UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2025
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-16197
PEAPACK-GLADSTONE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey
22-3537895
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
500 Hills Drive, Suite 300
Bedminster, New Jersey 07921-0700
(Address of principal executive offices, including zip code)
(908) 234-0700
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, no par value
PGC
The NASDAQ Stock Market, LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☐
Accelerated filer
☒
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of Common Stock outstanding as of August 1, 2025: 17,648,471
PART I FINANCIAL INFORMATION
Item 1
Financial Statements (Unaudited)
3
Consolidated Statements of Condition at June 30, 2025 and December 31, 2024
Consolidated Statements of Income for the three and six months ended June 30, 2025 and 2024
4
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2025 and 2024
5
Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2025 and 2024
6
Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024
8
Notes to Consolidated Financial Statements
9
Item 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
50
Item 3
Quantitative and Qualitative Disclosures About Market Risk
69
Item 4
Controls and Procedures
71
PART II OTHER INFORMATION
Legal Proceedings
Item 1A
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
72
Defaults Upon Senior Securities
Mine Safety Disclosures
Item 5
Other Information
Item 6
Exhibits
73
2
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands, except per share data)
(unaudited)
(audited)
June 30,
December 31,
2025
2024
ASSETS
Cash and due from banks
$
7,524
8,492
Federal funds sold
—
Interest-earning deposits
308,078
382,875
Total cash and cash equivalents
315,602
391,367
Securities available for sale
767,533
784,544
Securities held to maturity (fair value $88,079 at June 30, 2025 and $88,650 at December 31, 2024)
98,623
101,635
CRA equity security, at fair value
13,278
13,041
FHLB and FRB stock, at cost (A)
11,467
12,373
Loans held for sale, at lower of cost or fair value
5,495
8,594
Loans
5,819,037
5,512,326
Less: allowance for credit losses
81,770
72,992
Net loans
5,737,267
5,439,334
Premises and equipment
36,626
28,888
Accrued interest receivable
33,209
29,898
Bank owned life insurance
48,239
47,981
Goodwill
36,212
Other intangible assets
8,171
8,714
Finance lease right-of-use assets
914
985
Operating lease right-of-use assets
38,291
40,289
Deferred tax assets, net
14,150
16,381
Other assets
35,596
51,002
TOTAL ASSETS
7,200,673
7,011,238
LIABILITIES
Deposits:
Noninterest-bearing demand deposits
1,237,864
1,112,734
Interest-bearing deposits:
Checking
3,483,295
3,334,269
Savings
103,846
103,136
Money market accounts
1,095,665
1,078,024
Certificates of deposit - retail
440,612
483,998
Certificates of deposit - listing service
1,841
6,861
Subtotal deposits
6,363,123
6,119,022
Interest-bearing demand - brokered
10,000
Total deposits
6,129,022
Finance lease liabilities
1,268
1,348
Operating lease liabilities
41,806
43,569
Subordinated debt, net
98,933
133,561
Due to brokers
18,514
Accrued expenses and other liabilities
65,766
79,375
TOTAL LIABILITIES
6,570,896
6,405,389
SHAREHOLDERS’ EQUITY
Preferred stock (no par value; authorized 500,000 shares; liquidation preference of $1,000 per share)
Common stock (no par value; stated value $0.83 per share; authorized 42,000,000 shares; issued shares, 21,685,504 at June 30, 2025 and 21,535,856 at December 31, 2024; outstanding shares, 17,636,264 at June 30, 2025 and 17,586,616 at December 31, 2024)
18,078
17,953
Surplus
350,246
348,264
Treasury stock at cost (4,049,240 shares at June 30, 2025 and 3,949,240 shares at December 31, 2024)
(120,287
)
(117,509
Retained earnings
437,321
423,552
Accumulated other comprehensive loss, net of income tax
(55,581
(66,411
TOTAL SHAREHOLDERS’ EQUITY
629,777
605,849
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
Six Months Ended
INTEREST INCOME
Interest and fees on loans
79,657
71,645
155,004
144,176
Interest on investments:
Taxable
8,370
5,168
16,583
10,304
Interest on loans held for sale
7
15
12
Interest on interest-earning deposits
1,618
2,418
4,394
3,940
Total interest income
89,651
79,238
175,996
158,432
INTEREST EXPENSE
Interest on savings and interest-bearing deposit accounts
35,807
35,364
70,720
68,411
Interest on certificates of deposit
4,002
5,367
8,365
10,222
Interest on borrowed funds
505
381
516
3,848
Interest on finance lease liability
13
22
27
60
Interest on subordinated debt
924
1,686
2,363
3,370
Subtotal - interest expense
41,251
42,820
81,991
85,911
Interest on interest-bearing demand - brokered
110
134
210
260
Interest on certificates of deposits - brokered
1,242
2,844
Total interest expense
41,361
44,196
82,201
89,015
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
48,290
35,042
93,795
69,417
Provision for credit losses
6,586
3,911
11,057
4,538
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
41,704
31,131
82,738
64,879
OTHER INCOME
Wealth management fee income
15,943
16,419
31,378
30,826
Service charges and fees
1,194
1,345
2,306
2,667
370
328
741
831
Gain on loans held for sale at fair value (mortgage banking)
34
90
Gain on loans held for sale at lower of cost or fair value
23
Fee income related to loan level, back-to-back swaps
221
Gain on sale of SBA loans
521
449
823
849
Corporate advisory fee income
30
103
120
921
Other income
3,096
2,938
4,382
4,244
Securities gains
Fair value adjustment for CRA equity security
42
(84
237
(195
Total other income
21,451
21,555
40,305
40,256
OPERATING EXPENSES
Compensation and employee benefits
36,061
29,884
71,940
58,360
6,641
5,776
12,795
10,857
FDIC insurance expense
1,045
870
1,900
1,815
Other operating expense
8,146
6,596
14,698
12,135
Total operating expenses
51,893
43,126
101,333
83,167
INCOME BEFORE INCOME TAX EXPENSE
11,262
9,560
21,710
21,968
Income tax expense
3,321
2,030
6,174
5,807
NET INCOME
7,941
7,530
15,536
16,161
EARNINGS PER SHARE
Basic
0.45
0.42
0.88
0.91
Diluted
0.87
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
17,704,110
17,747,070
17,657,771
17,729,355
17,773,237
17,792,296
17,799,095
17,811,895
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Net income
Comprehensive income:
Unrealized gains/(losses) on available for sale securities:
Unrealized holding gains/(losses) arising during the period
4,533
(572
19,944
(7,337
Reclassification adjustment for amounts included in net income
(7
4,526
19,937
Tax effect
(1,208
153
(5,996
1,958
Net of tax
3,318
(419
13,941
(5,379
Unrealized gains/(losses) on cash flow hedges:
(1,633
(225
(4,186
2,647
451
62
1,075
(732
(1,182
(163
(3,111
1,915
Total other comprehensive income/(loss)
2,136
(582
10,830
(3,464
Total comprehensive income
10,077
6,948
26,366
12,697
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in thousands, except per share amounts)
Three Months Ended June 30, 2025 and June 30, 2024
Accumulated
Other
Total
(In thousands, except share and
Preferred
Common
Treasury
Retained
Comprehensive
Shareholders'
per share data)
Stock
Earnings
Loss
Equity
Balance at April 1, 2025 17,726,251 common shares outstanding
18,070
348,762
430,267
(57,717
621,873
Other comprehensive income
Restricted stock units issued, 605 shares
1
(1
Restricted stock units repurchased on vesting to pay taxes, (285) shares
(8
Amortization of restricted stock units
1,215
Cash dividends declared on common stock ($0.05 per share)
(887
Share repurchase, (100,000) shares
(2,778
Issuance of shares for Employee Stock Purchase Plan, 9,693 shares
277
285
Balance at June 30, 2025 17,636,264 common shares outstanding
Balance at April 1, 2024 17,761,538 common shares outstanding
17,932
343,111
(112,742
401,838
(67,760
582,379
Other comprehensive loss
Restricted stock units repurchased on vesting to pay taxes, (267) shares
(6
1,289
Modification of restricted stock units distributed in cash
662
(2,175
Issuance of shares for Employee Stock Purchase Plan, 4,614 shares
109
113
Balance at June 30, 2024 17,666,490 common shares outstanding
17,936
345,164
(114,917
408,481
(68,342
588,322
Six Months Ended June 30, 2025 and June 30, 2024
Balance at January 1, 2025 17,586,616 common shares outstanding
Restricted stock units issued, 175,124 shares
147
(147
Restricted stock units repurchased on vesting to pay taxes, (42,284) shares
(36
(1,213
(1,249
2,846
Cash dividends declared on common stock ($0.10 per share)
(1,767
Issuance of shares for Employee Stock Purchase Plan, 16,808 shares
14
496
510
Balance at January 1, 2024 17,739,677 common shares outstanding
17,831
346,954
(110,320
394,094
(64,878
583,681
Restricted stock units issued, 147,679 shares
123
(123
Restricted stock units repurchased on vesting to pay taxes, (36,625) shares
(31
(846
(877
3,138
(4,336
(1,774
Share repurchase, (200,000) shares
(4,597
Issuance of shares for Employee Stock Purchase Plan, 15,759 shares
377
390
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
1,921
1,855
Amortization of premium and accretion of discount on securities, net
(59
174
Amortization of restricted stock
Amortization of intangible assets
543
544
Amortization of subordinated debt costs
372
143
Deferred tax benefit
(2,691
(7,723
Stock-based compensation and employee stock purchase plan expense
95
75
Fair value adjustment for equity security
(237
195
Gain on securities available for sale
Loans originated for sale (A)
(13,423
(13,660
Proceeds from sales of loans held for sale (A)
17,435
18,128
Gain on loans held for sale (A)
(913
(939
(23
Loss on disposal of fixed assets
Increase in cash surrender value of life insurance, net
(258
(135
Increase in accrued interest receivable
(3,311
(2,858
Decrease/(increase) in other assets
3,117
(31,520
(Decrease)/increase in accrued expenses and other liabilities
(23,959
31,864
NET CASH PROVIDED BY OPERATING ACTIVITIES
8,070
19,961
INVESTING ACTIVITIES:
Principal repayments, maturities and calls of securities available for sale
348,176
312,459
Principal repayments, maturities and calls of securities held to maturity
2,971
2,701
Redemptions of FHLB and FRB stock
22,212
59,579
Proceeds from sales of securities available for sale
53,182
Purchase of securities available for sale
(364,303
(351,215
Purchase of FHLB and FRB stock
(21,306
(41,013
Proceeds from sales of loans held for sale at lower of cost or fair value
Net (increase)/decrease in loans, net of participations sold
(308,990
160,853
Purchase of premises and equipment
(9,610
(2,390
Disposal of premises and equipment
16
NET CASH (USED IN)/PROVIDED BY INVESTING ACTIVITIES
(277,652
141,013
FINANCING ACTIVITIES:
Net increase in deposits
234,101
382,092
Net decrease in short-term borrowings
(403,814
Dividends paid on common stock
Restricted stock repurchased on vesting to pay taxes
Repayment of subordinated debt
(35,000
Issuance of shares for employee stock purchase plan
Shares repurchased
NET CASH PROVIDED BY/(USED IN) FINANCING ACTIVITIES
193,817
(32,916
Net (decrease)/increase in cash and cash equivalents
(75,765
128,058
Cash and cash equivalents at beginning of period
187,671
Cash and cash equivalents at end of period
315,729
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest
83,295
80,605
Income tax, net
8,412
1,251
Security purchases due from broker
9,981
Right-of-use asset obtained in exchange for operating lease liabilities
365
28,321
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Certain information and footnote disclosures normally included in the audited consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2024 for Peapack-Gladstone Financial Corporation (the “Corporation” or the “Company”). In the opinion of Management of the Corporation, the accompanying unaudited consolidated interim financial statements contain all adjustments (consisting solely of normal and recurring accruals) necessary to present fairly the financial position as of June 30, 2025, and the results of operations, comprehensive income and changes in shareholders’ equity for the three and six months ended June 30, 2025 and 2024. The cash flow statements are presented for the six months ended June 30, 2025 and 2024. The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the full year or for any future period.
Principles of Consolidation and Organization: The consolidated financial statements of the Company are prepared on the accrual basis and include the accounts of the Company and its wholly-owned subsidiary, Peapack Private Bank & Trust (the “Bank”). The consolidated financial statements also include the Bank’s wholly-owned subsidiaries:
While the following notes to the consolidated financial statements include the consolidated results of the Company, the Bank and their subsidiaries, these notes primarily reflect the Bank’s and its subsidiaries’ activities. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements.
Basis of Financial Statement Presentation: The consolidated financial statements have been prepared in accordance with GAAP. In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the statement of condition and revenues and expenses for the periods presented. Actual results could differ from those estimates.
Segment Information: The Company's reportable segments are determined by the Chief Financial Officer, who is the designated Chief Operating Decision Maker ("CODM"), based upon information provided about the Company's products and services offered, primarily distinguished between banking and wealth management services provided by the Bank's Wealth Management Division. The Company's business segments are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business. The CODM evaluates the financial performance of the Company's business segments such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees. Segment pretax profit or loss is used to assess the performance of the banking segment by monitoring the spread between interest income and interest expense. Segment pretax profit or loss is used to assess the performance of the Wealth Management Division by monitoring wealth management fee income and assets under management and/or administration ("AUM"). Loans, investments and deposits primarily provide the revenues in the banking operation and wealth management fee income provides the revenues for the Wealth Management Division. Interest expense, provision for credit losses, payroll and premises and equipment provide the significant expenses in the banking segment, while payroll, occupancy and trust expenses are the significant expenses in the Wealth Management Division. All operations are domestic.
The Banking segment includes: commercial (including commercial and industrial (“C&I”) and equipment financing), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services; and customer support sales.
The Wealth Management Division includes: investment management services for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian; and other financial planning and advisory services. This segment also includes the activity from the Delaware subsidiary, PGB Trust & Investments of Delaware. The majority of wealth management fees are collected on a monthly or quarterly basis and are calculated on either a fixed or tiered fee schedule, based upon the market value of AUMs. Other non AUM-based revenues such as personal or fiduciary tax return preparation fees, executor fees, trust termination fees and/or financial planning and advisory fees are charged as services are rendered.
Cash and Cash Equivalents: For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-earning deposits and federal funds sold. Generally, federal funds are sold for one-day periods. Cash equivalents are of original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions and short-term borrowings with original maturities of 90 days or less.
Interest-Earning Deposits in Other Financial Institutions: Interest-earning deposits in other financial institutions mature within one year and are carried at cost.
Securities: Under Accounting Standards Update ("ASU") 2016-13, debt securities available-for-sale are measured at fair value and subject to impairment testing. When an available for sale debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, (1) recognize a charge to earnings for the credit-related component (if any) of the decline in fair value, and (2) recognize in other comprehensive income (loss) any non-credit related components of the fair value change. If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.
Debt securities are classified as held to maturity and carried at amortized cost when Management has the positive intent and ability to hold them to maturity. Under ASU 2016-13, held-to-maturity securities in a loss position are evaluated to determine if the decline in fair value has resulted from a credit-related loss or other factors, and then recognize a charge to earnings for the decline in fair value. The Company also has an investment in a Community Reinvestment Act (“CRA”) investment fund, which is classified as an equity security.
Interest income includes amortization of purchase premiums and discounts. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated, and premiums on callable debt securities, which are amortized to the earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.
Federal Home Loan Bank ("FHLB") and Federal Reserve Bank ("FRB") Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock, based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Cash and stock dividends are reported as income.
The Bank is also a member of the Federal Reserve Bank of New York and required to own a certain amount of FRB stock. FRB stock is carried at cost and classified as a restricted security. Cash and stock dividends are reported as income.
Loans Held for Sale: Mortgage loans originated with the intent to sell in the secondary market are carried at fair value, as determined by outstanding commitments from investors.
Mortgage loans held for sale are generally sold with servicing rights released; therefore, no servicing rights are recorded. Gains and losses on sales of mortgage loans, shown as gain on loans held for sale at fair value (mortgage loans) on the Statement of Income, are based on the difference between the selling price and the carrying value of the related loan sold.
SBA loans originated with the intent to sell in the secondary market are carried at the lower of cost or fair value. SBA loans are generally sold with the servicing rights retained. Gains and losses on the sale of SBA loans are based on the difference between the selling price and the carrying value of the related loan sold. Total SBA loans serviced totaled $140.8 million and $139.4 million as of June 30, 2025 and December 31, 2024, respectively. SBA loans held for sale totaled $5.9 million and $9.3 million at June 30, 2025 and December 31, 2024, respectively. The servicing asset recorded was not material.
Loans originated with the intent to hold and subsequently transferred to loans held for sale are carried at the lower of cost or fair value. These are loans that the Company no longer has the intent to hold for the foreseeable future.
10
Loans: Loans that Management has the intent and ability to hold for the foreseeable future or until maturity are stated at the principal amount outstanding. Interest on loans is recognized based upon the principal amount outstanding. Loans are stated at face value, less purchased premium and discounts and net deferred fees. Loan origination fees and certain direct loan origination costs are deferred and recognized on a level-yield method over the life of the loan as an adjustment to the loan’s yield. The definition of recorded investment in loans includes accrued interest receivable and deferred fees/costs, however, for the Company’s loan disclosures, accrued interest and deferred fees/costs were excluded as the impact was not material.
Loans are considered past due when they are not paid within 30 days in accordance with contractual terms. The accrual of income on loans, including individually evaluated loans, is discontinued if, in the opinion of Management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement, or when principal or interest is past due 90 days unless the asset is both well secured and in the process of collection. All interest accrued but not received for loans placed on nonaccrual status are reversed against interest income. Payments received on nonaccrual loans are recorded as principal payments. A nonaccrual loan is returned to accrual status only when interest and principal payments are brought current and future payments are reasonably assured, generally when the Bank receives contractual payments for a minimum of six consecutive months. Commercial loans are generally charged off, in whole or in part, after an analysis is completed which indicates that collectability of the full principal balance is in doubt. Consumer closed-end loans are generally charged off after they become 120 days past due and open-end loans after 180 days. Subsequent payments are credited to income only if collection of principal is not in doubt. If principal and interest payments are brought contractually current and future collectability is reasonably assured, loans may be returned to accrual status. Nonaccrual mortgage loans are generally charged off to the extent that the value of the underlying collateral does not cover the outstanding principal balance. The majority of the Company’s loans are secured by real estate in New Jersey, metropolitan New York and, to a lesser extent, Pennsylvania.
Allowance for Credit Losses: Current expected credit losses ("CECL") methodology for determining the allowance for credit losses ("ACL") requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts.
The ACL on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The ACL is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss for unfunded commitments incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Statements of Condition. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.
ACL in accordance with CECL methodology
With respect to pools of similar loans that are collectively evaluated, an appropriate level of general allowance is determined by portfolio segment using a non-linear discounted cash flow (“DCF”) model. The DCF model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including, but not limited to unemployment rates and national consumer price and confidence indices. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include: levels of and trends in delinquencies and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. The ACL results in two forms of allocations, specific and general. These two components represent the total ACL deemed adequate to cover current expected credit losses in the loan portfolio.
When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the ACL based on the fair value of collateral. The ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan's
11
collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.
The CECL methodology requires a significant amount of management judgment in determining the appropriate ACL. Several of the steps in the methodology are subjective, including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and may change from period to period. Although the ACL is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses.
In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified:
Primary Residential Mortgages. The Bank originates one to four family residential mortgage loans in the Tri-State area (which is comprised of New York, New Jersey and Connecticut), Pennsylvania and Florida. Loans are secured by first liens on the primary residence or investment property. Primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.
Junior Lien Loan on Residence (which include home equity lines of credit). The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit secured by one to four family properties in the Tri-State area. These loans are subordinate to a first mortgage, which may be from another lending institution. Primary risk characteristics associated with JLLs and home equity lines of credit typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, home equity lines of credit typically are made with variable or floating interest rates, which could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.
Multifamily. The Bank provides mortgage loans for multifamily properties (i.e., buildings which have five or more residential units). Multifamily loans are expected to be repaid from the cash flows of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates, other changes in general economic conditions or changes in rent regulation can have an impact on the borrower and its ability to repay the loan.
Owner-Occupied Commercial Real Estate Loans. The Bank provides mortgage loans for owner-occupied commercial real estate properties in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are mixed use as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.
Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Non-owner-occupied properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered mixed use. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.
Commercial and Industrial Loans. The Bank provides lines of credit and term loans to operating companies for business purposes. The loans are generally secured by business assets such as accounts receivable, inventory, business vehicles and equipment as well as the stock of a company, if privately held. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk
characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business’ profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. To mitigate the risk characteristics of commercial and industrial loans, these loans often include commercial real estate as collateral and the Bank will often require more frequent reporting requirements from the borrower in order to better monitor its business performance. However, the ability of the Bank to foreclose and realize sufficient value from the assets is often highly uncertain.
Leasing Finance. PCC offers a range of finance solutions nationally. PCC provides term loans and leases secured by assets financed for U.S. based mid-size and large companies. Facilities tend to be fully drawn under fixed-rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.
Asset risk in PCC’s portfolio is generally recognized through changes to loan income, or through changes to lease-related income streams due to fluctuations in lease rates. Changes to lease income can occur when the existing lease contract expires, the asset comes off lease or the business seeks to enter a new lease agreement. Asset risk may also change through depreciation, resulting from changes in the residual value of the operating lease asset or through impairment of the asset carrying value, which can occur at any time during the life of the asset.
Credit risk in PCC’s portfolio generally results from the potential default of borrowers or lessees, which may be driven by customer specific or broader industry-related conditions. Credit losses can impact multiple parts of the income statement including loss of interest/lease/rental income and/or higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets.
Construction. The Bank provides commercial construction loans for properties located in the Tri-state area. Risks common to commercial construction loans are cost overruns, inaccurate estimates of the period of construction, changes in market demand for property, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.
Consumer and Other. These are loans to individuals for household, family and other personal expenditures as well as obligations of states and political subdivisions in the U.S. This also represents all other loans that cannot be categorized in any of the previous mentioned loan segments. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral.
Loan Modifications: The Company will provide modifications, which may include other than insignificant delays in payment of amounts due, extension of the terms of the notes or reduction in the interest rates on the notes. In certain instances, the Company may grant more than one type of modification. Loan modifications are disclosed in accordance with ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures".
Leases: At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding right-of-use (“ROU”) asset and operating lease liability are recorded as separate line items on the statement of condition. An ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made.
If the rate implicit in the lease is not readily determinable, the incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s statement of condition, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. The Company maintains certain property and equipment under direct financing and operating leases. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space and are classified as operating leases.
The ROU asset is measured at the amount of the lease liability adjusted for lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment
of the ROU asset. Operating lease expense consists of a single lease cost allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the ROU asset.
There are no terms or conditions related to residual value guarantees and no restrictions or covenants that would impact the Company’s ability to pay dividends or to incur additional financial obligations.
Derivatives: At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”); or (3) an instrument with no hedging designation. For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For cash flow hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the statement of condition, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flows statement the same as the cash flows of the items being hedged.
The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the statement of condition or to specific firm commitments or forecasted transactions. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.
When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.
The Company also offers facility specific / loan level swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a financial institution / swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions. The Company is exposed to losses if a customer counterparty fails to make its payments under a contract in which the Company is in a net receiving position. At this time, the Company anticipates that its counterparties will be able to fully satisfy their obligations under the agreements. All of the contracts to which the Company is a party settle monthly. Further, the Company has netting agreements with the dealers with which it does business.
Stock-Based Compensation: The Company’s 2025 Long-Term Stock Incentive Plan allows the granting of shares of the Company’s common stock as incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to directors, officers and employees of the Company and its subsidiaries. There are no shares remaining for issuance with respect to the Company's 2021 Long-Term Stock Incentive Plan.
Options granted are, in general, exercisable not earlier than one year after the date of grant, at a price equal to the fair value of common stock on the date of grant and expire not more than ten years after the date of grant. Stock options may vest during a period of up to five years after the date of grant. The Company has a policy of using authorized but unissued shares to satisfy option exercises.
Upon adoption of ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” the Company elected to account for forfeitures as they occur, rather than estimate expected forfeitures.
There were no stock options granted during the three or six months ended June 30, 2025.
As of June 30, 2025, there was no unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Company's stock incentive plans.
The Company issued performance-based and service-based restricted stock units in 2025 and 2024. Service-based units vest ratably over a three- or five-year period. There were 88,101 service-based restricted stock units granted under the 2021 Long-Term Stock Incentive Plan during the first six months of 2025.
The performance-based awards are dependent upon the Company meeting certain performance criteria and, to the extent the performance criteria are met, will cliff vest at the end of the performance period, which is generally three years. There were 66,252 performance-based restricted stock units granted under the 2021 Long-Term Stock Incentive Plan in the first six months of 2025, all of which were granted in the first three months of 2025.
Changes in non-vested shares dependent on performance criteria for the six months ended June 30, 2025 were as follows:
Weighted
Average
Number of
Grant Date
Shares
Fair Value
Balance, January 1, 2025
135,477
33.35
Granted during 2025
66,252
29.55
Vested during 2025
(65,515
36.80
Forfeited during 2025
(2,278
30.96
Balance, June 30, 2025
133,936
30.37
Changes in service-based restricted stock awards/units for the six months ended June 30, 2025 were as follows:
247,905
33.00
88,101
(109,609
33.51
(8,665
32.51
217,732
31.36
As of June 30, 2025, there was $7.1 million of total unrecognized compensation cost related to service-based and performance-based restricted stock units. That cost is expected to be recognized over a weighted average period of 1.96 years. Stock compensation expense recorded for the second quarters of 2025 and 2024 totaled $2.4 million and $3.2 million, respectively. Stock compensation expense recorded for the six months ended June 30, 2025 and 2024 totaled $5.8 million and $5.9 million, respectively.
Phantom Plan: During the first quarter of 2024, the Company adopted the Peapack-Gladstone Financial Corporation 2024 Phantom Stock Plan (the "Phantom Plan"). The Phantom Plan allows the Company to issue performance-based and service-based awards which will be settled in cash. The award of a phantom unit entitles the participant to a cash payment equal to the value of the unit on the vesting date, which is the fair market value of a common share of the Company's stock on such vesting date.
The Company did not issue performance-based phantom units in the first six months of 2025. The Company issued service-based phantom units in the first six months of 2025. Service-based phantom units vest ratably over a three-year period. There were 146,039 service-based phantom units granted under the Phantom Plan during the first six months of 2025.
Phantom units are recorded in compensation and employee benefits expense based on the fair value of the units on the balance sheet date. The fair value of these awards is updated at each balance sheet date and changes in the fair value of the vested portions of the awards are recorded as increases or decreases to compensation expense within compensation and employee benefits in the
Consolidated Statements of Income. All of the outstanding phantom units at June 30, 2025 met the criteria to be treated under liability classification in accordance with ASC 718, given that these awards will settle in cash on the vesting date.
Compensation expense for the phantom units is based on the fair value of the units as of the balance sheet date as further discussed above, and such costs are recognized ratably over the service period of the awards. As the fair value of liability awards is required to be re-measured each period end, stock compensation expense amounts recognized in future periods for these awards will vary. The estimated future cash payments of these awards are presented as liabilities within "Accrued expenses and other liabilities" in the Consolidated Statement of Condition. As of June 30, 2025, there was $9.4 million of unrecognized compensation costs related to non-vested phantom units. That cost is expected to be recognized over a weighted average period of 2.10 years.
Employee Stock Purchase Plan (“ESPP”): The 2014 ESPP expired in April 2024 and was replaced by the 2024 ESPP, which was approved by shareholders on April 30, 2024 and allowed for the issuance of 150,000 shares.
The ESPP allows for the purchase of shares during four three-month Offering Periods of each calendar year. The Offering Periods end on March 31, June 30, September 30 and December 31 of each calendar year.
Each participant in the Offering Period is granted an option to purchase a number of shares and may contribute between one percent and 15 percent of their compensation. At the end of each Offering Period, the number of shares to be purchased by the employee is determined by dividing the employee’s contributions accumulated during the Offering Period by the applicable purchase price. The purchase price is an amount equal to 85 percent of the closing market price of a share of common stock on the purchase date. Participation in the ESPP is voluntary and employees can cancel their purchases at any time during the period without penalty. The fair value of each share purchase right is determined using the Black-Scholes option pricing model.
The Company recorded $56,000 and $43,000 in compensation and employee benefits expense for the three months ended June 30, 2025 and 2024, respectively, related to the ESPP. Total shares issued under the ESPP during the first quarter ended June 30, 2025 and 2024 were 9,693 and 4,614, respectively.
For the six months ended June 30, 2025 and 2024, the Company recorded $95,000 and $75,000 in compensation and employee benefits expense, respectively, related to the ESPP. Total shares issued under the ESPP during the first six months ended June 30, 2025 and 2024 were 16,808 and 15,759, respectively.
Earnings per share – Basic and Diluted: The following is a reconciliation of the calculation of basic and diluted earnings per share. Basic net income per share is calculated by dividing net income available to shareholders by the weighted average shares outstanding during the reporting period. Diluted net income per share is computed similarly to that of basic net income per share, except that the denominator is increased to include the number of additional shares that would have been outstanding utilizing the Treasury Stock Method if all shares underlying potentially dilutive stock options were issued and all shares of restricted stock, stock warrants or restricted stock units were to vest during the reporting period.
Net income available to common shareholders
Basic weighted average shares outstanding
Plus: common stock equivalents
69,127
45,226
141,324
82,540
Diluted weighted average shares outstanding
Net income per share
For the three months ended June 30, 2025 and 2024, restricted stock units totaling 186,691 and 250,510, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive. For the six months ended June 30, 2025 and 2024, restricted stock units totaling 71,791 and 277,945, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.
Income Taxes: The Company files a consolidated Federal income tax return. Separate state income tax returns are filed for each subsidiary based on current laws and regulations.
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on the enacted tax rates. Such tax assets and liabilities are adjusted for the effect of a change in tax rates in the period of enactment.
The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
The Company is no longer subject to examination by the U.S. Federal tax authorities for years prior to 2021 or by New Jersey tax authorities for years prior to 2019.
The Company recognizes interest and/or penalties related to income tax matters in income tax expense.
Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.
Restrictions on Cash: Cash on hand or on deposit with the Federal Reserve Bank of New York was required to meet regulatory reserve and clearing requirements.
Comprehensive Income: Comprehensive income consists of net income and the change during the period in the Company’s net unrealized gains or losses on securities available for sale and unrealized gains and losses on cash flow hedge, net of tax, less adjustments for realized gains and losses.
Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
Goodwill and Other Intangible Assets: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree (if any), over the fair value of any net assets acquired and liabilities assumed as of the date of acquisition in a purchase business combination. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Goodwill was primarily attributable to the Bank’s wealth management acquisitions. Management monitors the impact of changes in the financial markets and includes these assessments in our impairment process.
The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill, which includes assembled workforce has an indefinite life on our statement of financial condition.
Other intangible assets, which primarily consist of customer relationship intangible assets arising from acquisitions, are amortized on an accelerated basis over their estimated useful lives, which range from 5 to 15 years.
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2. INVESTMENT SECURITIES
A summary of amortized cost and approximate fair value of investment securities available for sale and held to maturity included in the Consolidated Statements of Condition as of June 30, 2025 and December 31, 2024 follows:
June 30, 2025
Gross
Allowance
Amortized
Unrealized
for
Fair
(In thousands)
Cost
Gains
Losses
Credit Losses
Value
Securities Available for Sale:
U.S government-sponsored agencies
244,823
(39,420
205,403
Mortgage-backed securities–residential
565,416
3,716
(40,409
528,723
SBA pool securities
21,187
(2,524
18,663
Corporate bond
15,500
141
(897
14,744
Total securities available for sale
846,926
3,857
(83,250
Securities Held to Maturity:
U.S. government-sponsored agencies
40,000
(1,738
38,262
58,623
(8,806
49,817
Total securities held to maturity
(10,544
88,079
December 31, 2024
244,813
(47,899
196,914
595,789
1,086
(48,263
548,612
27,772
(3,290
24,482
105
(1,069
14,536
883,874
1,191
(100,521
(2,666
37,334
61,635
(10,319
51,316
(12,985
88,650
The following table presents a summary of the gross gains, gross losses and net tax expense related to proceeds on sales of securities available for sale for the three and six months ended June 30, 2025. There were no sales of securities for the three and six months ended June 30, 2024.
Proceeds from sales
Gross gains
Net tax expense
(2
18
The following tables present the Company’s available for sale and held to maturity securities with continuous unrealized losses and the approximate fair value of these investments as of June 30, 2025 and December 31, 2024.
Duration of Unrealized Loss
Less Than 12 Months
12 Months or Longer
Approximate
Mortgage-backed securities residential
18,288
(206
206,109
(40,203
224,397
313
18,350
(2,523
9,103
18,601
(207
438,965
(83,043
457,566
Total securities
527,044
(93,587
545,645
(93,794
171,531
(2,063
216,735
(46,200
388,266
4,861
(11
19,621
(3,279
8,931
176,392
(2,074
442,201
(98,447
618,593
530,851
(111,432
707,243
(113,506
Available for sale and held to maturity securities with a carrying value of $573.1 million and $96.6 million as of June 30, 2025, respectively, were pledged to secure public funds and for other purposes required or permitted by law.
Available for sale and held to maturity securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the Consolidated Statements of Income when management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of securities currently in a continuous loss position continue to make timely principal and interest payments and none of these securities were past due or were placed on nonaccrual status at June 30, 2025. Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely given the lack of historical credit losses and governmental backing. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. Therefore, no allowance for credit losses was recorded for the three or six months ended June 30, 2025 or 2024, respectively.
The Company has an investment in a CRA investment fund with a fair value of $13.3 million at June 30, 2025. This investment is classified as an equity security on our Consolidated Statements of Condition. This security had a gain of $42,000 and $237,000 for the three and six months ended June 30, 2025. This amount was included in the fair value adjustment for CRA equity security on the Consolidated Statements of Income.
19
3. LOANS AND LEASES
Loans outstanding, excluding those held for sale, by general ledger classification, as of June 30, 2025 and December 31, 2024, consisted of the following:
% of
Totals
Residential mortgage
649,703
11.16
%
614,840
11.15
Multifamily mortgage
1,794,854
30.84
1,799,754
32.65
Commercial mortgage
643,520
11.06
588,104
10.67
Commercial loans (including equipment financing)
2,537,597
43.61
2,389,105
43.34
Commercial construction
Home equity lines of credit
52,434
0.90
42,327
0.77
Consumer loans, including fixed rate home equity loans
140,668
2.42
77,785
1.41
Other loans
261
0.01
411
Total loans
100.00
In determining an appropriate amount for the allowance, the Bank segments and aggregated the loan portfolio based on common characteristics. The following pool segments identified as of June 30, 2025 and December 31, 2024 are based on the CECL methodology:
Primary residential mortgage
636,253
10.94
609,038
11.05
Junior lien loan on residence
55,050
0.95
45,307
0.82
Multifamily property
30.86
32.66
Owner-occupied commercial real estate
264,095
4.54
275,089
4.99
Investment commercial real estate
1,001,995
17.22
978,436
17.75
Commercial and industrial
1,630,826
28.04
1,489,466
27.03
Lease financing
273,030
4.69
222,497
4.04
Construction
17,928
0.31
11,204
0.20
Consumer and other
142,730
2.45
80,165
1.46
5,816,761
5,510,956
Net deferred costs
2,276
1,370
Total loans including net deferred costs
The following tables present the recorded investment in nonaccrual and loans past due 90 days or over still on accrual by class of loans as of June 30, 2025 and December 31, 2024:
Nonaccrual
Loans Past Due
With No
90 Days or Over
And Still
for Credit Loss
Accruing Interest
3,295
111
19,341
55,978
9,691
11,621
17,731
42,909
244
1,044
50,413
114,958
20
3,168
92
15,294
53,105
9,754
11,684
5,394
30,881
434
1,234
34,140
100,168
The following tables present the aging of the recorded investment in past due loans as of June 30, 2025 and December 31, 2024 by class of loans, excluding nonaccrual loans:
30-59
60-89
90 Days or
Days
Greater
Past Due
287
842
1,129
3,623
8,303
11,926
284
317
1,866
2,183
4,511
11,011
15,522
1,143
199
1,342
Junior lien on residence
1,696
1,809
3,505
2,839
2,031
4,870
Credit Quality Indicators:
The Company places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten and then annually based on set criteria in the loan policy.
In addition, the Bank has engaged an independent loan review firm to validate risk ratings and to ensure compliance with our policies and procedures. This review of the following types of loans is performed quarterly:
21
The review excludes borrowers with commitments of less than $500,000.
The Company uses the following regulatory definitions for criticized and classified risk ratings:
Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.
Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values.
Loans not meeting the criteria above that are analyzed individually as part of the above-described process are considered to be pass-rated loans.
With the adoption of CECL, loans that are in the process of or expected to be in foreclosure are deemed to be collateral dependent with respect to measuring potential loss and allowance adequacy and are individually evaluated by Management. Loans that do not share common risk characteristics are also evaluated on an individual basis. All other loans are evaluated using a non-linear discounted cash flow methodology for measuring potential loss and allowance adequacy.
The following is a summary of the credit risk profile of loans by internally assigned grade as of June 30, 2025 and December 31, 2024 based on originations for the periods indicated; the years represent the year of origination for non-revolving loans:
Grade as of June 30, 2025 for Loans Originated During
2020
Revolving-
2023
2022
2021
and Prior
Revolving
Term
Primary residential mortgage:
Pass
55,733
72,875
86,490
106,144
69,733
235,685
5,630
632,290
Special mention
Substandard
1,366
2,505
3,963
Doubtful
Total primary residential mortgages
87,856
106,236
238,190
Current period gross charge-offs
Junior lien loan on residence:
669
1,039
836
46,346
5,976
54,938
112
Total junior lien loan on residence
46,457
5,977
Multifamily property:
80,125
25,487
51,309
410,982
589,893
495,747
735
44,752
1,699,030
12,029
8,997
32,952
11,794
12,008
39,070
62,872
Total multifamily property
434,805
613,827
543,814
Owner-occupied commercial real estate:
26,012
32,268
4,125
21,312
43,711
107,943
16,760
10,150
262,281
500
1,314
Total owner-occupied commercial real estate
109,257
17,260
Investment commercial real estate:
67,721
43,211
117,098
144,780
92,257
429,405
22,310
38,935
955,717
22,316
12,341
34,657
1,930
Total investment commercial real estate
176,787
443,676
Commercial and industrial:
172,894
369,914
100,761
120,075
112,731
21,416
630,059
19,322
1,547,172
1,284
8,281
1,043
4,936
3,254
18,798
10,271
1,886
19,039
52
6,368
18,488
8,752
64,856
Total commercial and industrial
380,185
103,931
139,114
121,064
28,827
653,483
31,328
1,858
446
45
2,349
Lease financing:
80,020
42,818
40,307
34,388
42,706
31,746
271,985
801
Total lease financing
41,108
31,990
24
Construction:
Total commercial construction loans
Consumer and other loans:
77,924
13,117
179
2,863
45,915
2,732
Total consumer and other loans
31
Total:
560,429
599,690
400,759
838,720
951,282
1,325,641
780,053
127,497
5,584,071
34,345
20,207
22,381
5,436
86,907
4,053
40,616
12,060
51,431
18,599
8,753
145,783
Total Loans
609,961
406,096
913,681
983,549
1,399,453
804,088
139,504
Total Current Period Gross Charge-offs
49
2,380
25
Grade as of December 31, 2024 for Loans Originated During
2019
73,532
90,214
109,903
73,777
53,434
198,266
405
5,663
605,194
93
442
2,234
3,844
91,289
109,996
53,876
200,500
43
1,357
2,468
1,874
419
55
2,409
30,792
5,841
45,215
91
30,883
5,842
29,275
51,583
456,162
602,288
117,288
414,192
1,950
43,488
1,716,226
11,961
7,719
19,680
13,366
7,195
43,287
63,848
469,528
621,444
465,198
2,088
3,291
5,379
32,693
7,662
24,802
43,469
18,970
126,666
14,647
3,707
272,616
1,148
1,325
44,617
127,991
39,906
123,864
169,645
136,994
55,551
371,046
18,473
38,620
954,099
12,653
179,399
385,629
425,315
127,304
133,067
132,237
10,760
33,985
537,844
12,554
1,413,066
12,205
187
435
13,037
10,307
4,352
19,252
2,040
4,417
12,484
10,448
63,352
435,622
131,866
152,319
144,494
12,800
38,589
550,328
23,448
241
345
46,585
43,887
38,297
47,659
23,711
21,124
221,263
800
44,687
21,558
26
31,687
100
4,943
3,265
4,009
33,194
2,843
80,161
33,198
36
39
680,350
447,082
938,693
1,040,108
279,889
1,171,697
648,509
112,716
5,319,044
25,314
20,559
46,518
6,227
42,465
7,247
2,482
53,627
12,579
10,449
145,383
690,657
453,519
981,158
1,072,669
282,371
1,245,883
661,088
123,611
3,294
47
5,806
At June 30, 2025, $115.0 million of substandard loans were individually evaluated, compared to $99.8 million at December 31, 2024. The increase in individually evaluated substandard loans was primarily due to two commercial and industrial relationships totaling $14.5 million and one multifamily loan totaling $4.8 million during the first six months of 2025. The increase in special mention loans was primarily due to increases of $21.0 million in multifamily, $22.3 million in investment commercial real estate and $6.9 million in C&I loans during the first six months of 2025.
Loan Modifications:
The Company will provide modifications, which may include other than insignificant delays in payment of amounts due, extension of the terms of the notes or reduction in the interest rates on the notes. In certain instances, the Company may grant more than one type of modification. All accruing modified loans were paying in accordance with their modified terms as of June 30, 2025. The Company has not committed to lend additional amounts as of June 30, 2025 to customers with outstanding loans that are classified as modified loans.
There were loan modifications made during the first six months of 2025, which included twenty multifamily loans, one primary residential mortgage, and commercial and industrial loans to five different borrowers of $100.5 million, $289,000 and $11.3 million, respectively.
The following tables provide information related to the modifications completed during the three months ended June 30, 2025 by pool segment and type of concession granted:
Significant Payment Delay
Three Months Ended June 30, 2025
% of Total
Class of
Cost Basis
Financing
at Period End
Receivable
38,563
2.15
Combination Int Rate Reduction
and Significant Payment Delay
41,432
2.31
41,524
2.32
Combination Interest Rate Reduction
Significant Payment Delay & Term Extension
2,889
0.16
The following tables provide information related to the modifications completed during the six months ended June 30, 2025 by pool segment and type of concession granted:
Six Months Ended June 30, 2025
289
0.05
46,866
2.61
10,774
0.66
57,929
3.32
50,739
2.83
50,831
2.84
28
Combination Significant Payment
Delay and Term Extension
416
0.03
The following table provides information related to the modifications during the three months ended June 30, 2024 by pool segment and type of concession granted:
Three Months Ended June 30, 2024
119
0.02
14,539
1.17
14,658
1.19
The following table provides information related to the modifications during the six months ended June 30, 2024 by pool segment and type of concession granted:
Interest Rate Reduction and
Term Extension
Six Months Ended June 30, 2024
12,250
0.98
29
The following table depicts the payment status of the loans that were modified to a borrower experiencing financial difficulties as of June 30, 2025:
Payment Status at June 30, 2025
30-89 Days
90+ Days
Current
804
92,190
17,753
13,466
9,545
7,919
124,213
17,960
The following table depicts the payment status of the loans that were modified to a borrower experiencing financial difficulties as of June 30, 2024:
Payment Status at June 30, 2024
26,788
248
26,907
The following table presents loans by class modified that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at June 30, 2025:
Amortized Cost Basis of Modified Loans
That Subsequently Defaulted
Interest Rate Reduction &
Significant Pay Delay
and Term Extension
9,307
6,742
18,652
24,495
The following table presents loans by class modified that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at June 30, 2024:
Significant
Pay Delay
Rate Reduction
4. ALLOWANCE FOR CREDIT LOSSES
The ACL on loans held for investment is the combination of the allowance for credit losses and the reserve for unfunded loan commitments. The ACL is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss for unfunded commitments incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable economic forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.
The Company does not estimate expected credit losses on accrued interest receivable (“AIR”) on loans, as AIR is reversed or written off when the full collection of the AIR related to a loan becomes doubtful. AIR on loans totaled $29.7 million at June 30, 2025 and $26.2 million at December 31, 2024.
The following tables present the loan balances by segment, and the corresponding balances in the allowance as of June 30, 2025 and December 31, 2024. The allowance was based on the CECL methodology.
Ending ACL
Attributable
To
Individually
To Loans
Evaluated
Collectively
Ending
ACL
632,958
4,828
54,939
209
7,083
1,738,876
11,443
18,526
1,077
990,374
11,449
12,526
11,920
1,587,917
25,625
37,545
121
271,986
2,083
2,204
190
Consumer and other loans
2,488
Total ACL
20,201
5,701,803
61,569
2,779
606,259
4,398
180
5,149
1,746,649
12,504
17,653
3,208
966,752
10,950
11,685
6,678
1,458,585
26,397
33,075
1,367
1,488
1,184
99,775
12,683
5,411,181
60,309
Individually evaluated loans included nonaccrual loans of $115.0 million at June 30, 2025 and $99.8 million at December 31, 2024. Individually evaluated loans did not include any performing modified loans at June 30, 2025. An allowance of $893,000 was allocated to modified loans at June 30, 2025.
The allowance for credit losses was $81.8 million as of June 30, 2025, compared to $73.0 million at December 31, 2024. The increase in the ACL was primarily driven by deterioration in key economic model drivers and an increase in specific reserves for one equipment financing relationship of $5.8 million. The ACL as a percentage of loans was 1.41 percent at June 30, 2025, compared to 1.32 percent at December 31, 2024. The increase in the ratio was primarily due to increases in specific reserves of $5.2 million
and $1.9 million related to C&I and multifamily loans as expected recoveries from operations and collateral values have worsened during the six months ended June 30, 2025.
Under Topic 326, the Company's methodology for determining the ACL on loans is based upon key assumptions, including historic net charge-offs, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.
The following tables present collateral dependent loans individually evaluated by segment as of June 30, 2025 and December 31, 2024:
Unpaid
Principal
Recorded
Related
Balance
Investment
With no related allowance recorded:
Primary residential mortgage (A)
3,486
2,838
Junior lien loan on residence (A)
Multifamily property (B)
19,692
20,541
Investment commercial real estate (C)
12,500
9,712
Commercial and industrial (A)(C)(D)
17,821
5,875
Lease financing (E)
343
318
Total loans with no related allowance
53,961
39,393
With related allowance recorded:
36,744
36,637
32,672
Commercial and industrial (A)(C)(D)(E)
29,508
25,178
22,324
Total loans with related allowance
69,031
64,545
57,726
Total loans individually evaluated
122,992
97,119
(A) Secured by residential real estate.
(B) Secured by multifamily residential properties.
(C) Secured by commercial real estate.
(D) Secured by all business assets.
(E) Secured by machinery and equipment.
2,935
1,851
97
101
15,320
15,295
16,968
9,810
3,885
2,738
3,558
542
1,363
35,279
31,092
33,651
37,874
37,810
17,020
1,126
Commercial and industrial (C)(D)(E)
31,145
28,143
27,962
845
867
71,794
68,683
46,975
Total loans individually evaluated for impairment
107,073
80,626
32
Interest income recognized on individually evaluated loans for the three and six months ended June 30, 2025 and 2024 was not material. The Company did not recognize any income on non-accruing loans for the three and six months ended June 30, 2025 and 2024.
The activity in the allowance for credit losses for the three months ended June 30, 2025 and June 30, 2024 is summarized below:
April 1,
Beginning
Provision
Charge-offs
Recoveries
(Credit) (A)
4,469
359
17,730
796
3,464
(210
11,764
762
32,980
4,541
1,816
388
158
2,574
(20
(105
75,150
63
6,577
(A) Provision to roll forward the ACL excludes a provision of $9,000 for off-balance sheet commitments.
4,101
4,191
178
10,242
7,738
12,601
4,906
(194
4,712
15,126
(674
14,452
28,755
(192
28,568
1,431
3,210
(2,951
1,690
597
58
655
915
(4
928
66,251
(5,383
3,215
3,901
67,984
(A) Provision to roll forward the ACL excludes a provision of $10,000 for off-balance sheet commitments.
The activity in the allowance for the six months ended June 30, 2025 and June 30, 2024 is summarized below:
33
January 1,
430
873
46
841
(2,349
48
6,771
716
1,296
(2,380
87
11,071
(A) Provision to roll forward the ACL excludes a credit of $14,000 for off-balance sheet commitments.
3,931
177
8,782
9,198
4,840
(128
15,403
(951
29,707
(241
(903
1,663
(3,183
139
869
(17
74
65,888
(5,637
3,217
4,516
(A) Provision to roll forward the ACL excludes a provision of $22,000 for off-balance sheet commitments.
Allowance for Credit Losses on Off-Balance Sheet Commitments
The following tables present the activity in the ACL for off-balance sheet commitments for the six months ended June 30, 2025 and 2024:
(Credit)
Off balance sheet commitments
691
(14
677
687
709
5. DEPOSITS
Certificates of deposit that met or exceeded $250,000 totaled $131.1 million and $137.3 million at June 30, 2025 and December 31, 2024, respectively. The Company had no brokered certificates of deposit at either June 30, 2025 or at December 31, 2024.
The following table sets forth the details of total deposits as of June 30, 2025 and December 31, 2024:
19.45
18.16
Interest-bearing checking (A)
54.74
54.40
1.63
1.68
Money market (B)
17.59
6.93
7.90
0.11
99.84
Interest-bearing demand - Brokered
The scheduled maturities of certificates of deposit, including brokered certificates of deposit, as of June 30, 2025, are as follows:
319,065
2026
116,795
2027
4,680
2028
530
2029
1,147
2030 and later
236
442,453
6. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS
The Company had no overnight borrowings with the FHLB at either June 30, 2025 or at December 31, 2024. At June 30, 2025, unused short-term overnight borrowing capacity totaled $1.8 billion from the FHLB, $22.0 million from correspondent banks and $2.3 billion at the Federal Reserve Bank of New York. The Company maintains a blanket lien on eligible mortgage loans and securities to secure outstanding and potential future borrowings from both the FHLB and the Federal Reserve Bank of New York.
7. BUSINESS SEGMENTS
The Company's reportable segments are determined by the Chief Financial Officer, who is the designated CODM, based upon information provided about the Company's products and services offered, primarily distinguished between banking and wealth management services provided by the Bank's wealth management division. They are also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business. The CODM evaluates the financial performance of the Company's business segments such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the performance of the Company's segments and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance of each segment to evaluate compensation of certain employees. Segment pretax profit or loss is used to assess the performance of the banking segment by monitoring the spread between interest income and interest expense. Segment pretax profit or loss is used to assess the performance of the Wealth Management Division by monitoring wealth management fee income and AUM. Loans, investments, and deposits primarily provide the revenues in the banking operation and wealth management fee income provide the revenues for the Wealth Management Division. Interest expense, provision for credit losses, payroll and premises and equipment provide the significant expenses in the banking segment, while payroll, occupancy, and trust expenses are the significant expenses in the Wealth Management Division. All operations are domestic.
35
Management uses certain methodologies to allocate income and expense to the business segments. A funds transfer pricing methodology is used to assign interest income and interest expense. Certain indirect expenses are allocated to segments. These include support unit expenses such as technology and operations and other support functions. Taxes are allocated to each segment based on the effective rate for the period shown.
Banking
The Banking segment includes: commercial (includes C&I and equipment finance), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services; and customer support and sales.
Wealth Management
The Wealth Management Division, which includes the operations of PGB Trust & Investments of Delaware, consists of: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services.
The following tables present the statements of income and total assets for the Company’s reportable segments for the three and six months ended June 30, 2025 and 2024.
Wealth
Management
Net interest income
47,713
577
Noninterest income
5,347
16,104
Total income
53,060
16,681
69,741
Compensation and benefits
28,540
7,521
Premises and equipment expense
4,890
5,606
Depreciation expense
912
1,035
FDIC expense
5,984
2,162
Total operating expense
47,957
10,522
58,479
Income before income tax expense
5,103
6,159
1,496
1,825
3,607
4,334
34,462
580
4,925
16,630
39,387
17,210
56,597
21,874
8,010
4,289
598
4,887
753
136
889
4,630
1,966
36,327
10,710
47,037
3,060
6,500
547
1,483
2,513
5,017
92,624
1,171
8,617
31,688
101,241
32,859
134,100
57,715
14,225
9,495
1,379
10,874
1,677
10,386
4,312
92,230
20,160
112,390
9,011
12,699
2,563
3,611
6,448
9,088
Total assets at period end
7,056,456
144,217
37
68,222
1,195
9,012
31,244
77,234
32,439
109,673
43,597
14,763
7,845
1,157
9,002
1,575
280
8,218
3,917
67,588
20,117
87,705
9,646
12,322
2,554
3,253
7,092
9,069
6,382,263
123,087
6,505,350
8. FAIR VALUE
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
The Company used the following methods and significant assumptions to estimate the fair value:
Investment Securities: The fair values for investment securities are determined by quoted market prices (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).
Loans Held for Sale, at Fair Value: The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third-party investors (Level 2).
Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.
Individually Evaluated Loans: The fair value of collateral dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Individually evaluated loans may, in some cases, also be measured by the discounted cash flow methodology where payments are anticipated. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
38
Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO") are measured at fair value, less estimated costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.
Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Management. Once received, a third-party conducts a review of the appraisal for compliance with the Uniform Standards of Professional Appraisal Practice and appropriate analysis methods for the type of property. Subsequently, a member of the Credit Department reviews the assumptions and approaches utilized in the appraisal, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals on collateral dependent impaired loans and other real estate owned (consistent for all loan types) are obtained on an annual basis, unless a significant change in the market or other factors warrants a more frequent appraisal. On an annual basis, Management compares the actual selling price of any collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value for other properties. The most recent analysis performed indicated that a discount up to 15 percent should be applied to appraisals on properties. The discount is determined based on the nature of the underlying properties, aging of appraisals and other factors. For each collateral-dependent impaired loan, we consider other factors, such as certain indices or other market information, as well as property specific circumstances to determine if an adjustment to the appraised value is needed. In situations where there is evidence of change in value, the Bank will determine if there is a need for an adjustment to the specific reserve on the collateral dependent impaired loans. When the Bank applies an interim adjustment, it generally shows the adjustment as an incremental specific reserve against the loan until it has received the full updated appraisal. All collateral-dependent impaired loans and other real estate owned valuations were supported by an appraisal less than 12 months old or in the process of obtaining an appraisal as of June 30, 2025.
The following tables summarize, at the dates indicated, assets measured at fair value on a recurring basis, including financial assets for which the Company has elected the fair value option:
Assets Measured on a Recurring Basis
Fair Value Measurements Using
Quoted
Prices in
Active
Markets For
Identical
Observable
Unobservable
Assets
Inputs
(Level 1)
(Level 2)
(Level 3)
Assets:
Available for sale:
Mortgage-backed securities-residential
CRA investment fund
Derivatives:
Cash flow hedges
3,629
Loan level swaps
11,725
796,165
782,887
Liabilities:
Securities available for sale:
7,815
22,275
827,675
814,634
The Company has elected the fair value option for certain loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 days or more past due or on nonaccrual as of June 30, 2025 and December 31, 2024.
There were no loans held for sale at fair value at June 30, 2025 and December 31, 2024.
The following tables summarize, at the dates indicated, assets measured at fair value on a non-recurring basis:
Individually evaluated loans:
29,554
853
13,258
679
40
32,661
21,465
The carrying amounts and estimated fair values of financial instruments at June 30, 2025 are as follows:
Fair Value Measurements at June 30, 2025 using
Carrying
Amount
Level 1
Level 2
Level 3
Financial assets
Cash and cash equivalents
Securities held to maturity
FHLB and FRB stock
N/A
5,949
Loans, net of allowance for credit losses
5,580,828
3,553
29,656
Accrued interest receivable loan level swaps (A)
722
11,003
Financial liabilities
Deposits
5,920,670
440,012
6,360,682
Subordinated debt
95,182
Accrued interest payable
7,147
5,854
1,274
Accrued interest payable loan level swaps (B)
Loan level swap
41
The carrying amounts and estimated fair values of financial instruments at December 31, 2024 are as follows:
Fair Value Measurements at December 31, 2024 using
9,315
Loans, net of allowance for loan and lease losses
5,198,085
3,695
26,203
21,426
5,638,163
488,026
6,126,189
125,750
8,354
6,327
1,881
146
9. REVENUE FROM CONTRACTS WITH CUSTOMERS
All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income.
The following tables present the sources of noninterest income for the periods indicated:
For the Three Months Ended June 30,
Service charges on deposits
Overdraft fees
Interchange income
265
258
820
975
Wealth management fees (A)
Loss on sale of property
Gain on lease termination
875
Other (B)
3,415
3,692
Total noninterest other income
For the Six Months Ended June 30,
215
222
1,591
1,940
5,632
5,846
The following tables present the sources of noninterest income by operating segment for the periods indicated:
Revenue by Operating Segment
161
3,481
211
Total noninterest income
Revenue by Operating
Segment
5,322
310
5,428
418
A description of the Company’s revenue streams accounted for under ASC 606 follows:
Service charges on deposit accounts: The Company earns fees from its deposit customers for certain transaction account maintenance, and overdraft fees. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.
Interchange income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented gross of cardholder rewards. Cardholder rewards are included in other expenses in the statement of income. Cardholder rewards reduced interchange income for the second quarter of 2025 by $13,000 and by $4,000 for the same quarter in 2024. Cardholder rewards reduced interchange income for the six months ended June 30, 2025 by $24,000 and by $6,000 for the same period in 2024.
Wealth management fees (gross): The Company earns wealth management fees from its contracts with wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company charges its clients on a monthly or quarterly basis in accordance with its investment advisory agreements. Fees are generally assessed based on a tiered scale of the market value of AUM at month end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).
Investment brokerage fees (net): The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider twice a month based upon customer activity for the month. The fees are recognized monthly, and a receivable is recorded until commissions are generally paid by the 15th of the following month. Because the Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers, investment brokerage fees are presented net of related costs.
Gains/(losses) on sales of property: The Company records a gain or loss from the sale of property when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of property to the buyer, the Company assesses whether the buyer is committed to perform its obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the property asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain/(loss) on sale if a significant financing component is present. There was $6,000 loss recorded by the Company on the sale of property for the three and six months ended June 30, 2025 and $4,000 loss on sale of property for both the three and six months ended June 30, 2024.
Gain on lease termination: The Company terminated its lease agreement for its Piscataway branch location that was no longer in use. The lease termination was finalized through a negotiated buyout payment of $275,000. At the time of termination, the Company had an accrued lease liability of $1.1 million related to the remaining lease obligation. As a result of the termination, the Company recognized a gain of $875,000, which is included in other income in the Consolidated Statement of Income. The gain reflects the difference between the accrued lease liability and the buyout payment.
Corporate advisory fee income: The Company provides our clients with financial advisory and underwriting services. Investment banking revenues, which includes mergers and acquisition advisory fees and private placement fees, are recorded when the performance obligation for the transaction is satisfied under the terms of each engagement. Reimbursed expenses are reported in other revenue on the statement of operations. Expenses related to investment banking are recognized as non-compensation expenses on the statement of operations. Amounts received and unearned are included on the statement of financial condition. Expenses related to investment banking deals not completed are recognized in non-compensation expenses on the statement of operations.
The Company’s mergers and acquisition advisory fees generally consist of a nonrefundable up-front fee and success fee. The nonrefundable fee is recorded as deferred revenue upon receipt and recognized at a point in time when the performance obligation is satisfied, or when the transaction is deemed by management to be terminated. Management’s judgment is required in determining when a transaction is considered to be terminated.
Other: All of the other income items are outside the scope of ASC 606.
44
10. OTHER OPERATING EXPENSES
The following table presents the major components of other operating expenses for the periods indicated:
Professional and legal fees
1,645
1,693
2,835
3,055
Trust department expense
1,092
936
2,135
Telephone
354
397
784
792
Loan expense
909
205
1,334
432
271
272
Advertising
919
625
1,073
968
Other operating expenses
2,956
5,994
4,470
Total other operating expenses
11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)
The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the three months ended June 30, 2025 and 2024:
Reclassified
From
Income/(Loss)
Three Months
Balance at
Ended
Before
Reclassifications
Net unrealized holding gain/(loss) on securities available for sale, net of tax
(61,525
3,323
(5
(58,207
Gain/(loss) on cash flow hedges
3,808
2,626
Accumulated other comprehensive gain/(loss), net of tax
2,141
(74,769
(75,188
7,009
6,846
The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the three months ended June 30, 2025 and 2024:
Affected Line Item in Income Statement
Unrealized gains/(losses) on securities available for sale:
Securities gains, net
Total reclassifications, net of tax
The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the six months ended June 30, 2025 and 2024:
Six Months
(72,148
13,946
5,737
10,835
(69,809
4,931
The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the six months ended June 30, 2025 and 2024:
Affected Line Item in Income
12. DERIVATIVES
The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.
Interest Rate Swaps Designated as Cash Flow Hedges: Interest rate swaps with a notional amount of $305.0 million as of June 30, 2025 and $360.0 million as of December 31, 2024 were designated as cash flow hedges of certain interest-bearing deposits. On a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty’s risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. As of June 30, 2025, there were no events or market conditions that would result in hedge ineffectiveness. The aggregate fair value of the swaps is recorded in other assets/liabilities with changes in fair value recorded in other comprehensive income. The amount included in accumulated other comprehensive income would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swaps.
The following table presents information about the interest rate swaps designated as cash flow hedges as of June 30, 2025 and December 31, 2024:
June 30,2025
December 31,2024
Notional amount
305,000
360,000
Weighted average pay rate
2.22
2.35
Weighted average receive rate
3.44
3.83
Weighted average maturity
1.72 years
2.08 years
Unrealized gain/(loss), net
Number of contracts
Notional
Interest rate swaps related to interest-bearing deposits
Total included in other assets
Total included in other liabilities
Cash Flow Hedges
The following table presents the net gains/(losses) recorded in accumulated other comprehensive income/(loss) and the consolidated financial statements relating to the cash flow derivative instruments for the three months and six months ended June 30, 2025 and 2024:
Interest rate contracts
Gain/(loss) recognized in other comprehensive income (effective portion)
Net interest income recorded on these swap transactions totaled $1.1 million and $2.1 million for the three months and six months ended June 30, 2025, respectively. Net interest income recorded on these swap transactions totaled $1.5 million and $3.0 million for the three and six months ended June 30, 2024, respectively. Net income/expense for these swap transactions is reported as a component of interest expense.
Derivatives Not Designated as Accounting Hedges
The Company offers facility specific/loan level swaps to its customers and offsets its exposure from such contracts by entering mirror image swaps with a financial institution/swap counterparty (loan level/back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions.
The accrued interest receivable and payable related to these swaps of $722,000 and $849,000 at June 30, 2025 and December 31, 2024, respectively, is recorded in other assets and other liabilities.
Information about these swaps is as follows:
436,744
430,785
Fair value
(11,003
(21,426
Weighted average pay rates
3.95
Weighted average receive rates
6.04
6.25
3.16 years
3.65 years
54
13. SUBORDINATED DEBT
In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors. The 2017 Notes were non-callable for five years, had a stated maturity of December 15, 2027, and had a fixed interest rate of 4.75 percent until December 15, 2022. After December 16, 2022, the interest rate reset quarterly to a level equal to the then current three-month London Interbank Offered Rate (“LIBOR”) rate plus 254 basis points, payable quarterly in arrears (which was 7.75 percent at December 31, 2024). The Company fully redeemed these notes plus $627,000 in unpaid interest on March 15, 2025. The remaining net issuance costs of $259,000 were written-off during the quarter ended March 31, 2025.
In December 2020, the Company issued $100.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of December 22, 2030, and bear interest at a fixed rate of 3.50 percent until December 22, 2025. From December 23, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 326 basis points, payable quarterly in arrears. Debt issuance costs incurred totaled $1.9 million and are being amortized to maturity.
Subordinated debt is presented net of issuance costs on the Consolidated Statements of Condition. The subordinated debt issuances are included in the Company’s regulatory total capital amount and ratio.
14. LEASES
The Company maintains certain property and equipment under direct financing and operating leases. As of June 30, 2025, the Company's operating lease ROU asset and operating lease liability totaled $38.3 million and $41.8 million, respectively. As of December 31, 2024, the Company's operating lease ROU asset and operating lease liability totaled $40.3 million and $43.6 million, respectively. Weighted average discount rates of 4.42 percent and 4.40 percent were used in the measurement of the ROU asset and lease liability at June 30, 2025 and December 31, 2024, respectively.
The Company's leases have remaining lease terms between two months to 12 years, with a weighted average lease term of 8.85 years at June 30, 2025. The Company's leases had remaining lease terms between four months to 12 years, with a weighted average lease term of 9.28 years at December 31, 2024. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal.
Total operating lease costs were $1.6 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively. The variable lease costs were $123,000 and $93,000 for the three months ended June 30, 2025 and 2024, respectively.
Total operating lease costs were $3.3 million and $2.3 million for the six months ended June 30, 2025 and 2024, respectively. The variable lease costs were $242,000 and $159,000 for the six months ended June 30, 2025 and 2024, respectively.
The following is a schedule of the Company's operating lease liabilities by contractual maturity as of June 30, 2025:
3,299
6,340
5,611
5,283
Thereafter
24,497
Total lease payments
50,837
Less: imputed interest
9,031
Total present value of lease payments
The following table shows the supplemental cash flow information related to the Company’s direct finance and operating leases for the periods indicated:
Right-of-use asset obtained in exchange for lease obligation
Operating cash flows from operating leases
3,045
1,887
Operating cash flows from direct finance leases
Financing cash flows from direct finance leases
70
273
15. ACCOUNTING PRONOUNCEMENTS
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments In Response to the SEC's Disclosure Update and Simplification Initiative to clarify or improve disclosure and presentation requirements on a variety of topics and align the requirements in the FASB accounting standard codification with the SEC regulations. The amendments will be effective for the Company only if the SEC removes the related disclosure requirement from its existing regulations no later than June 30, 2027. If the SEC timely removes such a related requirement from its existing regulations, the corresponding amendments within the ASU will become effective for the Company on the same date with early adoption permitted. The Company does not expect the amendments in this update to have a material impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement (Subtopic 220-40) – Reporting Comprehensive Income – Expense Disaggregation Disclosures. The amendments in this update improve the disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The new guidance is effective for public business entities for annual periods beginning after December 15, 2026, or the Company's fiscal year ending September 30, 2028, and interim periods beginning after December 15, 2027, or the Company's fiscal year ending September 30, 2029. Early adoption is permitted and is effective on either a prospective or retrospective basis. The Company is currently assessing the impact of this guidance on its consolidated financial statement disclosures.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS: This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about Management’s confidence and strategies and Management’s expectations about operations, growth, financial results, new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from those contemplated by such forward-looking statements include, among others, those risk factors identified in the Company’s Form 10-K for the year ended December 31, 2024, which include the following:
Except as may be required by applicable law or regulation, the Company undertakes no duty to update any forward-looking statements to conform the statement to actual results or change in the Company’s expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES: Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2024 contains a summary of the Company’s significant accounting policies.
The Company’s determination of the allowance for credit losses involves a higher degree of complexity and requires Management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in the methodology for determining the allowance for credit losses or in these judgments, assumptions or estimates could materially impact results of operations. This critical policy and its application are reviewed periodically with the Audit Committee and the Board of Directors.
The allowance for credit losses is a valuation allowance of Management’s estimate of expected credit losses in the loan portfolio calculated in accordance with ASC 326, "Credit Losses". The process to determine expected credit losses utilizes analytic tools and Management judgment and is reviewed on a quarterly basis. When Management is reasonably certain that a loan balance is not fully collectable, an analysis is completed whereby a specific reserve may be established or a full or partial charge off is recorded against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis, which considers available information from internal and external sources related to past loan loss and prepayment experience and current economic conditions, as well as the incorporation of reasonable and supportable forecasts. Management evaluates a variety of factors, including available published economic information, in arriving at its forecasts. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the allowance for credit losses are qualitative reserves that are expected, but, in the Management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors may include, among others, changes in lending policies and procedures, size and composition of the portfolio, experience and depth of Management and the effect of external factors such as competition and legal and regulatory requirements. The allowance is available for any loan that, in Management’s judgment, should be charged off.
Although Management uses the best information available, the level of the allowance for credit losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. Furthermore, the majority of the Company’s loans are secured by real estate in New Jersey and the boroughs of New York City. Accordingly, the collectability of a substantial portion of the carrying value of the Company’s loan portfolio is susceptible to changes in local market conditions, rent control regulations and any adverse economic conditions. Future adjustments to the provision for credit losses and allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control.
51
EXECUTIVE SUMMARY: The following table presents certain key aspects of our performance for the three and six months ended June 30, 2025 and 2024.
Change
2025 vs 2024
Results of Operations:
Interest income
10,413
Interest expense
(2,835
13,248
(476
5,508
5,136
(104
Total revenue
13,144
Operating expense
8,767
Pretax income before provision for credit losses
17,848
13,471
4,377
2,675
Pretax income
1,702
1,291
Diluted average shares outstanding
(19,059
Diluted earnings per share
Return on average assets annualized ("ROAA")
0.47
(0.02
)%
Return on average equity annualized ("ROAE")
5.11
5.22
(0.11
17,564
(6,814
24,378
552
8,927
9,430
(503
24,427
18,166
32,767
26,506
6,261
Provision for loan and lease losses
6,519
367
(625
(12,800
(0.04
Return on average assets annualized (ROAA)
0.44
0.51
(0.07
Return on average equity annualized (ROAE)
5.04
5.58
(0.54
Selected Balance Sheet Ratios:
Total capital (Tier I + II) to risk-weighted assets
13.94
14.84
(0.90
Tier I leverage ratio
8.94
9.01
Loans to deposits
91.45
89.94
1.51
Allowance for credit losses to total loans
1.32
0.09
Allowance for credit losses to nonperforming loans
71.13
72.87
(1.74
Nonperforming loans to total loans
1.98
1.82
For the quarter ended June 30, 2025, the Company recorded total revenue of $69.7 million, pretax income of $11.3 million, net income of $7.9 million and diluted earnings per share of $0.45, compared to revenue of $56.6 million, pretax income of $9.6 million, net income of $7.5 million and diluted earnings per share of $0.42 for the same period last year.
The increase in total revenue for the second quarter of 2025 was primarily due to higher net interest income due to improvements in the yield on the average balance of interest-earnings assets and cost on average interest-bearing liabilities. As a result, net interest margin increased to 2.77 percent for the second quarter of 2025 as compared to 2.25 percent for the same period in 2024. Wealth management fee income continues to be a consistent and steady revenue stream for the Company and represented 23 percent of total revenue for the second quarter of 2025.
For the six months ended June 30, 2025, the Company recorded total revenue of $134.1 million, pretax income of $21.7 million, net income of $15.5 million and diluted earnings per share of $0.87, compared to revenue of $109.7 million, pretax income of $22.0 million, net income of $16.2 million and diluted earnings per share of $0.91 for the same period in 2024. Total revenue benefited from strong net interest income growth due to improvements in yield on average interest earning assets and cost on average interest-bearing liabilities. The Company has seen positive momentum in net interest margin, which increased to 2.73 percent for the first six months of 2025 as compared to 2.22 percent for the same period in 2024. The Company's single point of contact private banking strategy and New York City expansion continues to deliver lower-cost core deposit relationships resulting in consistent improvement in both net interest margin and net interest income. During the first six months of 2025, deposits grew $234.1 million, which included $125.1 million in noninterest-bearing demand deposits.
Net income for the six months ended June 30, 2025 was impacted by increased operating expenses, principally attributable to the addition of new employees related to the Company's expansion into New York City and Long Island, increased health insurance costs and annual merit increases. An increase in the provision for credit losses of $6.5 million to $11.1 million also contributed to lower net income for the six months ended June 30, 2025.
OFF-BALANCE SHEET ARRANGEMENTS: For a discussion of our off-balance sheet arrangements, see the information set forth in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Aggregate Contractual Obligations.”
EARNINGS ANALYSIS
NET INTEREST INCOME (“NII”) / NET INTEREST MARGIN (“NIM”) / AVERAGE BALANCE SHEET:
The primary source of the Company’s operating income is net interest income, which is the difference between interest and dividends earned on interest-earning assets and fees earned on loans, and interest paid on interest-bearing liabilities. Earning assets include loans, investment securities, interest-earning deposits and federal funds sold. Interest-bearing liabilities include interest-bearing checking, savings and time deposits, Federal Home Loan Bank advances, subordinated debt and other borrowings. Net interest income is determined by the difference between the average yields earned on earning assets and the average cost of interest-bearing liabilities (“net interest spread”) and the relative amounts of earning assets and interest-bearing liabilities. Net interest margin is net interest income as a percent of total interest-earning assets on an annualized basis. The Company’s net interest income, spread and margin are affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows and general levels of nonperforming assets.
53
The following table summarizes the loans that the Company closed during the periods indicated:
For the Three Months Ended
Residential mortgage loans originated for portfolio
34,990
16,087
Residential mortgage loans originated for sale
1,712
2,361
Total residential mortgage loans
36,702
18,448
Commercial real estate loans
24,086
2,600
Multifamily
73,350
4,330
C&I loans (A) (B)
200,671
103,065
Small business administration
7,090
8,200
Wealth lines of credit (A)
2,400
Total commercial loans
307,597
129,145
Installment loans
8,164
1,664
Home equity lines of credit (A)
5,154
4,787
Total loans closed
357,617
154,044
For the Six Months Ended
60,147
27,748
5,786
6,386
65,933
34,134
71,366
14,100
80,150
6,230
457,953
248,868
13,018
10,990
12,300
14,800
634,787
294,988
85,105
8,532
9,959
6,890
795,784
344,544
(A) Includes loans and lines of credit that closed in the period but were not necessarily funded.
(B) Includes equipment finance leases and loans.
Residential mortgage, commercial real estate, multifamily and C&I loan originations increased by $31.8 million, $57.3 million, $73.9 million and $209.1 million, respectively, for the six months ended June 30, 2025, as demand for these loan products grew given moderating inflation and lower rates, which have created a more favorable lending environment during the three and six months ended June 30, 2025.
At June 30, 2025, December 31, 2024 and June 30, 2024, the Bank had a concentration in commercial real estate (“CRE”) loans as defined by applicable regulatory guidance as follows:
Multifamily real estate loans as a percent of total regulatory capital of the Bank
228
225
230
Non-owner occupied commercial real estate loans as a percent of total regulatory capital of the Bank
127
122
130
Total CRE concentration
355
347
360
Total CRE concentration as a percentage of regulatory capital is monitored by Management. Management believes it satisfactorily addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.
The following table reflects the components of the average balance sheet and of net interest income for the periods indicated:
Average Balance Sheet
Unaudited
June 30, 2024
Income/
Annualized
Expense
Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)
1,037,598
3.23
801,715
2.58
Tax-exempt (A) (B)
Loans (B) (C):
Residential mortgages
640,955
7,138
4.45
576,944
5,582
3.87
Commercial mortgages
2,426,318
27,392
4.52
2,420,570
26,881
4.44
Commercial
2,539,929
42,015
6.62
2,191,370
37,067
6.77
21,628
489
9.04
Installment
140,133
2,403
6.86
67,034
6.82
Home equity
50,613
946
7.48
36,576
748
8.18
348
5.75
200
12.00
5,798,296
79,899
5.51
5,314,322
71,916
5.41
183,584
3.53
207,287
4.67
Total interest-earning assets
7,019,478
89,887
5.12
6,323,324
79,502
5.03
Noninterest-earning assets:
8,237
7,537
Allowance for credit losses
(76,811
(67,568
35,501
24,820
130,550
99,838
Total noninterest-earning assets
97,477
64,627
Total assets
7,116,955
6,387,951
LIABILITIES:
3,558,108
29,116
3.27
3,094,386
29,252
3.78
950,891
6,544
2.75
791,385
6,016
3.04
104,114
0.56
105,825
96
0.36
447,422
3.58
504,313
4.26
Subtotal interest-bearing deposits
5,060,535
39,809
3.15
4,495,909
40,731
3.62
9,121
4.82
5.36
Certificates of deposit - brokered
98,642
Total interest-bearing deposits
5,069,656
39,919
4,604,551
42,107
3.66
FHLB advances and borrowings
44,656
27,247
5.59
1,283
4.05
2,869
3.07
98,905
3.74
133,377
5.06
Total interest-bearing liabilities
5,214,500
3.17
4,768,044
3.71
Noninterest-bearing liabilities:
Demand deposits
1,172,535
945,231
108,020
97,470
Total noninterest-bearing liabilities
1,280,555
1,042,701
Shareholders’ equity
621,900
577,206
Total liabilities and shareholders’ equity
Net interest income (tax-equivalent basis)
48,526
35,306
Net interest spread
1.95
Net interest margin (D)
2.77
2.25
Tax equivalent adjustment
(236
(264
56
1,034,942
3.20
797,695
629,136
13,808
4.39
577,296
11,001
3.81
2,405,546
53,571
2,440,487
54,422
4.46
2,486,690
82,119
6.60
2,215,762
74,626
6.74
20,278
917
123,910
4,196
66,161
2,257
48,294
1,791
7.42
36,491
1,485
8.14
326
6.13
207
12.56
5,693,902
155,495
5.46
5,356,682
144,721
5.40
236,847
173,692
6,965,691
176,472
5.07
6,328,069
158,965
5.02
8,308
8,821
Allowance for loan and lease losses
(75,618
(67,336
32,743
24,607
128,959
94,044
94,392
60,136
7,060,083
6,388,205
3,502,315
57,194
3,024,541
56,686
3.75
966,481
13,261
2.74
774,569
11,540
2.98
105,088
0.50
107,164
185
0.35
457,742
3.65
491,053
4.16
5,031,626
79,085
3.14
4,397,327
78,633
9,558
5.20
113,492
5.01
5,041,184
79,295
4,520,819
81,737
22,949
4.50
131,315
5.86
1,303
4.14
3,042
3.94
112,697
4.19
133,340
5.05
5,178,133
4,788,516
3.72
1,147,502
931,040
118,181
89,545
1,265,683
1,020,585
616,267
579,104
94,271
69,950
1.90
1.30
2.73
(533
57
The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the three and six month periods ended June 30, 2025 compared to June 30, 2024 are shown below:
For the Three Months Ended June 30, 2025
Difference due to
Change In
Change In:
(In Thousands):
Volume
Rate
Investments
2,070
1,132
3,202
8,001
(18
7,983
(255
(545
(800
9,816
569
10,385
Interest-bearing checking
4,109
(4,244
Money market
1,417
(890
527
(570
(795
(1,365
(621
(1,242
Interest bearing demand brokered
(13
(24
Borrowed funds
208
124
Capital lease obligation
(15
(9
(378
(384
(762
4,137
(6,972
5,679
7,541
13,220
For the Six Months Ended June 30, 2025
4,068
2,211
6,279
11,778
(1,004
1,262
(808
454
17,108
399
17,507
7,899
(7,391
508
3,343
(1,622
1,721
84
80
(670
(1,187
(1,857
(1,422
(2,844
(39
(50
(2,601
(731
(3,332
(37
(33
(480
(527
(1,007
6,017
(12,831
11,091
13,230
24,321
Net interest income, on a fully tax-equivalent basis, increased $13.2 million, or 37 percent, for the second quarter of 2025 to $48.5 million from $35.3 million for the same 2024 period. The net interest margin ("NIM") was 2.77 percent and 2.25 percent for the three months ended June 30, 2025 and 2024, respectively, an increase of 52 basis points. For the six months ended June 30, 2025 the Company recorded net interest income, on a fully tax-equivalent basis of $94.3 million compared to $70.0 million for the same 2024 period. The NIM was 2.73 percent and 2.22 percent for the six months ended June 30, 2025 and 2024, respectively, an increase of 51 basis points. Net interest income, on a fully tax-equivalent basis, and NIM expanded during the three and six months ended June 30, 2025 due to the Bank's focus on growing client deposit relationships, which were used to fund loans, as well as purchase
investment securities. Additionally, the Federal Reserve decreased the target Federal Funds rate by 100 basis points during the latter half of 2024, which has helped to improve NIM, primarily driven by lower deposit rates.
The average balance of interest-earning assets increased to $7.02 billion during the second quarter of 2025 from $6.32 billion for the same 2024 period, reflecting an increase of $696.2 million. Average interest-earning assets were $6.97 billion for the six months ended June 30, 2025 compared to $6.33 billion in the same 2024 period, representing an increase of $637.6 million. The increase in average interest-earning assets during the second quarter of 2025 when compared to the same quarter of 2024 included an increase in the average loans of $484.0 million, as well as an increase in the average balance of investments of $235.9 million, which was partially offset by a decrease in interest-earning deposits of $23.7 million. The increase in average interest-earning assets during the six months ended June 30, 2025 when compared to the same period of 2024 included an increase in average loans of $337.2 million, as well as increases in the average balance of investments of $237.2 million and interest-earning deposits of $63.2 million.
The increase in the average balance of outstanding loans for the three and six months ended June 30, 2025 was primarily driven by an increase in commercial loans, residential mortgages and installment loans, partially offset by a decline in commercial construction. The average balance of commercial loans increased by $348.6 million, or 16 percent, to $2.54 billion for the quarter ended June 30, 2025 when compared to $2.19 billion for the same 2024 period. The average balance of residential mortgages increased by $64.0 million, or 11 percent, to $641.0 million for the quarter ended June 30, 2025 while the average balance of installment loans increased by $73.1 million, or 109 percent, to $140.1 million for the same period. There was no average balance of commercial construction for the three months ended June 30, 2025 compared to $21.6 million for the same 2024 period. The average balance of commercial loans increased by $270.9 million, or 12 percent, to $2.49 billion for the six months ended June 30, 2025 when compared to $2.22 billion for the same period in 2024. The average balance of residential mortgages increased by $51.8 million, or 9 percent, to $629.1 million for the six months ended June 30, 2025 when compared to $577.3 million for the same period in 2024. The average balance of installment loans for the six months ended June 30, 2025 increased by $57.7 million, or 87 percent, when compared to the same period in 2024. The increase in the average balance of loans for the three- and six-month periods were mostly a result increasing loan demand from customers due to a lower interest rate environment and improving economic conditions.
The average yields earned on interest-earning assets increased when comparing the three and six months ended June 30, 2025 to the same periods in 2024. For the quarters ended June 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.12 percent and 5.03 percent, respectively, an increase of 9 basis points. For the six months ended June 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.07 percent and 5.02 percent, respectively, an increase of 5 basis points.
The increase in the average yield on total investments for the three and six months ended June 30, 2025 compared to the same 2024 periods was primarily driven by the purchase of securities at higher yields than the yields in the existing portfolio. The yield on investments increased 65 basis points to 3.23 percent for the three months ended June 30, 2025, as compared to 2.58 percent for the same 2024 period. The average yield on investments increased by 62 basis points to 3.20 percent for the six months ended June 30, 2025 as compared to 2.58 percent for the same period in 2024.
The average yield on total loans for the three and six months ended June 30, 2025 compared to the same 2024 period was primarily driven by an increase in the average yields on residential mortgages and, for the three-month period commercial mortgages, partially offset by a decline in the average yield on commercial loans. The yield on residential mortgages increased 58 basis points to 4.45 percent for the three months ended June 30, 2025, as compared to 3.87 percent for the same 2024 period. The increase in the average yield for residential mortgages for the three-month period was driven by the origination of loans with higher yields than the yields on the existing portfolio. The average yield on commercial mortgages for the three months ended June 30, 2025, increased 8 basis points to 4.52 percent as compared to 4.44 percent for the same period in 2024. The average yield on commercial loans for the three months ended June 30, 2025 decreased 15 basis points to 6.62 percent from 6.77 percent at June 30, 2024. For the six months ended June 30, 2025, the average yield on residential mortgages increased 58 basis points to 4.39 percent from 3.81 percent for the same period in 2024. The average yield on commercial loans decreased by 14 basis points to 6.60 percent from 6.74 percent for the six months ended June 30, 2025. The average yield on commercial loans decreased for both the three and six-month periods due to a decrease in the target Federal Funds rate during the second half of 2024, which had a greater impact on these loans, that are typically floating rates with short repricing periods.
For the three months ended June 30, 2025, the average balance of interest-bearing liabilities totaled $5.21 billion representing an increase of $446.5 million from $4.77 billion for the same 2024 period due to an increase in interest-bearing deposits of $465.1 million to $5.07 billion for the three months ended June 30, 2025. This increase was partially offset by a decrease in subordinated debt of $34.5 million to $98.9 million due to the redemption of $35.0 million of such debt in the first quarter of 2025. For the six months ended June 30, 2025, the average balance of interest-bearing liabilities totaled $5.18 billion representing an increase of $389.6 million from $4.79 billion for the same 2024 period due to an increase in interest-bearing deposits of $520.4 million to $5.04 billion for the six months ended June 30, 2025. This increase was partially offset by a decrease in brokered certificates of deposit of $113.5 million and a decrease in short term borrowings of $108.4 million for the six months ended June 30, 2025.
59
The increase in the average balance of interest-bearing deposits for the three months ended June 30, 2025 compared to the 2024 comparable period was primarily due to an increase in the average balances of interest-bearing checking deposits of $463.7 million and money market accounts of $159.5 million, partially offset by a decline in the average balance of brokered certificates of deposit of $98.6 million and certificates of deposit of $56.9 million. For the six months ended June 30, 2025 when compared to the same period in 2024, the average balance of interest-bearing checking deposits increased by $477.8 million and money market accounts of $191.9 million, partially offset by a decrease in the average balance of brokered certificate of deposits by $113.5 and retail certificates of deposit of $33.3 million. The increase in interest-bearing checking deposits for the three and six months ended June 30, 2025 was principally attributable to our expansion into New York City and client demand for FDIC insured products, which we offer through a reciprocal deposit program. The expansion into New York City allowed us to grow lower cost, relationship deposits, while reducing the Company's reliance on overnight borrowings, brokered deposits and other high-cost funding sources.
The Company is a participant in the Reich & Tang Demand Deposit Marketplace program and the Promontory Program. The Company uses these deposit sweep services to place customer funds into interest-bearing demand (checking) accounts issued by other participating banks. Customer funds are placed at one or more participating banks to increase the level of FDIC insurance available to deposit customers. As a participant, the Company receives reciprocal amounts of deposits from other participating banks. Average reciprocal deposit balances for the quarters ended June 30, 2025 and 2024 were $1.82 billion and $1.20 billion, respectively. Average reciprocal deposit balances for the six months ended June 30, 2025 and 2024 were $1.81 billion and $1.14 billion, respectively. The growth for the three and six months ended June 30, 2025 was due to clients' desire for the increased level of FDIC insurance offered by these programs.
At June 30, 2025, uninsured/unprotected deposits were approximately $1.7 billion, or 26 percent of total deposits. This amount was adjusted to exclude $311 million of public fund deposit balances, which are fully-collateralized and protected with securities and an FHLBNY letter of credit.
The Company had $44.7 million in average short-term borrowings during the second quarter of 2025 compared to $27.2 million for the same 2024 period. The Company had $22.9 million in average short-term borrowings during the six months ended June 30, 2025 compared to $131.3 million in the same 2024 period. The decrease in borrowings for the six-month period was driven by the growth in client deposits led by the Company’s expansion into New York City, which were used to pay down borrowings.
For the quarters ended June 30, 2025 and 2024, the cost of interest-bearing liabilities was 3.17 percent and 3.71 percent, respectively, reflecting a decrease of 54 basis points. The cost of interest-bearing liabilities was 3.17 percent and 3.72 percent for the six months ended June 30, 2025 and 2024, respectively, reflecting a decrease of 55 basis points. The decreases for the three and six months ended June 30, 2025 was driven by a decrease in the average cost of interest-bearing deposits of 51 basis points to 3.15 percent for the second quarter of 2025 and 47 basis points to 3.15 for the six months ended June 30, 2025. The Company also benefited from lower short-term borrowing costs in the second quarter of 2025 of 4.52 percent compared to an average cost of 5.59 percent for the same 2024 period. The cost of short-term borrowing for the six months ended June 30, 2025 decreased by 136 basis points to 4.50 percent when compared to 5.86 for the same period in 2024. The decrease in deposit and borrowing rates was due to the Federal Reserve lowering the target Federal Funds rate by 100 basis points during the latter half of 2024 and a change in the composition of the deposit portfolio with a greater concentration of lower-cost core relationship deposits.
INVESTMENT SECURITIES: Investment securities available for sale are purchased, sold and/or maintained as a part of the Company’s overall balance sheet, liquidity and interest rate risk management strategies, and in response to changes in interest rates, liquidity needs, prepayment speeds and/or other factors. These securities are carried at estimated fair value, and unrealized changes in fair value are recognized as a separate component of shareholders’ equity, net of income taxes. Realized gains and losses are recognized in income at the time the securities are sold. Investment securities held to maturity are those securities that the Company has both the ability and intent to hold to maturity. These securities are carried at amortized cost. Equity securities are carried at fair value with unrealized gains and losses recorded in noninterest income as incurred.
At June 30, 2025, the Company had investment securities available for sale with a fair value of $767.5 million compared with $784.5 million at December 31, 2024. A net unrealized loss (net of income tax) of $58.2 million and $72.1 million related to these securities were included in shareholders’ equity at June 30, 2025 and December 31, 2024, respectively.
At June 30, 2025, the Company had investment securities held to maturity with a carrying cost of $98.6 million and an estimated fair value of $88.1 million compared with a carrying cost of $101.6 million and an estimated fair value of $88.7 million at December 31, 2024.
The Company had one equity security (a CRA investment security) with a fair value of $13.3 million and $13.0 million at June 30, 2025 and December 31, 2024, respectively, with changes in fair value recognized in the Consolidated Statements of Income. The
Company recorded unrealized gains of $42,000 and $237,000 for the three and six months ended June 30, 2025, respectively, as compared to unrealized losses of $84,000 and $195,000 for the three and six months ended June 30, 2024.
The carrying value of investment securities available for sale and held to maturity as of June 30, 2025 and December 31, 2024 are shown below:
Estimated
Investment securities available for sale:
Mortgage-backed securities-residential (principally U.S. government-sponsored entities)
Total investment securities available for sale
Investment securities held to maturity:
Total investment securities held to maturity
945,549
855,612
985,509
873,194
The following table presents the contractual maturities and yields of debt securities available for sale and held to maturity as of June 30, 2025. The weighted average yield is a computation of income within each maturity range based on the amortized cost of securities:
After 1
After 5
But
After
Within
1 Year
5 Years
10 Years
Years
41,223
121,381
42,799
1.23
1.58
1.76
1.56
Mortgage-backed securities-residential (A)
50,101
8,271
15,697
454,654
1.70
1,927
4,758
11,978
3.24
1.74
1.45
1.69
6.32
Total investments available for sale
51,421
156,580
509,431
1.48
2.00
3.67
3.25
15,000
25,000
1.35
1.64
1.53
2.17
Total investments held to maturity
1.91
65,101
76,421
568,054
866,156
4.21
3.52
3.09
OTHER INCOME: The following table presents other income, excluding income from wealth management services, which is summarized and discussed subsequently:
61
(151
Gain on sale of loans (mortgage banking)
(73
126
Total other income (excluding wealth management income)
(361
(90
(26
(801
138
The Company recorded total other income, excluding wealth management fee income, of $5.5 million for the second quarter of 2025 compared to $5.1 million for the same 2024 period, reflecting an increase of $372,000. The increase was primarily due to income related to loan level, back-to-back swaps as well as an increase in the fair value adjustment for the CRA equity security. The Company recorded $8.9 million of total other income, excluding wealth management fee income, for the six months ended June 30, 2025 compared to $9.4 million for the same 2024 period, reflecting a decrease of $503,000. The decrease was primarily due to lower corporate advisory fee income and service charges and fees, which was partially offset by an increase in the fair value adjustment for the CRA equity security and increased income related to loan level, back-to-back swaps.
The Company provides loans that are partially guaranteed by the SBA to provide working capital and/or finance the purchase of equipment, inventory or commercial real estate that could be used for start-up businesses. All SBA loans are underwritten and documented as prescribed by the SBA. The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $521,000 and $449,000 for the quarters ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, the Company recorded a gain on the sale of SBA loans of $823,000 and $849,000, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.
The Company recorded corporate advisory fee income for the second quarter of 2025 of $30,000 compared to $103,000 for the same period ended June 30, 2024. The six months ended June 30, 2025 included corporate advisory fee income of $120,000 compared to $921,000 for the same 2024 period. The higher amount for the six months ended June 30, 2024 was related to a corporate advisory/investment banking acquisition transaction completed in the first quarter of 2024.
Income from the SBA programs, and corporate advisory fee income are dependent on volume, and thus are typically not consistent from quarter to quarter.
For the quarter ended June 30, 2025, income from the sale of newly originated residential mortgage loans was $27,000 compared to $34,000 for the same period in 2024. The Company recorded income of $90,000 from the sale of newly originated residential mortgage loans for both the six months ended June 30, 2025 and 2024, respectively.
Other income included a gain of $875,000 in the second quarter of 2025 for the termination of a lease agreement for a branch location that was no longer in use. Also included in other income were gains of $482,000 and $1.6 million recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases for the second quarter of 2025 and 2024. The six months ended June 30, 2025 and 2024 included income of $67,000 and $1.7 million, respectively. Additionally, the Company recorded $869,000 of unused commercial line fees for the quarter ended June 30, 2025 compared to $786,000 for the same 2024 period. The six months ended June 30, 2025 included $1.8 million of unused commercial line fees compared to $1.6 million for the same 2024 period.
The Company recorded a $42,000 positive fair value adjustment and an $84,000 negative fair value adjustment for CRA equity securities in the second quarters of 2025 and 2024, respectively. The Company recorded a $237,000 positive fair value adjustment and a $195,000 negative fair value adjustment for CRA equity securities for the six months ended June 30, 2025 and 2024, respectively. The increase in 2025 was due to a decline in medium-term rates during the six months of 2025.
OPERATING EXPENSES: The following table presents the components of operating expenses for the periods indicated:
6,177
865
FDIC assessment
175
Other Operating Expenses:
(48
156
(43
704
294
488
13,580
1,938
85
(220
902
1,524
Operating expenses for the quarter ended June 30, 2025 and 2024 totaled $51.9 million and $43.1 million, respectively, reflecting an increase of $8.8 million, or 20 percent. Operating expenses for the six months ended June 30, 2025 increased $18.2 million or 22 percent, to $101.3 million from $83.2 million for the same 2024 period. Increased operating expenses for the three and six months ended June 30, 2025 were principally attributable to the Company's ongoing expansion into New York City, increased health insurance costs, and annual merit increases. The addition of production teams in Long Island during the second quarter of 2025 also contributed to the growth in operating expenses. The increase in loan expense for both the three- and six-month periods ended June 30, 2025 was primarily due to expenses of $441,000 and $506,000, respectively, related to the workout of several equipment finance problem loans.
WEALTH MANAGEMENT DIVISION: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services. Officers from the wealth management division are available to provide wealth management, trust and investment services at the Bank’s headquarters in Bedminster, New Jersey, at private banking
locations in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey, in New York City and at the Bank’s subsidiary, PGB Trust & Investments of Delaware, in Greenville, Delaware.
The market value of the assets under management and/or administration (“AUM/AUA”) was $12.3 billion at June 30, 2025, reflecting a 3 percent increase from $11.9 billion at December 31, 2024 and an increase of 7 percent from $11.5 billion at June 30, 2024 due primarily to improved market conditions and new client inflows.
In the June 2025 quarter, the Wealth Management Division generated $15.9 million in fee income compared to $16.4 million for the June 2024 quarter, reflecting a 3 percent decrease. The decrease in fee income during the second quarter of 2025 was due to a large estate termination fee of $1.1 million, recognized in the second quarter of 2024. For the six months ended June 30, 2025, the Wealth Management Division generated $31.4 million in fee income compared to $30.8 million in fee income for the same period in 2024, reflecting a 2 percent increase. The increase in fee income for the six months ended June 30, 2025 was due to strong client inflows driven by new accounts and client additions and solid equity market performance.
Operating expenses relative to the Wealth Management Division, for the three months ended June 30, 2025, decreased to $10.5 million as compared to $10.7 million for the second quarter of 2024. Operating expenses relative to the Wealth Management Division were relatively flat at $20.2 million and $20.1 million, for the six months ended June 30, 2025 and June 30, 2024. Expenses are in line with the Company’s Strategic Plan, particularly the hiring of key management and revenue-producing personnel.
The Wealth Management Division currently generates adequate revenue to support the salaries, benefits and other expenses of the wealth division and Management believes it will continue to do so as the Company grows organically and/or by acquisition. Management believes that the Bank generates adequate liquidity to support the expenses of the Wealth Management Division should it be necessary.
NONPERFORMING ASSETS: OREO, loans past due in excess of 90 days and still accruing, and nonaccrual loans are considered nonperforming assets.
The following table sets forth asset quality data as of the dates indicated:
As of
March 31,
September 30,
Loans past due 90 days or more and still accruing
Nonaccrual loans
97,170
80,453
82,075
Other real estate owned
Total nonperforming assets
Performing modifications (A)(B)
111,962
63,259
45,846
51,796
Loans past due 30 through 89 days and still accruing
28,323
31,446
34,714
Loans subject to special mention
75,248
113,655
140,791
Classified loans
142,273
145,394
147,422
128,311
Individually evaluated loans
79,972
81,802
Nonperforming loans as a % of total loans (C)
Nonperforming assets as a % of total assets (C)
1.60
1.36
1.43
1.18
1.26
Nonperforming assets as a % of total loans plus other real estate owned (C)
The Company had increases in nonperforming assets, performing modifications, loans past due 30 through 89 days and still accruing, loans subject to special mention and individually evaluated loans at June 30, 2025 compared to December 31, 2024. The
64
persistent nature of the elevated interest rate environment combined with inflationary pressures have presented challenges for certain borrowers, which is reflected in the trend of asset quality data in recent quarters. The increase in nonperforming assets during the first six months of 2025 was driven by the addition of two commercial and industrial relationships totaling $14.5 million and one multifamily loan totaling $4.8 million. Multifamily loans represented approximately 49 percent of nonperforming assets as of June 30, 2025. The increase in performing modifications was primarily related to multifamily loans of $80.8 million and C&I loans of $3.0 million during the six month period ended June 30, 2025. This was partially offset by $12.1 million in C&I loans that are no longer classified as loan modifications. The increase in loans past due 30 through 89 days and still accruing compared to December 31, 2024 was primarily due to $11.9 million of multifamily loans that were past due as of June 30, 2025. The increase in special mention loans was primarily due to increases of $22.3 million in investment commercial real estate, $21.0 million in multifamily and $6.9 million in C&I loans during the six months ended June 30, 2025. The increase in individually evaluated substandard loans was primarily due to increases of $4.8 million consisting of one multifamily loan and increases of $14.5 million consisting of two C&I loans during the first six months of 2025, which resulted in an additional $1.1 million of specific reserves.
PROVISION FOR CREDIT LOSSES: The provision for credit losses was $6.6 million and $3.9 million for the second quarters of 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, the provision for loan losses was $11.1 million and $4.5 million, respectively. The allowance for credit losses (“ACL”) was $81.8 million as of June 30, 2025, compared to $73.0 million at December 31, 2024. The increased provision for credit losses for the three and six months ended June 30, 2025 was driven by overall loan growth, in addition to deterioration of key economic data points used in the CECL model. The provision for the second quarter of 2025 also included a specific reserve related for one equipment financing relationship for $5.8 million. Charge-offs totaled $20,000 during the second quarter of 2025 compared to charge-offs of $5.4 million during the second quarter of 2024. The higher charge-off level in 2024 was due to the sale of two problem loans which were approaching foreclosure and transferred to other real estate owned. The allowance for credit losses as a percentage of loans was 1.41 percent at June 30, 2025 compared to 1.32 percent at December 31, 2024. The increase in the ratio was primarily due to increases in specific reserves of $5.2 million and $1.9 million related to C&I and multifamily loans as expected recoveries from operations and collateral values have worsened during the six months ended June 30, 2025. The ACL recorded on individually evaluated loans was $20.2 million at June 30, 2025 compared to $12.7 million as of December 31, 2024. Total individually evaluated loans were $115.0 million and $99.8 million as of June 30, 2025 and December 31, 2024, respectively. The general component of the allowance increased from $60.3 million at December 31, 2024 to $61.6 million at June 30, 2025. The increase in the general reserve was primarily due to growth in the consumer and lease financing portfolios of $62.6 million and $50.5 million, respectively.
A summary of the allowance for credit losses for the quarterly periods indicated follows:
Allowance for credit losses:
Beginning of period
71,283
Provision for credit losses (A)
4,494
1,753
1,227
(Charge-offs)/recoveries, net
(2,336
(44
2,072
(2,168
End of period
Allowance for credit losses as a % of total loans
1.31
1.34
1.29
Collectively evaluated allowance for credit losses as a % of total loans
1.06
1.09
1.16
1.14
Allowance for credit losses as a % of nonperforming loans
77.34
88.60
82.83
The decrease in the allowance for credit losses as a percentage of nonperforming loans was primarily due to an increase in nonperforming loans of $14.8 million to $115.0 million at June 30, 2025, as compared to nonperforming loans of $100.2 million at December 31, 2024. This was partially offset by an increase in the ACL to $81.8 million at June 30, 2025 as compared to $73.0 million at December 31, 2024.
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INCOME TAXES: Income tax expense for the quarter ended June 30, 2025 was $3.3 million as compared to $2.0 million for the same period in 2024. Income tax expense for the six months ended June 30, 2025 was $6.2 million as compared to $5.8 million for the same period in 2024.
The effective tax rate for the three months ended June 30, 2025 was 29.49 percent compared to 21.23 percent for the same quarter in 2024. The effective tax rate for the six months ended June 30, 2025 was 28.44 percent compared to 26.43 percent for the same period in 2024. Both the three and six months ended June 30, 2024 included a benefit related to the Company's deferred tax asset associated with a surtax imposed by the State of New Jersey. This benefit was partially offset by adjustments related to the vesting of restricted stock at prices lower than original grant prices in 2024.
CAPITAL RESOURCES: A solid capital base provides the Company with financial strength and the ability to support future growth and is essential to executing the Company’s current Strategic Plan. The Company’s capital strategy is intended to provide stability to expand its business, even in stressed environments. Quarterly stress testing is integral to the Company’s capital management process.
The Company strives to maintain capital levels in excess of internal “triggers” and in excess of those considered to be well capitalized under regulatory guidelines applicable to banks and bank holding companies. Maintaining an adequate capital position supports the Company’s goal of providing shareholders an attractive and stable long-term return on investment.
Capital increased as a result of net income of $15.5 million for the six months ended June 30, 2025. Capital also improved as a result of a decline in accumulated other comprehensive loss of $10.8 million, net of tax. Total accumulated other comprehensive loss decreased to $55.6 million as of June 30, 2025 ($58.2 million loss related to the available for sale securities portfolio partially offset by a $2.6 million gain on the cash flow hedges), as compared to $66.4 million at December 31, 2024. This was partially offset by share repurchases of $2.8 million during the first six months of 2025.
The Company employs quarterly capital stress testing by modeling adverse case and severely adverse case scenarios. In the most recent completed stress test based on March 31, 2025 financial information, under the severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total, Common Equity Tier 1 and Tier 1 capital (each as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). At June 30, 2025 and December 31, 2024, all of the Bank’s capital ratios remain above the levels required to be considered “well capitalized” and the Company’s capital ratios remain above regulatory requirements. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, common equity Tier I and Tier I leverage ratios as set forth in the table below.
As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a Community Bank Leverage Ratio ("CBLR") (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies set the minimum capital for the CBLR at 9 percent.
66
The Bank’s regulatory capital amounts and ratios are presented in the following table:
To Be Well
For Capital
Capitalized Under
Adequacy Purposes
Prompt Corrective
Adequacy
Including Capital
Actual
Action Provisions
Purposes
Conservation Buffer (A)
Ratio
As of June 30, 2025:
Total capital(to risk-weighted assets)
787,170
13.54
581,475
10.00
465,180
8.00
610,549
10.50
Tier I capital(to risk-weighted assets)
714,365
12.29
348,885
6.00
494,254
8.50
Common equity tier I(to risk-weighted assets)
714,359
377,959
6.50
261,664
407,033
7.00
Tier I capital(to average assets)
9.99
357,396
5.00
285,917
4.00
As of December 31, 2024:
801,365
14.75
543,234
434,587
570,396
733,389
13.50
325,940
461,749
733,383
353,102
244,455
380,264
10.57
347,006
277,605
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The Company’s regulatory capital amounts and ratios are presented in the following table:
811,322
465,485
610,950
639,537
10.99
349,114
494,578
639,531
261,836
407,300
286,186
806,404
434,830
570,715
625,830
11.51
326,123
462,007
625,824
244,592
380,477
277,710
The Dividend Reinvestment Plan of Peapack-Gladstone Financial Corporation, or the “Reinvestment Plan,” allows shareholders of the Company to purchase additional shares of common stock using cash dividends without payment of any brokerage commissions or other charges. Shareholders may also make voluntary cash payments of up to $200,000 per quarter to purchase additional shares of common stock. Voluntary share purchases in the Reinvestment Plan can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company. All shares purchased during the quarter ended June 30, 2025 were purchased in the open market.
On June 26, 2025, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 21, 2025 to shareholders of record on August 7, 2025.
Management believes the Company’s capital position and capital ratios were adequate at June 30, 2025. Further, Management believes the Company has sufficient common equity to support its planned growth for the immediate future. The Company continually assesses other potential sources of capital to support future growth.
LIQUIDITY: Liquidity refers to an institution’s ability to meet short-term requirements including funding of loans, deposit withdrawals and maturing obligations, as well as long-term obligations, including potential capital expenditures. The Company’s liquidity risk management is intended to ensure the Company has adequate funding and liquidity to support its assets across a range of market environments and conditions, including stressed conditions. Principal sources of liquidity include cash, securities
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available for sale, customer deposit inflows, loan repayments and secured borrowings. Other liquidity sources include loan and security sales and loan participations.
Management actively monitors and manages the Company’s liquidity position and believes it is sufficient to meet future needs. Cash and cash equivalents, including interest-earning deposits, totaled $315.6 million at June 30, 2025. In addition, the Company had $767.5 million in securities designated as available for sale at June 30, 2025. These securities can be sold, or used as collateral for borrowings, in response to liquidity concerns. Available for sale and held to maturity securities with a carrying value of $573.1 million and $96.6 million as of June 30, 2025, respectively, were pledged to secure public funds and for other purposes required or permitted by law. However, only $46.6 million of pledged securities are encumbered. In addition, the Company generates significant liquidity from scheduled and unscheduled principal repayments of loans and mortgage-backed securities.
As of June 30, 2025, the Company had approximately $3.5 billion of external borrowing capacity available on a same day basis (subject to any practical constraints affecting the FHLB or FRB), which when combined with balance sheet liquidity provided the Company with 277 percent coverage of our uninsured/unprotected deposits.
The Company has a Board-approved Contingency Funding Plan. This plan provides a framework for managing adverse liquidity stress and contingent sources of liquidity. The Company conducts liquidity stress testing on a regular basis to ensure sufficient liquidity in a stressed environment. The Company believes it has sufficient liquidity given the current environment.
Management believes the Company’s liquidity position and sources were adequate at June 30, 2025.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
ASSET/LIABILITY MANAGEMENT: The Company’s management Asset/Liability Committee (“ALCO”) is responsible for developing, implementing and monitoring asset/liability strategies and advising the Board of Directors on such strategies, as well as the related level of interest rate risk. In this regard, interest rate risk simulation models are prepared on a quarterly basis. These models demonstrate balance sheet gaps and predict changes to net interest income and the economic/market value of portfolio equity under various interest rate scenarios. In addition, these models, as well as ALCO processes and reporting, are subject to annual independent third-party review.
ALCO generally manages interest rate risk through the management of capital, cash flows and the duration of assets and liabilities, including sales and purchases of assets, as well as additions of wholesale borrowings and other sources of medium/longer-term funding. ALCO engages in interest rate swaps as a means of extending the duration of shorter-term liabilities.
The following strategies are among those used to manage interest rate risk:
The interest rate swap program is administered by ALCO and follows procedures and documentation in accordance with regulatory guidance and standards as set forth in ASC 815 for cash flow hedges. The program incorporates pre-purchase analysis, liability designation, sensitivity analysis, correlation analysis, daily mark-to-market analysis and collateral posting as required. The Board is advised of all swap activity. In these swaps, the Company is receiving floating and paying fixed interest rates with total notional value of $305.0 million as of June 30, 2025.
In addition, the Company initiated a loan level/back-to-back swap program in support of its commercial lending business. Pursuant to this program, the Company extends a floating rate loan and executed a floating to fixed swap with the borrower. At the same time, the Company executes a third-party swap, the terms of which fully offset the fixed exposure and, result in a final floating rate exposure for the Company. As of June 30, 2025, $436.7 million of notional value in swaps were executed and outstanding with borrowers under this program.
As noted above, ALCO uses simulation modeling to analyze the Company’s net interest income sensitivity, as well as the Company’s economic value of portfolio equity under various interest rate scenarios. The models are based on the actual maturity and repricing characteristics of rate sensitive assets and liabilities. The models incorporate certain prepayment and interest rate assumptions, which management believed to be reasonable as of June 30, 2025. The models assume changes in interest rates without any proactive change in the balance sheet by management. In the models, the forecasted shape of the yield curve remained static as of June 30, 2025.
In an immediate and sustained 100 basis point increase in market rates at June 30, 2025, net interest income would decrease by 1.0 percent in year 1 and increase by 2.2 percent in year 2, compared to a flat interest rate scenario. In an immediate and sustained 100 basis point decrease in market rates at June 30, 2025, net interest income would increase approximately 0.5 percent for year 1 and decrease 3.2 percent for year 2, compared to a flat interest rate scenario.
In an immediate and sustained 200 basis point increase in market rates at June 30, 2025, net interest income would decrease approximately 2.0 percent in year 1 and increase by 4.4 percent in year 2, compared to a flat interest rate scenario. In an immediate and sustained 200 basis point decrease in market rates at June 30, 2025, net interest income for year 1 would increase approximately 0.3 percent, when compared to a flat interest rate scenario. In year 2, net interest income would decrease 8.5 percent, when compared to a flat interest rate scenario.
The Company's interest rate sensitivity models indicate the Company is liability sensitive as of June 30, 2025 and that net interest income would decline in a rising rate environment, but improve in a falling rate environment.
The table below shows the estimated changes in the Company’s economic value of portfolio equity (“EVPE”) that would result from an immediate parallel change in the market interest rates at June 30, 2025.
Estimated Increase/
EVPE as a Percentage of
Decrease in EVPE
Present Value of Assets (B)
Rates
EVPE
Increase/(Decrease)
(Basis Points)
EVPE (A)
Percent
Ratio (C)
(basis points)
+200
767,465
(37,922
(4.71
11.36
(10
+100
783,398
(21,989
(2.73
11.38
Flat interest rates
805,387
11.46
-100
828,919
23,532
2.92
11.55
-200
797,549
(7,838
(0.97
10.96
(A) EVPE is the discounted present value of expected cash flows from assets and liabilities.
(B) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(C) EVPE ratio represents EVPE divided by the present value of assets.
Certain shortcomings are inherent in the methodologies used in determining interest rate risk. Simulation modeling requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the modeling assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the information provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the forms and rules of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.
The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system reflects resource constraints. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. These inherent limitations include that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Further, controls can be circumvented. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
In the normal course of its business, lawsuits and claims may be brought against the Company and its subsidiaries. There are no currently pending or threatened litigation or proceedings against the Company or its subsidiaries, which if adversely decided, we believe would have a material adverse effect on the Company.
ITEM 1A. Risk Factors
There have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
TotalNumber of SharesPurchasedAs Part ofPublicly AnnouncedPlans or Programs
TotalNumber of SharesWithheld (A)
Average Price PaidPer Share
Maximum Number ofShares That MayYet Be PurchasedUnder the PlansOr Programs (B)
April 1, 2025 -
April 30, 2025
880,000
May 1, 2025 -
May 31, 2025
33,525
27.54
846,475
June 1, 2025 -
66,475
27.49
780,000
100,000
27.52
(A) Represents shares withheld to satisfy tax withholding obligations upon the exercise of stock options and/or the vesting of restricted stock awards/units. Such shares are repurchased pursuant to the applicable plan and are not under the Company's share repurchase program.
(B) On January 30, 2025, the Company's Board of Directors approved a plan to repurchase up to 880,000 shares, which was approximately 5 percent of the outstanding shares as of that date, through December 31, 2026. The timing and amount of shares repurchased will depend on certain factors, including but not limited to, market conditions, the Company's liquidity and capital requirements and alternative uses of capital.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
Not applicable.
ITEM 5. Other Information
Securities Trading Plans of Directors and Executive Officers
On March 28, 2025, Douglas L. Kennedy, President, Chief Executive Officer and a director of the Company entered into a Rule 10b5-1 trading arrangement, which is intended to satisfy the affirmative defense of Rule 10b5-1(c). The aggregate number of shares to be sold under the plan is 30,000. The plan terminated upon the earlier of July 25, 2025 or until the 30,000 shares have been sold.
During the three months ended June 30, 2025, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."
ITEM 6. Exhibits
Articles of Incorporation and By-Laws:
A. Certificate of Incorporation of the Registrant, as amended, incorporated herein by reference to Exhibit 3 of the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2009 (File No. 001-16197).
B. By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed on March 23, 2023 (File No. 001-16197).
Peapack-Gladstone Financial Corporation 2025 Long-Term Incentive Plan (incorporated by reference to Appendix A to the proxy statement for the Annual Meeting of Shareholders filed with the Securities and Exchange Commission on March 20, 2025 (File No. 001-16197).
31.1
Certification of Douglas L. Kennedy, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
31.2
Certification of Frank A. Cavallaro, Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Douglas L. Kennedy, Chief Executive Officer of the Corporation and Frank A. Cavallaro, Chief Financial Officer of the Corporation.
101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
DATE: August 8, 2025
By:
/s/ Douglas L. Kennedy
Douglas L. Kennedy
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Frank A. Cavallaro
Frank A. Cavallaro
Senior Executive Vice President and Chief Financial Officer
(Principal Financial Officer)