What changed in this filing

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Item 1A. Risk Factors

2026-03-04 compared with 2025-03-07 · 72 added, 34 removed, 282 unchanged (27% of the section changed)

12 unchanged sentences

A significant portion of the Company’s loan portfolio is secured by real estate.

As of December 31, 2024, approximately 96 percent of its loans had real estate as a primary or secondary component of collateral.

As of December 31, 2025, approximately 96 percent of its loans had real estate as a primary and/or secondary component of collateral.

The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended.

Weakness in the real estate market in the Company’s primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on the Company’s profitability and asset quality.

Any future declines in real estate values in the New Jersey, New York and Pennsylvania markets that the Company serves also may result in increases in delinquencies and losses in its loan portfolios.

Further, such declines in real estate values could impact values in the Company’s debt securities investment portfolio, ultimately resulting in an adverse effect on the Company’s profitability, capital and asset quality.

Stress in the real estate market, combined with any weakness in economic conditions could drive losses beyond that which is provided for in the Company’s allowance for credit losses.

In that event, the Company’s earnings could be adversely affected.

In that event, the Company’s earnings and capital could be adversely affected.

Furthermore, stress in the real estate market could severely impact the Company’s ability to sell residential mortgage loans and SBA 7a loans on the secondary market.

The inability to sell such loans would adversely impact the Company’s noninterest revenue and hence negatively impact earnings and capital.

A significant portion of the Company’s loan portfolio is secured by commercial real estate and events that negatively impact the commercial real estate market could adversely affect our asset quality and profitability for those loans secured by real property and increase the number of defaults and the level of losses within our loan portfolio.

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As of December 31, 2025, total commercial real estate loans, including construction loans, represented 56.6 percent of our loan portfolio.

Included in this portfolio are loans to industries including hotel/motel, retail, educational facilities, office space, warehouses, food/beverage services and religious facilities.

Included in this portfolio are loans to industries including hotel/motel, food/beverage services, educational facilities, retail, warehouse, office, religious facilities, automotive, healthcare facilities, gas station and educational facilities.

Additionally, mixed-use loans, in their hybrid nature, may include these industries, as well as others not denoted above.

These types of loans generally expose a lender to a higher degree of credit risk of non-payment and loss than residential mortgage loans do for several factors, including dependence on the successful operation of a business or a project for repayment.

These types of loans generally expose a lender to a higher degree of credit risk of non-payment and loss than residential mortgage loans due to several factors, including dependence on the successful operation of a business or a project for repayment.

Further, the Company facilitates construction-to-permanent financing, which may come with heightened credit risks.

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The value of the real estate collateral that provides an alternate source of repayment in the event of default by the borrower could deteriorate during the time the credit is extended.

Underwriting and portfolio management activities cannot completely eliminate all risks related to these loans.

Underwriting, portfolio management activities and other credit administration functions, cannot completely eliminate all risks related to these loans.

Any significant failure to pay on time by our clients or a significant default by our clients would materially and adversely affect us.

Concentrations in commercial real estate are closely monitored by regulatory agencies and subject to especially heightened scrutiny both on a public and confidential basis.

Any formal or informal action by our supervisors may require us to increase our reserves on these loans and adversely impact our earnings.

Any formal or informal action by our supervisors may require us to increase our reserves on these loans and adversely impact our earnings and capital.

A downturn in the real estate market in our primary market areas could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans, which in turn could have an adverse effect on our profitability and asset quality.

If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected.

If we are required to liquidate the collateral securing a loan to satisfy

the debt during a period of reduced real estate values, our earnings and shareholders’ equity could be adversely affected.

Any weakening of the commercial real estate market may increase the likelihood of default on these loans, which could negatively impact our loan portfolio’s performance and asset quality.

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When weaknesses are identified, the SBA may request corrective actions or impose enforcement actions.

Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or funding for the SBA program may also have a material adverse effect on our business.

Any changes to the SBA program, including but not limited to changes to the level of guarantee provided by the federal government on SBA loans, changes to ongoing SBA servicing related expenses, changes to program specific rules impacting volume eligibility under the guaranty program, as well as changes to the program amounts authorized by Congress or funding for the SBA program may also have a material adverse effect on our business.

In addition, any default by the U.S.

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The non-guaranteed portion of SBA loans have a higher degree of credit risk and risk of loss as compared to the guaranteed portion of such loans.

We generally retain the non-guaranteed portions of the SBA loans that we originate and sell, and to the extent the borrowers of such loans experience financial difficulties, our financial condition and results of operations would be adversely impacted.

We generally retain the

non-guaranteed portions of the SBA loans that we originate and sell, and to the extent the borrowers of such loans experience financial difficulties, our financial condition and results of operations would be adversely impacted.

When we sell the guaranteed portion of SBA loans in the ordinary course of business, we are required to make certain representations and warranties to the purchaser about the SBA loans and the manner in which they were originated.

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In 2006, the OCC, the FDIC, and the FRB, or collectively, the Agencies, issued joint guidance entitled “Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices,” or the “CRE Guidance.” Although the CRE Guidance did not establish specific lending limits, it provides that a bank’s commercial real estate lending exposure will receive increased supervisory scrutiny where total nonowner occupied commercial real estate loans, including loans secured by apartment buildings, investor commercial real estate, and construction and land loans, represent 300% or more of an institution’s total risk-based capital, and the outstanding balance of the commercial real estate loan portfolio has increased by 50% or more during the preceding 36 months.

Using regulatory guidance definitions, the Bank’s commercial real estate loan balance decreased 1.55% for the year ended December 31, 2024 and commercial real estate loans represented 235.05% of the Bank’s risk-based capital at December 31, 2024, a decrease from 269.98% at December 31, 2023.

Using regulatory guidance definitions, the Bank’s commercial real estate loan balance was $868.9 million at December 31, 2025 and commercial real estate loans represented 231.92% of the Bank’s risk-based capital at December 31, 2025, a decrease from 235.05% at December 31, 2024.

In December 2015, the Agencies released a new statement on prudent risk management for commercial real estate lending, or the “2015 Statement.” In the 2015 Statement, the Agencies, among other things, indicated the intent to continue “to pay special attention” to commercial real estate lending activities and concentrations going forward.

If the FDIC, our primary federal regulator, were to impose restrictions on the amount of such loans we can hold in our portfolio or require us to implement additional compliance measures, for reasons noted above or otherwise, our earnings could be adversely affected as would our earnings per share.

There is a risk that the Company may not be repaid in a timely manner, or at all, for loans it makes or securities it purchases.

There is a risk that the Company may not be repaid in a timely manner, or at all, for loans it makes or securities it holds.

The risk of nonpayment (or deferred or delayed payment) of loans is inherent in banking.

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The Company’s marketing focus on small to medium size businesses may result in the assumption by the Company of certain lending risks that are different from or greater than those which would apply to loans made to larger companies.

The Company seeks to minimize its credit risk exposure through credit controls, which include evaluation of potential borrowers’ available collateral, liquidity and cash flow.

The Company seeks to minimize its credit risk exposure through credit controls, which include evaluation of potential borrowers’ available collateral, liquidity, cash flow and debt service coverage (both individually and globally).

However, there can be no assurance that such procedures will actually reduce credit losses.

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Such nonpayment, or delayed or deferred payment on securities held by the Company, if they occur may have a material adverse effect on the Company’s earnings and overall financial condition.

As of December 31, 2024, the Company maintained a valuation reserve on a single available for sale security of $2.8 million.

The Company seeks to minimize its credit risk exposure on securities through ongoing monitoring and credit controls, which evaluate the financial condition of the issuer of the securities.

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Its allowance for credit losses may not be adequate to cover actual losses and future provisions for credit losses could materially and adversely affect the results of operations.

Risks within the loan portfolio are analyzed on a continuous basis by Management and, periodically, by an independent loan review function and by the Audit Committee.

A risk system, consisting of multiple-grading categories, is utilized as an analytical tool to assess risk and the appropriate level of loss reserves.

Risks within the loan portfolio are analyzed on a continuous basis by Management and, periodically, by an independent loan review function as overseen by the Audit Committee.

A risk system, consisting of multiple-grading categories, is utilized as an analytical tool to assess risk and the appropriate level of credit loss reserves.

Along with the risk system, Management further evaluates risk characteristics of the loan portfolio under current economic conditions and considers such factors as the financial condition of the borrowers, past and expected credit loss experience, historical trends and other factors that Management feels deserve recognition in establishing an adequate reserve.

This risk assessment process is performed at least quarterly and, as adjustments become necessary, they

are realized in the periods in which they become known.

This risk assessment process is performed at least quarterly and, as adjustments become necessary, they are realized in the periods in which they become known.

The amount of future losses is susceptible to changes in economic, operating and other conditions, including changes in interest rates that may be beyond the Company’s control, and these losses may exceed current estimates.

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Interest rates are subject to factors which are beyond the Company’s control, including general economic conditions, competition and policies of various governmental and regulatory agencies, such as the FRB.

Changes in monetary policy, including changes in interest rates, could influence not only the interest the Company receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the ability to originate loans and obtain deposits, (ii) the fair value of financial assets and liabilities, including the held to maturity and available for sale securities portfolios and (iii) the average duration of interest-earning assets.

Changes in monetary policy, including changes in interest rates and/or quantitative easing or tightening protocols, could influence not only the interest the Company receives on loans and investment securities and the amount of interest it pays on deposits and borrowings, but such changes could also affect (i) the ability to originate loans and obtain deposits, (ii) the fair value of financial assets and liabilities, including the held to maturity and available for sale securities portfolios and (iii) the average duration of interest-earning assets.

This also includes the risk that interest-earning assets may be more responsive to changes in interest rates than interest-bearing liabilities, or vice versa (repricing risk), the risk that the individual interest rates or rate indexes underlying various interest-earning assets and interest-bearing liabilities may not change in the same degree over a given time period (basis risk) and the risk of changing interest rate relationships across the spectrum of interest-earning asset and interest-bearing liability maturities (yield curve risk).

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Generally, the Act is effective the day after it is signed into law, but different effective dates apply to specific sections of this law, many of which will not become effective until various Federal regulatory agencies have promulgated rules implementing the statutory provisions.

In addition, subsequent legislation and regulatory action has, and future legislation and regulatory action may, amend or revise various provisions of the Dodd-Frank Act.

In addition, subsequent

legislation and regulatory action has, and future legislation and regulatory action may, amend or revise various provisions of the Dodd-Frank Act.

Uncertainty remains as to the ultimate impact of the Dodd-Frank Act and the implementing regulations thereunder, which could have a material adverse impact either on the financial services industry as a whole, or on the Company’s business, results of operations and financial condition.

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Secondarily, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making.

Liquidity risk.

There is the risk that the Company will be insufficiently liquid to meet its obligations as they come due.

Liquidity risk is the potential that the Company will be unable to meet its obligations as they come due because of an inability to liquidate assets or obtain adequate funding on a timely basis, at a reasonable cost and within acceptable risk tolerances.

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If customers move money out of bank deposits and into other investments, or if customers perceive a risk in leaving their deposits with the Bank and transfer the deposits to larger institutions seen as less risky, the Company could lose a low-cost source of funds, increasing its funding costs and reducing the Company’s net interest income and net income.

As of December 31, 2024, $815.1 million, or 38.8%, of the Company’s deposits were time deposits with $768.6 million, or 94.3% of those time deposits, maturing within one year.

As of December 31, 2025, the Company had $882.9 million in time deposits, comprising 38.0% of total deposits.

Time deposits maturing within one year were $842.4 million, or 95.4% of time deposits and 36.2% of total deposits.

Additionally, as of December 31, 2025, uninsured or uncollateralized deposits represented 21.7% of total deposits.

The Company’s liquidity position could be impacted by these deposits if its customers decide to withdraw funds at maturity and invest in non-deposit products, including but not limited to U.S.

Additionally, the Company’s earnings could be impacted if interest rates increase and the Company needs to increase the rates offered on time deposits to retain these funds.

The Company’s management monitors the deposit composition of its Consolidated Balance Sheet through various Board and Management reporting on a regular basis.

Treasuries, money market funds and other alternative sources.

Additionally, the Company’s earnings could be impacted if interest rates increase and the Company needs to increase the rates offered on deposits to retain these funds.

The Company’s management and Board of Directors monitors the deposit composition of its Consolidated Balance Sheet through various Board and Management reporting on a regular basis.

The Company maintains elevated wholesale funding balances, including brokered deposits, FHLB advances and other borrowing and deposit sources.

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This proposal would require many banks to hold at least 10% of their assets in residential mortgages in order to maintain access to FHLB funding.

If these proposals change or progress, this could impact the Company’s ability to borrow from the FHLB and require it to find other sources of credit, including borrowing directly from the FRB.

If these proposals change

or progress, this could impact the Company’s ability to borrow from the FHLB and require it to find other sources of credit, including borrowing directly from the FRB.

The Company is in competition with many other banks, including larger commercial banks which have greater resources, as well as “fintech” companies for loan and deposit customers.

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In addition, financial technology companies, either directly or in partnership with other insured depository institutions, compete for loan and deposit customers.

Similarly, larger legacy non-financial companies, such as

Apple, Alphabet and Amazon, are further increasing competition to compete for loans, deposits and payments.

Similarly, larger legacy non-financial companies, such as Apple, Alphabet and Amazon, are further increasing competition to compete for loans, deposits and payments.

A number of the Company’s competitors have substantially greater resources than it does to expend upon advertising and marketing, and their substantially greater capitalization enables them to make much larger loans.

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However, should this proposal be adopted and a state owned bank formed, it could impede the Company’s ability to attract and retain governmental and municipal deposits, thereby impairing the Company’s liquidity.

The emergence of U.S.

dollar–denominated stablecoins and the evolving legislative and regulatory landscape governing them—including recently proposed and enacted federal frameworks such as the GENIUS Act and other stablecoin specific bills—may adversely affect our deposit base, liquidity profile, and competitive position.

As stablecoins become more widely adopted for payments and value storage, customers may shift funds from traditional bank deposits into digital assets, potentially reducing our low cost funding sources and increasing our reliance on more expensive or volatile funding alternatives.

New legislation could also impose operational, compliance, cybersecurity, or reporting requirements on financial institutions that interact with stablecoin issuers, custodians, or users.

The pace and direction of regulatory change remain uncertain, and future rules could materially impact our ability to compete, our cost structure, or the behavior of our customers.

Any of these developments could adversely affect our business, financial condition, and results of operations.

The nature and growth rate of our loan portfolio may expose us to increased lending risks.

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As a result, the Bank might experience increased compliance costs, loan losses, litigation related expenses and delays in taking title to real estate collateral, if these loans do not perform and borrowers challenge whether the Bank satisfied the ability-to-repay rule upon originating the loan.

Future offerings of common stock or debt securities may adversely affect the market price of the Company’s stock.

In the future, if the Company’s or the Bank’s capital ratios fall below the prevailing regulatory minimums, or if the Company seeks to pursue growth opportunities such as acquisitions, the Company or the Bank may be required to raise additional capital through offerings of common stock, preferred stock, subordinated debt, senior debt, or other capital instruments.

Any such equity offerings may dilute the holdings of existing shareholders or reduce the market price of the Company’s common stock, or both.

Debt offerings could increase the Company’s interest expense, impose restrictive covenants, or otherwise adversely affect the Company’s financial condition.

There can be no assurance that any such capital could be raised on acceptable terms, or at all.

Future offerings of common stock may adversely affect the market price of the Company’s stock.

In the future, if the Company’s or the Bank’s capital ratios fall below the prevailing regulatory required minimums, or should the Company seek to expand through acquisitions, the Company or the Bank could be forced to raise additional capital by making additional offerings of common stock or preferred stock.

Additional equity offerings may dilute the holdings of existing shareholders or reduce the market price of common stock, or both.

The Company cannot predict how changes in technology will impact its business.

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● Internet-based banking;

● Stablecoins and other crypto currencies;

● Tele-banking;

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any of which could have a material adverse effect on the Company’s financial condition and results of operations.

The Company maintains an incident response and business continuity framework, which is periodically tested through tabletop exercises involving executive management, senior leadership and other critical business functions.

These exercises are intended to support effective decision making, communication and coordination during cybersecurity or operational incidents;

however, there can be no assurance that such measures will be effective in all circumstances.

For further information, please refer to Item 1C in this document.

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The Company’s potential inability to retain key employees could have a material adverse effect on its financial condition and results of operations.

As a community banking organization, the Company is highly reliant on key employees, including its Chief Executive Officer, Chief Financial Officer, heads of key operational areas, area managers, business development officers and loan officers.

As a community banking organization, the Company is highly reliant on key employees, including its Chief Executive Officer, President, Chief Financial Officer, heads of key operational areas, area managers, business development officers and loan officers.

The loss of these employees could have an adverse impact on the Company’s operating capacities and the ability to implement growth strategies and adversely impact the financial performance.

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The occurrence of any such event in the future could have material adverse effect on the business, which in turn, could have a materially adverse impact on the financial condition and results of operations of the Company.

Our use of artificial intelligence, including generative artificial intelligence, may expose us to operational, regulatory, legal, and reputational risks that could adversely affect our business, financial condition, and results of operations.

We use, and expect to continue to expand our use of, artificial intelligence and machine learning technologies, including generative artificial intelligence models, in our operations and through third-party vendors.

These technologies are complex, rapidly evolving, and may not perform as intended.

AI systems may produce inaccurate, biased, or unpredictable results, which could lead to flawed business decisions, customer harm, control failures, or violations of law or regulation, including consumer protection and fair lending requirements.

The regulatory and supervisory framework governing the use of artificial intelligence in the banking industry is developing and remains uncertain.

Banking regulators have increased scrutiny of AI-related practices, including governance, model risk management, explainability, data usage, and third-party oversight.

New laws, regulations, or supervisory expectations could limit our ability to deploy AI technologies, require significant changes to our systems or processes, increase compliance costs, or result in supervisory actions, fines, or penalties if our use of AI is deemed noncompliant or unsafe.

The use of AI, including generative AI, may also increase cybersecurity, data privacy, and information security risks.

AI systems may require access to sensitive customer or proprietary information, and any failure to adequately safeguard such data, prevent misuse, or comply with applicable privacy and data protection laws could result in regulatory enforcement actions, litigation, financial losses, and reputational harm.

We also face risks from reliance on third-party vendors that develop or utilize AI technologies.

These vendors may use proprietary or opaque models, limit our ability to validate or monitor AI-driven outcomes, or fail to maintain adequate controls.

Disruptions, deficiencies, or misconduct by such vendors could adversely affect our operations, compliance posture, or customer relationships.

If we are unable to effectively manage the risks associated with artificial intelligence and emerging technologies, or if these technologies fail to operate as intended, our business, financial condition, and results of operations could be materially adversely affected.

The Company may be adversely affected by changes in U.S.

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While the U.S.

Department of Treasury, the Federal Reserve, and the FDIC took steps to ensure the depositors of the failed banks in early 2023 would have access to their insured and uninsured deposits, there is no assurance that these or similar actions will restore customer confidence in the baking system, and the Company may be further impacted by concerns regarding the soundness, real or perceived, of

other financial institutions or other future bank failures or disruptions.

Any loss in client deposits or changes in the Company’s perception could increase the cost of funding, limit access to capital markets or negatively impact the Company’s overall liquidity or capitalization.

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Although the Company has policies and procedures aimed at detecting and preventing the use of its banking network for money laundering and related activities, those policies and procedures may not eliminate instances in which the Company may be used by customers to engage in illegal or improper activities.

To the extent that the Company fails to fully comply

with the applicable laws and regulations, banking agencies may have the authority to impose fines, other penalties and sanctions on the Company.

To the extent that the Company fails to fully comply with the applicable laws and regulations, banking agencies may have the authority to impose fines, other penalties and sanctions on the Company.

The Company may not be able to detect fraudulent activities fully, or on a timely basis, which could expose the Company to financial losses, reputational harm and regulatory scrutiny.

The Company is required to maintain robust internal controls, monitoring systems, and reporting mechanisms designed to prevent, detect, and address fraud committed by customers, employees, vendors, or other third parties.

Fraud related risks have become increasingly complex as digital channels expand, criminal schemes evolve, and expectations from regulators and industry stakeholders continue to rise.

Although the Company has implemented policies, procedures, and technological safeguards intended to identify and mitigate fraudulent behavior, these measures may not prevent all instances of fraud.

Fraudulent activities may be sophisticated, coordinated, or intentionally concealed, and may involve identity theft, account takeover, unauthorized transactions, misappropriation of funds, or manipulation of internal processes.

To the extent the Company fails to detect or prevent fraudulent activity, it may suffer financial losses, incur increased operational costs, face customer disputes, or experience reputational damage.

In addition, regulators may impose fines, penalties, or other sanctions if the Company’s fraud prevention controls are deemed inadequate or if the Company fails to comply with applicable laws, regulations, or supervisory expectations.

The Company’s ability to maintain its reputation is critical to the success of the business and the failure to do so may adversely impact its performance.

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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 1A. Risk Factors