☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2026
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 Jersey07921-0700
(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 Regulation 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).
Yes ☒ No ☐
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 July 31, 2026: 17,727,952
Securities held to maturity (fair value $69,880 at June 30, 2026 and $87,491 at December 31, 2025)
78,560
95,862
CRA equity security, at fair value
13,320
13,459
Federal Home Loan Bank / Federal Reserve Bank stock, at cost
12,931
14,605
Loans held for sale, at fair value
1,202
450
Loans held for sale, at lower of cost or fair value
2,176
4,437
Loans
6,675,251
6,253,736
Less: allowance for credit losses
69,167
71,039
Net loans
6,606,084
6,182,697
Premises and equipment
40,830
39,164
Other real estate owned
908
—
Accrued interest receivable
34,060
31,971
Bank owned life insurance
48,071
47,761
Goodwill
36,212
36,212
Other intangible assets
7,140
7,627
Finance lease right-of-use assets
774
844
Operating lease right-of-use assets
38,098
39,886
Deferred tax assets, net
5,409
772
Other assets
38,184
48,639
TOTAL ASSETS
$
7,970,293
$
7,526,409
LIABILITIES
Deposits:
Noninterest-bearing demand deposits
$
1,624,244
$
1,428,745
Interest-bearing deposits:
Checking
3,497,096
3,448,497
Savings
111,710
105,123
Money market accounts
1,448,916
1,197,995
Certificates of deposit - retail
375,633
408,219
Certificates of deposit - listing service
—
400
Total deposits
7,057,599
6,588,979
Short-term borrowings
74,854
73,267
Finance lease liabilities
1,103
1,186
Operating lease liabilities
41,493
43,294
Subordinated debt, net
—
99,030
Due to brokers
9,642
—
Accrued expenses and other liabilities
69,817
62,447
TOTAL LIABILITIES
7,254,508
6,868,203
SHAREHOLDERS’ EQUITY
Preferred stock (no par value; authorized 500,000 shares; issued 30,000 shares; liquidation preference of $1,000 per share)
30,000
—
Common stock (no par value; stated value $0.83 per share; authorized 42,000,000 shares; issued shares, 21,867,973 at June 30, 2026 and 21,707,259 at December 31, 2025; outstanding shares, 17,718,733 at June 30, 2026 and 17,558,019 at December 31, 2025)
18,230
18,096
Surplus
354,747
353,267
Treasury stock at cost (4,149,240 shares at June 30, 2026 and 4,149,240 shares at December 31, 2025)
(122,953
)
(122,953
)
Retained earnings
485,522
457,357
Accumulated other comprehensive loss, net of income tax
(49,761
)
(47,561
)
TOTAL SHAREHOLDERS’ EQUITY
715,785
658,206
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY
$
7,970,293
$
7,526,409
See accompanying notes to consolidated financial statements.
3
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
INTEREST INCOME
Interest and fees on loans
$
90,706
$
79,657
$
177,296
$
155,004
Interest on investments:
Taxable
6,947
8,370
14,073
16,583
Interest on loans held for sale
7
6
15
15
Interest on interest-earning deposits
2,550
1,618
3,875
4,394
Total interest income
100,210
89,651
195,259
175,996
INTEREST EXPENSE
Interest on savings and interest-bearing deposit accounts
33,176
35,807
63,579
70,720
Interest on certificates of deposit
2,947
4,002
6,046
8,365
Interest on borrowed funds
154
505
586
516
Interest on finance lease liability
12
13
24
27
Interest on subordinated debt
—
924
1,207
2,363
Subtotal - interest expense
36,289
41,251
71,442
81,991
Interest on interest-bearing demand - brokered
—
110
—
210
Total interest expense
36,289
41,361
71,442
82,201
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES
63,921
48,290
123,817
93,795
Provision for credit losses
8,088
6,586
15,415
11,057
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
55,833
41,704
108,402
82,738
OTHER INCOME
Wealth management fee income
17,220
15,943
33,723
31,378
Loan fee income
2,069
1,899
5,913
2,888
Capital markets revenue
925
799
1,469
1,254
Other income
1,917
2,803
3,704
4,778
Securities gains/(losses)
—
7
(81
)
7
Total other income
22,131
21,451
44,728
40,305
OPERATING EXPENSES
Compensation expense
29,352
28,232
59,134
54,547
Benefits expense
10,250
7,829
19,833
17,393
Premises and equipment
7,009
6,641
13,867
12,795
FDIC insurance expense
1,495
1,045
2,883
1,900
Professional and legal fees
1,532
1,645
3,086
2,835
Trust department expense
1,189
1,092
2,369
2,135
Loan expense
687
939
1,243
1,372
Advertising
468
919
735
1,073
Other expenses
3,685
3,551
7,957
7,283
Total operating expenses
55,667
51,893
111,107
101,333
INCOME BEFORE INCOME TAX EXPENSE
22,297
11,262
42,023
21,710
Income tax expense
6,325
3,321
11,898
6,174
NET INCOME
15,972
7,941
30,125
15,536
Dividends on preferred stock
195
—
195
—
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
$
15,777
$
7,941
$
29,930
$
15,536
EARNINGS PER SHARE
Basic
$
0.89
$
0.45
$
1.70
$
0.88
Diluted
$
0.86
$
0.45
$
1.65
$
0.87
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic
17,717,883
17,704,110
17,652,229
17,657,771
Diluted
18,625,408
17,773,237
18,213,905
17,799,095
See accompanying notes to consolidated financial statements.
4
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
(Unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
Net income
$
15,972
$
7,941
$
30,125
$
15,536
Comprehensive income/(loss):
Unrealized gains/(losses) on available for sale securities:
Unrealized holding gains/(losses) arising during the period
(1,254
)
4,533
(4,782
)
19,944
Reclassification adjustment for amounts included in net income
—
(7
)
81
(7
)
(1,254
)
4,526
(4,701
)
19,937
Tax effect
792
(1,208
)
1,712
(5,996
)
Net of tax
(462
)
3,318
(2,989
)
13,941
Unrealized gains/(losses) on cash flow hedges:
Unrealized holding gains/(losses) arising during the period
441
(1,633
)
1,075
(4,186
)
441
(1,633
)
1,075
(4,186
)
Tax effect
(111
)
451
(286
)
1,075
Net of tax
330
(1,182
)
789
(3,111
)
Total other comprehensive income/(loss)
(132
)
2,136
(2,200
)
10,830
Total comprehensive income/(loss)
$
15,840
$
10,077
$
27,925
$
26,366
See accompanying notes to consolidated financial statements.
5
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended June 30, 2026 and June 30, 2025
Accumulated
Other
Total
(In thousands, except share and
Preferred
Common
Treasury
Retained
Comprehensive
Shareholders'
per share data)
Stock
Stock
Surplus
Stock
Earnings
Loss
Equity
Balance at April 1, 2026 17,708,327 common shares outstanding
$
30,000
$
18,221
$
352,934
$
(122,953
)
$
470,631
$
(49,629
)
$
699,204
Net income
—
—
—
—
15,972
—
15,972
Other comprehensive loss
—
—
—
—
—
(132
)
(132
)
Restricted stock units issued, 607 shares
—
1
(1
)
—
—
—
—
Restricted stock units repurchased on vesting to pay taxes, (252) shares
—
—
(11
)
—
—
—
(11
)
Amortization of restricted stock units
—
—
1,486
—
—
—
1,486
Cash dividends declared on common stock ($0.05 per share)
—
—
—
—
(886
)
—
(886
)
Cash dividends declared on preferred stock
—
—
—
—
(195
)
—
(195
)
Issuance of shares for Employee Stock Purchase Plan, 10,051 shares
—
8
339
—
—
—
347
Balance at June 30, 2026 17,718,733 common shares outstanding
$
30,000
$
18,230
$
354,747
$
(122,953
)
$
485,522
$
(49,761
)
$
715,785
Accumulated
Other
Total
(In thousands, except share and
Preferred
Common
Treasury
Retained
Comprehensive
Shareholders'
per share data)
Stock
Stock
Surplus
Stock
Earnings
Loss
Equity
Balance at April 1, 2025 17,726,251 common shares outstanding
$
—
$
18,070
$
348,762
$
(117,509
)
$
430,267
$
(57,717
)
$
621,873
Net income
—
—
—
—
7,941
—
7,941
Other comprehensive income
—
—
—
—
—
2,136
2,136
Restricted stock units issued, 605 shares
—
1
(1
)
—
—
—
—
Restricted stock units repurchased on vesting to pay taxes, (285) shares
—
(1
)
(7
)
—
—
—
(8
)
Amortization of restricted stock units
—
—
1,215
—
—
—
1,215
Cash dividends declared on common stock ($0.05 per share)
—
—
—
—
(887
)
—
(887
)
Share repurchase, (100,000) shares
—
—
—
(2,778
)
—
—
(2,778
)
Issuance of shares for Employee Stock Purchase Plan, 9,693 shares
—
8
277
—
—
—
285
Balance at June 30, 2025 17,636,264 common shares outstanding
$
—
$
18,078
$
350,246
$
(120,287
)
$
437,321
$
(55,581
)
$
629,777
6
Six Months Ended June 30, 2026 and June 30, 2025
Accumulated
Other
(In thousands, except share and
Preferred
Common
Treasury
Retained
Comprehensive
per share data)
Stock
Stock
Surplus
Stock
Earnings
Loss
Total
Balance at January 1, 2026 17,558,019 common shares outstanding
$
—
$
18,096
$
353,267
$
(122,953
)
$
457,357
$
(47,561
)
$
658,206
Net income
—
—
—
—
30,125
—
30,125
Other comprehensive loss
—
—
—
—
—
(2,200
)
(2,200
)
Restricted stock units issued, 172,270 shares
—
144
(144
)
—
—
—
—
Restricted stock units repurchased on vesting to pay taxes, (32,620) shares
—
(27
)
(1,058
)
—
—
—
(1,085
)
Amortization of restricted stock units
—
—
2,041
—
—
—
2,041
Cash dividends declared on common stock ($0.10 per share)
—
—
—
—
(1,765
)
—
(1,765
)
Preferred stock issuance (30,000 shares at $1,000 per share)
30,000
—
—
—
—
—
30,000
Cash dividends declared on preferred stock
—
—
—
—
(195
)
—
(195
)
Issuance of shares for Employee Stock Purchase Plan, 21,064 shares
—
17
641
—
—
—
658
Balance at June 30, 2026 17,718,733 common shares outstanding
$
30,000
$
18,230
$
354,747
$
(122,953
)
$
485,522
$
(49,761
)
$
715,785
Accumulated
Other
(In thousands, except share and
Preferred
Common
Treasury
Retained
Comprehensive
per share data)
Stock
Stock
Surplus
Stock
Earnings
Loss
Total
Balance at January 1, 2025 17,586,616 common shares outstanding
$
—
$
17,953
$
348,264
$
(117,509
)
$
423,552
$
(66,411
)
$
605,849
Net income
—
—
—
—
15,536
—
15,536
Other comprehensive income
—
—
—
—
—
10,830
10,830
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
)
Amortization of restricted stock units
—
—
2,846
—
—
—
2,846
Cash dividends declared on common stock ($0.10 per share)
—
—
—
—
(1,767
)
—
(1,767
)
Share repurchase, (100,000) shares
—
—
—
(2,778
)
—
—
(2,778
)
Issuance of shares for Employee Stock Purchase Plan, 16,808 shares
—
14
496
—
—
—
510
Balance at June 30, 2025 17,636,264 common shares outstanding
$
—
$
18,078
$
350,246
$
(120,287
)
$
437,321
$
(55,581
)
$
629,777
See accompanying notes to consolidated financial statements.
7
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
2026
2025
OPERATING ACTIVITIES:
Net income
$
30,125
$
15,536
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation
2,346
1,921
Amortization of premium and accretion of discount on securities, net
(36
)
(59
)
Amortization of restricted stock
2,041
2,846
Amortization of intangible assets
487
543
Write-off of subordinated debt costs
938
—
Amortization of subordinated debt costs
32
372
Provision for credit losses
15,415
11,057
Deferred tax expense
(3,211
)
(2,691
)
Stock-based compensation and employee stock purchase plan expense
110
95
Fair value adjustment for equity security
139
(237
)
Loss/(gain) on securities available for sale
81
(7
)
Loans originated for sale (A)
(15,748
)
(13,423
)
Proceeds from sales of loans held for sale (A)
18,238
17,435
Gain on loans held for sale (A)
(981
)
(913
)
Loss on disposal of fixed assets
—
6
Increase in cash surrender value of life insurance, net
(310
)
(258
)
Increase in accrued interest receivable
(2,089
)
(3,311
)
Decrease in other assets
13,654
3,117
Increase/(decrease) in accrued expenses and other liabilities
14,587
(23,959
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
75,818
8,070
INVESTING ACTIVITIES:
Principal repayments, maturities and calls of securities available for sale
353,067
348,176
Principal repayments, maturities and calls of securities held to maturity
17,265
2,971
Redemptions of FHLB and FRB stock
36,139
22,212
Proceeds from sales of securities available for sale
97,019
53,182
Purchase of securities available for sale
(433,032
)
(364,303
)
Purchase of FHLB and FRB stock
(34,465
)
(21,306
)
Net increase in loans, net of participations sold
(439,710
)
(308,990
)
Purchase of premises and equipment
(3,926
)
(9,610
)
Disposal of premises and equipment
79
16
NET CASH USED IN INVESTING ACTIVITIES
(407,564
)
(277,652
)
FINANCING ACTIVITIES:
Net increase in deposits
468,620
234,101
Net increase in short-term borrowings
1,587
—
Dividends paid on preferred stock
(195
)
—
Dividends paid on common stock
(1,765
)
(1,767
)
Restricted stock repurchased on vesting to pay taxes
(1,085
)
(1,249
)
Repayment of subordinated debt
(100,000
)
(35,000
)
Proceeds from issuance of preferred stock
30,000
—
Issuance of shares for employee stock purchase plan
658
510
Shares repurchased
—
(2,778
)
NET CASH PROVIDED BY FINANCING ACTIVITIES
397,820
193,817
Net increase/(decrease) in cash and cash equivalents
66,074
(75,765
)
Cash and cash equivalents at beginning of period
187,820
391,367
Cash and cash equivalents at end of period
$
253,894
$
315,602
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest
$
71,946
$
83,295
Income tax, net
2,138
8,412
Transfer of loans to other real estate owned
908
—
Right-of-use asset obtained in exchange for operating lease liabilities
1,304
365
(A) Includes mortgage loans originated with the intent to sell, which are carried at fair value. In addition, this includes the guaranteed portion of Small Business Administration (“SBA”) loans, which are carried at the lower of cost or fair value.
See accompanying notes to consolidated financial statements.
8
PEAPACK-GLADSTONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Certain information and footnote disclosure 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 forthe year ended December 31, 2025 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, 2026, and the results of operations, comprehensive income and changes in shareholders’ equity for the three and six months ended June 30, 2026 and 2025. The cash flow statements are presented for the six months ended June 30, 2026 and 2025. The results of operations for the three and six months ended June 30, 2026 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:
•
Peapack Capital Corporation (“PCC”)
•
Peapack-Gladstone Mortgage Group, Inc., which owns 99 percent of Peapack Ventures, LLC and 79 percent of Peapack-Gladstone Realty, Inc., a New Jersey real estate investment company
•
PGB Trust & Investments of Delaware, which owns one percent of Peapack Ventures, LLC
•
Peapack Ventures, LLC, which owns 21 percent of Peapack-Gladstone Realty, Inc.
•
Peapack-Gladstone Realty, Inc.
•
PGB Securities, Inc.
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 statements of condition and revenues and expenses for the periods presented. Actual results could differ from those estimates.
Segment Information: The Company has two reportable segments as determined by the Chief Financial Officer, who is the designated Chief Operating Decision Maker (the "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, which includes monitoring net interest income. Segment pretax profit or loss is used to assess the performance of the Wealth Management Division, which includes monitoring wealth management fee income and assets under management and/or administration ("AUM"). Loans and investments 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.
9
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 a tiered fee schedule, based upon the market value of AUM. 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: 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 an allowance for credit losses ("ACL") by 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 Accounting Standards Update ("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 provision to the ACL through 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 Consolidated Statements 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 $126.7 million and $132.5 million as of June 30, 2026 and December 31, 2025, respectively. SBA loans held for sale, with an estimated fair value of $2.4 million and $4.8 million at June 30, 2026 and December 31, 2025, 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.
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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") requires the 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 economic 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
The ACL includes 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. 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.
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
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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 noassurance 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 (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 ("HELOC") 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 HELOCs 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, HELOCs 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
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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, 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. The ability of the Bank to foreclose and realize sufficient value from the assets is often highly uncertain.
Equipment Finance and Leasing. PCC offers a wide range of equipment finance solutions nationally and goes to market through capital markets, intermediary, vendor and direct platforms. PCC provides term loans and leases secured by assets financed for U.S. based companies and governments. Payment is typically made in monthly or quarterly installments under fixed-rate terms. Lease transactions may contain renewal or purchase options at the end of the lease term. PCC estimates the expected residual value of the leased property at lease inception by considering both internal and third-party valuations and may obtain partial or full residual value guarantees to reduce its residual asset risk. PCC serves a broad range of industries, including transportation, manufacturing, medical, construction and utilities.
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.
PCC's ongoing risk management strategy for residual assets includes regular reviews of estimated residual value, which may result in an impairment of the asset carrying value at any time during the life of the asset.
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 previously 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 loan modifications, at its discretion, to assist borrowers that may be experiencing financial difficulty. Examples of changes provided in a loan modification may include payment deferrals that are more than insignificant, an extension of the note term, or a reduction in the interest. 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 Consolidated Statements 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 Consolidated Statements 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, wealth management offices and office space and are classified as operating leases.
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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 in 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 Consolidated Statements 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 Consolidated Statements of Cash Flows 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 Consolidated Statements 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.
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
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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 months ended June 30, 2026. As of June 30, 2026, there was no unrecognized compensation cost related to non-vested stock options granted under the Company's stock incentive plans.
The Company issued performance-based and service-based restricted stock units in 2026 and 2025. Service-based units vest ratably over a three- or five-year period. There were 98,934 service-based restricted stock units granted under the 2025 Long-Term Stock Incentive Plan during the first six months of 2026.
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. Additionally, the Company entered into Special Executive Retention Performance Restricted Stock Unit (the “Market-Based RSUs”) Award Agreements (the "Agreements") with our President and Chief Executive Officer and the Senior Executive Vice President of the Company and President of Private Wealth Management, to incentivize the executives to remain in the employ of the Company through December 31, 2028 and to reward them for achieving certain Company performance goals specified in the Agreements. The number of Market-Based RSUs issued upon vesting will range from 0% to 250% of the shares granted based on the 30-day average stock price of the Company measured at the end of each performance period. The fair value of Market Based RSUs granted is estimated using a Monte Carlo simulation. Expected volatilities were determined based on the historical volatilities of the Company and the specified peer group. The risk-free interest rate for the performance period was derived from the Treasury constant maturities yield curve on the valuation dates. There were 133,354 performance-based restricted stock units granted under the 2025 Long-Term Stock Incentive Plan during the first six months of 2026, of which 66,000 units were Market-Based RSUs.
Changes in non-vested shares dependent on performance criteria for the six months ended June 30, 2026 were as follows:
Weighted
Average
Number of
Grant Date
Shares
Fair Value
Balance, January 1, 2026
133,936
$
30.37
Granted during 2026
133,354
41.78
Vested during 2026
(53,729
)
30.96
Forfeited during 2026
—
—
Balance, June 30, 2026
213,561
$
38.57
Changes in service-based restricted stock awards/units for the six months ended June 30, 2026 were as follows:
Weighted
Average
Number of
Grant Date
Shares
Fair Value
Balance, January 1, 2026
214,089
$
31.37
Granted during 2026
98,934
33.18
Vested during 2026
(118,541
)
31.26
Forfeited during 2026
(2,905
)
30.96
Balance, June 30, 2026
191,577
$
32.38
As of June 30, 2026, there was $11.8 million of total unrecognized compensation cost related to service-based and performance-based restricted stock units. This cost is expected to be recognized over a weighted average period of 2.28 years. Stock compensation expense recorded for the second quarters of 2026 and 2025 totaled $1.5 million and $1.2 million, respectively. Stock compensation expense recorded for the six months ended June 30, 2026 and 2025 totaled $2.0 million and $2.8 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.
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The Company did not issue performance-based phantom units in the first six months of 2026. The Company issued 106,490 service-based phantom units in the first six months of 2026. Service-based phantom units vest ratably over a three-year period.
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, 2026 met the criteria to be treated under liability classification in accordance with Accounting Standards Codification ("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 Statements of Condition. As of June 30, 2026, there was $13.1 million of unrecognized compensation costs related to non-vested phantom units. That cost is expected to be recognized over a weighted average period of 1.91 years. Stock compensation expense recorded for the second quarters of 2026 and 2025 totaled $3.2 million and $1.2 million, respectively. Stock compensation expense recorded for the six months ended June 30, 2026 and 2025 totaled $6.0 million and $2.9 million, respectively.
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.
During each Offering Period, each participant 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 $54,000 in compensation and employee benefits expense for the three months ended June 30, 2026 related to ESPP, compared to $56,000 for the three months ended June 30, 2025. Total shares issued under the ESPP during the second quarters ended June 30, 2026 and 2025 were 10,051 and 9,693, respectively.
For the six months ended June 30, 2026 and 2025, the Company recorded $110,000 and $95,000 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, 2026 and 2025 were 21,064 and 16,808, 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 common 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
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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.
Three Months Ended
Six Months Ended
June 30,
June 30,
(Dollars in thousands, except per share data)
2026
2025
2026
2025
Net income
$
15,972
$
7,941
$
30,125
$
15,536
Less: Dividends on preferred stock
195
—
195
—
Net income available to common shareholders
$
15,777
$
7,941
$
29,930
$
15,536
Basic weighted average shares outstanding
17,717,883
17,704,110
17,652,229
17,657,771
Plus: common stock equivalents
907,525
69,127
561,676
141,324
Diluted weighted average shares outstanding
18,625,408
17,773,237
18,213,905
17,799,095
Net income per share
Basic
$
0.89
$
0.45
$
1.70
$
0.88
Diluted
0.86
0.45
1.65
0.87
For the three months ended June 30, 2026 and 2025, 66,000 and 186,691 restricted stock units, respectively, were not included in the computation of diluted earnings per share because they were anti-dilutive. For the six months ended June 30, 2026 and 2025, 51,050 and 71,791 restricted stock units, 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 2022 or by New Jersey tax authorities for years prior to 2020.
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.
17
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.
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, 2026 and December 31, 2025 follows:
June 30, 2026
Gross
Gross
Allowance
Amortized
Unrealized
Unrealized
for
Fair
(In thousands)
Cost
Gains
Losses
Credit Losses
Value
Securities Available for Sale:
U.S treasuries
$
9,944
$
7
$
(1
)
$
—
$
9,950
U.S government-sponsored agencies
219,842
—
(33,524
)
—
186,318
Mortgage-backed securities–residential
563,730
621
(36,905
)
—
527,446
SBA pool securities
17,893
—
(2,240
)
—
15,653
Corporate bond
13,000
262
(189
)
—
13,073
Total securities available for sale
$
824,409
$
890
$
(72,859
)
$
—
$
752,440
Securities Held to Maturity:
U.S. government-sponsored agencies
$
25,000
$
—
$
(1,083
)
$
—
$
23,917
Mortgage-backed securities–residential
53,560
—
(7,597
)
—
45,963
Total securities held to maturity
$
78,560
$
—
$
(8,680
)
$
—
$
69,880
December 31, 2025
Gross
Gross
Allowance
Amortized
Unrealized
Unrealized
for
Fair
(In thousands)
Cost
Gains
Losses
Credit Losses
Value
Securities Available for Sale:
U.S government-sponsored agencies
$
244,833
$
—
$
(33,610
)
$
—
$
211,223
Mortgage-backed securities–residential
561,794
3,551
(34,980
)
—
530,365
SBA pool securities
19,345
—
(2,133
)
—
17,212
Corporate bond
15,500
250
(347
)
—
15,403
Total securities available for sale
$
841,472
$
3,801
$
(71,070
)
$
—
$
774,203
Securities Held to Maturity:
U.S. government-sponsored agencies
$
40,000
$
—
$
(1,125
)
$
—
$
38,875
Mortgage-backed securities–residential
55,862
23
(7,269
)
—
48,616
Total securities held to maturity
$
95,862
$
23
$
(8,394
)
$
—
$
87,491
18
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 six months ended June 30, 2026 and June 30, 2025, respectively. There were no sales of securities for the three months ended June 30, 2026.
Six Months Ended
(In thousands)
June 30, 2026
June 30, 2025
Proceeds from sales
$
97,019
$
53,182
Gross gains/(losses)
(81
)
7
Net tax expense
22
(2
)
19
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, 2026 and December 31, 2025.
June 30, 2026
Duration of Unrealized Loss
Less Than 12 Months
12 Months or Longer
Total
Approximate
Approximate
Approximate
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(In thousands)
Value
Losses
Value
Losses
Value
Losses
Securities Available for Sale:
U.S. treasuries
$
4,987
$
(1
)
$
—
$
—
$
4,987
$
(1
)
U.S. government-sponsored agencies
—
—
186,318
(33,524
)
186,318
(33,524
)
Mortgage-backed securities residential
177,661
(1,887
)
185,739
(35,018
)
363,400
(36,905
)
SBA pool securities
—
—
15,653
(2,240
)
15,653
(2,240
)
Corporate bond
—
—
7,311
(189
)
7,311
(189
)
Total securities available for sale
$
182,648
$
(1,888
)
$
395,021
$
(70,971
)
$
577,669
$
(72,859
)
Securities Held to Maturity:
U.S. government-sponsored agencies
$
—
$
—
$
23,917
$
(1,083
)
$
23,917
$
(1,083
)
Mortgage-backed securities residential
4,287
(36
)
41,676
(7,561
)
45,963
(7,597
)
Total securities held to maturity
$
4,287
$
(36
)
$
65,593
$
(8,644
)
$
69,880
$
(8,680
)
Total securities
$
186,935
$
(1,924
)
$
460,614
$
(79,615
)
$
647,549
$
(81,539
)
December 31, 2025
Duration of Unrealized Loss
Less Than 12 Months
12 Months or Longer
Total
Approximate
Approximate
Approximate
Fair
Unrealized
Fair
Unrealized
Fair
Unrealized
(In thousands)
Value
Losses
Value
Losses
Value
Losses
Securities Available for Sale:
U.S. government-sponsored agencies
$
—
$
—
$
211,223
$
(33,610
)
$
211,223
$
(33,610
)
Mortgage-backed securities residential
42,035
(79
)
205,749
(34,901
)
247,784
(34,980
)
SBA pool securities
—
—
17,212
(2,133
)
17,212
(2,133
)
Corporate bond
—
—
9,652
(347
)
9,652
(347
)
Total securities available for sale
$
42,035
$
(79
)
$
443,836
$
(70,991
)
$
485,871
$
(71,070
)
Securities Held to Maturity:
U.S. government-sponsored agencies
$
—
$
—
$
38,875
$
(1,125
)
$
38,875
$
(1,125
)
Mortgage-backed securities residential
—
—
43,737
(7,269
)
43,737
(7,269
)
Total securities held to maturity
$
—
$
—
$
82,612
$
(8,394
)
$
82,612
$
(8,394
)
Total securities
$
42,035
$
(79
)
$
526,448
$
(79,385
)
$
568,483
$
(79,464
)
Available for sale and held to maturity securities with a carrying value of $419.3 million and $76.6 million as of June 30, 2026, respectively, were pledged to secure public funds and for other purposes required or permitted by law. None of the pledged securities are encumbered.
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, 2026. 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, 2026 or 2025, respectively.
The Company has an investment in a CRA investment fund with a fair value of $13.3 million at June 30, 2026. This investment is classified as an equity security on our Consolidated Statements of Condition. This security had a loss of $55,000 and a loss of
20
$139,000 for the three and six months ended June 30, 2026, respectively. This amount was included in the fair value adjustment for CRA equity security on the Consolidated Statements of Income.
3. LOANS AND LEASES
Loans outstanding, excluding those held for sale, by general ledger classification, as of June 30, 2026 and December 31, 2025, consisted of the following:
% of
% of
June 30,
Total
December 31,
Total
(Dollars in thousands)
2026
Loans
2025
Loans
Residential mortgage
$
678,032
10.2
%
$
647,766
10.4
%
Multifamily mortgage
1,804,380
27.0
1,862,592
29.8
Commercial mortgage
981,896
14.7
774,428
12.4
Commercial loans (including equipment financing)
2,932,967
44.0
2,721,447
43.5
Commercial construction
771
0.0
495
0.0
Home equity lines of credit
55,136
0.8
59,306
0.9
Consumer loans, including fixed rate home equity loans
220,961
3.3
187,360
3.0
Other loans
1,108
0.0
342
0.0
Total loans
$
6,675,251
100.0
%
$
6,253,736
100.0
%
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, 2026 and December 31, 2025 are based on the CECL methodology:
% of
% of
June 30,
Total
December 31,
Total
(Dollars in thousands)
2026
Loans
2025
Loans
Primary residential mortgage
$
667,771
10.0
%
$
632,890
10.1
%
Junior lien loan on residence
57,467
0.9
61,420
1.0
Multifamily property
1,804,380
27.0
1,862,592
29.8
Owner-occupied commercial real estate
297,144
4.5
289,801
4.6
Investment commercial real estate
1,320,989
19.8
1,101,082
17.6
Commercial and industrial
1,988,934
29.8
1,823,557
29.2
Lease financing
287,212
4.3
266,038
4.3
Construction
21,466
0.3
24,959
0.4
Consumer and other
227,391
3.4
189,633
3.0
Total loans
6,672,754
100.0
%
6,251,972
100.0
%
Net deferred costs
2,497
1,764
Total loans including net deferred costs
$
6,675,251
$
6,253,736
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, 2026 and December 31, 2025:
June 30, 2026
Nonaccrual
Loans Past Due
With No
90 Days or Over
Allowance
And Still
(In thousands)
for Credit Loss
Nonaccrual
Accruing Interest
Primary residential mortgage
$
3,097
$
3,097
$
—
Junior lien loan on residence
103
103
—
Multifamily property
22,620
42,571
3,300
Investment commercial real estate
9,564
9,564
—
Commercial and industrial
2,963
12,619
—
Consumer and other
—
80
—
Total
$
38,347
$
68,034
$
3,300
21
December 31, 2025
Nonaccrual
Loans Past Due
With No
90 Days or Over
Allowance
And Still
(In thousands)
for Credit Loss
Nonaccrual
Accruing Interest
Primary residential mortgage
$
2,573
$
2,573
$
—
Junior lien loan on residence
106
106
—
Multifamily property
14,671
31,343
—
Investment commercial real estate
9,628
11,557
—
Commercial and industrial
8,973
22,641
—
Lease financing
23
23
—
Total
$
35,974
$
68,243
$
—
The following tables present the aging of the recorded investment in past due loans as of June 30, 2026 and December 31, 2025 by class of loans, excluding nonaccrual loans:
June 30, 2026
30-59
60-89
90 Days or
Days
Days
Greater
Total
(In thousands)
Past Due
Past Due
Past Due
Past Due
Primary residential mortgage
$
1,210
$
275
$
—
$
1,485
Multifamily property
9,071
20,768
3,300
33,139
Commercial and industrial
5,564
11,192
—
16,756
Total
$
15,845
$
32,235
$
3,300
$
51,380
December 31, 2025
30-59
60-89
90 Days or
Days
Days
Greater
Total
(In thousands)
Past Due
Past Due
Past Due
Past Due
Primary residential mortgage
$
7,121
$
799
$
—
$
7,920
Junior lien on residence
—
64
—
64
Multifamily property
4,642
9,576
—
14,218
Commercial and industrial
4,228
125
—
4,353
Total
$
15,991
$
10,564
$
—
$
26,555
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:
•
A large sample of relationships or new lending to existing relationships greater than $1,000,000 booked since the prior review;
•
All criticized and classified rated borrowers with relationship exposure of more than $500,000;
•
A large sample of Pass-rated (including Pass Watch) borrowers with total relationships in excess of $1,000,000 and a small sample of Pass related relationships less than $1,000,000;
•
All leveraged loans of $1,000,000 or greater;
•
At least two borrowing relationships managed by each commercial banker;
•
Any new Federal Reserve Board Regulation O loan commitments over $1,000,000; and
22
•
Any other credits requested by Bank senior management or a member of the Board of Directors and any borrower for which the reviewer determines a review is warranted based upon knowledge of the portfolio, local events, industry stresses, etc.
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.
23
The following is a summary of the credit risk profile of loans by internally assigned grade as of June 30, 2026 and December 31, 2025 based on originations for the periods indicated; the years represent the year of origination for non-revolving loans:
Grade as of June 30, 2026 for Loans Originated During
2021
Revolving-
(In thousands)
2026
2025
2024
2023
2022
and Prior
Revolving
Term
Total
Primary residential mortgage:
Pass
$
81,333
$
77,261
$
66,180
$
77,999
$
95,946
$
257,403
$
—
$
7,549
$
663,671
Special mention
—
—
—
348
—
—
—
—
348
Substandard
—
—
—
1,309
1,404
1,039
—
—
3,752
Doubtful
—
—
—
—
—
—
—
—
—
Total primary residential mortgages
81,333
77,261
66,180
79,656
97,350
258,442
—
7,549
667,771
Current period gross charge-offs
—
—
—
—
—
1
—
—
1
Junior lien loan on residence:
Pass
—
—
—
388
892
552
49,091
6,441
57,364
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
19
84
103
Doubtful
—
—
—
—
—
—
—
—
—
Total junior lien loan on residence
—
—
—
388
892
552
49,110
6,525
57,467
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Multifamily property:
Pass
83,556
227,317
21,248
43,259
408,553
908,385
—
44,391
1,736,709
Special mention
—
—
—
—
3,374
21,726
—
—
25,100
Substandard
—
—
—
—
—
42,571
—
—
42,571
Doubtful
—
—
—
—
—
—
—
—
—
Total multifamily property
83,556
227,317
21,248
43,259
411,927
972,682
—
44,391
1,804,380
Current period gross charge-offs
—
—
—
—
—
8,298
—
—
8,298
Owner-occupied commercial real estate:
Pass
24,218
60,723
31,531
3,973
20,713
132,230
12,218
9,736
295,342
Special mention
—
—
—
—
—
—
500
—
500
Substandard
—
—
—
—
—
1,302
—
—
1,302
Doubtful
—
—
—
—
—
—
—
—
—
Total owner-occupied commercial real estate
24,218
60,723
31,531
3,973
20,713
133,532
12,718
9,736
297,144
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Investment commercial real estate:
Pass
289,658
281,431
39,853
98,015
95,253
427,274
29,561
28,467
1,289,512
Special mention
—
—
—
—
21,269
644
—
—
21,913
Substandard
—
—
—
—
9,564
—
—
—
9,564
Doubtful
—
—
—
—
—
—
—
—
—
Total investment commercial real estate
289,658
281,431
39,853
98,015
126,086
427,918
29,561
28,467
1,320,989
Current period gross charge-offs
—
—
—
—
—
994
—
—
994
Commercial and industrial:
Pass
272,967
425,519
231,959
52,941
84,906
76,358
756,848
35,124
1,936,622
Special mention
—
—
146
790
—
5,894
—
5,141
11,971
Substandard
217
1,876
10,550
1,249
—
779
11,794
13,876
40,341
Doubtful
—
—
—
—
—
—
—
—
—
Total commercial and industrial
273,184
427,395
242,655
54,980
84,906
83,031
768,642
54,141
1,988,934
Current period gross charge-offs
—
345
—
7,810
—
—
—
—
8,155
Lease financing:
Pass
54,392
97,392
34,693
28,716
26,315
45,704
—
—
287,212
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
—
Total lease financing
54,392
97,392
34,693
28,716
26,315
45,704
—
—
287,212
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Construction:
Pass
—
5,500
—
—
—
—
13,452
2,514
21,466
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
—
Total commercial construction loans
—
5,500
—
—
—
—
13,452
2,514
21,466
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Consumer and other loans:
Pass
61,887
104,294
—
—
—
2,674
52,870
5,586
227,311
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
80
—
80
Doubtful
—
—
—
—
—
—
—
—
—
Total consumer and other loans
61,887
104,294
—
—
—
2,674
52,950
5,586
227,391
Current period gross charge-offs
—
—
—
—
—
—
—
14
14
Total:
24
Grade as of June 30, 2026 for Loans Originated During
2021
Revolving-
(In thousands)
2026
2025
2024
2023
2022
and Prior
Revolving
Term
Total
Pass
868,011
1,279,437
425,464
305,291
732,578
1,850,580
914,040
139,808
6,515,209
Special mention
—
—
146
1,138
24,643
28,264
500
5,141
59,832
Substandard
217
1,876
10,550
2,558
10,968
45,691
11,893
13,960
97,713
Doubtful
—
—
—
—
—
—
—
—
—
Total Loans
$
868,228
$
1,281,313
$
436,160
$
308,987
$
768,189
$
1,924,535
$
926,433
$
158,909
$
6,672,754
Total Current Period Gross Charge-offs
$
—
$
345
$
—
$
7,810
$
—
$
9,293
$
—
$
14
$
17,462
25
Grade as of December 31, 2025 for Loans Originated During
2020
Revolving-
(In thousands)
2025
2024
2023
2022
2021
and Prior
Revolving
Term
Total
Primary residential mortgage:
Pass
$
85,591
$
71,744
$
84,353
$
100,859
$
65,826
$
213,686
$
—
$
7,595
$
629,654
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
1,341
725
—
1,170
—
—
3,236
Doubtful
—
—
—
—
—
—
—
—
—
Total primary residential mortgages
85,591
71,744
85,694
101,584
65,826
214,856
—
7,595
632,890
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Junior lien loan on residence:
Pass
—
—
456
966
53
640
53,187
6,013
61,315
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
104
1
105
Doubtful
—
—
—
—
—
—
—
—
—
Total junior lien loan on residence
—
—
456
966
53
640
53,291
6,014
61,420
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Multifamily property:
Pass
228,337
23,563
50,982
404,551
582,573
457,032
525
44,575
1,792,138
Special mention
—
—
—
—
9,577
4,510
—
—
14,087
Substandard
—
—
—
11,888
14,337
30,142
—
—
56,367
Doubtful
—
—
—
—
—
—
—
—
—
Total multifamily property
228,337
23,563
50,982
416,439
606,487
491,684
525
44,575
1,862,592
Current period gross charge-offs
—
—
—
6,724
—
6,267
—
—
12,991
Owner-occupied commercial real estate:
Pass
66,950
31,903
4,051
21,019
42,915
95,725
15,980
9,947
288,490
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
1,311
—
—
1,311
Doubtful
—
—
—
—
—
—
—
—
—
Total owner-occupied commercial real estate
66,950
31,903
4,051
21,019
42,915
97,036
15,980
9,947
289,801
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Investment commercial real estate:
Pass
282,992
40,256
99,050
127,401
70,298
386,318
21,975
35,928
1,064,218
Special mention
—
—
—
22,030
—
3,277
—
—
25,307
Substandard
—
—
—
9,628
—
1,929
—
—
11,557
Doubtful
—
—
—
—
—
—
—
—
—
Total investment commercial real estate
282,992
40,256
99,050
159,059
70,298
391,524
21,975
35,928
1,101,082
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Commercial and industrial:
Pass
474,578
299,802
71,416
95,215
92,549
11,815
694,850
25,386
1,765,611
Special mention
—
—
935
—
6,870
647
3,000
181
11,633
Substandard
—
10,234
1,249
—
120
2,377
19,634
12,699
46,313
Doubtful
—
—
—
—
—
—
—
—
—
Total commercial and industrial
474,578
310,036
73,600
95,215
99,539
14,839
717,484
38,266
1,823,557
Current period gross charge-offs
—
232
2,517
11,087
—
44
—
—
13,880
Lease financing:
Pass
103,440
38,742
31,353
29,541
38,229
23,992
718
—
266,015
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
23
—
—
23
Doubtful
—
—
—
—
—
—
—
—
—
Total lease financing
103,440
38,742
31,353
29,541
38,229
24,015
718
—
266,038
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Construction:
Pass
5,500
—
—
—
—
—
19,459
—
24,959
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
—
Total commercial construction loans
5,500
—
—
—
—
—
19,459
—
24,959
Current period gross charge-offs
—
—
—
—
—
—
—
—
—
Consumer and other loans:
Pass
140,823
—
—
—
149
2,623
43,417
2,621
189,633
Special mention
—
—
—
—
—
—
—
—
—
Substandard
—
—
—
—
—
—
—
—
—
Doubtful
—
—
—
—
—
—
—
—
—
Total consumer and other loans
140,823
—
—
—
149
2,623
43,417
2,621
189,633
Current period gross charge-offs
—
—
—
—
—
4
—
33
37
Total:
Pass
1,388,211
506,010
341,661
779,552
892,592
1,191,831
850,111
132,065
6,082,033
Special mention
—
—
935
22,030
16,447
8,434
3,000
181
51,027
Substandard
—
10,234
2,590
22,241
14,457
36,952
19,738
12,700
118,912
Doubtful
—
—
—
—
—
—
—
—
—
Total Loans
$
1,388,211
$
516,244
$
345,186
$
823,823
$
923,496
$
1,237,217
$
872,849
$
144,946
$
6,251,972
Total Current Period Gross Charge-offs
$
—
$
232
$
2,517
$
17,811
$
—
$
6,315
$
—
$
33
$
26,908
At June 30, 2026, $68.0 million of substandard loans were individually evaluated, compared to $68.2 million at December 31, 2025. The decrease in substandard loans was driven by the upgrade of four multifamily loans totaling $22.7 million and the liquidation of one multifamily loan with a balance of $7.2 million, offset by the downgrade of five multifamily loans totaling $16.6 million during
26
the six months ended June 30, 2026. The increase in special mention loans was primarily due to four multifamily loans with an outstanding balance of $23.8 million and three commercial loans with an outstanding balance of $2.3 million at June 30, 2026. This increase was partially offset by the sale of one multifamily loan of $8.3 million, the payoff of one investment commercial real estate loan of $2.6 million and the upgrade of one multifamily loan of $4.5 million.
Loan Modifications:
The Company will provide loan modifications, at its discretion, to assist borrowers that may be experiencing financial difficulty. Examples of changes provided in a loan modification may include payment deferrals that are more than insignificant, an extension of the note term, or a reduction in the interest rate on a note. 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, 2026. The Company has not committed to lend additional amounts as of June 30, 2026 to customers with outstanding loans that are classified as modified loans.
There were seven loan modifications made during the first six months of 2026, which included two multifamily loans, two primary residential mortgages, and three commercial and industrial loans totaling $4.0 million, $430,000 and $2.3 million, respectively.
The following tables provide information related to the modifications completed during the three months ended June 30, 2026 by pool segment and type of concession granted:
Significant Payment Delay
Three Months Ended
June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Primary residential mortgage
$
348
0.05
%
Total
$
348
0.05
%
Combination Interest Rate Reduction
and Significant Payment Delay
Three Months Ended
June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
2,808
0.16
%
Total
$
2,808
0.16
%
Combination Significant Payment
Term Extension
Three Months Ended
June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Commercial and industrial
$
117
0.01
%
Total
$
117
0.01
%
27
The following tables provide information related to the modifications completed during the six months ended June 30, 2026 by pool segment and type of concession granted:
Significant Payment Delay
Six Months Ended June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Primary residential mortgage
$
430
0.06
%
Total
$
430
0.06
%
Combination Interest Rate Reduction
and Significant Payment Delay
Six Months Ended June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
4,017
0.22
%
Total
$
4,017
0.22
%
Combination Significant Payment
Delay and Term Extension
Six Months Ended June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Commercial and industrial
$
2,216
0.11
%
Total
$
2,216
0.11
%
Term Extension
Six Months Ended June 30, 2026
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Commercial and industrial
$
117
0.01
%
Total
$
117
0.01
%
The following table provides information related to the modifications 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
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
38,563
2.15
%
Total
$
38,563
2.15
%
28
Combination Interest Rate Reduction
and Significant Payment Delay
Three Months Ended
June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
41,432
2.31
%
Commercial and industrial
92
0.01
%
Total
$
41,524
2.32
%
Combination Interest Rate Reduction
and Significant Payment Delay
Three Months Ended
June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
2,889
0.16
%
Total
$
2,889
0.16
%
The following table provides information related to the modifications during the six months ended June 30, 2025 by pool segment and type of concession granted:
Significant Payment Delay
Six Months Ended June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Primary residential mortgage
$
289
0.05
%
Multifamily property
46,866
2.61
%
Commercial and industrial
10,774
0.66
%
Total
$
57,929
3.32
%
Combination Interest Rate Reduction
and Significant Payment Delay
Six Months Ended June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Multifamily property
$
50,739
2.83
%
Commercial and industrial
92
0.01
%
Total
$
50,831
2.84
%
29
Combination Significant Payment
Delay and Term Extension
Six Months Ended June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Commercial and industrial
$
416
0.03
%
Total
$
416
0.03
%
Combination Interest Rate Reduction
Significant Payment Delay & Term Extension
Six Months Ended June 30, 2025
Amortized
% of Total
Cost Basis
Class of
at Period
Financing
(Dollars in thousands)
End
Receivable
Commercial and industrial
$
2,889
0.16
%
Total
$
2,889
0.16
%
The following table depicts the payment status of the loans that were modified to a borrower experiencing financial difficulties as of June 30, 2026:
Payment Status at June 30, 2026
30-89 Days
90+ Days
(Dollars in thousands)
Current
Past Due
Past Due
Primary residential mortgage
$
653
$
82
$
92
Multifamily property
31,908
—
2,329
Commercial and industrial
9,859
3,936
—
Total
$
42,420
$
4,018
$
2,421
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
(Dollars in thousands)
Current
Past Due
Past Due
Primary residential mortgage
$
804
$
112
$
—
Multifamily property
92,190
8,303
—
Investment commercial real estate
17,753
—
—
Commercial and industrial
13,466
9,545
7,919
Total
$
124,213
$
17,960
$
7,919
30
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, 2026:
Amortized Cost Basis of Modified Loans
That Subsequently Defaulted
Six Months Ended June 30, 2026
Significant
Term
(Dollars in thousands)
Pay Delay
Extension
Primary residential mortgage
$
480
$
—
Multifamily property
2,329
—
Commercial and industrial
—
8,462
Total
$
2,809
$
8,462
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
Six Months Ended June 30, 2025
Interest Rate
Significant
Reduction &
Pay Delay
Significant
Significant
and Term
(Dollars in thousands)
Pay Delay
Pay Delay
Extension
Primary residential mortgage
$
804
$
—
$
—
Multifamily property
8,303
9,307
—
Investment commercial real estate
—
—
17,753
Commercial and industrial
9,545
—
6,742
Total
$
18,652
$
9,307
$
24,495
4. ALLOWANCE FOR CREDIT LOSSES
The ACL on loans held for investment is the combination of the allowance for credit losses on loans 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
31
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 $30.7 million at June 30, 2026 and $28.5 million at December 31, 2025.
The following tables present the loan balances by segment, and the corresponding balances in the allowance as of June 30, 2026 and December 31, 2025. The allowance was based on the CECL methodology.
June 30, 2026
Ending ACL
Attributable
Ending ACL
Total
To
Total
Attributable
Individually
Individually
Loans
To Loans
Total
Evaluated
Evaluated
Collectively
Collectively
Total
Ending
(In thousands)
Loans
Loans
Evaluated
Evaluated
Loans
ACL
Primary residential mortgage
$
3,097
$
—
$
664,674
$
5,717
$
667,771
$
5,717
Junior lien loan on residence
103
—
57,364
178
57,467
178
Multifamily property
42,571
1,818
1,761,809
8,572
1,804,380
10,390
Owner-occupied commercial real estate
—
—
297,144
3,421
297,144
3,421
Investment commercial real estate
9,564
—
1,311,425
15,584
1,320,989
15,584
Commercial and industrial
12,619
2,806
1,976,315
24,216
1,988,934
27,022
Lease financing
—
—
287,212
2,825
287,212
2,825
Construction
—
—
21,466
342
21,466
342
Consumer and other loans
80
80
227,311
3,608
227,391
3,688
Total ACL
$
68,034
$
4,704
$
6,604,720
$
64,463
$
6,672,754
$
69,167
December 31, 2025
Ending ACL
Attributable
Ending ACL
Total
To
Total
Attributable
Individually
Individually
Loans
To Loans
Total
Evaluated
Evaluated
Collectively
Collectively
Total
Ending
(In thousands)
Loans
Loans
Evaluated
Evaluated
Loans
ACL
Primary residential mortgage
$
2,573
$
—
$
630,317
$
5,328
$
632,890
$
5,328
Junior lien loan on residence
106
—
61,314
208
61,420
208
Multifamily property
31,343
3,574
1,831,249
8,884
1,862,592
12,458
Owner-occupied commercial real estate
—
—
289,801
3,630
289,801
3,630
Investment commercial real estate
11,557
994
1,089,525
12,993
1,101,082
13,987
Commercial and industrial
22,641
7,466
1,800,916
21,919
1,823,557
29,385
Lease financing
23
—
266,015
2,554
266,038
2,554
Construction
—
—
24,959
297
24,959
297
Consumer and other loans
—
—
189,633
3,192
189,633
3,192
Total ACL
$
68,243
$
12,034
$
6,183,729
$
59,005
$
6,251,972
$
71,039
Individually evaluated loans included nonaccrual loans of $68.0 million at June 30, 2026 and $68.2 million at December 31, 2025. Individually evaluated loans did not include any performing modified loans at June 30, 2026. An allowance of $355,000 was allocated to modified loans at June 30, 2026.
The allowance for credit losses was $69.2 million as of June 30, 2026, compared to $71.0 million at December 31, 2025. The decrease in the ACL was primarily driven by charge-offs of $17.5 million during the six months ended June 30, 2026. Charge-offs of $7.8 million were related to the liquidation of one commercial and industrial relationship with an additional $8.3 million associated with the sale of two multifamily loans. The commercial and industrial loan charge-off in the current period was tied to a specific provision recorded in previous periods. The decrease was partially offset by a provision for credit losses of $15.3 million driven by loan growth of $421.5 million for the six months ended June 30, 2026. The ACL as a percentage of loans was 1.04 percent at June 30, 2026, compared to 1.14 percent at December 31, 2025. The decrease in the ratio for the six months ended June 30, 2026 was primarily due to the above mentioned charge-offs.
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
32
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, 2026 and December 31, 2025:
June 30, 2026
Average
Unpaid
Individually
Principal
Recorded
Related
Evaluated
(In thousands)
Balance
Investment
Allowance
Loans
With no related allowance recorded:
Primary residential mortgage (A)
$
3,331
$
3,097
$
—
$
3,022
Junior lien loan on residence (A)
116
103
—
104
Multifamily property (B)
23,611
22,620
—
22,080
Investment commercial real estate (C)
12,500
9,564
—
11,199
Commercial and industrial (A)(C)(D)
10,732
2,963
—
6,371
Total loans with no related allowance
$
50,290
$
38,347
$
—
$
42,776
With related allowance recorded:
Multifamily property (B)
$
20,249
$
19,951
$
1,818
$
11,176
Commercial and industrial (A)(C)(D)
10,095
9,656
2,806
9,754
Consumer and other loans (E)
80
80
80
13
Total loans with related allowance
$
30,424
$
29,687
$
4,704
$
20,943
Total loans individually evaluated
$
80,714
$
68,034
$
4,704
$
63,719
(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) Unsecured.
December 31, 2025
Average
Unpaid
Individually
Principal
Recorded
Related
Evaluated
(In thousands)
Balance
Investment
Allowance
Loans
With no related allowance recorded:
Primary residential mortgage (A)
$
2,761
$
2,573
$
—
$
2,979
Junior lien loan on residence (A)
117
106
—
109
Multifamily property (B)
15,264
14,671
—
33,732
Investment commercial real estate (C)
12,500
9,628
—
9,682
Commercial and industrial (A)(C)(D)
9,057
8,600
—
21,608
Lease financing (E)
126
23
—
821
Total loans with no related allowance
$
39,825
$
35,601
$
—
$
68,931
With related allowance recorded:
Multifamily property (B)
$
16,862
$
16,672
$
3,574
$
14,748
Investment commercial real estate (C)
1,929
1,929
994
1,929
Commercial and industrial (A)(C)(D)
14,041
14,041
7,466
7,630
Total loans with related allowance
$
32,832
$
32,642
$
12,034
$
24,307
Total loans individually evaluated for impairment
$
72,657
$
68,243
$
12,034
$
93,238
(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.
33
Interest income recognized on individually evaluated loans for the three and six months ended June 30, 2026 and 2025 was not material. The Company did not recognize any income on non-accruing loans for the three and six months ended June 30, 2026 and 2025.
The activity in the allowance for credit losses for the three months ended June 30, 2026 and June 30, 2025 is summarized below:
April 1,
June 30,
2026
2026
Beginning
Provision
Ending
(In thousands)
ACL
Charge-offs
Recoveries
(Credit) (A)
ACL
Primary residential mortgage
$
5,396
$
(1
)
$
—
$
322
$
5,717
Junior lien loan on residence
195
—
—
(17
)
178
Multifamily property
12,129
(4,760
)
—
3,021
10,390
Owner-occupied commercial real estate
3,544
—
—
(123
)
3,421
Investment commercial real estate
15,207
(994
)
—
1,371
15,584
Commercial and industrial
24,312
(345
)
230
2,825
27,022
Lease financing
2,544
—
—
281
2,825
Construction
209
—
—
133
342
Consumer and other loans
3,490
(2
)
1
199
3,688
Total ACL
$
67,026
$
(6,102
)
$
231
$
8,012
$
69,167
(A) Provision to roll forward the ACL excludes provision of $76,000 for off-balance sheet commitments.
April 1,
June 30,
2025
2025
Beginning
Provision
Ending
(In thousands)
ACL
Charge-offs
Recoveries
(Credit) (A)
ACL
Primary residential mortgage
$
4,469
$
—
$
—
$
359
$
4,828
Junior lien loan on residence
195
—
—
14
209
Multifamily property
17,730
—
—
796
18,526
Owner-occupied commercial real estate
3,464
—
—
(210
)
3,254
Investment commercial real estate
11,764
—
—
762
12,526
Commercial and industrial
32,980
—
24
4,541
37,545
Lease financing
1,816
—
—
388
2,204
Construction
158
—
—
32
190
Consumer and other loans
2,574
(20
)
39
(105
)
2,488
Total ACL
$
75,150
$
(20
)
$
63
$
6,577
$
81,770
(A) Provision to roll forward the ACL excludes a provision of $9,000 for off-balance sheet commitments.
The activity in the allowance for credit losses for the six months ended June 30, 2026 and June 30, 2025 is summarized below:
34
January 1,
June 30,
2026
2026
Beginning
Provision
Ending
(In thousands)
ACL
Charge-offs
Recoveries
(Credit) (A)
ACL
Primary residential mortgage
$
5,328
$
(1
)
$
—
$
390
$
5,717
Junior lien loan on residence
208
—
—
(30
)
178
Multifamily property
12,458
(8,298
)
—
6,230
10,390
Owner-occupied commercial real estate
3,630
—
—
(209
)
3,421
Investment commercial real estate
13,987
(994
)
—
2,591
15,584
Commercial and industrial
29,385
(8,155
)
255
5,537
27,022
Lease financing
2,554
—
—
271
2,825
Construction
297
—
—
45
342
Consumer and other loans
3,192
(14
)
1
509
3,688
Total ACL
$
71,039
$
(17,462
)
$
256
$
15,334
$
69,167
(A) Provision to roll forward the ACL excludes a provision of $81,000 for off-balance sheet commitments.
January 1,
June 30,
2025
2025
Beginning
Provision
Ending
(In thousands)
ACL
Charge-offs
Recoveries
(Credit) (A)
ACL
Primary residential mortgage
$
4,398
$
—
$
—
$
430
$
4,828
Junior lien loan on residence
180
—
—
29
209
Multifamily property
17,653
—
—
873
18,526
Owner-occupied commercial real estate
3,208
—
—
46
3,254
Investment commercial real estate
11,685
—
—
841
12,526
Commercial and industrial
33,075
(2,349
)
48
6,771
37,545
Lease financing
1,488
—
—
716
2,204
Construction
121
—
—
69
190
Consumer and other loans
1,184
(31
)
39
1,296
2,488
Total ACL
$
72,992
$
(2,380
)
$
87
$
11,071
$
81,770
(A) Provision to roll forward the ACL excludes a credit of $14,000 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, 2026 and 2025:
January 1,
2026
June 30,
Beginning
Provision
2026
(In thousands)
ACL
(Credit)
Ending ACL
Off balance sheet commitments
$
608
$
81
$
689
Total ACL
$
608
$
81
$
689
January 1,
2025
June 30,
Beginning
Provision
2025
(In thousands)
ACL
(Credit)
Ending ACL
Off balance sheet commitments
$
691
$
(14
)
$
677
Total ACL
$
691
$
(14
)
$
677
35
5. DEPOSITS
Certificates of deposit that met or exceeded $250,000 totaled $119.4 million and $138.1 million at June 30, 2026 and December 31, 2025, respectively. The Company had no brokered certificates of deposit at either June 30, 2026 or December 31, 2025.
The following table sets forth the details of total deposits as of June 30, 2026 and December 31, 2025:
June 30,
December 31,
2026
2025
(Dollars in thousands)
Noninterest-bearing demand deposits
$
1,624,244
23.0
%
$
1,428,745
21.7
%
Interest-bearing checking (A)
3,497,096
49.6
3,448,497
52.3
Savings
111,710
1.6
105,123
1.6
Money market (B)
1,448,916
20.5
1,197,995
18.2
Certificates of deposit - retail
375,633
5.3
408,219
6.2
Certificates of deposit - listing service
—
—
400
0.0
Total deposits
7,057,599
100.0
%
6,588,979
100.0
%
(A)
Interest-bearing checking included $2.11 billion at June 30, 2026 and $1.98 billion at December 31, 2025 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace programs.
(B)
Money market included $203.1 million at June 30, 2026 and $165.6 million at December 31, 2025 of reciprocal balances in the Promontory Demand Deposit Marketplace program.
The scheduled maturities of certificates of deposit, including brokered certificates of deposit, as of June 30, 2026, are as follows:
(In thousands)
2026
$
265,929
2027
108,056
2028
622
2029
534
2030
337
2031 and later
155
Total
$
375,633
6. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS
At June 30, 2026, the Company had $74.9 million of overnight borrowings at the FHLB at a rate of 3.94 percent. At December 31, 2025, the Company had $73.3 million of overnight borrowings at the FHLB at a rate of 3.96 percent. At June 30, 2026, unused short-term overnight borrowing capacity totaled $1.69 billion from the FHLB, $15.0 million from correspondent banks and $2.67 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 has two reportable segments as 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 expense 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, which includes monitoring net interest income. Segment pretax profit or loss is used to assess the performance of the Wealth Management Division, which includes monitoring wealth management fee income and AUM. Loans and investments 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 contribute to the significant expenses in the banking segment, while payroll, occupancy, and trust expenses are the significant expenses in the Wealth Management Division. All operations of the Company are domestic.
36
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, 2026 and 2025.
Three Months Ended June 30, 2026
Wealth
(In thousands)
Banking
Management
Total
Net interest income
$
63,362
$
559
$
63,921
Noninterest income
4,858
17,273
22,131
Total income
68,220
17,832
86,052
Provision for credit losses
8,088
—
8,088
Compensation and benefits
31,659
7,943
39,602
Premises and equipment expense
5,103
730
5,833
Depreciation expense
1,065
111
1,176
FDIC expense
1,495
—
1,495
Professional and legal fees
1,532
—
1,532
Trust department expense
—
1,189
1,189
Other operating expense
3,897
943
4,840
Total operating expense
52,839
10,916
63,755
Income before income tax expense
15,381
6,916
22,297
Income tax expense
4,290
2,035
6,325
Net income
$
11,091
$
4,881
$
15,972
37
Three Months Ended June 30, 2025
Wealth
(In thousands)
Banking
Management
Total
Net interest income
$
47,713
$
577
$
48,290
Noninterest income
5,347
16,104
21,451
Total income
53,060
16,681
69,741
Provision for credit losses
6,586
—
6,586
Compensation and employee benefits
28,540
7,521
36,061
Premises and equipment expense
4,890
716
5,606
Depreciation expense
912
123
1,035
FDIC insurance expense
1,045
—
1,045
Professional and legal fees
1,645
—
1,645
Trust department expense
—
1,092
1,092
Other operating expense
4,339
1,070
5,409
Total operating expense
47,957
10,522
58,479
Income before income tax expense
5,103
6,159
11,262
Income tax expense
1,496
1,825
3,321
Net income
$
3,607
$
4,334
$
7,941
Six Months Ended June 30, 2026
Wealth
(In thousands)
Banking
Management
Total
Net interest income
$
122,699
$
1,118
$
123,817
Noninterest income
10,890
33,838
44,728
Total income
133,589
34,956
168,545
Provision for credit losses
15,415
—
15,415
Compensation and employee benefits
64,398
14,569
78,967
Premises and equipment expense
10,118
1,403
11,521
Depreciation expense
2,123
223
2,346
FDIC insurance expense
2,883
—
2,883
Professional and legal fees
3,069
17
3,086
Trust department expense
—
2,369
2,369
Other operating expense
8,122
1,813
9,935
Total operating expense
106,128
20,394
126,522
Income before income tax expense
27,461
14,562
42,023
Income tax expense
7,775
4,123
11,898
Net income
$
19,686
$
10,439
$
30,125
Total assets at period end
$
7,749,820
$
220,473
$
7,970,293
38
Six Months Ended June 30, 2025
Wealth
(In thousands)
Banking
Management
Total
Net interest income
$
92,624
$
1,171
$
93,795
Noninterest income
8,617
31,688
40,305
Total income
101,241
32,859
134,100
Provision for credit losses
11,057
—
11,057
Compensation and employee benefits
57,715
14,225
71,940
Premises and equipment expense
9,495
1,379
10,874
Depreciation expense
1,677
244
1,921
FDIC insurance expense
1,900
—
1,900
Professional and legal fees
2,835
—
2,835
Trust department expense
—
2,135
2,135
Other operating expense
7,551
2,177
9,728
Total operating expense
92,230
20,160
112,390
Income before income tax expense
9,011
12,699
21,710
Income tax expense
2,563
3,611
6,174
Net income
$
6,448
$
9,088
$
15,536
Total assets at period end
$
7,056,456
$
144,217
$
7,200,673
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
39
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.
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, 2026.
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
Significant
Markets For
Other
Significant
Identical
Observable
Unobservable
June 30,
Assets
Inputs
Inputs
(In thousands)
2026
(Level 1)
(Level 2)
(Level 3)
Assets:
Available for sale:
U.S. treasuries
$
9,950
$
—
$
9,950
$
—
U.S. government-sponsored agencies
186,318
—
186,318
—
Mortgage-backed securities-residential
527,446
—
527,446
—
SBA pool securities
15,653
—
15,653
—
Corporate bond
13,073
—
13,073
—
CRA investment fund
13,320
13,320
—
—
Derivatives:
Cash flow hedges
3,504
—
3,504
—
Loan level swaps
9,208
—
9,208
—
Total
$
778,472
$
13,320
$
765,152
$
—
Liabilities:
Derivatives:
Loan level swaps
9,208
—
9,208
—
Total
$
9,208
$
—
$
9,208
$
—
40
Assets Measured on a Recurring Basis
Fair Value Measurements Using
Quoted
Prices in
Active
Significant
Markets For
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(In thousands)
2025
(Level 1)
(Level 2)
(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies
$
211,223
$
—
$
211,223
$
—
Mortgage-backed securities-residential
530,365
—
530,365
—
SBA pool securities
17,212
—
17,212
—
Corporate bond
15,403
—
15,403
—
CRA investment fund
13,459
13,459
—
—
Derivatives:
Cash flow hedges
2,441
—
2,441
—
Loan level swaps
8,376
—
8,376
—
Total
$
798,479
$
13,459
$
785,020
$
—
Liabilities:
Derivatives:
Cash flow hedges
$
12
$
—
$
12
$
—
Loan level swaps
8,376
—
8,376
—
Total
$
8,388
$
—
$
8,388
$
—
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, 2026 and December 31, 2025.
The following table presents residential loans held for sale, at fair value, at the dates indicated:
(In thousands)
June 30, 2026
December 31, 2025
Residential loans contractual balance
$
1,184
$
445
Fair value adjustment
18
5
Total fair value of residential loans held for sale
$
1,202
$
450
The following tables summarize, at the dates indicated, assets measured at fair value on a non-recurring basis:
Fair Value Measurements Using
Quoted
Prices in
Active
Significant
Markets For
Other
Significant
Identical
Observable
Unobservable
June 30,
Assets
Inputs
Inputs
(In thousands)
2026
(Level 1)
(Level 2)
(Level 3)
Assets:
Individually evaluated loans:
Multifamily
$
18,133
$
—
$
—
$
18,133
Commercial and industrial
6,850
—
—
6,850
41
Fair Value Measurements Using
Quoted
Prices in
Active
Significant
Markets For
Other
Significant
Identical
Observable
Unobservable
December 31,
Assets
Inputs
Inputs
(In thousands)
2025
(Level 1)
(Level 2)
(Level 3)
Assets:
Individually evaluated loans:
Multifamily property
$
13,098
$
—
$
—
$
13,098
Investment commercial real estate
935
—
—
935
Commercial and industrial
6,575
—
—
6,575
The carrying amounts and estimated fair values of financial instruments at June 30, 2026 are as follows:
Fair Value Measurements at June 30, 2026 using
Carrying
(In thousands)
Amount
Level 1
Level 2
Level 3
Total
Financial assets
Cash and cash equivalents
$
253,894
$
253,894
$
—
$
—
$
253,894
Securities available for sale
752,440
—
752,440
—
752,440
Securities held to maturity
78,560
—
69,880
—
69,880
CRA investment fund
13,320
13,320
—
—
13,320
FHLB and FRB stock
12,931
—
—
—
N/A
Loans held for sale, at fair value
1,202
—
1,202
—
1,202
Loans held for sale, at lower of cost or fair value
2,176
—
2,406
—
2,406
Loans, net of allowance for credit losses
6,606,084
—
—
6,509,173
6,509,173
Accrued interest receivable
34,060
—
3,390
30,670
34,060
Accrued interest receivable loan level swaps (A)
374
—
374
—
374
Cash flow hedges
3,504
—
3,504
—
3,504
Loan level swaps
8,834
—
8,834
—
8,834
Financial liabilities
Deposits
$
7,057,599
$
6,681,966
$
373,267
$
—
$
7,055,233
Short-term borrowings
74,854
—
74,854
—
74,854
Accrued interest payable
5,252
4,643
609
—
5,252
Accrued interest payable loan level swaps (B)
374
—
374
—
374
Loan level swap
8,834
—
8,834
—
8,834
(A)
Included in other assets in the Consolidated Statements of Condition.
(B)
Included in accrued expenses and other liabilities in the Consolidated Statements of Condition.
42
The carrying amounts and estimated fair values of financial instruments at December 31, 2025 are as follows:
Fair Value Measurements at December 31, 2025
Carrying
(In thousands)
Amount
Level 1
Level 2
Level 3
Total
Financial assets
Cash and cash equivalents
$
187,820
$
187,820
$
—
$
—
$
187,820
Securities available for sale
774,203
—
774,203
—
774,203
Securities held to maturity
95,862
—
87,491
—
87,491
CRA investment fund
13,459
13,459
—
—
13,459
FHLB and FRB stock
14,605
—
—
—
N/A
Loans held for sale, at fair value
450
—
450
—
450
Loans held for sale, at lower of cost or fair value
4,437
—
4,819
—
4,819
Loans, net of allowance for credit losses
6,182,697
—
—
6,172,779
6,172,779
Accrued interest receivable
31,971
—
3,441
28,530
31,971
Accrued interest receivable loan level swaps (A)
541
—
541
—
541
Cash flow hedges
2,441
—
2,441
—
2,441
Loan level swaps
7,835
—
7,835
—
7,835
Financial liabilities
Deposits
$
6,588,979
$
6,180,360
$
406,932
$
—
$
6,587,292
Short-term borrowings
73,267
—
73,267
—
73,267
Subordinated debt
99,030
—
—
97,388
97,388
Accrued interest payable
5,788
5,025
744
19
5,788
Accrued interest payable loan level swaps (B)
541
—
541
—
541
Cash flow hedges
12
—
12
—
12
Loan level swaps
7,835
—
7,835
—
7,835
(A)
Included in other assets in the Consolidated Statements of Condition.
(B)
Included in accrued expenses and other liabilities in the Consolidated Statements of Condition.
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,
(In thousands)
2026
2025
Service charges on deposits
Overdraft fees
$
109
$
109
Interchange income
299
265
Other
982
820
Wealth management fees (A)
17,220
15,943
Loss on sale of property
—
(6
)
Gain on lease termination
—
875
Corporate advisory fee income
34
30
Other (B)
3,487
3,415
Total noninterest other income
$
22,131
$
21,451
43
For the Six Months Ended June 30,
(In thousands)
2026
2025
Service charges on deposits
Overdraft fees
$
206
$
215
Interchange income
557
500
Other
1,986
1,591
Wealth management fees (A)
33,723
31,378
Loss on sale of property
—
(6
)
Gain on lease termination
—
875
Corporate advisory fee income
103
120
Other (B)
8,153
5,632
Total noninterest other income
$
44,728
$
40,305
(A)
Includes investment brokerage fees.
(B)
All of the other category is outside the scope of ASC 606.
The following tables present the sources of noninterest income by operating segment for the periods indicated:
For the Three Months Ended June 30,
For the Three Months Ended June 30,
2026
2025
(In thousands)
Wealth
Wealth
Revenue by Operating Segment
Banking
Management
Total
Banking
Management
Total
Service charges on deposits
Overdraft fees
$
109
$
—
$
109
$
109
$
—
$
109
Interchange income
299
—
299
265
—
265
Other
982
—
982
820
—
820
Wealth management fees (A)
—
17,220
17,220
—
15,943
15,943
Loss on sale of property
—
—
—
(6
)
—
(6
)
Gain on lease termination
—
—
—
875
—
875
Corporate advisory fee income
34
—
34
30
—
30
Other (B)
3,434
53
3,487
3,254
161
3,415
Total noninterest income
$
4,858
$
17,273
$
22,131
$
5,347
$
16,104
$
21,451
For the Six Months Ended June 30,
For the Six Months Ended June 30,
2026
2025
(In thousands)
Wealth
Wealth
Revenue by Operating Segment
Banking
Management
Total
Banking
Management
Total
Service charges on deposits
Overdraft fees
$
206
$
—
$
206
$
215
$
—
$
215
Interchange income
557
—
557
500
—
500
Other
1,986
—
1,986
1,591
—
1,591
Wealth management fees (A)
—
33,723
33,723
—
31,378
31,378
Loss on sale of property
—
—
—
(6
)
—
(6
)
Gain on lease termination
—
—
—
875
—
875
Corporate advisory fee income
103
—
103
120
—
120
Other (B)
8,038
115
8,153
5,322
310
5,632
Total noninterest income
$
10,890
$
33,838
$
44,728
$
8,617
$
31,688
$
40,305
(A)
Includes investment brokerage fees.
(B)
All of the other category is outside the scope of ASC 606.
A description of the Company’s revenue streams accounted for under ASC 606 follows:
44
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 2026 by $20,000 and by $13,000 for the same quarter in 2025. Cardholder rewards reduced interchange income for the six months ended June 30, 2026 by $36,000 and by $24,000 for the same period in 2025.
Wealth management fees (gross): The Company earns wealth management fees from its contracts with wealth management clients to manage assets for investment. These fees are charged on a monthly or quarterly basis in accordance with its investment advisory agreements. Fees are generally assessed based on a tiered scale, based on the market value of AUM at month or quarter end. Other non-AUM based fees are charged on a fixed basis or as services are rendered.
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.
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.
10. 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, 2026 and 2025:
Amount
Other
Reclassified
Comprehensive
Other
From
Income/(Loss)
Comprehensive
Accumulated
Three Months
Balance at
Income/(Loss)
Other
Ended
Balance at
April 1,
Before
Comprehensive
June 30,
June 30,
(In thousands)
2026
Reclassifications
Income/(Loss)
2026
2026
Net unrealized holding gain/(loss) on securities available for sale, net of tax
$
(51,846
)
$
(462
)
$
—
$
(462
)
$
(52,308
)
Gain/(loss) on cash flow hedges
2,217
330
—
330
2,547
Accumulated other comprehensive gain/(loss), net of tax
$
(49,629
)
$
(132
)
$
—
$
(132
)
$
(49,761
)
45
Amount
Other
Reclassified
Comprehensive
Other
From
Income/(Loss)
Comprehensive
Accumulated
Three Months
Balance at
Income/(Loss)
Other
Ended
Balance at
April 1,
Before
Comprehensive
June 30,
June 30,
(In thousands)
2025
Reclassifications
Income/(Loss)
2025
2025
Net unrealized holding gain/(loss) on securities available for sale, net of tax
$
(61,525
)
$
3,323
$
(5
)
$
3,318
$
(58,207
)
Gain/(loss) on cash flow hedges
3,808
(1,182
)
—
(1,182
)
2,626
Accumulated other comprehensive gain/(loss), net of tax
$
(57,717
)
$
2,141
$
(5
)
$
2,136
$
(55,581
)
The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the three months ended June 30, 2026 and 2025:
Three Months Ended
June 30,
(In thousands)
2026
2025
Affected Line Item in Income Statement
Unrealized gains/(losses) on securities available for sale:
Reclassification adjustment for amounts included in net income
$
—
$
(7
)
Securities gains/(losses)
Tax effect
—
2
Income tax expense
Total reclassifications, net of tax
$
—
$
(5
)
The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the six months ended June 30, 2026 and 2025:
Amount
Other
Reclassified
Comprehensive
Other
From
Income/(Loss)
Comprehensive
Accumulated
Six Months
Balance at
Income/(Loss)
Other
Ended
Balance at
January 1,
Before
Comprehensive
June 30,
June 30,
(In thousands)
2026
Reclassifications
Income/(Loss)
2026
2026
Net unrealized holding gain/(loss) on securities available for sale, net of tax
$
(49,319
)
$
(3,041
)
$
52
$
(2,989
)
$
(52,308
)
Gain/(loss) on cash flow hedges
1,758
789
—
789
2,547
Accumulated other comprehensive gain/(loss), net of tax
$
(47,561
)
$
(2,252
)
$
52
$
(2,200
)
$
(49,761
)
46
Amount
Other
Reclassified
Comprehensive
Other
From
Income/(Loss)
Comprehensive
Accumulated
Six Months
Balance at
Income/(Loss)
Other
Ended
Balance at
January 1,
Before
Comprehensive
June 30,
June 30,
(In thousands)
2025
Reclassifications
Income/(Loss)
2025
2025
Net unrealized holding gain/(loss) on securities available for sale, net of tax
$
(72,148
)
$
13,946
$
(5
)
$
13,941
$
(58,207
)
Gain/(loss) on cash flow hedges
5,737
(3,111
)
—
(3,111
)
2,626
Accumulated other comprehensive gain/(loss), net of tax
$
(66,411
)
$
10,835
$
(5
)
$
10,830
$
(55,581
)
The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the six months ended June 30, 2026 and 2025:
Six Months Ended
June 30,
(In thousands)
2026
2025
Affected Line Item in Income
Unrealized gains/(losses) on securities available for sale:
Reclassification adjustment for amounts included in net income
$
81
$
(7
)
Securities gains/(losses)
Tax effect
(29
)
2
Income tax expense
Total reclassifications, net of tax
$
52
$
(5
)
11. 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 $280.0 million at June 30, 2026 and $305.0 million at December 31, 2025 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, 2026, 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, 2026 and December 31, 2025:
(Dollars in thousands)
June 30, 2026
December 31, 2025
Notional amount
$
280,000
$
305,000
Weighted average pay rate
2.03
%
2.17
%
Weighted average receive rate
2.80
%
3.10
%
Weighted average maturity
0.99 years
1.39 years
Unrealized gain/(loss), net
$
3,504
$
2,429
Number of contracts
11
12
47
June 30, 2026
Notional
Fair
(In thousands)
Amount
Value
Interest rate swaps related to interest-bearing deposits
$
280,000
$
3,504
Total included in other assets
$
280,000
3,504
Total included in other liabilities
—
—
December 31, 2025
Notional
Fair
(In thousands)
Amount
Value
Interest rate swaps related to interest-bearing deposits
$
305,000
$
2,429
Total included in other assets
280,000
2,441
Total included in other liabilities
25,000
(12
)
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 and six months ended June 30, 2026 and 2025:
For the Three Months Ended June 30,
For the Six Months Ended June 30,
(In thousands)
2026
2025
2026
2025
Interest rate contracts
Gain/(loss) recognized in other comprehensive income (effective portion)
$
441
$
(1,633
)
$
1,075
$
(4,186
)
Net interest income recorded on these swap transactions totaled $533,000 and $1.1 million for the three and six months ended June 30, 2026, respectively. Net interest income recorded on these swap transactions totaled $1.1 million and $2.1 million for the three and six months ended June 30, 2025, 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 $374,000 and $541,000 at June 30, 2026 and December 31, 2025, respectively, is recorded in other assets and other liabilities.
Information about these swaps is as follows:
(Dollars in thousands)
June 30, 2026
December 31, 2025
Notional amount
$
405,893
$
429,286
Fair value
$
(8,834
)
$
(7,835
)
Weighted average pay rates
4.25
%
4.12
%
Weighted average receive rates
5.18
%
5.37
%
Weighted average maturity
2.99 years
3.02 years
Number of contracts
50
53
12. PREFERRED STOCK
In March 2026, the Company issued 30,000 shares of Series B Non-Cumulative Perpetual Convertible Preferred Stock (the “Series B Preferred Stock”) in a private placement, raising $30.0 million in capital. Under the related purchase agreement, the Company had the ability to issue, at its sole discretion, up to 20,000 additional shares for $20.0 million through December 31, 2027. On July 24, 2026, the Company issued the remaining 20,000 shares for $20.0 million. The Series B Preferred Stock is convertible into
48
common stock at the option of the holder on or after the five-year anniversary of the applicable issue date or in connection with a change in control, subject to applicable terms and conditions. Subject to customary anti-dilution adjustments, conversion occurs at a rate of 26.3157 shares of common stock for each share of Series B Preferred Stock held. The Series B Preferred Stock carries a dividend rate of 6.00 percent per annum, is non-callable for the first five years, but may thereafter be redeemed by the Company, subject to applicable terms, conditions and regulatory approvals. These securities qualify as Tier 1 Capital for purposes of calculating regulatory capital ratios.
13. SUBORDINATED DEBT
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 were non-callable for five years, had a stated maturity of December 22, 2030, and had a fixed interest rate of 3.50 percent until December 22, 2025. After December 23, 2025, the interest rate would have reset quarterly to a level equal to the then current three-month SOFR plus 326 basis points, payable quarterly in arrears. The Company fully redeemed the 2020 Notes plus $1.2 million in unpaid interest on March 2, 2026. The remaining net issuance costs of $938,000 were written off during the quarter ended March 31, 2026.
14. LEASES
The Company maintains certain property and equipment under direct financing and operating leases. As of June 30, 2026, the Company's operating lease ROU asset and operating lease liability totaled $38.1 million and $41.5 million, respectively. As of December 31, 2025, the Company's operating lease ROU asset and operating lease liability totaled $39.9 million and $43.3 million, respectively. Weighted average discount rates of 4.39 percent and 4.44 percent were used in the measurement of the ROU asset and lease liability at June 30, 2026 and December 31, 2025, respectively.
The Company's leases have remaining lease terms between six months to 11 years, with a weighted average lease term of 8.20 years at June 30, 2026. The Company's leases had remaining lease terms between six months to 11 years, with a weighted average lease term of 8.47 years at December 31, 2025. 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 $1.7 million and $1.6 million for three months ended June 30, 2026 and 2025, respectively. The variable lease costs were $132,000 and $123,000 for the three months ended June 30, 2026 and 2025, respectively.
Total operating lease costs were $3.4 million and $3.3 million for the six months ended June 30, 2026 and 2025, respectively. The variable lease costs were $263,000 and $242,000 for the six months ended June 30, 2026 and 2025, respectively.
The following is a schedule of the Company's operating lease liabilities by contractual maturity as of June 30, 2026:
(In thousands)
2026
$
3,423
2027
6,513
2028
6,098
2029
5,796
2030
5,873
Thereafter
22,233
Total lease payments
49,936
Less: imputed interest
8,443
Total present value of lease payments
$
41,493
The following table shows the supplemental cash flow information related to the Company’s direct finance and operating leases for the periods indicated:
For the Six Months Ended June 30,
(In thousands)
2026
2025
Right-of-use asset obtained in exchange for lease obligation
$
1,304
$
365
Operating cash flows from operating leases
3,361
3,045
Operating cash flows from direct finance leases
24
27
Financing cash flows from direct finance leases
70
70
49
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 and interim periods beginning after December 15, 2027. 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.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software. This amendment clarifies and modernizes the accounting for costs related to internal-use software. The amendments remove all references to project stages throughout Subtopic 350-40 and clarify the threshold entities apply to begin capitalizing costs. The amendments will be effective for the Company for fiscal years beginning after December 15, 2027 and interim periods within those fiscal years. The Company is currently evaluating the impact of this guidance on its consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-08, "Financial Instruments - Credit Losses (Topic 326): Purchased Loans." The pronouncement amends the guidance on the accounting for certain purchased loans. The new guidance makes significant changes to the accounting for certain acquired seasoned loans subject to the current expected credit loss model. The amendments in ASU 2025-08 apply prospectively and will be effective for the Company beginning January 1, 2027, with early adoption permitted, and is not expected to have a material impact on the Company's consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-11, "Interim Reporting (Topic 270): Narrow-Scope Improvements." The pronouncement is intended to provide clarity about the current interim reporting requirements, provides a list of the interim disclosures required by all other Codification topics and establishes a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. ASU 2025-11 will be effective for the Company beginning January 1, 2028, with early adoption permitted, and is not expected to have a material impact on the Company's consolidated financial statements.
50
Item 2
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, asset quality, 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, 2025, which include the following:
•
our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
•
the impact of anticipated higher operating expenses in 2026 and beyond;
•
our ability to successfully integrate our expanded employee base;
•
an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;
•
declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
•
declines in the value of our investment portfolio;
•
impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
•
higher than expected increases in our allowance for credit losses;
•
changes in the methodology and assumptions used to calculate the allowance for credit losses;
•
higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
•
inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
•
declines in real estate values within our market areas;
•
legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
•
the imposition of tariffs or other domestic or international governmental policies, trade restrictions and retaliatory measures impacting our borrowers and the broader economy;
•
the impact of any federal government shutdown, debt ceiling impasses or fiscal uncertainty;
•
the failure to maintain current technologies and/or to successfully implement future information technology enhancements and the operational risks associated with the adoption of artificial intelligence and other emerging technologies;
•
risks associated with cybersecurity threats, data breaches, ransomware attacks, or other failures in our operational or security systems and infrastructure, including the risks arising from our dependence on third-party service providers and vendors;
•
higher than expected FDIC insurance premiums;
•
adverse weather conditions;
•
the current or anticipated impact of military conflict, terrorism or other geopolitical events;
•
our inability to successfully generate new business in new geographic markets, including our expansion into New York City and Long Island;
•
a reduction in our lower-cost funding sources;
•
changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
•
our inability to adapt to technological changes;
•
claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
•
our inability to attract and retain key employees;
•
demand for loans and deposits in our market areas;
•
adverse changes in securities markets;
•
changes in New York City rent regulation and real estate tax laws;
•
changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary and fiscal policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
•
changes in accounting policies and practices; and/or
•
other unexpected material adverse changes in our financial condition, operations or earnings.
51
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.
52
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, 2025 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 our 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.
53
EXECUTIVE SUMMARY: The following tables present certain key aspects of our performance for the three and six months ended June 30, 2026 and 2025.
For the Three Months Ended June 30,
Change
(Dollars in thousands, except per share data)
2026
2025
2026 vs 2025
Results of Operations:
Interest income
$
100,210
$
89,651
$
10,559
Interest expense
36,289
41,361
(5,072
)
Net interest income
63,921
48,290
15,631
Wealth management fee income
17,220
15,943
1,277
Other income
4,911
5,508
(597
)
Total other income
22,131
21,451
680
Total revenue
86,052
69,741
16,311
Operating expenses
55,667
51,893
3,774
Pretax income before provision for credit losses
30,385
17,848
12,537
Provision for credit losses
8,088
6,586
1,502
Pretax income
22,297
11,262
11,035
Income tax expense
6,325
3,321
3,004
Net income
15,972
7,941
8,031
Dividends on preferred stock
195
—
195
Net income available to common shareholders
$
15,777
$
7,941
$
7,836
Diluted average shares outstanding
18,625,408
17,773,237
852,171
Diluted earnings per share
$
0.86
$
0.45
$
0.41
Return on average assets annualized ("ROAA")
0.81
%
0.45
%
0.36
%
Return on average common equity annualized ("ROAE")
8.94
5.11
3.83
54
For the Six Months Ended June 30,
Change
(Dollars in thousands, except per share data)
2026
2025
2026 vs 2025
Results of Operations:
Interest income
$
195,259
$
175,996
$
19,263
Interest expense
71,442
82,201
(10,759
)
Net interest income
123,817
93,795
30,022
Wealth management fee income
33,723
31,378
2,345
Other income
11,005
8,927
2,078
Total other income
44,728
40,305
4,423
Total revenue
168,545
134,100
34,445
Operating expenses
111,107
101,333
9,774
Pretax income before provision for credit losses
57,438
32,767
24,671
Provision for credit losses
15,415
11,057
4,358
Pretax income
42,023
21,710
20,313
Income tax expense
11,898
6,174
5,724
Net income
30,125
15,536
14,589
Dividends on preferred stock
195
—
195
Net income available to common shareholders
$
29,930
$
15,536
$
14,394
Diluted average shares outstanding
18,213,905
17,799,095
414,810
Diluted earnings per share
$
1.65
$
0.87
$
0.78
Return on average assets annualized (ROAA)
0.78
%
0.44
%
0.34
%
Return on average common equity annualized (ROAE)
8.73
5.04
3.69
June 30,
December 31,
Change
2026
2025
2026 vs 2025
Selected Balance Sheet Ratios:
Total capital (Tier I + II) to risk-weighted assets
11.88
%
12.68
%
(0.80
)%
Tier I leverage ratio
9.13
8.87
0.26
Loans to deposits
94.58
94.91
(0.33
)
Allowance for credit losses to total loans
1.04
1.14
(0.10
)
Allowancefor credit losses to nonperforming loans
96.96
104.10
(7.14
)
Nonperforming loans to total loans
1.07
1.09
(0.02
)
For the quarter ended June 30, 2026, the Company recorded total revenue of $86.1 million, pretax income of $22.3 million, net income available to common shareholders of $15.8 million and diluted earnings per share of $0.86, compared to revenue of $69.7 million, pretax income of $11.3 million, net income available to common shareholders of $7.9 million and diluted earnings per share of $0.45 for the same period last year.
The increase in net income for the second quarter of 2026 was primarily due to higher net interest income of $15.6 millionpartially offset by increases in operating expenses and provision for credit losses. The increase in operating expenses was principally attributable to the strategic addition of new employees related to the Company's expansion into New York City and Long Island and the expansion of the equipment financing team, increased health insurance costs and annual merit increases. The implementation of our strategy, including our metro New York City expansion, continues to deliver lower-cost core deposit relationships resulting in consistent improvement in our cost of funds and net interest margin. During the second quarter of 2026, deposits grew $230.8 million, which included $79.7 million in noninterest-bearing demand deposits. Net interest margin improved to 3.32 percent for the second quarter of 2026 as compared to 2.77 percent for the same period in 2025. Wealth management fee income continues to be a consistent and steady revenue stream for the Company and represented 20 percent of total revenue for the second quarter of 2026.
55
For the six months ended June 30, 2026, the Company recorded total revenue of $168.5 million, pretax income of $42.0 million, net income available to common shareholders of $29.9 million and diluted earnings per share of $1.65 compared to revenue of $134.1 million, pretax income of $21.7 million, net income available to common shareholders of $15.5 million and diluted earnings per share of $0.87 for the same period in 2025.
The increase in total revenue was primarily driven by strong net interest income growth due to improvements in yield on average interest earning assets (primarily due to growth in commercial and commercial mortgage loans) and cost on average interest-bearing liabilities. The Company has seen positive momentum in net interest margin, which increased to 3.29 percent for the first six months of 2026 as compared to 2.73 percent for the same period in 2025. Both wealth management fee income and other income also contributed to growth in revenue with increases of $2.3 million and $2.1 million for the six months ended June 30, 2026, respectively. Net income for the six months ended June 30, 2026 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 and the expansion of the equipment financing team, increased health insurance costs and annual merit increases.
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, 2025 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Aggregate Contractual Obligations.”
NET INTEREST INCOME (“NII”) / NET INTEREST MARGIN (“NIM”) / AVERAGE BALANCE SHEETS:
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 calculating 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.
Outstanding loan balances are the primary driver of the yields on interest-earning assets. The following tables summarize the loans that the Company closed during the periods indicated:
For the Three Months Ended
June 30,
June 30,
(In thousands)
2026
2025
Residential mortgage loans originated for portfolio
$
52,253
$
34,990
Residential mortgage loans originated for sale
4,792
1,712
Total residential mortgage loans
57,045
36,702
Commercial real estate loans
136,077
24,086
Multifamily
46,500
73,350
C&I loans (A) (B)
383,129
200,671
Small business administration
—
7,090
Wealth lines of credit (A)
23,255
2,400
Total commercial loans
588,961
307,597
Installment loans
26,844
8,164
Home equity lines of credit (A)
4,369
5,154
Total loans closed
$
677,219
$
357,617
56
For the Six Months Ended
June 30,
June 30,
(In thousands)
2026
2025
Residential mortgage loans originated for portfolio
$
81,629
$
60,147
Residential mortgage loans originated for sale
9,472
5,786
Total residential mortgage loans
91,101
65,933
Commercial real estate loans
274,647
71,366
Multifamily
78,325
80,150
C&I loans (A) (B)
657,398
457,953
Small business administration
11,445
13,018
Wealth lines of credit (A)
28,480
12,300
Total commercial loans
1,050,295
634,787
Installment loans
57,015
85,105
Home equity lines of credit (A)
11,007
9,959
Total loans closed
$
1,209,418
$
795,784
(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, C&I and wealth lines of credit loan originations increased by $20.3 million, $112.0 million, $182.5 million, and $20.9 million, respectively, for the three months ended June 30, 2026, as compared to the same period in 2025. Residential mortgage, commercial real estate, C&I and wealth lines of credit loan originations increased by $25.2 million, $203.3 million, $199.4 million, and $16.2 million, respectively, for the six months ended June 30, 2026 as compared to the same period in 2025. Loan growth for both periods was driven primarily by strategic business development initiatives, including the hiring of a new head of commercial real estate and the Company's expansion into the New York City and Long Island markets, along with continued customer demand across key lending categories.
At June 30, 2026, December 31, 2025 and June 30, 2025, the Bank had a concentration in commercial real estate (“CRE”) loans as defined by applicable regulatory guidance as follows:
June 30,
December 31,
June 30,
2026
2025
2025
Multifamily real estate loans as a percent of total regulatory capital of the Bank
233
%
231
%
228
%
Non-owner occupied commercial real estate loans as a percent of total regulatory capital of the Bank
170
136
127
Total CRE concentration
403
%
367
%
355
%
Total CRE concentration increased to 403 percent of the Bank's total regulatory capital at June 30, 2026 from 367 percent at December 31, 2025. The increase was primarily attributable to growth in non-owner occupied commercial real estate lending, reflecting increased loan originations resulting from the Company's strategic business development initiatives, including the hiring of a new head of commercial real estate partially offset by growth in the Bank's regulatory capital. 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.
57
The following tables reflect the components of the average balance sheet and of net interest income for the periods indicated:
Average Balance Sheet
Unaudited
Three Months Ended
June 30, 2026
June 30, 2025
Average
Income/
Annualized
Average
Income/
Annualized
(Dollars in thousands)
Balance
Expense
Yield
Balance
Expense
Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)
$
902,433
$
6,947
3.08
%
$
1,037,598
$
8,370
3.23
%
Loans (B) (C):
Residential mortgages
674,171
8,121
4.82
640,955
7,138
4.45
Commercial mortgages
2,728,178
33,116
4.87
2,426,318
27,392
4.52
Commercial
2,854,290
45,245
6.34
2,539,929
42,015
6.62
Commercial construction
746
12
6.45
—
—
—
Installment
219,354
3,457
6.32
140,133
2,403
6.86
Home equity
57,084
973
6.84
50,613
946
7.48
Other
1,079
4
1.49
348
5
5.75
Total loans
6,534,902
90,928
5.58
5,798,296
79,899
5.51
Interest-earning deposits
321,314
2,550
3.18
183,584
1,618
3.53
Total interest-earning assets
7,758,649
100,425
5.19
%
7,019,478
89,887
5.12
%
Noninterest-earning assets:
Cash and due from banks
7,865
8,237
Allowance for credit losses
(66,991
)
(76,811
)
Premises and equipment
40,188
35,501
Other assets
131,214
130,550
Total noninterest-earning assets
112,276
97,477
Total assets
$
7,870,925
$
7,116,955
LIABILITIES:
Interest-bearing deposits:
Checking
$
3,810,661
$
25,306
2.66
%
$
3,558,108
$
29,116
3.27
%
Money market accounts
1,194,874
7,665
2.57
950,891
6,544
2.75
Savings
112,263
205
0.73
104,114
147
0.56
Certificates of deposit - retail
396,342
2,947
2.98
447,422
4,002
3.58
Subtotal interest-bearing deposits
5,514,140
36,123
2.63
5,060,535
39,809
3.15
Interest-bearing demand - brokered
—
—
—
9,121
110
4.82
Total interest-bearing deposits
5,514,140
36,123
2.63
5,069,656
39,919
3.15
FHLB advances and borrowings
15,087
154
4.09
44,656
505
4.52
Finance lease liabilities
1,118
12
4.31
1,283
13
4.05
Subordinated debt
—
—
—
98,905
924
3.74
Total interest-bearing liabilities
5,530,345
36,289
2.63
%
5,214,500
41,361
3.17
%
Noninterest-bearing liabilities:
Demand deposits
1,528,479
1,172,535
Accrued expenses and other liabilities
106,295
108,020
Total noninterest-bearing liabilities
1,634,774
1,280,555
Shareholders’ equity
705,806
621,900
Total liabilities and shareholders’ equity
$
7,870,925
$
7,116,955
Net interest income (tax-equivalent basis)
$
64,136
$
48,526
Net interest spread
2.56
%
1.95
%
Net interest margin (D)
3.32
%
2.77
%
Tax equivalent adjustment
$
(215
)
$
(236
)
Net interest income
$
63,921
$
48,290
(A)
Average balances for available for sale securities are based on amortized cost.
(B)
Interest income is presented on a tax-equivalent basis using a 21 percent federal tax rate.
(C)
Loans are stated net of unearned income and include nonaccrual loans.
(D)
Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
58
Average Balance Sheet
Unaudited
Six Months Ended
June 30, 2026
June 30, 2025
Average
Income/
Annualized
Average
Income/
Annualized
(Dollars in thousands)
Balance
Expense
Yield
Balance
Expense
Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)
$
918,169
$
14,073
3.07
%
$
1,034,942
$
16,583
3.20
%
Tax-exempt (A) (B)
—
—
—
—
—
—
Loans (B) (C):
Residential mortgages
665,493
16,079
4.83
629,136
13,808
4.39
Commercial mortgages
2,703,324
64,667
4.82
2,405,546
53,571
4.45
Commercial
2,814,233
88,603
6.30
2,486,690
82,119
6.60
Commercial construction
662
21
6.40
—
—
—
Installment
209,268
6,451
6.22
123,910
4,196
6.77
Home equity
56,453
1,909
6.82
48,294
1,791
7.42
Other
854
9
2.13
326
10
6.13
Total loans
6,450,287
177,739
5.56
5,693,902
155,495
5.46
Interest-earning deposits
255,226
3,875
3.06
236,847
4,394
3.71
Total interest-earning assets
7,623,682
195,687
5.18
%
6,965,691
176,472
5.07
%
Noninterest-earning assets:
Cash and due from banks
8,277
8,308
Allowance for credit losses
(69,366
)
(75,618
)
Premises and equipment
39,764
32,743
Other assets
135,128
128,959
Total noninterest-earning assets
113,803
94,392
Total assets
$
7,737,485
$
7,060,083
LIABILITIES:
Interest-bearing deposits:
Checking
$
3,762,526
$
49,148
2.63
%
$
3,502,315
$
57,194
3.27
%
Money market accounts
1,133,083
14,033
2.50
966,481
13,261
2.74
Savings
112,069
398
0.72
105,088
265
0.50
Certificates of deposit - retail
403,943
6,046
3.02
457,742
8,365
3.65
Subtotal interest-bearing deposits
5,411,621
69,625
2.59
5,031,626
79,085
3.14
Interest-bearing demand - brokered
—
—
—
9,558
210
4.39
Total interest-bearing deposits
5,411,621
69,625
2.59
5,041,184
79,295
3.15
FHLB advances and borrowings
30,091
586
3.93
22,949
516
4.50
Finance lease liabilities
1,138
24
4.25
1,303
27
4.14
Subordinated debt
32,831
1,207
7.41
112,697
2,363
4.19
Total interest-bearing liabilities
5,475,681
71,442
2.63
%
5,178,133
82,201
3.17
%
Noninterest-bearing liabilities:
Demand deposits
1,467,367
1,147,502
Accrued expenses and other liabilities
108,654
118,181
Total noninterest-bearing liabilities
1,576,021
1,265,683
Shareholders’ equity
685,783
616,267
Total liabilities and shareholders’ equity
$
7,737,485
$
7,060,083
Net interest income (tax-equivalent basis)
$
124,245
$
94,271
Net interest spread
2.55
%
1.90
%
Net interest margin (D)
3.29
%
2.73
%
Tax equivalent adjustment
$
(428
)
$
(476
)
Net interest income
$
123,817
$
93,795
(A)
Average balances for available for sale securities are based on amortized cost.
(B)
Interest income is presented on a tax-equivalent basis using a 21 percent federal tax rate.
(C)
Loans are stated net of unearned income and include nonaccrual loans.
(D)
Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.
59
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, 2026 compared to June 30, 2025 are shown below:
For the Three Months Ended June, 2026
Difference due to
Change In
Change In:
Income/
(In Thousands):
Volume
Rate
Expense
ASSETS:
Investment securities
$
(1,066
)
$
(358
)
$
(1,424
)
Loans
9,923
1,106
11,029
Interest-earning deposits
1,148
(216
)
932
Total interest income
$
10,005
$
532
$
10,537
LIABILITIES:
Interest-bearing checking
$
1,872
$
(5,682
)
$
(3,810
)
Money market
1,622
(501
)
1,121
Savings
13
45
58
Certificates of deposit - retail
(418
)
(637
)
(1,055
)
Interest bearing demand brokered
(55
)
(55
)
(110
)
Borrowed funds
(319
)
(31
)
(350
)
Capital lease obligation
(4
)
1
(3
)
Subordinated debt
(464
)
(460
)
(924
)
Total interest expense
$
2,247
$
(7,320
)
$
(5,073
)
Net interest income (tax-equivalent basis)
$
7,758
$
7,852
$
15,610
For the Six Months Ended June, 2026
Difference due to
Change In
Change In:
Income/
(In Thousands):
Volume
Rate
Expense
ASSETS:
Investment securities
$
(1,830
)
$
(680
)
$
(2,510
)
Loans
20,749
1,495
22,244
Interest-earning deposits
310
(829
)
(519
)
Total interest income
$
19,229
$
(14
)
$
19,215
LIABILITIES:
Interest-bearing checking
$
3,824
$
(11,870
)
$
(8,046
)
Money market
2,156
(1,517
)
639
Savings
19
114
133
Certificates of deposit - retail
(894
)
(1,425
)
(2,319
)
Interest bearing demand brokered
(105
)
(105
)
(210
)
Borrowed funds
113
(43
)
70
Capital lease obligation
(3
)
—
(3
)
Subordinated debt
(2,354
)
1,331
(1,023
)
Total interest expense
$
2,756
$
(13,515
)
$
(10,759
)
Net interest income (tax-equivalent basis)
$
16,473
$
13,501
$
29,974
Net interest income increased $15.6 million, or 32 percent, for the second quarter of 2026 to $63.9 million from $48.3 million in the second quarter of 2025. The net interest margin ("NIM") was 3.32 percent and 2.77 percent for the three months ended June 30, 2026 and 2025, respectively, an increase of 55 basis points year over year. For the six months ended June 30, 2026 the Company recorded net interest income of $123.8 million compared to $93.8 million for the same 2025 period. The NIM was 3.29 percent and 2.73 percent for the six months ended June 30, 2026 and 2025, respectively, an increase of 56 basis points. Net interest income, on a fully tax-equivalent basis, and NIM improved for the three and six months ended June 30, 2026 primarily due to growth in average loan balances, which increased interest income, coupled with continued growth in lower-cost client deposit relationships, which were used to fund consistent loan production. The Bank also benefited from the 175 basis-point reduction in the target federal funds rate by the Federal Reserve from the latter half of 2024 through 2025, which lowered deposit costs and supported margin expansion.
60
The average balance of interest-earning assets increased to $7.76 billion during the second quarter of 2026 from $7.02 billion for the second quarter of 2025, reflecting an increase of $739.2 million, or 11 percent. Average interest-earning assets were $7.62 billion for the six months ended June 30, 2026 compared to $6.97 billion in the same 2025 period, reflecting an increase of $658.0 million, or 9 percent. The increase in the average balance of interest-earning assets during the second quarter of 2026 when compared to the same quarter of 2025 was due to an increase in the average balance of loans of $736.6 million and an increase in interest-earning deposits of $137.7 million, partially offset by a decrease in the average balance of investments of $135.2 million. The increase in the average balance of interest-earning assets during the six months ended June 30, 2026 when compared to the same period of 2025 was due to an increase in the average balance of loans of $756.4 million and an increase in interest-earning deposits of $18.4 million, partially offset by a decrease in the average balance of investments of $116.8 million.
The increase in the average balance of outstanding loans for the three and six months ended June 30, 2026 was primarily driven by an increase in commercial loans, commercial mortgages, residential mortgages and installment loans. The average balance of commercial loans increased by $314.4 million, or 12 percent, to $2.85 billion for the quarter ended June 30, 2026 when compared to $2.54 billion for the quarter ended June 30, 2025. The average balance of commercial mortgages increased by $301.9 million, or 12 percent, to $2.73 billion for the quarter ended June 30, 2026 when compared to $2.43 billion during the quarter ended June 30, 2025. The average balance of installment loans increased by $79.2 million, or 57 percent, to $219.4 million for the quarter ended June 30, 2026 when compared to $140.1 million during the quarter ended June 30, 2025. The average balance of commercial loans increased by $327.5 million, or 13 percent, to $2.81 billion for the quarter ended June 30, 2026 when compared to $2.49 billion for the six months ended June 30, 2025. The average balance of commercial mortgages increased $297.8 million, or 12 percent, to $2.70 billion for the six months ended June 30, 2026 when compared to $2.41 billion for the same period in 2025. The average balance of installment loans increased by $85.4 million, or 69 percent, to $209.3 million when compared to $123.9 million for the six months ended June 30, 2025. The increase in the average balance of loans for the three and six month periods was primarily driven by the Company's strategic business development initiatives which included the addition of a new head of the commercial real estate lending team, along with our continued expansion into New York City and Long Island with continued customer demand across key lending categories.
The average yield on total loans for the three months ended June 30, 2026 increased to 5.58 percent when compared to 5.51 percent for the three months ended June 30, 2025. The yield on residential mortgages increased 37 basis points to 4.82 percent for the three months ended June 30, 2026, as compared to 4.45 percent for the same 2025 period. The yield on residential mortgages increased to 4.83 percent for the six months ended June 30, 2026, when compared to 4.39 percent for the same 2025 period. The increase in the average yield for residential mortgages for the three-month period was driven by the origination of loans at higher rates than the existing portfolio. The average yield on commercial mortgages for the three months ended June 30, 2026, increased 35 basis points to 4.87 percent as compared to 4.52 percent for the same period in 2025. The average yield on commercial mortgages for the six months ended June 30, 2026, increased to 4.82 percent when compared to 4.45 percent for the same 2025 period. The increase in the average yield on commercial mortgages for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily attributable to changes in portfolio mix and loan repricing characteristics. During the period, higher-yielding new originations and the runoff of lower-yielding legacy loans, more than offset the impact of Federal Reserve rate reductions.The average yield on commercial loans for the three months ended June 30, 2026 decreased 28 basis points to 6.34 percent from 6.62 percent at June 30, 2025. The average yield on commercial loans for the six months ended June 30, 2026, decreased 30 basis points to 6.30 percent from 6.60 percent at June 30, 2025. The average yield on commercial loans decreased due to a decrease in the target Federal Funds rate of 175 basis points from the second half of 2024 through December 31, 2025, which had a greater impact on these loans, which are typically floating rate loans with shorter repricing periods. As of June 30, 2026, 29 percent of loans will reprice within one month, 34 percent within three months and 51 percent within one year.
Interest-earning deposits are an additional part of the Company's liquidity and interest rate risk management strategies. The combined average balance of these deposits for the three months ended June 30, 2026 was $321.3 million with an average yield of 3.18 percent as compared to $183.6 million and an average yield of 3.53 percent for the same period in 2025. The average balance of interest-earning deposits for the six months ended June 30, 2026 was $255.2 million with an average yield of 3.06 percent as compared to $236.8 million and an average yield of 3.71 percent for the same period in 2025.The increase in the average balance was due to an increase in deposits and from the receipt of proceeds from the sale of securities in the first quarter. The decrease in the rate was a result of the lower interest rate environment.
For the quarters ended June 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.19 percent and 5.12 percent, respectively, an increase of 7 basis points year over year. For the six months ended June 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.18 percent and 5.07 percent, respectively, an increase of 11 basis points year over year.
The average balance of total investments declined by $135.2 million to $902.4 million for the three months ended June 30, 2026 as compared to $1.04 billion for the three months ended June 30, 2025. The yield on investments decreased by 15 basis points to 3.08
61
percent for the three months ended June 30, 2026, compared to 3.23 percent for the same period a year ago. The average balance on total investments declined by $116.8 million to $918.2 million for the six months ended June 30, 2026 as compared to $1.03 billion for the six months ended June 30, 2025. The yield on investments decreased by 13 basis points to 3.07 percent for the six months ended June 30, 2026, compared to 3.20 percent for the same period in 2025. The decreases in the average balance and average yield on total investments were a result of a security sale of $97.0 million of higher-yielding investments, as part of a portfolio repositioning completed during the first quarter of 2026.
For the three months ended June 30, 2026, the average balance of interest-bearing liabilities totaled $5.53 billion representing an increase of $315.8 million from $5.21 billion for the three month period ended June 30, 2025 primarily due to an increase in interest-bearing deposits of $444.5 million to $5.51 billion for the three months ended June 30, 2026. This increase was partially offset by a decrease in average FHLB advances and borrowings of $29.6 million to $15.1 million from $44.7 million for the same 2025 period and in average outstanding subordinated debt of $98.9 million due to the redemption of $100.0 million of such debt in March 2026. For the six months ended June 30, 2026, the average balance of interest-bearing liabilities totaled $5.48 billion representing an increase of $297.5 million from $5.18 billion for the six-month period ended June 30, 2025 primarily due to an increase in interest-bearing deposits of $370.4 million to $5.41 billion for the six months ended June 30, 2026, partially offset by a decrease in the average balance of subordinated debt of $79.9 million to $32.8 million.
The increase in the average balance of interest-bearing deposits for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $252.6 million and money market accounts of $244.0 million, partially offset by a decline in the average balance of certificates of deposit of $51.1 million and interest-bearing brokered demand deposits of $9.1 million. The increase in average balance of interest-bearing deposits for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $260.2 million and money market accounts of $166.6 million, partially offset by the decline in the average balance of certificates of deposit of $53.8 million and interest-bearing brokered deposits of $9.6 million. The increase in interest-bearing checking deposits for the three and six months ended June 30, 2026 was due to our continued expansion into the New York City and Long Island markets and client demand for FDIC insured products, which we offer through reciprocal deposit programs. Our expansion around metro NY has allowed us to grow lower cost, relationship-based 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, 2026 and 2025 were $2.37 billion and $1.82 billion, respectively. Average reciprocal deposit balances for the six months ended June 30, 2026 and 2025 were $2.31 billion and $1.81 billion, respectively.
At June 30, 2026, uninsured/unprotected deposits were approximately $2.44 billion, or 35 percent of total deposits. This amount was adjusted to exclude $126 million of public fund deposit balances, which are fully-collateralized and protected with investment securities and an FHLB of New York letter of credit.
For the quarters ended June 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.63 percent and 3.17 percent, respectively, reflecting a decrease of 54 basis points. For the six months ended June 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.63 percent and 3.17 percent, respectively, reflecting a decrease of 54 basis points. The decrease for the three and six month periods ended June 30, 2026 was driven by a decrease in the average cost of interest-bearing deposits. The Company also benefited from lower short-term borrowing costs for the three and six months ended June 30, 2026 and 2025, which decreased by 43 basis points to 4.09 percent when compared to 4.52 percent and decreased by 57 basis points to 3.93 percent when compared to 4.50 percent, respectively. The decrease in deposit and borrowing rates was due to the Federal Reserve lowering the target Federal Funds rate by 175 basis points during the latter half of 2024 through the end of 2025, 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 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.
62
At June 30, 2026, the Company had investment securities available for sale with a fair value of $752.4 million compared with $774.2 million at December 31, 2025. The decline in investment securities was primarily due to the sale of $97.0 million of mostly mortgage-backed securities during the six months ended June 30, 2026. A net unrealized loss (net of income tax) of $52.3 million and $49.3 million related to these securities were included in shareholders’ equity at June 30, 2026 and December 31, 2025, respectively.
At June 30, 2026, the Company had investment securities held to maturity with a carrying cost of $78.6 million and an estimated fair value of $69.9 million compared with a carrying cost of $95.9 million and an estimated fair value of $87.5 million at December 31, 2025.
The Company had one equity security (a CRA investment security) with a fair value of $13.3 million at June 30, 2026 compared to $13.5 million at December 31, 2025, with changes in fair value recognized in the Consolidated Statements of Income.The Company recorded unrealized losses of $55,000 and $139,000 for the three and six months ended June 30, 2026, respectively, compared to unrealized gains of $42,000 and $237,000 for the three and six months ended June 30, 2025.
The carrying value of investment securities available for sale and held to maturity as of June 30, 2026 and December 31, 2025 are shown below:
June 30, 2026
December 31, 2025
Estimated
Estimated
Amortized
Fair
Amortized
Fair
(In thousands)
Cost
Value
Cost
Value
Investment securities available for sale:
U.S. treasuries
$
9,944
$
9,950
$
—
$
—
U.S. government-sponsored agencies
219,842
186,318
244,833
211,223
Mortgage-backed securities-residential (principally U.S. government-sponsored entities)
563,730
527,446
561,794
530,365
SBA pool securities
17,893
15,653
19,345
17,212
Corporate bond
13,000
13,073
15,500
15,403
Total investment securities available for sale
$
824,409
$
752,440
$
841,472
$
774,203
Investment securities held to maturity:
U.S. government-sponsored agencies
25,000
23,917
40,000
38,875
Mortgage-backed securities-residential (principally U.S. government-sponsored entities)
53,560
45,963
55,862
48,616
Total investment securities held to maturity
$
78,560
$
69,880
$
95,862
$
87,491
Total
$
902,969
$
822,320
$
937,334
$
861,694
63
The following table presents the contractual maturities and yields of debt securities available for sale and held to maturity as of June 30, 2026. 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
But
After
Within
Within
Within
10
(Dollars in thousands)
1 Year
5 Years
10 Years
Years
Total
Investment securities available for sale:
U.S. treasuries
$
—
$
9,950
$
—
$
—
$
9,950
—
4.17
%
—
—
4.17
%
U.S. government-sponsored agencies
—
76,083
110,235
—
186,318
—
1.36
%
1.83
%
—
1.65
%
Mortgage-backed securities-residential (A)
50,206
8,507
19,510
449,223
527,446
4.36
%
2.32
%
2.92
%
3.78
%
3.78
%
SBA pool securities
—
1,327
8,004
6,322
15,653
—
3.33
%
1.90
%
1.18
%
1.70
%
Corporate bond
—
—
13,073
—
13,073
—
—
6.96
%
—
6.96
%
Total investments available for sale
$
50,206
$
95,867
$
150,822
$
455,545
$
752,440
Weighted-average yield (A)
4.36
%
1.73
%
2.34
%
3.74
%
3.22
%
Investment securities held to maturity:
U.S. government-sponsored agencies
—
25,000
—
—
25,000
—
1.64
%
—
—
1.64
%
Mortgage-backed securities-residential (B)
—
—
—
53,560
53,560
—
—
—
2.14
%
2.14
%
Total investments held to maturity
$
—
$
25,000
$
—
$
53,560
78,560
1.64
%
—
2.14
%
1.98
%
Total
$
50,206
$
120,867
$
150,822
$
509,105
$
831,000
Weighted-average yield (A)
4.36
%
1.71
%
2.34
%
3.57
%
3.10
%
(A)
Weighted-average yields are based on amortized cost with effective yields weighted for the contractual maturity of each security.
(B)
Shown using stated final maturity.
OTHER INCOME: The following tables present further detail on other income which is summarized and discussed subsequently:
For the Three Months Ended June 30,
Change
(In thousands)
2026
2025
2026 vs 2025
Wealth management fee income
$
17,220
$
15,943
$
1,277
Service charges and fees
1,390
1,194
196
Bank owned life insurance
386
370
16
Loan fee income
2,069
1,899
170
Gain on sale of loans (mortgage banking)
62
27
35
Fee income related to loan level, back-to-back swaps
385
221
164
Gain on sale of SBA loans
444
521
(77
)
Corporate advisory fee income
34
30
4
Other income
196
1,197
(1,001
)
Securities gains, net
—
7
(7
)
Fair value adjustment for CRA equity security
(55
)
42
(97
)
Total other income
$
22,131
$
21,451
$
680
64
For the Six Months Ended June 30,
Change
(In thousands)
2026
2025
2026 vs 2025
Wealth management fee income
$
33,723
$
31,378
$
2,345
Service charges and fees
2,749
2,306
443
Bank owned life insurance
731
741
(10
)
Loan fee income
5,913
2,888
3,025
Gain on sale of loans (mortgage banking)
134
90
44
Fee income related to loan level, back-to-back swaps
385
221
164
Gain on sale of SBA loans
847
823
24
Corporate advisory fee income
103
120
(17
)
Other income
363
1,494
(1,131
)
Securities gains/(losses), net
(81
)
7
(88
)
Fair value adjustment for CRA equity security
(139
)
237
(376
)
Total other income
$
44,728
$
40,305
$
4,423
The Company recorded total other income of $22.1 million for the second quarter of 2026 compared to $21.5 million for the same 2025 period, reflecting an increase of $680,000. The increase was primarily due to increases in wealth management fee income and service charges and fees, partially offset by a decrease in the gain on sale of SBA loans and other income. The Company recorded total other income of $44.7 million for the six months ended June 30, 2026 compared to $40.3 million for the same 2025 period, reflecting an increase of $4.4 million. The increase was largely due to an increase in wealth management fee income and loan fee income, partially offset by a decrease in other income and a negative fair value adjustment of the CRA equity security during the six months ended June 30, 2026.
Service charges and fee income increased $196,000 to $1.4 million during the quarter ended June 30, 2026 from $1.2 million for the same period in 2025. For the six months ended June 30, 2026 and 2025, the Company recorded service charges and fee income of $2.7 million and $2.3 million, respectively. The increases for both periods reflected an increase in our commercial client base, which has generated higher fee activity during the first half of 2026.
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 and retains the non-guaranteed portion of SBA loans in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $444,000 for the quarter ended June 30, 2026, compared to $521,000 in gains during the quarter ended June 30, 2025. For the six months ended June 30, 2026 and 2025, the Company recorded gains on the sale of SBA loans of $847,000 and $823,000, 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 2026 of $34,000 compared to $30,000 for the same period ended June 30, 2025. The six months ended June 30, 2026 included corporate advisory fee income of $103,000 compared to $120,000 for the same 2025 period. Income from the SBA programs, and corporate advisory fee income are dependent on volume, and may vary from quarter to quarter.
For the quarter ended June 30, 2026, income from the sale of newly originated residential mortgage loans was $62,000 compared to $27,000 for the same period in 2025. While the interest rate environment has improved following rate reductions by the Federal Reserve, residential mortgage activity continues to be constrained by limited housing inventory and affordability considerations, which have tempered both refinancing and home purchase volumes.
Loan fee income increased to $2.1 million for the second quarter of 2026 as compared to $1.9 million for the quarter ended June 30, 2025. Loan fee income increased to $5.9 million for the six months ended June 30, 2026 compared to $2.9 million for the same period in 2025. Loan fee income included gains of $1.0 million and $3.7 million for the three and six months ended June 30, 2026, respectively, as compared to gains of $482,000 and $67,000 for the same periods in 2025 related to equipment transfers to lessees upon the termination of leases recorded by the Equipment Finance Division. The period-over-period change was primarily driven by differences in the volume and timing of lease terminations and the underlying fair value of the equipment at the end of the lease term, which can vary based on market conditions and asset-specific factors.Additionally, the Company recorded $730,000 of unused commercial line fees for the quarter ended June 30, 2026 compared to $869,000 for the same 2025 period. The six months ended June 30, 2026 included $1.5 million of unused commercial line fees compared to $1.8 million for the same 2025 period. The six months ended June 30, 2026 included $473,000 of letter of credit fee income compared to $290,000 for the same 2025 period.
65
Letter of credit fee income increased for the six-month period as a result of the Company’s expansion into the metro New York area, which has driven higher utilization of trade finance products among a growing commercial client base.
The Company completed a security sale of $97.0 million resulting in a loss of $81,000 during the first six months of 2026 and a $53.2 million sale with a gain of $7,000 during the same period in 2025. These sales were completed as part of a portfolio repositioning.
The Company recorded a $55,000 negative fair value adjustment and a $42,000 positive fair value adjustment for CRA equity securities in the second quarters of 2026 and 2025, respectively. The Company recorded a $139,000 negative fair value adjustment and a $237,000 positive fair value adjustment for CRA equity securities for the six months ended June 30, 2026 and 2025, respectively. The decrease in 2026 was due to an increase in medium-term rates during the first six months of 2026, which results in a reduction in the fair value of our CRA equity securities.
OPERATING EXPENSES: The following table presents the components of operating expenses for the periods indicated:
For the Three Months Ended June 30,
Change
(In thousands)
2026
2025
2026 vs 2025
Compensation and employee benefits
$
39,602
$
36,061
$
3,541
Premises and equipment
7,009
6,641
368
FDIC assessment
1,495
1,045
450
Other Operating Expenses:
Professional and legal fees
1,532
1,645
(113
)
Trust department expense
1,189
1,092
97
Telephone
351
354
(3
)
Loan expense
687
939
(252
)
Amortization of intangible assets
244
271
(27
)
Advertising
468
919
(451
)
Other
3,090
2,926
164
Total operating expenses
$
55,667
$
51,893
$
3,774
For the Six Months Ended June 30,
Change
(In thousands)
2026
2025
2026 vs 2025
Compensation and employee benefits
$
78,967
$
71,940
$
7,027
Premises and equipment
13,867
12,795
1,072
FDIC assessment
2,883
1,900
983
Other Operating Expenses:
Professional and legal fees
3,086
2,835
251
Trust department expense
2,369
2,135
234
Telephone
730
784
(54
)
Loan expense
1,243
1,372
(129
)
Amortization of intangible assets
488
543
(55
)
Advertising
735
1,073
(338
)
Other
6,739
5,956
783
Total operating expenses
$
111,107
$
101,333
$
9,774
Operating expenses for the quarter ended June 30, 2026 and 2025 totaled $55.7 million and $51.9 million, respectively, reflecting an increase of $3.8 million, or 7 percent year over year. Operating expenses for the six months ended June 30, 2026 and 2025 totaled $111.1 million and $101.3 million, respectively, reflecting an increase of $9.8 million, or 10 percent. Increased operating expenses for the three and six months ended June 30, 2026 were principally attributable to the Company's ongoing expansion into New York City and Long Island, in addition to annual merit increases across the Company. The addition of production teams in Long Island, including the opening of two new Long Island offices during the latter half of 2025, and the expansion of our equipment financing team, also contributed to the growth in premises and equipment and other operating expenses. FDIC assessment expense increased for the three and six months ended June 30, 2026 due primarily to higher assessment rates implemented by the FDIC and an increase in the Bank's average total assets subject to assessment. The increase in professional and legal fees for the six months ended June 30, 2026 was primarily due to expenses related to the subordinated debt redemption and the issuance of preferred stock during the first quarter of 2026.
66
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.
The market value of the assets under management and/or administration (“AUM/AUA”) was $13.9 billion at June 30, 2026, reflecting a 6 percent increase from $13.1 billion at December 31, 2025, and an increase of 13 percent from $12.3 billion at June 30, 2025 due primarily to improved market conditions and new client inflows.
In the June 2026 quarter, the Wealth Management Division generated $17.2 million in fee income compared to $15.9 million for the June 2025 quarter, reflecting an 8 percent increase. For the six months ended June 30, 2026, the Wealth Management Division generated $33.7 million in fee income compared to $31.4 million in fee income for the same period in 2025, reflecting a 7 percent increase. The increase in fee income for both the three and six months ended June 30, 2026 was due to strong client inflows driven by new accounts and client additions and solid equity market performance. New business inflows for the second quarter ended June 30, 2026 totaled $205 million, as compared to $193 million for the second quarter ended June 30, 2025. New business inflows for the six months ended June 30, 2026 totaled $432 million, as compared to $537 million for the six months ended June 30, 2025.
Operating expenses relative to the Wealth Management Division, for the three months ended June 30, 2026, increased to $10.9 million as compared to $10.5 million for the second quarter of 2025. Operating expenses relative to the Wealth Management Division were $20.4 million and $20.2 million, for the six months ended June 30, 2026 and June 30, 2025, respectively. The increase in operating expenses reflected the overall growth in the business and new hires. Expenses are in line with the Company’s strategic plan, particularly the hiring of key management and revenue-producing personnel.
NONPERFORMING ASSETS: Loans past due in excess of 90 days and still accruing, nonaccrual loans, and other real estate owned are considered nonperforming assets.
The following table sets forth asset quality data as of the dates indicated:
As of
June 30,
March 31,
December 31,
September 30,
June 30,
(Dollars in thousands)
2026
2026
2025
2025
2025
Loans past due 90 days or more and still accruing
$
3,300
$
—
$
—
$
—
$
—
Nonaccrual loans
68,034
59,321
68,243
84,142
114,958
Other real estate owned
908
—
—
—
—
Total nonperforming assets
$
72,242
$
59,321
$
68,243
$
84,142
$
114,958
Performing modifications (A)(B)
$
27,268
$
85,835
$
95,266
$
101,501
$
111,962
Loans past due 30 through 89 days and still accruing
$
48,080
$
47,053
$
26,555
$
28,817
$
15,522
Loans subject to special mention
$
59,832
$
75,935
$
51,027
$
56,534
$
86,907
Classified loans
$
97,713
$
90,583
$
118,912
$
134,982
$
145,783
Individually evaluated loans
$
68,034
$
59,321
$
68,243
$
84,142
$
114,958
Nonperforming loans as a % of total loans (C)
1.07
%
0.92
%
1.09
%
1.40
%
1.98
%
Nonperforming assets as a % of total assets (C)
0.91
%
0.77
%
0.91
%
1.13
%
1.60
%
Nonperforming assets as a % of total loans plus other real estate owned (C)
1.08
%
0.92
%
1.09
%
1.40
%
1.98
%
(A)
Amounts reflect modifications that are paying according to modified terms.
(B)
Excludes modifications included in nonaccrual loans of $21.6 million at June 30, 2026, $19.6 million at March 31, 2026, $36.0 million at December 31, 2025, $37.6 million at September 30, 2025, and $38.1 million at June 30, 2025.
(C)
Nonperforming loans/assets do not include performing modifications.
Loans past due 30 through 89 days and still accruing increased to $48.1 million, or 0.72 percent of total loans at June 30, 2026 compared to $26.6 million, or 0.42 percent, at December 31, 2025. The increase in past due loans at June 30, 2026 was primarily
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due to six multifamily loans with an aggregate outstanding balance of $29.8 million and one equipment finance loan with a balance of $10.3 million that matured and was in the process of modification at quarter end. The persistent nature of inflationary pressures has presented challenges for certain borrowers as operating expenses, including insurance, utilities and maintenance costs continue to rise.
Nonperforming assets increased by $4.0 million to $72.2 million at June 30, 2026, as compared to $68.2 million at December 31, 2025. The increase was driven by the classification of one $16.6 million multifamily relationship as nonaccrual and one $3.3 million multifamily loan as past due over 90 days or more and still accruing, partially offset by the liquidation of one commercial loan sale of $9.6 million and the sale of one multifamily loan of $7.2 million. During the second quarter of 2026, the Company recognized $4.8 million of charge-offs related to the sale of one multifamily loan with an outstanding balance of $7.2 million. A specific reserve of $2.4 million had been established on this loan in prior periods. Multifamily loans represented approximately 63 percent of nonperforming assets as of June 30, 2026.
The decrease in performing modifications was primarily related to ten multifamily loans totaling $54.9 million that are no longer classified as loan modifications because they have performed in accordance with their modified terms for at least twelve consecutive months and therefore no longer meet the reporting criteria for loan modifications. Additionally, $19.0 million in multifamily loans were moved to nonaccrual status.
The increase in special mention loans was primarily due to four multifamily loans totaling $23.8 million and $2.3 million in commercial loans. The increase was partially offset by multifamily loans totaling $12.8 million that are no longer classified as special mention. This increase was partially offset by the sale of one multifamily loan of $8.3 million, the payoff of one investment commercial real estate loan of $2.6 million and the upgrade of one multifamily loan of $4.5 million. The decrease in classified loans was primarily due to five multifamily loans totaling $29.9 million that are no longer classified as substandard as of June 30, 2026, as four such loans totaling $22.7 million were upgraded and one multifamily loan with a balance of $7.2 million was liquidated.
PROVISION FOR CREDIT LOSSES: The provision for credit losses was $8.1 million and $6.6 million for the second quarters of 2026 and 2025, respectively. The increase was primarily attributable to continued loan growth, changes in economic forecast assumptions incorporated into the Company's allowance methodology, and higher specific reserves established on certain individually evaluated loans. During the second quarter of 2026, approximately $4.2 million of the provision was attributable to loan growth and changes in economic data, while $3.9 million related to increases in specific reserves. For the six months ended June 30, 2026 and 2025, the provision for loan losses was $15.4 million and $11.1 million, respectively. Similar to the quarterly results, the year-over-year increase primarily reflected continued loan growth and higher specific reserves established on certain individually evaluated loans. In addition, the Company's ACL methodology incorporates forward-looking economic factors, and during the quarter, the quantitative reserve reflected weakened macroeconomic expectations coupled with loan growth, drove the higher provision level.
The allowance for credit losses (“ACL”) was $69.2 million as of June 30, 2026, compared to $71.0 million at December 31, 2025. Although the Company recorded a $15.4 million provision during the first six months of 2026, the ACL declined as net charge-offs exceeded the provision recorded during the period. Net charge-offs totaled $17.2 million during the first six months of 2026 compared to net charge-offs of $2.3 million during the first six months of 2025. For 2026, charge-offs of $7.8 million were related to the liquidation of one commercial and industrial relationship with an additional $8.3 million associated with the sale of two multifamily loans. The commercial and industrial loan charge-off in the current period was tied to a specific provision recorded in previous periods. For the six-month period, net charge-offs were primarily attributable to $7.8 million associated with the resolution of one commercial and industrial lending relationship and $8.3 million related to the sale of two multifamily loans.
The ACL as a percentage of loans was 1.04 percent at June 30, 2026 compared to 1.14 percent at December 31, 2025. The decline in the ratio was primarily attributable to $17.2 million in net charge-offs recorded during the six months ended June 30, 2026, of which $9.2 million of specific reserves were recorded in prior periods and loan growth. These charge-offs were partially offset by a provision for credit losses of $15.4 million for the six months ended June 30, 2026 driven by loan growth of $421.5 million for the six months ended June 30, 2026.
After considering charge-off activity, changes in portfolio risk characteristics, delinquency trends, economic conditions, and qualitative factors, Management believes the allowance remains adequate to absorb expected losses as of June 30, 2026.Management continues to closely monitor asset quality trends, including criticized and delinquent loan migration, and will adjust the ACL as conditions warrant. The ACL recorded on individually evaluated loans was $4.7 million at June 30, 2026 compared to $12.0 million as of December 31, 2025. Total individually evaluated loans were $68.0 million and $68.2 million as of June 30, 2026 and December 31, 2025, respectively. The general component of the allowance on loans collectively evaluated increased from $59.0 million at December 31, 2025 to $64.5 million at June 30, 2026.
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A summary of the allowance for credit losses for the quarterly periods indicated follows:
June 30,
March 31,
December 31,
September 30,
June 30,
(Dollars in thousands)
2026
2026
2025
2025
2025
Allowance for credit losses:
Beginning of period
$
67,026
$
71,039
$
68,642
$
81,770
$
75,150
Provision for credit losses (A)
8,012
7,322
7,659
4,871
6,577
(Charge-offs)/recoveries, net
(5,871
)
(11,335
)
(5,262
)
(17,999
)
43
End of period
$
69,167
$
67,026
$
71,039
$
68,642
$
81,770
Allowance for credit losses as a % of total loans
1.04
%
1.04
%
1.14
%
1.14
%
1.41
%
Collectively evaluated allowance for credit losses as a % of total loans
0.97
%
0.94
%
0.94
%
0.95
%
1.06
%
Allowance for credit losses as a % of nonperforming loans
96.96
%
112.99
%
104.10
%
81.58
%
71.13
%
(A)
Excludes provision of $76,000 at June 30, 2026, provision of $5,000 at March 31, 2026, provision of $12,000 at December 31, 2025, a credit of $81,000 at September 30, 2025, and provision of $9,000 at June 30, 2025 related to off-balance sheet commitments.
The decrease in the allowance for credit losses as a percentage of nonperforming loans was primarily due to an increase in nonperforming loans of $4.0 million to $72.2 million at June 30, 2026, as compared to nonperforming loans of $68.2 million at December 31, 2025, and a decrease in the ACL of $1.9 million to $69.2 million at June 30, 2026. The increase in nonperforming assets during the second quarter of 2026 was driven primarily by the reclassification of one $16.6 million multifamily relationship to nonaccrual and one $3.3 million multifamily loan as past due over 90 days and still accruing, partially offset by loan liquidations and sales discussed above. The latter loan had matured, and closing was pending resolution of certain legal matters as of June 30, 2026.
INCOME TAXES: Income tax expense for the quarter ended June 30, 2026 was $6.3 million as compared to $3.3 million for the same period in 2025. The increase in income tax expense reflected higher pretax income of $22.3 million for the quarter ended June 30, 2026 as compared to $11.3 million for the same quarter in 2025.
The effective tax rate for the three months ended June 30, 2026 was 28.4 percent compared to 29.5 percent for the same quarter in 2025.
Income tax expense for the six months ended June 30, 2026 was $11.9 million as compared to $6.2 million for the same period in 2025. The increase in income tax expense reflected higher pretax income of $42.0 million for the six months ended June 30, 2026 as compared to $21.7 million for the same period in 2025.
The effective tax rate for the six months ended June 30, 2026 was 28.3 percent compared to 28.4 percent for the same period in 2025.
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 available to common shareholders of $29.9 million and the issuance of 30,000 shares of Series B Preferred Stock totaling $30.0 million for the six months ended June 30, 2026. These increases were partially offset by cash dividends of $1.8 million, a preferred stock dividend of $195,000 and an increase in accumulated other comprehensive loss of $2.2 million during the six months ended June 30, 2026. Total accumulated other comprehensive loss grew to $49.8 million as of June 30, 2026 ($52.3 million loss related to the available for sale securities portfolio partially offset by a $2.5 million gain on the cash flow hedges), as compared to $47.6 million at December 31, 2025.
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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, 2026 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, 2026 and December 31, 2025, 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.
The Bank’s regulatory capital amounts and ratios are presented in the following table:
To Be Well
For Capital
Capitalized Under
For Capital
Adequacy Purposes
Prompt Corrective
Adequacy
Including Capital
Actual
Action Provisions
Purposes
Conservation Buffer (A)
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
As of June 30, 2026:
Total capital (to risk-weighted assets)
$
775,370
11.65
%
$
665,329
10.00
%
$
532,263
8.00
%
$
698,596
10.50
%
Tier I capital (to risk-weighted assets)
705,511
10.60
532,263
8.00
399,197
6.00
565,530
8.50
Common equity tier I (to risk-weighted assets)
705,452
10.60
432,464
6.50
299,398
4.50
465,730
7.00
Tier I capital (to average assets)
705,511
8.96
393,865
5.00
315,092
4.00
315,092
4.00
As of December 31, 2025:
Total capital (to risk-weighted assets)
$
807,580
12.64
%
$
638,896
10.00
%
$
511,117
8.00
%
$
670,841
10.50
%
Tier I capital (to risk-weighted assets)
735,931
11.52
511,117
8.00
383,338
6.00
543,062
8.50
Common equity tier I (to risk-weighted assets)
735,872
11.52
415,282
6.50
287,503
4.50
447,227
7.00
Tier I capital (to average assets)
735,931
9.89
372,195
5.00
297,756
4.00
297,756
4.00
(A)
See footnote on following table.
70
The Company’s regulatory capital amounts and ratios are presented in the following table:
To Be Well
For Capital
Capitalized Under
For Capital
Adequacy Purposes
Prompt Corrective
Adequacy
Including Capital
Actual
Action Provisions
Purposes
Conservation Buffer (A)
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
As of June 30, 2026:
Total capital (to risk-weighted assets)
$
790,916
11.88
%
N/A
N/A
$
532,788
8.00
%
$
699,284
10.50
%
Tier I capital (to risk-weighted assets)
721,057
10.83
N/A
N/A
399,591
6.00
566,087
8.50
Common equity tier I (to risk-weighted assets)
690,998
10.38
N/A
N/A
299,693
4.50
466,189
7.00
Tier I capital (to average assets)
721,057
9.13
N/A
N/A
315,922
4.00
315,922
4.00
As of December 31, 2025:
Total capital (to risk-weighted assets)
$
811,375
12.68
%
N/A
N/A
$
511,816
8.00
%
$
671,759
10.50
%
Tier I capital (to risk-weighted assets)
660,696
10.33
N/A
N/A
383,862
6.00
543,805
8.50
Common equity tier I (to risk-weighted assets)
660,637
10.33
N/A
N/A
287,897
4.50
447,839
7.00
Tier I capital (to average assets)
660,696
8.87
N/A
N/A
298,086
4.00
298,086
4.00
(A)
The Basel Rules require the Company and the Bank to maintain a 2.5% “capital conservation buffer” on top of the minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of (i) Common Equity Tier 1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer face constraints on dividends, stock repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall.
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 fulfilled through 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, 2026 were purchased in the open market.
On July 30, 2026, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 27, 2026 to shareholders of record on August 13, 2026.
Management believes the Company’s capital position and capital ratios were adequate at June 30, 2026. Further, Management believes the Company has sufficient 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
71
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 $253.9 million at June 30, 2026. In addition, the Company had $752.4 million in securities designated as available for sale at June 30, 2026. 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 $419.3 million and $76.6 million as of June 30, 2026, respectively, were pledged to secure public funds and for other purposes required or permitted by law. None of the 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, 2026, the Company had approximately $4.0 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 204 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. Management believes the Company’s liquidity position and sources were adequate at June 30, 2026.
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:
•
Market C&I loans, which tend to have adjustable-rate features, and which generate customer relationships that can result in higher core deposit accounts;
•
Market equipment finance leases and loans, which tend to have shorter terms and higher interest rates than real estate loans;
•
Limit residential mortgage portfolio originations to adjustable-rate and/or shorter-term and/or “relationship” loans that result in core deposit and/or wealth management relationships;
•
Market core deposit relationships, which are generally longer duration liabilities;
•
Utilize medium- to- longer-term certificates of deposit and/or wholesale borrowings to extend liability duration;
•
Utilize interest rate swaps to extend liability duration;
•
Utilize a loan level/back-to-back interest rate swap program, which converts a borrower’s fixed rate loan to adjustable rate for the Company;
•
Closely monitor and actively manage the investment portfolio, including management of duration, prepayment and interest rate risk;
•
Maintain adequate levels of capital; and
•
Utilize loan sales.
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
72
designation, sensitivity analysis, correlation analysis, daily mark-to-market analysis and collateral posting as required. In these swaps, the Company is receiving floating and paying fixed interest rates with a total notional value of $280.0 million as of June 30, 2026.
In addition, the Company maintains 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 executes 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, 2026, $405.9 million of notional value in swaps were executed and outstanding with borrowers under this program.
As noted above, ALCO uses simulation modeling to analyze the Company’s net interest income sensitivity, as well as the Company’s economic value of portfolio equity under various interest rate scenarios. The models are based on the actual maturity and repricing characteristics of rate sensitive assets and liabilities. The models incorporate certain prepayment and interest rate assumptions, which management believed to be reasonable as of June 30, 2026. The models assume changes in interest rates without any proactive change in the balance sheet by management. In the models, the forecasted shape of the yield curve remained static as of June 30, 2026.
The table below shows the estimated changes in the Company’s economic value of equity (“EVE”) and net interest income that would result from an immediate parallel change in the market interest rates at June 30, 2026.
($ in millions)
Change in
Interest Rates
Estimated EVE (A)
Estimated NII
(Basis Points)
Amount
Percent Change
Amount
Percent Change
+200
$
1,012.2
(2.2
)%
$
263.2
(2.3
)%
+100
1,023.2
(1.1
)
266.3
(1.1
)
Flat interest rates
1,034.8
—
269.4
—
-100
1,047.2
1.2
270.8
0.5
-200
991.9
(4.2
)
270.9
0.6
(A) EVE is the discounted present value of expected cash flows from assets and liabilities.
In an immediate and sustained 100 basis point increase in market rates at June 30, 2026, net interest income would decrease by 1.1 percent in year 1 and increase by 2.3 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, 2026, net interest income would increase 0.5 percent in year 1 and decrease 3.9 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, 2026, net interest income would decrease approximately 2.3 percent in year 1 and increase by 4.5 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, 2026, net interest income for year 1 would increase approximately 0.6 percent, when compared to a flat interest rate scenario. In year 2, net interest income would decrease 8.8 percent, when compared to a flat interest rate scenario.
The Company's interest rate sensitivity models indicate that, as of June 30, 2026, the Company is modestly liability sensitive in the near term, with net interest income declining in the first year under rising rate scenarios but improving in the second year, while sustained decreases in market rates would modestly benefit net interest income in the first year but result in pressure on net interest income, in the second year.
Certain shortcomings are inherent in the methodologies used in determining interest rate risk. Simulation modeling requires making certain assumptions that 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.
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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, has 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 Company’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, 2026 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. The Company is not aware of any currently pending or threatened litigation or proceeding against the Company or its subsidiaries that, if adversely decided, the Company believes 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, 2025.
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ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs
Total Number of Shares Withheld (1)
Average Price Paid Per Share
Maximum Number of Shares That May Yet Be Purchased Under the Plans Or Programs (2)
April 1, 2026 -
April 30, 2026
—
—
$
—
680,000
May 1, 2026 -
May 31, 2026
—
252
42.07
680,000
June 1, 2026 -
June 30, 2026
—
—
—
680,000
Total
—
252
$
42.07
(1) 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.
(2) 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
During the three months ended June 30, 2026, 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."
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).
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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.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
(Registrant)
DATE: August 7, 2026
By:
/s/ Douglas L. Kennedy
Douglas L. Kennedy
President and Chief Executive Officer
(Principal Executive Officer)
DATE: August 7, 2026
By:
/s/ Frank A. Cavallaro
Frank A. Cavallaro
Senior Executive Vice President and Chief Financial Officer