 million and $ 78.5 million as of March 31, 2025 and December 31, 2024, respectively, and is presented within total accrued interest receivable on the Consolidated Statements of Financial Condition.

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

March 31, 2025

30-59 Days 60-89 Days Non-accrual Recorded

24 unchanged sentences

Total gross loans $ 22,326 12,236 72,061 — 106,623 18,560,947 18,667,570 55,674

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

The principal amounts of these non-accrual loans were $ 89.9 million

and $ 49.6 million as of September 30, 2024 and December 31, 2023, respectively.

Included in non-accrual loans were $ 27.7 million and $ 23.2 million of loans which were less than 90 days past due as of September 30, 2024 and December 31, 2023, respectively.

There were no loans 90 days or greater past due and still accruing interest as of September 30, 2024 and December 31, 2023.

The amount of cash basis interest income that was recognized on impaired loans for the three and nine months ended September 30, 2024 was not material.

The activity in the allowance for credit losses by portfolio segment for the three and nine months ended September 30, 2024 and 2023 was as follows (in thousands):

Three months ended September 30, Mortgage loans Commercial loans Consumer loans Total

Balance at beginning of period $ 135,312 48,003 5,016 188,331

Provision charge (benefit) to operations 855 8,973 ( 228 ) 9,600

Recoveries of loans previously charged-off 16 513 139 668

Loans charged-off ( 808 ) ( 6,495 ) ( 121 ) ( 7,424 )

Balance at end of period $ 135,375 50,994 4,806 191,175

Balance at beginning of period $ 69,940 29,707 2,426 102,073

Provision charge (benefit) to operations 4,619 6,436 ( 55 ) 11,000

Recoveries of loans previously charged-off 101 405 88 594

Loans charged-off ( 3 ) ( 6,019 ) ( 82 ) ( 6,104 )

Balance at end of period $ 74,657 30,529 2,377 107,563

Nine months ended September 30, Mortgage loans Commercial loans Consumer loans Total

The increase in accruing past due loans versus the trailing quarter was primarily attributable to two loans:

a $ 10.5 million commercial real estate loan which is expected to be fully resolved in the second quarter through the completion of a pending note sale with no anticipated loss and a $ 7.4 million commercial real estate loan that is in the process of refinancing with the Bank.

As of March 31, 2025 and December 31, 2024, total non-accrual loans held for sale, which are not in the tables above, totaled $ 3.9 million and $ 2.4 million, respectively.

Additionally, total past due loans held for sale, including non-accrual loans held for sale, totaled $ 5.8 million and $ 4.8 million, respectively.

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

The principal amounts of these non-accrual loans were $ 103.2 million and $ 72.1 million as of March 31, 2025 and December 31, 2024, respectively.

Included in non-accrual loans were $ 58.0 million and $ 24.6 million of loans which were less than 90 days past due as of March 31, 2025 and December 31, 2024, respectively.

There were no loans 90 days or greater past due and still accruing interest as of March 31, 2025 and December 31, 2024.

The activity in the allowance for credit losses by portfolio segment for the three months ended March 31, 2025 and 2024 was as follows (in thousands):

Three months ended March 31, Mortgage loans Commercial loans Consumer loans Total

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

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

Provision charge to operations 52,066 21,935 1,853 75,854

Provision (benefit) charge to operations ( 3,820 ) 4,175 ( 30 ) 325

Recoveries of loans previously charged-off 806 279 191 1,276

2 unchanged sentences

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

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

2022-02 ( 510 ) ( 43 ) ( 41 ) ( 594 )

Provision charge (benefit) charge to operations 17,573 9,898 ( 71 ) 27,400

Provision (benefit) charge to operations ( 7,580 ) 7,924 ( 144 ) 200

Recoveries of loans previously charged-off 63 687 145 895

1 unchanged sentence

Balance at end of period $ 65,890 38,292 2,247 106,429

For the three and nine months ended September 30, 2024, the Company recorded a $ 9.6 million and a $ 75.9 million provision for credit losses on loans, respectively.

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

For the three months ended September 30, 2024, net charge-offs totaled $ 6.8 million, which was primarily attributable to one commercial loan.

For the nine months ended September 30, 2024, net charge-offs totaled $ 9.1 million, which was primarily attributable to two commercial loans.

The following table summarizes the Company's gross charge-offs recorded during the three months ended September 30, 2024 by year of origination (in thousands):

2024 2023 2022 2021 2020 Prior to 2020 Total Loans

Mortgage loans:

Commercial $ — — — — — 801 801

Residential — — 7 — — — 7

Total mortgage loans — — 7 — — 801 808

Commercial loans — 42 — 6,453 — — 6,495

Consumer loans (1)

7 — — 4 — 7 19

Total gross loans $ 7 42 7 6,457 — 808 7,321

(1) During the three months ended September 30, 2024, charge-offs on consumer overdraft accounts totaled $ 103,000 , which are not included in the table above.

The following table summarizes the Company's gross charge-offs recorded during the nine months ended September 30, 2024 by year of origination (in thousands):

2024 2023 2022 2021 2020 Prior to 2020 Total Loans

Mortgage loans:

Commercial $ — — — — — 801 801

Residential — — 7 — — — 7

Total mortgage loans — — 7 — — 801 808

Commercial loans — 41 157 8,500 1,606 207 10,511

Consumer loans (1)

20 — — 5 — 9 34

Total gross loans $ 20 41 164 8,505 1,606 1,017 11,353

(1) During the nine months ended September 30, 2024, charge-offs on consumer overdraft accounts totaled $ 240,000 , which are not included in the table above.

The following table summarizes the Company's gross charge-offs recorded during the three months ended September 30, 2023 by year of origination (in thousands):

2023 2022 2021 2020 2019 Prior to 2019 Total Loans

Mortgage loans:

Residential $ — — — — — 3 3

Total mortgage loans — — — — — 3 3

Commercial loans — — — 5,000 — 1,019 6,019

Consumer loans (1)

7 — — — — — 7

Total gross loans $ 7 — — 5,000 — 1,022 6,029

(1) During the three months ended September 30, 2023, charge-offs on consumer overdraft accounts totaled $ 75,000 , which is not included in the table above.

The following table summarizes the Company's gross charge-offs recorded during the nine months ended September 30, 2023 by year of origination (in thousands):

For the three months ended March 31, 2025, the Company recorded a $ 325,000 provision for credit losses on loans, compared to a $ 200,000 provision on loans for the same period in 2024.

The increase in the provision for credit losses on loans was due to an increase in specific reserves on impaired credits.

For the three months ended March 31, 2025, net charge-offs totaled $ 2.0 million.

The following table summarizes the Company's gross charge-offs recorded during the three months ended March 31, 2025 by year of origination (in thousands):

2025 2024 2023 2022 2021 Prior to 2021 Total Loans

1 unchanged sentence

Commercial $ — — — 358 — 532 890

Residential — — — — — 24 24

Total mortgage loans — — — 358 — 532 890

3 unchanged sentences

Total gross loans $ 12 10 12 2,491 65 558 3,148

(1) During the nine months ended September 30, 2023, charge-offs on consumer overdraft accounts totaled $ 221,000 , which is not included in the table above.

(1) During the three months ended March 31, 2025, charge-offs on consumer overdraft accounts totaled $ 115,000 , which are not included in the table above.

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

As of September 30, 2024, there were 27 loans totaling $ 74.0 million, compared to 17 loans totaling $ 42.3 million as of December 31, 2023, that were individually evaluated for impairment.

As of March 31, 2025, there were 31 loans totaling $ 86.1 million, compared to 26 loans totaling $ 55.4 million as of December 31, 2024, 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.

6 unchanged sentences

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 not been any significant time lapses since the receipt of the most recent appraisals.

As of September 30, 2024 and December 31, 2023, the Company had collateral-dependent loans with fair values of $ 13.3 million and $ 24.1 million secured by commercial real estate, respectively.

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

As of March 31, 2025 and December 31, 2024, the Company had collateral-dependent loans with fair values of $ 12.8 million and $ 11.0 million secured by commercial real estate, respectively.

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.

11 unchanged sentences

These modifications extend the term of the loan, which reduces the monthly payment requirement.

In 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326):

Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), which eliminated the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

This guidance was applied on a modified retrospective basis.

Upon adoption of this guidance, the Company no longer establishes a specific reserve for loan modifications to borrowers experiencing financial difficulty.

Instead, these loan modifications are included in their respective pool and a projected loss rate is applied to the current loan balance to arrive at the quantitative and qualitative baseline portion of the allowance for credit losses.

At adoption, 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.

The following tables present the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2024 (in thousands):

For the three months ended September 30, 2024

Term Extension Interest Rate Reduction Interest Rate Reduction and Term Extension % of Total Class of Loans

Mortgage loans:

Commercial $ — 1,045 — 0.01 %

Multi-family — 1,297 — 0.04 %

Total mortgage loans — 2,342 — 0.02 %

Commercial loans — 5,743 962 0.14 %

Total gross loans $ — 8,085 962 0.05 %

For the nine months ended September 30, 2024

Term Extension Interest Rate Reduction Interest Rate Reduction and Term Extension % of Total Class of Loans

Mortgage loans:

Commercial $ — 1,045 — 0.01 %

Multi-family — 1,297 — 0.04 %

Total mortgage loans — 2,342 — 0.02 %

Commercial loans — 5,743 9,759 0.33 %

Total gross loans $ — 8,085 9,759 0.09 %

For the three months ended September 30, 2023

Term Extension Interest Rate Reduction Interest Rate Reduction and Term Extension % of Total Class of Loans

Mortgage loans:

Multi-family $ — — 1,508 0.08 %

Total mortgage loans — — 1,508 0.02 %

Total gross loans $ — — 1,508 0.01 %

For the nine months ended September 30, 2023

Term Extension Interest Rate Reduction Interest Rate Reduction and Term Extension % of Total Class of Loans

Mortgage loans:

Multi-family $ — — 1,508 0.08 %

Total mortgage loans — — 1,508 0.02 %

Commercial loans 3,771 — 1,250 0.21 %

Total gross loans $ 3,771 — 2,758 0.06 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2024 (in thousands):

Weighted-Average Months of Term Extension Weighted-Average Rate Increase

The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 (in thousands):

For the three months ended March 31, 2025

Term Extension Interest Rate Increase Interest Rate Reduction and Term Extension Total of loan modifications % of Total Class of Loans and Leases

Mortgage loans:

Commercial $ 2,984 — 1,027 4,011 0.05 %

Multi-family 0 5.00 %

Total mortgage loans 2,984 — 1,027 4,011 0.03 %

1 unchanged sentence

Total gross loans $ 4,128 — 1,630 5,758 0.03 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2024 (in thousands):

Weighted-Average Months of Term Extension Weighted-Average Rate Increase

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025 (in thousands):

Weighted-Average Months of Term Extension Weighted-Average Rate Increase (Decrease)

Mortgage loans:

Commercial 3 0.75 %

Multi-family 0 5.00 %

Total mortgage loans 3 0.75 %

1 unchanged sentence

Total gross loans 14 0.08 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the three months ended September 30, 2023 (in thousands):

Weighted-Average Months of Term Extension Weighted-Average Rate Change

Mortgage loans:

Multi-family 2 2.23 %

Total mortgage loans 2 2.23 %

Total gross loans 2 2.23 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 2023 (in thousands):

Weighted-Average Months of Term Extension Weighted-Average Rate Change

Mortgage loans:

Multi-family 2 2.23 %

Total mortgage loans 2 2.23 %

Commercial loans 10 0.20 %

Total gross loans 9 0.61 %

There were no loan modifications made to borrowers experiencing financial difficulty that subsequently defaulted during the three and nine months ended September 30, 2024 and September 30, 2023, respectively.

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended September 30, 2024 (in thousands):

There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended March 31, 2025, that subsequently defaulted.

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the twelve months ended March 31, 2025 (in thousands):

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

5 unchanged sentences

Total gross loans $ 12,341 313 — 89 1,555 14,298

The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the nine months ended September 30, 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

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

Commercial loans 5,021 — — — — 5,021

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 September 30, 2024, the balance of PCD loans totaled $ 619.7 million with a related allowance for credit losses of $ 14.9 million.

As of March 31, 2025, the balance of PCD loans totaled $ 585.8 million with a related allowance for credit losses of $ 15.0 million.

The balance of PCD loans as of December 31, 2024 was $ 620.4 million with a related allowance for credit losses of $ 15.2 million.

24 unchanged sentences

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 as of September 30, 2024 and December 31, 2023 (in thousands):

The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of March 31, 2025 and December 31, 2024 (in thousands):