What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 240 added, 142 removed, 227 unchanged (63% of the section changed)

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Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms.

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

Government (including tariff and trade policies), changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, and the impact of a potential shutdown of the federal government.

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

Government, tariffs, the effects of the recent turmoil in the banking industry, changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, and the impact of a potential shutdown of the federal government.

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

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Lakeland Bancorp, Inc.

Merger Agreement

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

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.

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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.

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).

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

ASC 805 provides for a period of time during which the acquirer may adjust the 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 and decreased goodwill by $10.5 million to $180.4 million, related to finalizing the valuation.

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

In accordance with ASC 805, during

2024 the Company recorded a measurement period adjustment and decreased goodwill by $10.5 million to $180.4 million, related to finalizing the valuation.

While there were no merger-related expenses with Lakeland for the 2025 period, these costs totaled $18.9 million and $21.1 million for the three and six months ended June 30, 2024.

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

Additionally, an initial CECL provision for credit losses of $60.1 million was recorded as part of the Lakeland merger, for the three and six months ended June 30, 2024, respectively.

Critical Accounting Policies

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These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment.

The Company has identified the allowance for credit losses on loans and the acquisition method of accounting as critical accounting policies.

The Company has identified the allowance for credit losses on loans as a critical accounting policy.

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

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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 (“PDR”) curves through the use of segment-specific loss given default (“LGD”) risk factors that convert default rates to loss severity based on industry-level, observed relationships between the two variables for each segment, primarily due to the nature of the underlying collateral.

These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the relationship between the Company’s historical default and loss severity deviates from that of the wider industry.

The historical PDR curves, together with corresponding economic conditions, establish a quantitative relationship between economic conditions and loan performance through an economic cycle.

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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.

As of March 31, 2025, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.

The allowance estimation process resulted in a total provision on loans of $325,000 for the three months ended March 31, 2025, and an overall

coverage ratio of 102 basis points.

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

As of June 30, 2025, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.

The allowance estimation process resulted in a total benefit to the provision of $2.7 million and $2.3 million for the three and six months ended June 30, 2025, and an overall coverage ratio of 98 basis points.

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

If the Company used a more severe outlook, the provision on loans would have risen by approximately $20.5 million, leading to an overall coverage ratio of approximately 113 basis points.

If the Company used a more severe outlook, the provision would have risen by approximately $22.3 million, leading to an overall coverage ratio of approximately 110 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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The segments have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled.

As of March 31, 2025, the portfolio and class segments for the Company’s loan portfolio were:

As of June 30, 2025, the portfolio and class segments for the Company’s loan portfolio were:

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

• Commercial Loans – Commercial Owner-Occupied and Commercial Non-Owner Occupied

• Commercial Loans – Commercial Owner-Occupied and Commercial & Industrial Loans

• Consumer Loans – First Lien Home Equity and Other Consumer

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

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

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

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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.

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.

Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination.

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

COMPARISON OF FINANCIAL CONDITION AS OF MARCH 31, 2025 AND DECEMBER 31, 2024

Total assets as of March 31, 2025 were $24.22 billion, a $172.9 million increase from December 31, 2024.

The increase in total assets was primarily due to a $132.0 million increase in total loans and a $110.5 million increase in total investments, partially offset by a decrease in intangible and other assets.

The Company’s loan held for investment portfolio increased $132.0 million to $18.79 billion as of March 31, 2025, from $18.66 billion as of December 31, 2024.

The loan portfolio consists of the following (in thousands):

March 31, 2025 December 31, 2024

Recent Legislation

On July 4, 2025, subsequent to the end of the Company’s second fiscal quarter, the One Big Beautiful Bill ("OBBB") was enacted into law.

The legislation includes a number of significant tax-related provisions, including changes affecting corporate tax incentives, international tax provisions, and various business credits and deductions.

Pursuant to ASC 740, Income Taxes, the Company will recognize the effects of the OBBB in the third fiscal quarter of 2025, the period in which the legislation was enacted.

The Company is currently evaluating the potential impact of the OBBB on its financial statements and, based on its preliminary assessment, does not currently expect the legislation to have a material impact.

COMPARISON OF FINANCIAL CONDITION AS OF JUNE 30, 2025 AND DECEMBER 31, 2024

Total assets as of June 30, 2025 were $24.55 billion, a $495.5 million increase from December 31, 2024.

The increase in total assets was primarily due to a $445.5 million increase in loans held for investment and a $246.5 million increase in total investments, partially offset by a $155.5 million decrease in loans held for sale, and decreases in intangibles and other assets.

The Company’s loans held for investment portfolio totaled $19.10 billion as of June 30, 2025 and $18.66 billion as of December 31, 2024.

The loan portfolio consisted of the following:

June 30, 2025 December 31, 2024

Mortgage loans:

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4,688,888 4,447,672

Mortgage warehouse lines 240,134 160,928

Consumer loans 617,190 613,819

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Premiums on purchased loans 1,308 1,338

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

Total loans $ 18,791,371 18,659,370

Net deferred fees and unearned discounts (11,372) (9,538)

Total loans held for investment $ 19,104,830 18,659,370

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

During the three months ended March 31, 2025, the loans held for investment portfolio had net increases of $75.3 million of multi-family loans, $74.3 million of commercial loans and $67.6 million of commercial mortgage loans, partially offset by net decreases of $67.1 million of construction loans and $16.2 million of residential mortgage loans.

Total commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 86.1% of the loan portfolio as of March 31, 2025, compared to 85.9% as of December 31, 2024.

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

During the three months ended June 30, 2025, the loans held for investment portfolio had net increases of $182.7 million of commercial loans, $63.4 million of mortgage warehouse lines, $59.3 million of multi-family loans and $18.3 million of commercial mortgage loans, partially offset by net decreases of $9.0 million of residential mortgage loans, $4.4 million of construction loans and $3.7 million of consumer loans.

Total commercial loans, including mortgage warehouse lines, commercial mortgage, multi-family and construction loans, represented 86.4% of the loan portfolio as of June 30, 2025, compared to 85.9% as of December 31, 2024.

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

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

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

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

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

These loans are particularly sensitive to economic conditions.

As of March 31, 2025, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $11.51 billion, or 61.22% of total loans.

As of June 30, 2025, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $11.58 billion, or 60.6% of total gross loans.

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

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

The table below summarizes the concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments ("PAA"), based on the collateral securing the loans, as of March 31, 2025 (in thousands):

The table below summarizes the concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments, based on the collateral securing the loans, as of June 30, 2025 (in thousands):

Amount Percentage of Total

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Industrial 2,225,361 19.0

Mixed 888,998 7.6 %

Office 908,080 7.7

Mixed 845,895 7.2

Special use property 626,047 5.3

Hotel 127,150 1.1 %

Residential 320,720 2.7

Hotel 131,257 1.1

Land 62,499 0.5

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

As a result, obtaining current and objectively prepared appraisals is an important part of the underwriting process.

As a result, obtaining current and objectively prepared appraisals is a major part of the underwriting process.

The Company engages a variety of professional firms to supply appraisals, market studies and feasibility reports, environmental assessments and project site inspections to complement its internal resources to underwrite and monitor these credit exposures.

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

The table below summarizes the Company’s commercial real estate portfolio, including multi-family and construction loans as of March 31, 2025, as segregated by the geographic region in which the property is located (dollars in thousands):

The table below summarizes the Company’s commercial real estate portfolio, including multi-family and construction loans on a gross basis, not including any purchase accounting adjustments as of June 30, 2025, as segregated by the geographic region in which the property is located (dollars in thousands):

Amount Percentage of Total

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Other states 1,100,259 9.4

Total commercial real estate loans $ 11,665,794 100.0 %

Total CRE, multi-family and construction loans $ 11,726,620 100.0 %

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

The Company’s gross commitments and outstanding balances as a participant in SNCs were $159.2 million and $57.0 million, respectively, as of March 31, 2025, compared to $168.4 million and $86.8 million, respectively, as of December 31, 2024.

The following table sets forth information regarding the Company’s non-performing assets as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

The Company’s gross commitments and outstanding balances as a participant in SNCs were $174.8 million and $84.5 million, respectively, as of June 30, 2025, compared to $168.4 million and $86.8 million, respectively, as of December 31, 2024.

The following table sets forth information regarding the Company’s non-performing assets as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025 December 31, 2024

Mortgage loans:

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Total non-performing assets $ 108,122 81,534

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

The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of March 31, 2025 and December 31, 2024 (in thousands):

March 31, 2025 December 31, 2024

The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of June 30, 2025 and December 31, 2024 (in thousands):

June 30, 2025 December 31, 2024

Mortgage loans:

Residential $ 3,816 1,208

Commercial 347 —

Multi-family 431 1,635

Residential 5,009 5,049

Construction — —

Total mortgage loans 4,594 2,843

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Total 60-89 day delinquent loans $ 9,682 3,316

As of March 31, 2025, the Company’s allowance for credit losses related to the loan portfolio was 1.02% of total loans, compared to 1.04% as of December 31, 2024 and 0.98% as of March 31, 2024, respectively.

The Company recorded a provision for credit losses on loans of $325,000 for the three months ended March 31, 2025, compared with a provision on loans of $200,000 for the three months ended March 31, 2024, respectively.

For the three months ended March 31, 2025, the Company had net charge-offs of $2.0 million compared to net charge-offs of $971,000 for the same period in 2024.

The allowance for credit losses decreased $1.7 million to $191.8 million as of March 31, 2025 from $193.4 million as of December 31, 2024.

Total non-performing loans were $103.2 million, or 0.54% of total loans as of March 31, 2025, compared to $72.1 million, or 0.39% of total loans as of December 31, 2024.

The $31.2 million increase in non-performing loans as of March 31, 2025, compared to the trailing quarter, was primarily attributable to two loans:

a $20.3 million commercial real estate loan secured by a mixed use property with a current loan-to-value of 53% and an $11.5 million construction loan secured by a nearly complete warehouse facility with a current loan-to-value of 62%.

These loans have no prior charge-off history and carry no specific reserve allocations.

As of March 31, 2025 and December 31, 2024, the Company held foreclosed assets of $6.8 million and $9.5 million, respectively.

Foreclosed assets as of March 31, 2025 were comprised of commercial real estate.

Total non-performing assets as of March 31, 2025 increased $28.4 million to $110.0 million, or 0.45% of total assets, from $81.5 million, or 0.34% of total assets as of December 31, 2024.

During the three months ended March 31, 2025, there was a write-down of a foreclosed commercial property of $2.7 million based on a contracted sales price.

The sale of this property closed on April 25, 2025 and will reduce foreclosed assets by $5.8 million.

Total investment securities were $3.34 billion as of March 31, 2025, a $110.5 million increase from December 31, 2024.

This increase was primarily due to purchases of mortgage-backed and municipal securities and a decrease in unrealized losses on available for sale debt securities.

Total deposits decreased $175.0 million during the three months ended March 31, 2025, to $18.45 billion.

Total savings and demand deposit accounts decreased $172.5 million to $15.28 billion as of March 31, 2025, while total time deposits decreased $2.4 million to $3.17 billion as of March 31, 2025.

The decrease in savings and demand deposits consisted of a $142.8 million decrease in interest bearing demand deposits, a $22.0 million decrease in money market deposits and a $8.7 million decrease in savings deposits, partially offset by a $1.1 million increase in non-interest-bearing demand deposits.

Within total savings and demand deposits, total municipal deposits decreased $130.8 million to $3.38 billion as of March 31, 2025.

Additionally, within total deposits, brokered deposits totaled $327.7 million as of March 31, 2025, compared to $251.5 million as of December 31, 2024.

The decrease in time deposits consisted of a $78.6 million decrease in retail time deposits, partially offset by a $76.2 million increase in brokered time deposits.

Borrowed funds increased $315.8 million during the three months ended March 31, 2025, to $2.34 billion.

The increase in borrowings was largely due to asset funding requirements.

Borrowed funds represented 9.6% of total assets as of March 31, 2025, an increase from 8.4% as of December 31, 2024.

Stockholders’ equity increased $57.6 million during the three months ended March 31, 2025, to $2.66 billion, primarily due to net income earned for the period and a decrease in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.

For the three months ended March 31, 2025, common stock repurchases totaled 99,541 shares at an average cost of $18.19 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation.

As of March 31, 2025, approximately 873,000 shares remained eligible for repurchase under the current authorization.

As of June 30, 2025, the Company’s allowance for credit losses related to the loan portfolio was 0.98% of total loans, compared to 1.04% and 1.00% as of December 31, 2024 and June 30, 2024, respectively.

The Company recorded benefits to the provisions for credit losses on loans of $2.7 million and $2.3 million for the three and six months ended June 30, 2025, compared with provisions of $66.1 million and $66.3 million for the three and six months ended June 30, 2024, respectively.

For the three and six months ended June 30, 2025, the Company had net charge-offs of $1.2 million and $3.2 million, respectively, compared to net charge-offs of $1.3 million and $2.3 million, respectively, for the same periods in 2024.

The allowance for credit losses decreased $5.6 million to $187.9 million as of June 30, 2025 from $193.4 million as of December 31, 2024.

The benefit to the provision for credit losses on loans for the three and six months ended June 30, 2025 was primarily attributable to an improved economic forecast and an overall improvement in the Company's asset quality, partially offset by an increase in specific reserves required on individually analyzed loans.

The provision for credit losses on loans for the three and six months ended June 30, 2024 was primarily attributable to an initial CECL provision for credit losses of $60.1 million, recorded as part of the Lakeland merger.

Total non-performing loans were $107.2 million, or 0.56% of total loans as of June 30, 2025, compared to $72.1 million, or 0.39% of total loans as of December 31, 2024.

The $35.1 million increase in non-performing loans consisted of a $21.9 million increase in non-performing commercial mortgage loans, a $6.3 million increase in non-performing commercial loans, a $5.7 million increase in non-performing construction loans and a $2.7 million increase in non-performing residential mortgage loans, partially offset by a $1.4 million decrease in non-performing multi-family loans and a $109,000 decrease in non-performing consumer loans.

As of June 30, 2025 and December 31, 2024, the Company held foreclosed assets of $1.0 million and $9.5 million, respectively.

During the six months ended June 30, 2025, there was a write-down of one foreclosed commercial property of $2.7 million based on a contracted sales price.

The sale of this property closed in the second quarter of 2025, which reduced foreclosed assets by an additional $5.8 million.

Foreclosed assets as of June 30, 2025 were comprised of one commercial property.

Total non-performing assets as of June 30, 2025 increased $26.6 million to $108.1 million, or 0.44% of total assets, from $81.5 million, or 0.34% of total assets as of December 31, 2024.

Total investment securities were $3.47 billion as of June 30, 2025, a $246.5 million increase from December 31, 2024.

This increase was primarily due to purchases of mortgage-backed securities and a decrease in unrealized losses on available for sale debt securities.

Total deposits increased $84.7 million during the six months ended June 30, 2025, to $18.71 billion.

Total time deposits increased $99.3 million to $3.27 billion as of June 30, 2025, while total savings and demand deposit accounts decreased $14.6 million to $15.44 billion as of June 30, 2025.

The increase in time deposits consisted of a $108.1 million increase in brokered time deposits, partially offset by an $8.8 million decrease in retail time deposits.

The decrease in savings and demand deposits was largely attributable to a $50.7 million decrease in savings deposits and a $36.8 million decrease in non-interest bearing demand deposits, partially offset by a $52.2 million increase in money market deposits and a $20.7 million increase in interest bearing demand deposits.

The Company uses brokered deposits as an alternative source of wholesale funding to cover funding gaps created by asset growth.

Within total deposits, brokered deposits totaled $763.2 million and $255.0 million as of June 30, 2025 and December 31, 2024, respectively.

Our total estimated uninsured and uncollateralized deposits as of June 30, 2025, were $4.52 billion.

Borrowed funds increased $354.2 million during the six months ended June 30, 2025, to $2.37 billion.

Borrowed funds represented 9.7% of total assets as of June 30, 2025, an increase from 8.4% as of December 31, 2024.

Stockholders’ equity increased $106.3 million during the six months ended June 30, 2025, to $2.71 billion, primarily due to net income earned for the period and a decrease in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.

For the three and six months ended June 30, 2025, common stock repurchases totaled 55,826 shares at an average cost of $17.83 per share and 156,570 shares at an average cost of $18.07 per share, respectively, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation.

As of June 30, 2025, approximately 816,000 shares remained eligible for repurchase under the current stock repurchase authorization.

Book value per share and tangible book value per share(1) as of June 30, 2025 were $20.73 and $14.60, respectively, compared with $19.93 and $13.66, respectively, as of December 31, 2024.

Liquidity and Capital Resources.

Liquidity refers to the Company’s ability to generate adequate amounts of cash to meet financial obligations to its depositors, to fund loans and securities purchases and operating expenses.

Sources of funds include scheduled amortization of loans, loan prepayments, scheduled maturities of unpledged investments, cash flows from mortgage-backed securities and the ability to borrow funds from the FHLBNY, FRBNY and approved broker-dealers.

Sources of funds include scheduled amortization of loans, loan prepayments, scheduled maturities of unpledged investments, cash flows from securities and the ability to borrow funds from FHLBNY, FRBNY and approved broker-dealers.

Cash flows from loan payments and maturing investment securities are fairly predictable sources of funds.

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

For the three months ended March 31, 2025 and 2024, loan repayments totaled $1.72 billion and $648.8 million, respectively.

The Company has continued to monitor and focus on depositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $2.40 billion and $3.65 billion, respectively as of March 31, 2025.

Our estimated uninsured and uncollateralized deposits as of March 31, 2025 totaled $4.47 billion, or 24.2% of deposits.

Our total estimated uninsured deposits, including collateralized deposits as of March 31, 2025, was $9.81 billion.

For the six months ended June 30, 2025 and 2024, loan repayments totaled $3.79 billion and $2.09 billion, respectively.

The Company continues to monitor and focus on depositor behavior and borrowing capacity with FHLBNY and FRBNY, with current borrowing capacity of $4.32 billion and $3.19 billion, respectively, as of June 30, 2025.

Our estimated uninsured and uncollateralized deposits as of June 30, 2025 totaled $4.52 billion, or 24.2% of deposits.

Our total estimated uninsured deposits, including collateralized deposits as of June 30, 2025, were $9.80 billion.

Within time deposits, approximately $683.5 million, or 20.9% was uninsured as of March 31, 2025.

Commercial real estate loans, multi-family loans, commercial loans, one- to four-family residential loans and consumer loans are the primary investments of the Company.

Purchasing securities for the investment portfolio is a secondary use of funds and the investment portfolio is structured to complement and facilitate the Company’s lending activities and ensure adequate liquidity.

Loan originations and purchases totaled $1.93 billion for the three months ended March 31, 2025, compared to $622.7 million for the same period in 2024.

Purchases for the investment portfolio totaled $227.0 million for the three months ended March 31, 2025, compared to $422.4 million for the year ended December 31, 2024.

As of March 31, 2025, the Bank had outstanding loan commitments to borrowers of $2.88 billion, including undisbursed home equity lines and personal credit lines of $404.1 million.

Total deposits decreased $175.0 million for the three months ended March 31, 2025.

Loan originations and purchases totaled $1.18 billion for the six months ended June 30, 2025, compared to $553.0 million for the same period in 2024.

Purchases for the investment portfolio totaled $440.9 million for the six months ended June 30, 2025, compared to $422.4 million for the year ended December 31, 2024.

As of June 30, 2025, the Bank had outstanding loan commitments to borrowers of $3.74 billion, including undisbursed home equity lines and personal credit lines of $667.4 million.

Total deposits increased $84.7 million during the six months ended June 30, 2025, to $18.71 billion.

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

Certificate of deposit accounts that are scheduled to mature within one year totaled $3.05 billion as of March 31, 2025.

Certificate of deposit accounts that are scheduled to mature within one year totaled $3.09 billion as of June 30, 2025.

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

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The Federal Deposit Insurance Corporation ("FDIC") and the other federal bank regulatory agencies issued a final rule that revised the leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act, that were effective January 1, 2015.

Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio at 4%,

increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on non-accrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property.

Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio at 4%, increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on non-accrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property.

The rule also required unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out was exercised.

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The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer,” of 2.5% in addition to the amount necessary to meet its minimum risk-based capital requirements.

As of March 31, 2025, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:

March 31, 2025

As of June 30, 2025, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:

June 30, 2025

Required Required with Capital Conservation Buffer Actual

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

COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND 2024

The Company reported net income of $64.0 million, or $0.49 per basic and diluted share for the three months ended March 31, 2025, compared to net income of $32.1 million, or $0.43 per basic and diluted share, for the three months ended March 31, 2024.

Net income for the three months ended March 31, 2025 was negatively impacted by a $2.7 million write-down on a foreclosed property, partially offset by a $624,000 profit on fixed asset sales related to the consolidation of three branches.

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

The following tables sets forth certain information for the three months ended March 31, 2025 and 2024.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2025 AND 2024

The Company reported net income of $72.0 million, or $0.55 per basic and diluted share for the three months ended June 30, 2025, compared to $64.0 million, or $0.49 per basic and diluted share, for the three months ended March 31, 2025 and

a net loss of $11.5 million, or $(0.11) per basic and diluted share, for the three months ended June 30, 2024.

For the six months ended June 30, 2025, net income totaled $136.0 million, or $1.04 per basic and diluted share, compared to $20.6 million, or $0.23 per basic and diluted share, for the six months ended June 30, 2024.

While there were no transaction costs related to our merger with Lakeland for the 2025 period, these costs totaled $79.0 million and $81.2 million, including an initial CECL provision for credit losses recorded as part of the Lakeland merger, for the three and six months ended June 30, 2024, respectively.

The following tables sets forth certain information for the three and six months ended June 30, 2025.

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

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For the three months ended

March 31, 2025 March 31, 2024

June 30, 2025 June 30, 2024

Average Balance Interest Average

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Deposits $ 75,714 $ 788 4.21 % 40,228 1,859 5.38 %

Federal funds sold and other short-term investments — — — — — —

Available for sale debt securities 2,958,325 29,306 3.96 2,244,725 17,646 3.14

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(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.

(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include loans held for sale and non-accrual loans.

(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.

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

For the six months ended

June 30, 2025 June 30, 2024

Average Balance Interest Average

Yield/Cost Average Balance Interest Average

(Dollars in Thousands) (Unaudited)

Interest Earning Assets:

Deposits $ 77,882 $ 1,463 4.21 % 32,901 3,041 5.38 %

Federal funds sold and other short-term investments — — — % — — — %

Available for sale debt securities 2,893,373 56,927 3.91 % 1,959,549 27,669 2.82 %

Held to maturity debt securities, net (1)

317,607 3,962 2.50 % 354,731 4,625 2.61 %

Equity securities, at fair value 19,212 — — % 5,525 — — %

Federal Home Loan Bank stock 120,883 4,161 6.92 % 81,309 5,055 12.43 %

Total mortgage loans 13,351,451 379,845 5.73 % 9,326,838 263,774 5.61 %

Total commercial loans 4,747,564 154,673 6.57 % 2,953,842 94,632 6.39 %

Total consumer loans 610,728 20,623 6.81 % 378,522 12,874 6.84 %

Total net loans 18,709,743 555,141 5.98 % 12,659,202 371,280 5.83 %

Total interest earning assets $ 22,138,700 $ 621,654 5.65 % 15,093,217 411,670 5.43 %

Non-Interest Earning Assets:

Cash and due from banks 142,380 108,229

Other assets 1,919,313 1,443,958

Total assets $ 24,200,393 16,645,404

Interest Bearing Liabilities:

Demand deposits $ 9,984,248 $ 130,235 2.63 % 6,914,802 99,745 2.90 %

Savings deposits 1,665,075 1824 0.22 % 1,308,983 1,469 0.23 %

Time deposits 3,198,491 61,618 3.88 % 1,575,801 32,378 4.13 %

Total deposits 14,847,814 193,677 2.63 % 9,799,586 133,592 2.74 %

Borrowed funds 2,205,805 42,247 3.86 % 2,049,587 37,949 3.75 %

Subordinated debentures 402,665 16,907 8.47 % 115,899 4,953 8.59 %

Total interest bearing liabilities $ 17,456,284 252,831 2.92 % 11,965,072 176,494 2.97 %

Non-Interest Bearing Liabilities:

Non-interest bearing deposits $ 3,709,602 2,469,459

Other non-interest bearing liabilities 373,029 298,053

Total non-interest bearing liabilities 4,082,631 2,767,512

Total liabilities 21,538,915 14,732,584

Stockholders' equity 2,661,478 1,912,820

Total liabilities and stockholders' equity $ 24,200,393 16,645,404

Net interest income $ 368,823 235,176

Net interest income increased $88.1 million to $181.7 million for the three months ended March 31, 2025, from $93.7 million for same period in 2024.

Net interest income for the three months ended March 31, 2025 was favorably impacted by net assets acquired from Lakeland and accretion of purchase accounting adjustments, combined with the

favorable repricing of adjustable rate loans and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings.

The net interest margin increased 47 basis points to 3.34% for the quarter ended March 31, 2025, compared to 2.87% for the quarter ended March 31, 2024.

The weighted average yield on interest-earning assets increased 57 basis points to 5.63% for the quarter ended March 31, 2025, compared to 5.06% for the quarter ended March 31, 2024, while the weighted average cost of interest-bearing liabilities increased 10 basis points for the quarter ended March 31, 2025, to 2.90%, compared to 2.80% for the quarter ended March 31, 2024.

The average cost of interest-bearing deposits for the quarter ended March 31, 2025, was 2.64%, compared to 2.60% for the same period last year.

Average non-interest-bearing demand deposits totaled $3.72 billion for the quarter ended March 31, 2025, compared to $2.07 billion for the quarter ended March 31, 2024.

The average cost of total deposits, including non-interest-bearing deposits, was 2.11% for the quarter ended March 31, 2025, compared with 2.04% for the quarter ended March 31, 2024.

The average cost of borrowed funds for the quarter ended March 31, 2025, was 3.76%, compared to 3.60% for the same period last year.

Interest income on loans secured by real estate increased $79.6 million to $187.1 million for the three months ended March 31, 2025, from $107.5 million for the three months ended March 31, 2024.

Commercial loan interest income increased $39.7 million to $75.8 million for the three months ended March 31, 2025, from $36.1 million for the three months ended March 31, 2024.

Consumer loan interest income increased $5.6 million to $10.2 million for the three months ended March 31, 2025, from $4.5 million for the three months ended March 31, 2024.

For the three months ended March 31, 2025, the average balance of total loans increased $7.92 billion to $18.59 billion, compared to the same period in 2024.

The average yield on total loans for the three months ended March 31, 2025, increased 44 basis points to 5.95%, from 5.51% for the same period in 2024.

Interest income on held to maturity debt securities decreased $272,000 to $2.0 million for the three months ended March 31, 2025, compared to the same period last year.

Average held to maturity debt securities decreased $37.2 million to $320.0 million for the three months ended March 31, 2025, from $357.2 million for the same period in 2024.

Interest income on available for sale debt securities decreased $17,599,000 to $27.6 million for the three months ended March 31, 2025, from $10.0 million for the three months ended March 31, 2024.

The average balance of available for sale debt securities increased $1.15 billion to $2.83 billion for the three months ended March 31, 2025, compared to the same period in 2024.

Dividend income on FHLBNY stock decreased $285,000 to $2.0 million for the three months ended March 31, 2025, from $2.3 million for the three months ended March 31, 2024.

The average balance of FHLBNY stock increased $33.8 million to $107.5 million for the three months ended March 31, 2025, compared to the same period in 2024.

The average yield on total securities increased to 3.86% for the three months ended March 31, 2025, compared with 2.87% for the same period in 2024.

Interest expense on deposit accounts increased $44.9 million to $97.4 million for the three months ended March 31, 2025, compared with $52.5 million for the three months ended March 31, 2024.

The average cost of interest-bearing deposits increased to 2.64% for the three months ended March 31, 2025, from 2.60% for the three months ended March 31, 2024.

The average balance of interest-bearing core deposits, which consist of total savings and demand deposits, for the three months ended March 31, 2025, increased $4.72 billion to $11.78 billion.

Average time deposit account balances increased $2.13 billion to $3.20 billion for the three months ended March 31, 2025, from $1.07 billion for the three months ended March 31, 2024.

Interest expense on borrowed funds increased $395,000 to $17.8 million for the three months ended March 31, 2025, from $17.4 million for the three months ended March 31, 2024.

The average cost of borrowings increased to 3.76% for the three months ended March 31, 2025, from 3.60% for the three months ended March 31, 2024.

Average borrowings decreased $22.9 million to $1.92 billion for the three months ended March 31, 2025, from $1.94 billion for the three months ended March 31, 2024.

Net interest rate spread 2.73 % 2.46 %

Net interest-earning assets $ 4,682,416 3,128,145

Net interest margin (3)

3.35 % 3.08 %

Ratio of interest-earning assets to total interest-bearing liabilities 1.27x 1.26x

(1) Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.

(2) Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.

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

Net Interest Income .

Net interest income increased $45.6 million to $187.1 million for the three months ended June 30, 2025, from $141.5 million for same period in 2024.

Net interest income increased $133.6 million to $368.8 million for the six months ended June 30, 2025, from $235.2 million for same period in 2024.

The increase in net interest income for the three months ended June 30, 2025, was primarily due to originations of new loans at current market rates and the favorable repricing of adjustable rate loans, partially offset by a decrease in average lower-costing deposits and an increase in average borrowings.

The increase in net interest income for the six months ended June 30, 2025 was largely driven by growth in average earning assets and net assets added in the May 16, 2024 acquisition of Lakeland and related accretion of purchase accounting adjustments.

The net interest margin increased 15 basis points to 3.36% for the quarter ended June 30, 2025, compared to 3.21% for the quarter ended June 30, 2024.

The weighted average yield on interest-earning assets increased one basis point to 5.68% for the quarter ended June 30, 2025, compared to 5.67% for the quarter ended June 30, 2024, while the weighted average cost of interest-bearing liabilities decreased 15 basis points for the quarter ended June 30, 2025, to 2.94%, compared to 3.09% for the quarter ended June 30, 2024.

The average cost of interest-bearing deposits for the quarter ended June 30, 2025, was 2.62%, compared to 2.84% for the same period last year.

Average non-interest-bearing demand deposits totaled $3.70 billion for the quarter ended June 30, 2025, compared to $2.87 billion for the quarter ended June 30, 2024.

The average cost of total deposits, including non-interest-bearing deposits, was 2.10% for the quarter ended June 30, 2025, compared with 2.24% for the quarter ended June 30, 2024.

The average cost of borrowed funds for the quarter ended June 30, 2025, was 3.94%, compared to 3.83% for the same period last year.

For the six months ended June 30, 2025, the net interest margin increased 27 basis points to 3.35%, compared to 3.08% for the six months ended June 30, 2024.

The weighted average yield on interest-earning assets increased 22 basis points to 5.65% for the six months ended June 30, 2025, compared to 5.43% for the six months ended June 30, 2024, while the weighted average cost of interest-bearing liabilities decreased five basis points to 2.92% for the six months ended June 30, 2025, compared to 2.97% for the same period last year.

The average cost of interest-bearing deposits decreased 11 basis points to 2.63% for the six months ended June 30, 2025, compared to 2.74% for the same period last year.

Average non-interest-bearing demand deposits totaled $3.71 billion for the six months ended June 30, 2025, compared with $2.47 billion for the six months ended June 30, 2024.

The average cost of total deposits, including non-interest-bearing deposits, was 2.10% for the six months ended June 30, 2025, compared with 2.19% for the six months ended June 30, 2024.

The average cost of borrowings for the six months ended June 30, 2025, was 3.86%, compared to 3.75% for the same period last year.

Interest income on loans secured by real estate increased $36.5 million to $192.8 million for the three months ended June 30, 2025, from $156.3 million for the three months ended June 30, 2024.

Commercial loan interest income increased $20.3 million to $78.9 million for the three months ended June 30, 2025, from $58.5 million for the three months ended June 30, 2024.

Consumer loan interest income increased $2.1 million to $10.5 million for the three months ended June 30, 2025, from $8.4 million for the three months ended June 30, 2024.

For the three months ended June 30, 2025, the average balance of total loans increased $4.18 billion to $18.83 billion, compared to the same period in 2024.

The average yield on total loans for the three months ended June 30, 2025, decreased 4 basis points to 6.01%, from 6.05% for the same period in 2024.

Interest income on loans secured by real estate increased $116.1 million to $379.8 million for the six months ended June 30, 2025, from $263.8 million for the six months ended June 30, 2024.

Commercial loan interest income increased $60.0 million to $154.7 million for the six months ended June 30, 2025, from $94.6 million for the six months ended June 30, 2024.

Consumer loan interest income increased $7.7 million to $20.6 million for the six months ended June 30, 2025, from $12.9 million for the six months ended June 30, 2024.

For the six months ended June 30, 2025, the average balance of total loans increased $6.05 billion to $18.71 billion, compared with $12.66 billion for the same period in 2024.

The average yield on total loans for the six months ended June 30, 2025, increased 15 basis points to 5.98%, from 5.83% for the same period in 2024.

Interest income on held to maturity debt securities totaled $2.0 million for the three months ended June 30, 2025, compared to $2.4 million the same period last year.

Average held to maturity debt securities decreased $37.0 million to $315.2 million for the three months ended June 30, 2025, from $352.2 million for the same period last year.

Interest income on held to maturity debt securities decreased $663,000 to $4.0 million for the six months ended June 30, 2025, compared to the same period in 2024.

Average held to maturity debt securities decreased $37.1 million to $317.6 million for the six months ended June 30, 2025, from $354.7 million for the same period last year.

Interest income on available for sale debt securities increased $11.7 million to $29.3 million for the three months ended June 30, 2025, from $17.6 million for the three months ended June 30, 2024.

The average balance of available for sale debt securities increased $713.6 million to $2.96 billion for the three months ended June 30, 2025, compared to the same period in 2024.

Interest income on available for sale debt securities increased $29.3 million to $56.9 million for the six months ended

June 30, 2025, from $27.7 million for the same period last year.

The average balance of available for sale debt securities increased $933.8 million to $2.89 billion for the six months ended June 30, 2025.

Dividend income on FHLBNY stock decreased $609,000 to $2.1 million for the three months ended June 30, 2025, from $2.75 million for the three months ended June 30, 2024.

The average balance of FHLBNY stock increased $44.6 million to $133.4 million for the three months ended June 30, 2025, compared to the same period in 2024.

Dividend income on FHLBNY stock increased $28.4 million to $61.1 million for the six months ended June 30, 2025, from $32.7 million for the same period last year.

The average balance of FHLBNY stock increased $39.6 million to $120.9 million for the six months ended June 30, 2025.

The average yield on total securities increased to 3.80% for the three months ended June 30, 2025, compared with 3.07% for the same period in 2024.

For the six months ended June 30, 2025, the average yield on total securities increased to 3.75%, compared with 2.78% for the same period in 2024.

Interest expense on deposit accounts increased $15.2 million to $96.3 million for the three months ended June 30, 2025, compared with $81.1 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, interest expense on deposit accounts increased $60.1 million to $193.7 million, from $133.6 million for the same period last year.

The average cost of interest-bearing deposits improved to 2.62% and 2.63% for the three and six months ended June 30, 2025, respectively, from 2.84% and 2.74% for the three and six months ended June 30, 2024, respectively.

The average balance of interest-bearing core deposits, which consist of total savings and demand deposits, for the three months ended June 30, 2025, increased $2.13 billion to $11.52 billion.

For the six months ended June 30, 2025, average interest-bearing core deposits increased $3.43 billion, to $11.65 billion, from $8.22 billion for the same period in 2024.

Average time deposit account balances increased $1.11 billion to $3.20 billion for the three months ended June 30, 2025, from $2.09 billion for the three months ended June 30, 2024.

For the six months ended June 30, 2025, average time deposit account balances increased $1.62 billion to $3.20 billion, from $1.58 billion for the same period in 2024.

Interest expense on borrowed funds increased $3.9 million to $24.5 million for the three months ended June 30, 2025, from $20.6 million for the three months ended June 30, 2024.

For the six months ended June 30, 2025, interest expense on borrowed funds increased $4.3 million to $42.2 million, from $37.9 million for the six months ended June 30, 2024.

The average cost of borrowings increased to 3.94% for the three months ended June 30, 2025, from 3.83% for the three months ended June 30, 2024.

The average cost of borrowings increased to 3.86% for the six months ended June 30, 2025, from 3.75% for the same period last year.

Average borrowings increased $332.2 million to $2.49 billion for the three months ended June 30, 2025, from $2.16 billion for the three months ended June 30, 2024.

For the six months ended June 30, 2025, average borrowings increased $156.2 million to $2.21 billion, compared to $2.05 billion for the six months ended June 30, 2024.

Provision for Credit Losses.

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The amount of the allowance is based on estimates, and the ultimate losses may vary from such estimates as more information becomes available or later events change.

Management assesses the adequacy of the allowance for credit losses on a quarterly basis and makes provisions for credit losses, if necessary, in order to maintain the valuation of the allowance.

The Company recorded a $325,000 provision for credit losses on loans, compared with a $200,000 provision for credit losses on loans for the quarter ended March 31, 2024.

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

The Company recorded benefits to the provisions for credit losses on loans of $2.7 million and $2.3 million for the three and six months ended June 30, 2025, respectively, compared with provisions of $66.1 million and $66.3 million for the three and six months ended June 30, 2024, respectively.

The benefits to the provision for credit losses on loans for the three and six months ended June 30, 2025, was primarily attributable to an improved economic forecast and an overall improvement in the Company's asset quality, partially offset by an increase in specific reserves required on individually analyzed loans.

Non-Interest Income.

Non-interest income totaled $27.0 million for the quarter ended March 31, 2025, an increase of $6.2 million, compared to the same period in 2024.

Fee income increased $3.7 million to $9.7 million for the three months ended March 31, 2025, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card-related fee income and commercial loan prepayment fees, resulting from the Lakeland merger.

Other income increased $1.4 million to $2.2 million for the three months ended March 31, 2025, compared to the quarter ended March 31, 2024, primarily due to an increase in profit on fixed asset sales, combined with an increase in net fees on loan-level interest rate swap transactions and an increase in gains on sales of mortgage loans.

Insurance agency income increased $858,000 to $5.7 million for the three months ended March 31, 2025, compared to the quarter ended March 31, 2024, largely due to an increase in contingency income and business activity, while BOLI income increased $275,000 to $2.1 million for the three months ended March 31, 2025, compared to the prior year quarter, related to the addition of Lakeland's BOLI, partially offset by a decrease in equity valuations.

Non-interest income totaled $27.1 million for the quarter ended June 30, 2025, an increase of $4.8 million, compared to the same period in 2024.

Net gain on securities transactions increased $3.0 million for the three months ended June 30, 2025, compared to the same period in 2024, primarily due to a prior year $2.8 million loss on the sale of subordinated debt issued by Lakeland from the Provident investment portfolio.

Fee income increased $2.0 million to $10.7 million for the three months ended June 30, 2025, compared to the prior year quarter, primarily due to increases in deposit fee income, debit card related fee income and loan related fee income, resulting from the Lakeland merger.

Additionally, other income increased $895,000 to $1.9 million for the three months ended June 30, 2025, compared to the quarter ended June 30, 2024, primarily due to increases in gains on the sale of SBA loans, while insurance agency income increased $454,000 to $4.9 million for the three months ended June 30, 2025, compared to the quarter ended June 30, 2024, largely due to an increase in

business activity.

Partially offsetting these increases to non-interest income, wealth management fees decreased $821,000 to $6.9 million for the three months ended June 30, 2025, compared to the quarter ended June 30, 2024, mainly due to a decrease in the average market value of assets under management during the period, while BOLI income decreased $738,000 to $2.6 million for the three months ended June 30, 2025, compared to the prior year quarter, primarily due to a decrease in benefit claims recognized.

For the six months ended June 30, 2025, non-interest income totaled $54.1 million, an increase of $11.0 million compared to the same period in 2024.

Fee income increased $5.8 million to $20.4 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to increases in deposit fee income, debit and credit card related fee income and loan related fee income resulting from the Lakeland merger.

Net gains on securities transactions increased $3.1 million for the six months ended June 30, 2025, primarily due to a prior year $2.8 million loss on the sale of subordinated debt issued by Lakeland from the Provident investment portfolio prior to the merger.

Other income increased $2.3 million to $4.1 million for the six months ended June 30, 2025, compared to $1.8 million for the same period in 2024, primarily due to an increase in gains on sales of SBA and mortgage loans.

Additionally, insurance agency income increased $1.3 million to $10.6 million for the six months ended June 30, 2025, compared to $9.3 million for the same period in 2024, largely due to increases in contingent commissions, retention revenue and new business activity.

Partially offsetting these increases in non-interest income, wealth management income decreased $982,000 to $14.3 million for the six months ended June 30, 2025, compared to the same period in 2024, mainly due to a decrease in the average market value of assets under management during the period, while BOLI income decreased $462,000 to $4.7 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to a decrease in benefit claims recognized, combined with lower equity valuations.

Non-Interest Expense .

For the three months ended March 31, 2025, non-interest expense t otaled $116.3 million, an increase of $44.4 million, compared to the three months ended March 31, 2024.

Compensation and benefits expense increased $22.3 million to $62.4 million for three months ended March 31, 2025, compared to $40.0 million for the same period in 2024.

The increase was primarily due to the addition of Lakeland, combined with an increase in salary expense associated with Company-wide annual merit increases.

Amortization of intangibles increased $8.8 million to $9.5 million for the three months ended March 31, 2024, compared to $705,000 for 2024, largely due to core deposit intangible amortization related to the addition of Lakeland.

Other operating expense increased $6.1 million to $16.4 million for the three months ended March 31, 2025, compared to $10.3 million for the three months ended March 31, 2024, largely due to the addition of Lakeland and a $2.7 million write-down on a foreclosed property in the current quarter.

Net occupancy expense increased $5.4 million to $13.9 million for the three months ended March 31, 2024, compared to the same period in 2024, primarily due to increased depreciation and maintenance expenses because of the addition of Lakeland.

Data processing expense increased $2.8 million to $9.6 million for three months ended March 31, 2025, compared to $6.8 million for the same period in 2024.

The increase in data processing expense was primarily due to increases in software service, telecommunication and core service expenses, due to the addition of Lakeland.

Additionally, FDIC insurance expense increased $1.1 million to $3.4 million for the three months ended March 31, 2025, compared to the same period in 2024, primarily due to increases in the assessment rate and average assets, as a result of the addition of Lakeland.

Partially offsetting these increases in non-interest expense, merger-related expenses, which completed at the end of 2024, decreased $2.2 million for the three months ended March 31, 2025, compared to the same period in 2024.

For the three months ended June 30, 2025, non-interest expense totaled $114.6 million, a decrease of $780,000, compared to the three months ended June 30, 2024.

Merger-related expenses decreased $18.9 million for the three months ended June 30, 2025, compared to the same period in 2024.

Partially offsetting the decrease in merger-related expenses, compensation and benefits expense increased $8.4 million to $63.2 million for the three months ended June 30, 2025, compared to $54.9 million for the same period in 2024, primarily attributable to the addition of Lakeland personnel.

Other operating expenses increased $3.2 million to $14.5 million for the three months ended June 30, 2025, compared to $11.3 million for the same period in 2024, primarily due to the addition of Lakeland.

Amortization of intangibles increased $3.0 million to $9.5 million for the three months ended June 30, 2025, compared to $6.5 million for the same period in 2024, largely due to core deposit intangible amortization related to Lakeland.

Net occupancy expense increased $1.9 million to $13.0 million for three months ended June 30, 2025, compared to $11.1 million for the same period in 2024, primarily due to an increase in depreciation and maintenance expenses due to the addition of Lakeland.

Data processing expenses increased $1.2 million to $9.6 million for three months ended June 30, 2025, compared to $8.4 million for the same period in 2024, primarily due to the addition of Lakeland.

Non-interest expense totaled $230.9 million for the six months ended June 30, 2025, an increase of $43.7 million, compared to $187.2 million for the six months ended June 30, 2024.

Compensation and benefits expense increased $30.7 million to $125.6 million for the six months ended June 30, 2025, compared to $94.9 million for the six months ended June 30, 2024, primarily attributable to the addition of Lakeland personnel.

Amortization of intangibles increased $11.8 million to $19.0 million for the six months ended June 30, 2025, compared to $7.2 million for the six months ended June 30, 2024, largely due to core deposit intangible amortization related to Lakeland.

Other operating expenses increased $9.3 million to $30.9 million for the three months ended June 30, 2025, compared to $21.6 million for the same period in 2024, primarily due to a $2.7 million write-down on a foreclosed property, combined with the addition of Lakeland.

Net occupancy expense increased $7.3 million to $26.9 million for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland.

Data processing expense increased $4.0 million to $19.2 million for the six months ended June 30, 2025, compared to $15.2 million for the six months ended June 30, 2024, primarily due to the addition of Lakeland, while FDIC insurance increased $1.4 million to $6.7 million for the six months ended June 30, 2025, primarily due to the addition of Lakeland.

Partially offsetting these increases to non-interest expense, merger-related expenses decreased $21.1 million for the six months ended June 30, 2025.

Income Tax Expense .

For the three months ended March 31, 2025, the Company's income tax expense was $27.8 million with an effective tax rate of 30.3%, compared with $10.9 million with an effective tax rate of 25.3% for the three months ended March 31, 2024.

The increase in tax expense for the three months ended March 31, 2025, compared with the same period last year, was largely the result of an increase in taxable income and an increase in state tax rates as a result of the May 2024 Lakeland merger, as well as a discrete item related to stock-based compensation.

The increase in state tax rates is a result of the Company no longer receiving benefit of a reduced New Jersey state rate available for the Company's REIT and New Jersey investment company subsidiaries.

The state of New Jersey allows certain bank subsidiaries with assets under $15 billion to benefit from the lower rate, however due to the Lakeland merger in May of 2024, the $15 billion asset threshold was crossed and the increased New Jersey rate was applicable.

For the three months ended June 30, 2025, the Company's income tax expense was $30.5 million with an effective tax rate of 29.7%, compared with an income tax benefit of $9.8 million for the three months ended June 30, 2024.

The increase in tax expense for the three months ended June 30, 2025, compared with the same period last year was largely due to an increase in taxable income in the quarter.

The prior year income tax benefit was largely due to a $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the state of New Jersey of a 2.5% Corporate Transit Fee in the quarter, effective January 1, 2024, combined with a decrease in taxable income in the prior year quarter as a result of additional expenses from the Lakeland merger.

For the six months ended June 30, 2025, the Company's income tax expense was $58.3 million with an effective tax rate of 30.0%, compared with income tax expense of $1.1 million for the six months ended June 30, 2024.

The increase in tax expense for the six months ended June 30, 2025 compared with the same period last year was largely due to an increase in taxable income, combined with a prior year $5.3 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024.

The prior year income tax expense was favorably impacted by the Lakeland merger.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis