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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-02-28 · 114 added, 122 removed, 327 unchanged (42% of the section changed)

33 unchanged sentences

Allowance for Credit Losses on Loans

On January 1, 2020, the Company adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with the CECL methodology.

It also applies to off-balance sheet credit exposures, including loan commitments and lines of credit.

The adoption of the new standard resulted in the Company recording a $7.9 million increase to the allowance for credit losses and a $3.2 million liability for off-balance sheet credit exposures.

The adoption of the standard did not result in a change to the Company's results of operations upon adoption as it was recorded as an $8.3 million cumulative effect adjustment, net of income taxes, to retained earnings.

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 deviate 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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The allowance estimation process resulted in a total provision of $4.1 million for the year ended December 31, 2025, and an overall coverage ratio of 95 basis points.

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

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

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

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

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• 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 Non-Real Estate Secured

• Consumer Loans – First Lien Home Equity and Other Consumer

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(2) modification designation;

(3) risk ratings of special mention, substandard or

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

(4) watchlist credits;

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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.

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

Any one or a combination of these events may adversely affect borrowers’ ability to repay the loans, resulting in increased delinquencies,

credit losses and higher levels of provisions.

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

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

For the year ended December 31, 2024, the increase in provision was primarily attributable to an initial CECL provision for credit losses on loans of $60.1 million, recorded as part of the Lakeland merger.

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

Recent Legislation

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") 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 recognized the effects of the OBBBA in the third fiscal quarter of 2025, the period in which the legislation was enacted.

The Company evaluated the potential impact of the OBBBA on its financial statements and, based on its assessment, the legislation did not have a material impact on its financial statements.

Acquisition Method of Accounting

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Interest-earning assets:

Deposits $ 36,932 $ 7,062 5.23 % $ 65,991 $ 3,421 5.18 % $ 102,505 $ 809 0.79 %

Federal funds sold and short-term investments — — — 255 12 4.55 84,969 1,208 1.42

Deposits and other short term investments $ 82,383 $ 3,012 3.66 % $ 36,932 $ 7,062 5.23 % $ 66,246 $ 3421 5.18 %

Held to maturity debt securities, net

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Interest-earning assets:

Deposits, Federal funds sold and short-term investments $ (9,867) $ 13,497 $ 3,630 $ (8,646) $ 10,061 $ 1,415

Deposits and other short term investments $ 24,905 $ (28,955) $ (4,050) $ (9,867) $ 13,497 $ 3,630

Investment securities (986) (205) (1191) (780) 303 (477)

Securities available for sale 25,318 16,729 42,047 15,773 20,666 36,439

Equity securities 243 (143) 100 404 96 500

Federal Home Loan Bank Stock 2,293 (1,688) 605 276 1,890 2,166

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Comparison of Financial Condition as of December 31, 2025 and December 31, 2024

Total assets as of December 31, 2024 were $24.05 billion, a $9.84 billion increase from December 31, 2023.

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

Total assets at December 31, 2025 were $24.98 billion, a $928.9 million increase from December 31, 2024.

The increase in total assets was primarily due to a $844.7 million increase in loans held for investment and a $354.0 million increase in total investments, partially offset by a $147.7 million decrease in loans held for sale, and decreases in intangibles and other assets.

The Company’s loan held for investment portfolio totaled $19.50 billion as of December 31, 2025 and $18.66 billion as of December 31, 2024.

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Total loans $ 19,504,061 18,659,370

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

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

For the year ended December 31, 2024, the Company experienced net increases of $1.57 billion in multi-family loans, $2.17 billion in commercial loans and $2.72 billion in commercial mortgage loans, partially offset by net decreases of $170.3 million in construction loans and net decreases in residential mortgage and consumer loans of $845.7 million and $314.7 million, respectively.

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

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

For the year ended December 31, 2025, the Company had net increases of $395.8 million in commercial loans, $284.4 million in multi-family loans and $170.7 million in commercial mortgage loans, partially offset by net decreases of $161.4 million in construction loans, $36.3 million in residential mortgage loans and $1.4 million in consumer loans.

Commercial loans, consisting of commercial real estate, multi-family, commercial, mortgage warehouse and construction loans, represented 86.7% of the loan portfolio at December 31, 2025, compared to 85.9% at December 31, 2024.

Retail loans, which consist of one- to four-family residential mortgage and consumer loans, such as fixed-rate home equity loans and lines of credit, totaled $2.59 billion and accounted for 13.3% of the loan portfolio as of December 31, 2025, compared to $2.62 billion, or 14.1%, of the loan portfolio as of December 31, 2024.

For the year ended December 31, 2025, loan fundings, including advances on lines of credit, totaled $10.11 billion, compared with $4.82 billion for 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.

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

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

Collateral properties include multi-family apartment buildings, warehouse/distribution buildings, shopping centers, office buildings, mixed-use buildings, hotels/motels, senior living, apartment buildings, residential and commercial tract developments, and raw land or lots to be developed into single-family homes.

Collateral properties include multi-family apartment buildings, warehouse/distribution buildings, shopping centers, office buildings, mixed-use buildings, hotels/motels, senior living, residential and commercial tract developments, and raw land or lots to be developed into single-family homes.

The primary source of repayment on the permanent loan portion of these loans is generally expected to come from the cash flow stream of the underlying leases which are dependent on the successful operations of the respective tenants.

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

The table below summarizes the collateral concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments ("PAA") as of December 31, 2024 (dollars in thousands):

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

Amount Percentage of Total

2 unchanged sentences

Industrial 2,271,692 19.2

Office 892,842 7.7

Mixed 923,768 7.8

Office 783,196 6.6

Special use property 581,967 4.9

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Total CRE, multi-family and construction loans (1)

$ 11,849,805 100.0 %

(1) As of December 31, 2025, purchase accounting adjustments related to CRE, multi-family and construction loans totaled $121.6 million.

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

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However, in periods of economic uncertainty where real estate market conditions may change rapidly, more current appraisals are obtained when warranted by conditions such as a borrower’s deteriorating financial condition, their possible inability to perform on the loan or other indicators of increasing risk of reliance on collateral value as the sole source of repayment of the loan.

Annual appraisals are generally obtained for loans graded substandard or worse where real estate is a material portion of the collateral value and/or the income from the real estate or sale of the real estate is the primary source of debt service.

Appraisals are generally obtained more frequently for loans graded substandard or worse where real estate is a material portion of the collateral value and/or the income from the real estate or sale of the real estate is the primary source of debt service.

Appraisals are, in substantially all cases, reviewed by a third-party to determine the reasonableness of the appraised value.

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Additionally, the third-party reviewer provides a detailed report of that analysis.

Further review may be conducted by credit or lending teams, including the Bank’s commercial workout team as conditions warrant.

Further review may be conducted by credit or the Bank’s commercial workout team as conditions warrant.

These additional steps of review are undertaken to confirm that the underlying appraisal and the third-party analysis can be relied upon.

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

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

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

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For the year ended December 31, 2025, the Company recorded a provision of $4.1 million for credit losses related to loans, compared to $83.6 million for the year ended December 31, 2024.

The Company had net charge-offs of $14.6 million for the year ended December 31, 2024, compared to net charge-offs of $8.1 million in 2023.

The increase in the allowance for credit losses on loans was due to an $83.6 million provision for credit losses on loans, which included an initial CECL provision of $60.1 million on loans acquired from Lakeland, and a $17.2 million allowance recorded through goodwill related to PCD loans acquired from Lakeland, partially offset by net charge-offs of $14.6 million.

Total non-performing loans as of December 31, 2025 were $78.4 million, or 0.40% of total loans, compared with $72.1 million, or 0.39% of total loans as of December 31, 2024.

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Within total impaired loans, there were $52.4 million of loans for which the present value of expected future cash flows or current collateral valuations exceeded the carrying amounts of the loans and for which no specific reserves were required in accordance with GAAP.

Non-performing commercial mortgage loans increased $15.7 million to $20.9 million as of December 31, 2024, from $5.2 million as of December 31, 2023.

As of December 31, 2024, non-performing commercial mortgage loans consisted of 17 loans.

Of these 17 loans, nine loans totaling $5.9 million were PCD loans.

The largest non-performing commercial mortgage loan was a $7.3 million loan secured by a first mortgage on a retail building located in Atlantic City, New Jersey.

Non-performing commercial loans decreased $17.2 million, to $24.2 million as of December 31, 2024, from $41.5 million as of December 31, 2023.

Non-performing (i.e., non-accruing) commercial mortgage loans increased $6.0 million to $26.9 million as of December 31, 2025, from $20.9 million as of December 31, 2024.

Non-performing commercial mortgage loans consisted of 11 loans as of December 31, 2025.

Of these 11 loans, 5 loans totaling $1.2 million were PCD loans.

The largest non-performing commercial mortgage loan was a $20.3 million loan secured by a first mortgage on a retail/office property in Manhattan, New York.

Non-performing commercial loans increased $9.0 million, to $33.2 million as of December 31, 2025, from $24.2 million as of December 31, 2024.

Non-performing commercial loans as of December 31, 2025 consisted of 41 loans, of which 14 loans were under 90 days past-due.

Of these non-performing commercial loans, 6 were PCD loans totaling $8.1 million.

The largest non-performing commercial loan relationship consisted of three loans with aggregate outstanding balances of $4.1 million as of December 31, 2024.

These loans are secured by all business assets.

Non-performing construction loans increased $12.5 million to $13.2 million as of December 31, 2024, from $771,000 as of December 31, 2023.

Non-performing construction loans as of December 31, 2024 consisted of two loans, of which one was a PCD loan.

There were two non-performing construction loans in 2023.

The largest non-performing construction loan was a $12.3 million loan residential development project in Jackson, New Jersey secured by a first mortgage on the land and completed and to-be completed housing units.

Non-performing multi-family mortgage loans consisted of six loans totaling $7.5 million as of December 31, 2024, compared to one non-performing multi-family mortgage loan totaling $744,000 as of December 31, 2023.

Of these six loans, four loans totaling $2.1 million were PCD loans.

The largest non-performing multi-family mortgage loan was a $3.7 million loan secured by a first mortgage on residential condominium units in Brooklyn, New York.

As of December 31, 2024, the Company held $9.5 million of foreclosed assets, compared with $11.7 million as of December 31, 2023.

Foreclosed assets are carried at the lower of the outstanding loan balance at the time of foreclosure or fair value, less estimated costs to sell.

During the year ended December 31, 2024, there were four properties sold with an aggregate carrying value of $861,000 and one write-down of a foreclosed commercial property of $1.3 million.

Foreclosed assets at December 31, 2024 consisted primarily of commercial real estate.

The largest non-performing commercial loan relationship consisted of five loans with aggregate outstanding balances of $10.4 million as of December 31, 2025.

These loans are secured by commercial real estate.

Non-performing construction loans decreased $8.1 million to $5.2 million as of December 31, 2025, from $13.2 million as of December 31, 2024.

Non-performing construction loans as of December 31, 2025 consisted of one loan, of which was a PCD loan.

This non-performing construction loan was a $5.2 million loan residential development project in Jackson, New Jersey secured by a first mortgage on the land and completed and to-be completed housing units.

Non-performing multi-family mortgage loans consisted of three loans totaling $2.3 million as of December 31, 2025, compared to six non-performing multi-family mortgage loan totaling $7.5 million as of December 31, 2024.

Of these three loans, one loan totaling $424,000 was a PCD loan.

The largest non-performing multi-family mortgage loan was a $1.0 million loan secured by a first mortgage on a 6-unit apartment building in Queens, New York.

As of December 31, 2025 and December 31, 2024, the Company held foreclosed assets of $2.0 million and $9.5 million, respectively.

During the year ended December 31, 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.

There was one addition to foreclosed assets with an aggregate carrying value of $1.0 million.

Foreclosed assets at December 31, 2025 consisted of commercial real estate.

Non-performing assets totaled $80.4 million, or 0.32% of total assets as of December 31, 2025, compared to $81.5 million, or 0.34% of total assets as of December 31, 2024.

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The amount of cash basis interest income that was recognized on impaired loans during the year ended December 31, 2025 was not material.

Total deposits increased $8.33 billion during the year ended December 31, 2024, to $18.62 billion.

As part of the merger with Lakeland, we acquired $8.62 billion in total deposits.

Total savings and demand deposit accounts increased $6.26 billion to $15.46 billion as of December 31, 2024, while total time deposits increased $2.07 billion to $3.17 billion as of December 31, 2024.

The increase in savings and demand deposits was largely attributable to a $3.13 billion increase in interest-bearing demand deposits, a $1.59 billion increase in non-interest-bearing demand deposits, a $1.04 billion increase in money market deposits and a $504.0 million increase in savings deposits.

The increase in time deposits consisted of a $1.98 billion increase in retail time deposits and a $91.1 million increase in brokered time deposits.

Total deposits increased $654.9 million during the year ended December 31, 2025, to $19.28 billion.

Total savings and demand deposit accounts increased $535.7 million to $15.99 billion at December 31, 2025, while total time deposits increased $119.1 million to $3.29 billion at December 31, 2025.

The increase in savings and demand deposits was largely attributable to a $372.0 million increase in interest-bearing demand deposits and a $328.7 million increase in money market deposits, partially offset by a $90.4 million decrease in savings deposits and a $74.5 million decrease in non-interest-bearing demand deposits.

The increase in time deposits consisted of a $253.6 million increase in brokered time deposits, partially offset by a $134.5 million decrease in retail time deposits.

During the year ended December 31, 2025, our Certificate of Deposit Account Registry Services ("CDARS") product increased $105.4 million to $321.0 million as of December 31, 2025, from $215.6 million as of December 31, 2024.

Within total deposits, brokered deposits totaled $1.40 billion as of December 31, 2024, compared to $689.3 million as of December 31, 2023.

Within total deposits, brokered deposits totaled $1.85 billion as of December 31, 2025, compared to $1.40 billion as of December 31, 2024.

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

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

Our estimated uninsured and uncollateralized deposits at December 31, 2024 totaled $4.42 billion, or 23.7%.

Our estimated uninsured and uncollateralized deposits at December 31, 2025 totaled $4.82 billion, or 25.0% of deposits.

Our total estimated uninsured deposits, including collateralized deposits as of December 31, 2025 was $10.59 billion.

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Borrowed funds increased $91.5 million during the year ended December 31, 2025, to $2.11 billion.

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

Borrowed funds represented 8.5% of total assets at December 31, 2025, a decrease from 13.9% at December 31, 2024.

Stockholders’ equity increased $910.6 million during the year ended December 31, 2024 to $2.60 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and a slight improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.

Stockholders’ equity increased $232.0 million during the year ended December 31, 2025, to $2.83 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 year ended December 31, 2025, common stock repurchases totaled 158,293 shares at an average cost of $18.07 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation.

At December 31, 2024, approximately 3.1 million shares remained eligible for repurchase under the current stock repurchase authorization.

As of December 31, 2025, approximately 814,000 shares remained eligible for repurchase under the current stock repurchase authorization.

Book value per share and tangible book value per share at December 31, 2025 were $21.69 and $15.70, respectively, compared with $19.93 and $13.66, respectively, at December 31, 2024.

Comparison of Operating Results for the Years Ended December 31, 2025 and December 31, 2024

Net income for the year ended December 31, 2025 totaled $291.2 million, or $2.23 per basic and diluted share, compared to $115.5 million, or $1.05 per basic and diluted share, for the year ended December 31, 2024.

Prior year earnings include six and a half months of combined operations with Lakeland, compared to a full year in 2025.

Additionally, while there were no transaction costs related to our merger with Lakeland during 2025, for the year ended December 31, 2024, these costs totaled $20.2 million and $117.0 million, respectively.

The 2024 full year results included an initial Current Expected Credit Loss ("CECL") provision for credit losses on loans of $60.1 million recorded as part of the Lakeland merger.

Net Interest Income.

Net interest income increased $160.0 million to $760.6 million for 2025, from $600.6 million for 2024.

The net interest margin increased 13 basis points to 3.39% for 2025, compared to 3.26% for 2024.

The increase in net interest income was largely driven by growth in average earning assets including net assets added in the May 16, 2024 acquisition of Lakeland and related accretion of purchase accounting adjustments, further aided by lower rates on funding.

Interest income increased $226.6 million to $1.27 billion for 2025, compared to $1.05 billion for 2024.

Average interest-earning assets increased $3.98 billion to $22.40 billion for 2025, compared to $18.40 billion for 2024.

The yield on interest-earning assets remained flat at 5.68% for 2025, compared to 2024.

The weighted average yield on total loans decreased four basis points to 6.01% for 2025 and the weighted average yield on available for sale debt securities increased 64 basis points to 3.96% for 2025, from 3.32% for 2024.

The weighted average yield on FHLBNY stock decreased to 7.93% for 2025, compared to 9.70% for 2024.

Interest expense increased $66.7 million to $512.2 million for 2025, from $445.5 million for 2024.

The average rate paid on interest-bearing liabilities increased 14 basis points to 2.91% for 2025, compared to 2024.

The average rate paid on interest-bearing deposits decreased 20 basis points to 2.63% for 2025, from 2.83% for 2024.

The average rate paid on borrowings increased 19 basis points to 3.90% for 2025, from 3.71% for 2024.

The average balance of interest-bearing liabilities increased $3.03 billion to $17.62 billion for 2025, compared to $14.60 billion for 2024.

Average outstanding borrowings increased $34.6 million to $2.02 billion for 2025, compared to 2024.

Average non-interest bearing demand deposits increased $602.1 million to $3.72 billion for 2025, from $3.12 billion for 2024.

Average interest-bearing deposits increased $2.85 billion to $15.20 billion for 2025, from $12.35 billion for 2024.

Within average interest-bearing deposits, average interest-bearing core deposits increased $1.95 billion to $11.93 billion for 2025, while average time deposits increased $900.6 million to $3.27 billion for 2025.

Provision for Credit Losses .

Provisions for credit losses are charged to operations in order to maintain the allowance for credit losses at a level management considers necessary to absorb projected credit losses that may arise over the expected term of each loan in the portfolio.

In determining the level of the allowance for credit losses, management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and a reasonable and supportable forecast.

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.

For the year ended December 31, 2025, the Company recorded a $3.6 million provision for credit losses, compared with a provision for credit losses of $87.6 million for 2024.

The provision consisted of a $4.1 million provision charge for credit losses related to loans and a $545,000 provision benefit for credit losses related to off-balance sheet credit exposures, compared with provision charges for credit losses on loans and off-balance sheet credit exposures of $83.6 million and $4.0 million, respectively, for 2024.

The provision for credit losses on loans for the year ended December 31, 2025 was primarily attributable to overall growth in the loan portfolio.

For the year ended December 31, 2025, net charge-offs totaled $12.8 million or an annualized seven basis points of average loans, compared with net charge-offs of $14.6 million, or an annualized nine basis points of average loans, for the year ended December 31, 2024.

Non-Interest Income.

For the year ended December 31, 2025, non-interest income totaled $109.8 million, an increase of $15.7 million, compared to 2024.

Fee income increased $8.7 million to $42.8 million for the year ended December 31, 2025, compared to 2024, primarily due to increases in deposit fee income, loan prepayment fee income and debit and credit card related fee income.

Other income increased $3.9 million to $8.5 million for the year ended December 31, 2025, compared to $4.5 million for 2024, primarily due to an increase in gains on sales of SBA and mortgage loans and other miscellaneous income.

Net gains on securities transactions increased $3.8 million for the year ended December 31, 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.

Additionally, insurance agency income increased $2.1 million to $18.3 million for the year ended December 31, 2025, compared to $16.2 million for 2024, largely due to increases in contingent commissions, retention revenue and new business activity.

Partially offsetting these increases in non-interest income, BOLI income decreased $1.6 million to $10.1 million for the year ended December 31, 2025, compared to 2024, primarily due to a decrease in benefit claims, partially offset by an increase in income related to the addition of Lakeland's BOLI, while wealth management income decreased $1.3 million to $29.3 million for the year ended December 31, 2025, compared to 2024, mainly due to a decrease in the average market value of assets under management during the period.

Non-Interest Expense.

Non-intere st expense totaled $458.7 million for the year ended December 31, 2025, an increase of $1.1 million, compared to $457.5 million for the year ended December 31, 2024.

Compensation and benefits expense increased $34.8 million to $253.1 million for the year ended December 31, 2025, compared to $218.3 million for 2024 primarily attributable to the addition of Lakeland personnel.

Amortization of intangibles increased $8.1 million to $37.1 million for the year ended December 31, 2025, compared to $28.9 million for 2024, largely due to core deposit intangible amortization related to the addition of Lakeland.

Net occupancy expense increased $7.8 million to $52.8 million for the year ended December 31, 2025, compared to 2024, primarily due to increases in depreciation and maintenance expense related to the addition of Lakeland.

Other operating expenses increased $5.1 million to $59.8 million for the year ended December 31, 2025, compared to $54.7 million for 2024, primarily due to a $1.4 million increase in write-downs on foreclosed property, combined with additional expenses due to the addition of Lakeland.

Data processing expense increased $1.8 million to $37.4 million for the year ended December 31, 2025, compared to $35.6 million for 2024, primarily due to the addition of Lakeland.

Partially offsetting these increases to non-interest expense, merger-related expenses decreased $56.9 million for the year ended December 31, 2025.

Income Tax Expense .

For the year ended December 31, 2025, the Company's income tax expense was $117.0 million with an effective tax rate of 28.7%, compared with $34.1 million with an effective tax rate of 22.8% for the year ended December 31, 2024.

The increase in tax expense for the year ended December 31, 2025, compared with last year was primarily due to an increase in taxable income, partially resulting from the prior year initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

Additionally, the increase in tax expense and the effective tax rate was due to a prior year $10.0 million tax benefit related to the revaluation of deferred tax assets.

Comparison of Operating Results for the Years Ended December 31, 2024 and December 31, 2023

Net income for the year ended December 31, 2024 totaled $115.5 million, or $1.05 per basic and diluted share, compared to $128.4 million, or $1.72 per basic and $1.71 per diluted share, for the year ended December 31, 2023.

Earnings for the year ended December 31, 2024 reflect the impact of the May 16, 2024 merger with Lakeland, which added $10.59 billion to total assets, $7.91 billion to loans, and $8.62 billion to deposits, net of purchase accounting adjustments.

The merger with Lakeland significantly impacted provisions for credit losses in 2024 due to the initial Current Expected Credit Loss ("CECL") provisions recorded on acquired loans in the second quarter.

Transaction costs related to our merger with Lakeland totaled $20.2 million and $56.9 million, for the three months and year ended December 31, 2024, respectively, compared with transaction costs of $2.5 million and $7.8 million for the respective 2023 periods.

The merger with Lakeland significantly impacted provisions for credit losses in 2024 due to the initial CECL provisions recorded on acquired loans in the second quarter.

Transaction costs related to our merger with Lakeland totaled $56.9 million for the year ended December 31, 2024, compared with transaction costs of $7.8 million for the respective 2023 period.

Additionally, the Company realized a $2.8 million loss related to the sale of subordinated debt issued by Lakeland from the Provident investment portfolio, during the second quarter of 2024.

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The net interest margin increased 10 basis points to 3.26% for 2024, compared to 3.16% for 2023.

Net interest income for the year ended December 31, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans and higher market rates on new loan originations, partially offset by the unfavorable repricing of both deposits and borrowings.

Net interest income

for the year ended December 31, 2024 was favorably impacted by the net assets acquired from Lakeland, combined with the favorable repricing of adjustable rate loans and higher market rates on new loan originations, partially offset by the unfavorable repricing of both deposits and borrowings.

Interest income increased $430.3 million to $1.05 billion for 2024, compared to $615.8 million for 2023.

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The decrease in tax expense for the year ended December 31, 2024, compared with last year was largely due to a $10.0 million tax benefit related to the revaluation of deferred tax assets to reflect the imposition by the State of New Jersey of a 2.5% Corporate Transit Fee, effective January 1, 2024, combined with a decrease in taxable income as a result of the initial CECL provision for credit losses on loans of $60.1 million recorded in accordance with GAAP requirements for accounting for business combinations and additional expenses from the Lakeland merger.

Comparison of Operating Results for the Years Ended December 31, 2023 and December 31, 2022

Net income for the year ended December 31, 2023 was $128.4 million, compared to $175.6 million for the year ended December 31, 2022.

For the year ended December 31, 2023, basic and diluted earnings per share were $1.72 and $1.71 per share, respectively, compared to basic and diluted earnings per share of $2.35, for the year ended December 31, 2022.

Earnings for the year ended December 31, 2023 was largely impacted by a decrease in net interest income, primarily attributable to a decrease in lower-costing deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, in addition to increased provisions for credit losses primarily due to a worsened economic forecast compared to the prior year.

Transaction costs related to our pending merger with Lakeland totaled $7.8 million, for the year ended December 31, 2023, compared with transaction costs of $4.1 million for the respective 2022 period.

In addition, prior year earnings for the year ended December 31, 2022, included an $8.6 million gain on the sale of a foreclosed property.

Net Interest Income.

Net interest income decreased $18.1 million to $399.5 million for 2023, from $417.6 million for 2022.

The interest rate spread decreased 59 basis points to 2.63% for 2023, from 3.22% for 2022.

The net interest margin decreased 21 basis points to 3.16% for 2023, compared to 3.37% for 2022.

The decrease in net interest income for the year ended December 31, 2023, was primarily due to a decrease in lower-costing deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, partially offset by originations of new loans and the favorable repricing of adjustable-rate loans.

For the year ended December 31, 2023, fees related to the forgiveness of PPP loans decreased $1.4 million to $7,000, compared to $1.4 million for the year ended December 31, 2022.

Interest income increased $149.6 million to $615.8 million for 2023, compared to $466.2 million for 2022.

The increase in interest income was primarily driven by the favorable repricing of adjustable-rate loans and an increase in rates on new loan originations.

Average interest-earning assets increased $224.4 million to $12.64 billion for 2023, compared to $12.41 billion for 2022.

The increase in average earning assets was primarily due to a $568.8 million increase in average outstanding loan balances to $10.37 billion for 2023, which was largely attributable to commercial loan originations, partially offset by a $230.5 million decrease in average available for sale debt securities.

The yield on interest-earning assets increased 111 basis points to 4.87% for 2023, from 3.76% for 2022.

The weighted average yield on total loans increased 111 basis points to 5.37% for 2023 and the weighted average yield on available for sale debt securities increased 58 basis points to 2.33% for 2023, from 1.75% for 2022.

The weighted average yield on FHLBNY stock increased to 7.47% for 2023, compared to 4.71% for 2022.

Interest expense increased $167.7 million to $216.4 million for 2023, from $48.6 million for 2022.

The increase in interest expense was primarily attributable to an increase in the cost of interest-bearing liabilities, along with an increase in average interest-bearing liabilities.

The average rate paid on interest-bearing liabilities increased 170 basis points to 2.24% for 2023, compared to 2022.

The average rate paid on interest-bearing deposits increased 152 basis points to 1.99% for 2023, from 0.47% for 2022.

The average rate paid on borrowings increased 218 basis points to 3.41% for 2023, from 1.23% for 2022.

The average balance of interest-bearing liabilities increased $646.3 million to $9.67 billion for 2023, compared to $9.03 billion for 2022.

Average outstanding borrowings increased $880.3 million to $1.64 billion for 2023, compared to 2022.

Average non-interest bearing demand deposits decreased $421.0 million to $2.33 billion for 2023, from $2.75 billion for 2022.

Average interest-bearing deposits decreased $234.2 million to $8.02 billion for 2023, from $8.26 billion for 2022.

Within average interest-bearing deposits, average interest-bearing core deposits decreased $539.0 million to $7.03 billion for 2023, while average time deposits increased $304.8 million to $994.9 million for 2023.

Provision for Credit Losses .

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.

For the year ended December 31, 2023, the Company recorded a $27.9 million provision for credit losses on loans, compared to a $8.4 million provision for 2022.

The Company, f or the year ended December 31, 2023, had net loan charge-offs of $8.1 million, compared to net charge-offs of $1.1 million for 2022.

Total charge-offs for the year ended December 31, 2023 were $10.4 million, compared to $6.5 million for the year ended December 31, 2022.

Recoveries for the year ended December 31, 2023 , were $2.3 million, compared to $5.4 million for the year ended December 31, 2022.

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

Non-Interest Income .

For the year ended December 31, 2023, non-interest income totaled $79.8 million, a decrease of $8.0 million, compared to the same period in 2022.

Other income decreased $6.9 million to $7.3 million for the year ended December 31, 2023, compared to $14.2 million for the same period in 2022, primarily due to an $8.6 million gain realized in the prior year on the sale of a foreclosed commercial office property, partially offset by an increase in gains on sales of SBA loans.

Additionally, fee income decreased $3.7 million to $24.4 million for the year ended December 31, 2023, compared to the same period in 2022, primarily due to a decrease in commercial loan prepayment fees.

Partially offsetting these decreases in non-interest income, insurance agency income increased $2.5 million to $13.9 million for the year ended December 31, 2023, compared to $11.4 million for the same period in 2022, largely due to increases in retention revenue and new business activity.

BOLI income increased $494,000 to $6.5 million for the year ended December 31, 2023, compared to the same period in 2022, largely due to greater equity valuations, partially offset by a decrease in benefit claims recognized.

Non-Interest Expense.

Non-interest expense totaled $275.6 million for the year ended December 31, 2023, an increase of $18.8 million, compared to $256.8 million for the year ended December 31, 2022.

Other operating expense increased $8.5

million to $47.4 million for the year ended December 31, 2023, compared to $38.9 million for the year ended December 31, 2022.

The increase in other operating expenses was largely due to a $3.0 million charge for contingent litigation reserves, combined with a $2.0 million write-down of a foreclosed property and an increase in professional fees.

Merger-related expense increased $3.7 million to $7.8 million for the year ended December 31, 2023, compared to 2022.

The Company recorded a $264,000 provision for credit losses for off-balance sheet credit exposures, compared to a $3.4 million negative provision last year.

The $3.6 million increase in the provision for credit losses for off-balance sheet credit exposures for the year was primarily due to a period over period decrease in line of credit utilization, combined with a period over period increase in loans approved and awaiting closing.

FDIC insurance expense increased $3.4 million to $8.6 million for the year ended December 31, 2023, compared to $5.2 million for the trailing year, primarily due to an increase in the assessment rate and the FDIC special assessment.

Data processing expense increased $1.3 million to $23.0 million for the year ended December 31, 2023, mainly due to an increase in software service and core processing expenses.

Compensation and benefits expense increased $1.3 million to $148.5 million for the year ended December 31, 2023, compared to $147.2 million for the year ended December 31, 2022, primarily due to increases in salary expense, employee medical benefits and post-retirement benefit expense, partially offset by decreases in the accrual for incentive compensation and stock-based compensation.

Partially offsetting these increases, net occupancy expense decreased $2.3 million to $32.3 million for the year ended December 31, 2023, compared to the same period in 2022, mainly due to decreases in depreciation and maintenance expenses.

Income Tax Expense .

For the year ended December 31, 2023, the Company's income tax expense was $47.4 million with an effective tax rate of 27.0%, compared with $64.5 million with an effective tax rate of 26.8% for the year ended December 31, 2022.

The decrease in tax expense for the year ended December 31, 2023, compared with the same period last year was largely the result of a decrease in taxable income.

Liquidity and Capital Resources

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As of December 31, 2025, the Bank had outstanding loan commitments to borrowers of $3.71 billion, including undisbursed home equity lines and personal credit lines of $644.9 million.

Total deposits increased $8.33 billion for the year ended December 31, 2024.

Total deposits increased $654.9 million for the year ended December 31, 2025.

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.

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As of December 31, 2025, the Bank’s total risk-based capital ratio was 13.08%.

A bank is considered to be well-capitalized if it has a leverage (Tier 1) capital ratio of at least 5.00% and a total risk-based capital ratio of at least 10.00%.

A bank is considered to be well-capitalized if it has a leverage (Tier 1) capital ratio of at least 5.00% and a total risk-based

capital ratio of at least 10.00%.

The total capital to risk-weighted assets requirement, taking into account the capital conservation buffer, is 10.50%.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis