PEAPACK GLADSTONE FINANCIAL CORP

Previous wording

FORWARD LOOKING STATEMENTS: This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about Management’s confidence and strategies and Management’s expectations about operations, growth, financial results, new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from those contemplated by such forward-looking statements include, among others, those risk factors identified in the Company’s Form 10-K for the year ended December 31, 2024, which include the following:

Current wording

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, 2024, which include the following:

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an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;

Current wording

a decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;

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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;

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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/or lead to higher operating costs;

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changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

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changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;

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a decrease in demand for loans and deposits in our market areas;

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demands for loans and deposits in our market areas;

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The Company’s determination of the allowance for credit losses involves a higher degree of complexity and requires Management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in the methodology for determining the allowance for credit losses or in these judgments, assumptions or estimates could materially impact results of operations. This critical policy and its application are reviewed periodically with the Audit Committee and the Board of Directors.

Current wording

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.

Previous wording

EXECUTIVE SUMMARY: The following table presents certain key aspects of our performance for the three and six months ended June 30, 2025 and 2024.

Current wording

EXECUTIVE SUMMARY: The following table presents certain key aspects of our performance for the three and nine months ended September 30, 2025 and 2024.

Previous wording

For the quarter ended June 30, 2025, the Company recorded total revenue of $69.7 million, pretax income of $11.3 million, net income of $7.9 million and diluted earnings per share of $0.45, compared to revenue of $56.6 million, pretax income of $9.6 million, net income of $7.5 million and diluted earnings per share of $0.42 for the same period last year.

Current wording

For the quarter ended September 30, 2025, the Company recorded total revenue of $70.7 million, pretax income of $13.6 million, net income of $9.6 million and diluted earnings per share of $0.54, compared to revenue of $56.6 million, pretax income of $10.7 million, net income of $7.6 million and diluted earnings per share of $0.43 for the same period last year.

Previous wording

The increase in total revenue for the second quarter of 2025 was primarily due to higher net interest income due to improvements in the yield on the average balance of interest-earnings assets and cost on average interest-bearing liabilities. As a result, net interest margin increased to 2.77 percent for the second quarter of 2025 as compared to 2.25 percent for the same period in 2024. Wealth management fee income continues to be a consistent and steady revenue stream for the Company and represented 23 percent of total revenue for the second quarter of 2025.

Current wording

The increase in total revenue for the third quarter of 2025 was primarily due to higher interest income of $9.3 million to $92.5 million due to an increase in the average balance of loans. In addition, interest expense declined by $3.6 million due to improvements in the cost on average interest-bearing liabilities, which declined by 60 basis points to 3.18 percent for the quarter ended September 30, 2025. As a result, net interest margin increased to 2.81 percent for the third quarter of 2025 as compared to 2.34 percent for the same period in 2024. Wealth management fee income continues to be a consistent and steady revenue stream for the Company and represented 22 percent of total revenue for the third quarter of 2025.

Previous wording

For the six months ended June 30, 2025, the Company recorded total revenue of $134.1 million, pretax income of $21.7 million, net income of $15.5 million and diluted earnings per share of $0.87, compared to revenue of $109.7 million, pretax income of $22.0 million, net income of $16.2 million and diluted earnings per share of $0.91 for the same period in 2024. Total revenue benefited from strong net interest income growth due to improvements in yield on average interest earning assets and cost on average interest-bearing liabilities. The Company has seen positive momentum in net interest margin, which increased to 2.73 percent for the first six months of 2025 as compared to 2.22 percent for the same period in 2024. The Company's single point of contact private banking strategy and New York City expansion continues to deliver lower-cost core deposit relationships resulting in consistent improvement in both net interest margin and net interest income. During the first six months of 2025, deposits grew $234.1 million, which included $125.1 million in noninterest-bearing demand deposits.

Current wording

For the nine months ended September 30, 2025, the Company recorded total revenue of $204.8 million, pretax income of $35.3 million, net income of $25.2 million and diluted earnings per share of $1.42, compared to revenue of $166.3 million, pretax income of $32.7 million, net income of $23.7 million and diluted earnings per share of $1.34 for the same period in 2024. Total revenue benefited from strong net interest income growth due to an increase in the average balance of interest-earning assets, improvements in the cost on average interest-bearing liabilities and slightly higher yields on average interest-earning assets. The Company has seen positive momentum in net interest margin, which increased to 2.76 percent for the first nine months of 2025 as compared to 2.26 percent for the same period in 2024. The Company's single point of contact private banking strategy and New York City expansion continues to deliver lower-cost core deposit relationships resulting in consistent improvement in both net interest margin and net interest income. During the first nine months of 2025, deposits grew $433.1 million, which included $210.8 million in noninterest-bearing demand deposits.

Previous wording

Net income for the six months ended June 30, 2025 was impacted by increased operating expenses, principally attributable to the addition of new employees related to the Company's expansion into New York City and Long Island, increased health insurance costs and annual merit increases. An increase in the provision for credit losses of $6.5 million to $11.1 million also contributed to lower net income for the six months ended June 30, 2025.

Current wording

Net income for the three and nine months ended September 30, 2025 was impacted by increased operating expenses, principally attributable to the addition of new employees related to the Company's expansion into New York City and Long Island and the expansion of the equipment financing team, increased health insurance costs and annual merit increases.

Previous wording

The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the three and six month periods ended June 30, 2025 compared to June 30, 2024 are shown below:

Current wording

The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the three and nine month periods ended September 30, 2025 compared to September 30, 2024 are shown below:

Previous wording

Net interest income, on a fully tax-equivalent basis, increased $13.2 million, or 37 percent, for the second quarter of 2025 to $48.5 million from $35.3 million for the same 2024 period. The net interest margin ("NIM") was 2.77 percent and 2.25 percent for the three months ended June 30, 2025 and 2024, respectively, an increase of 52 basis points. For the six months ended June 30, 2025 the Company recorded net interest income, on a fully tax-equivalent basis of $94.3 million compared to $70.0 million for the same 2024 period. The NIM was 2.73 percent and 2.22 percent for the six months ended June 30, 2025 and 2024, respectively, an increase of 51 basis points. Net interest income, on a fully tax-equivalent basis, and NIM expanded during the three and six months ended June 30, 2025 due to the Bank's focus on growing client deposit relationships, which were used to fund loans, as well as purchase investment securities. Additionally, the Federal Reserve decreased the target Federal Funds rate by 100 basis points during the latter half of 2024, which has helped to improve NIM, primarily driven by lower deposit rates.

Current wording

Net interest income, on a fully tax-equivalent basis, increased $12.9 million, or 34 percent, for the third quarter of 2025 to $50.8 million from $37.9 million for the same 2024 period. The net interest margin ("NIM") was 2.81 percent and 2.34 percent for the three months ended September 30, 2025 and 2024, respectively, an increase of 47 basis points. For the nine months ended September 30, 2025 the Company recorded net interest income, on a fully tax-equivalent basis of $145.1 million compared to $107.9 million for the same 2024 period while NIM expanded 50 basis points to 2.76 percent. Net interest income, on a fully tax-equivalent basis, and NIM improved primarily due to continued growth in lower-costing client deposit relationships, which were used to fund loan production and investment purchases and allowed less reliance on higher-costing borrowed funds. The Bank also benefited from the Federal Reserve's 100-basis-point reduction in the target federal funds rate during the second half of 2024, which lowered deposit costs and supported margin expansion.

Previous wording

The average balance of interest-earning assets increased to $7.02 billion during the second quarter of 2025 from $6.32 billion for the same 2024 period, reflecting an increase of $696.2 million. Average interest-earning assets were $6.97 billion for the six months ended June 30, 2025 compared to $6.33 billion in the same 2024 period, representing an increase of $637.6 million. The increase in average interest-earning assets during the second quarter of 2025 when compared to the same quarter of 2024 included an increase in the average loans of $484.0 million, as well as an increase in the average balance of investments of $235.9 million, which was partially offset by a decrease in interest-earning deposits of $23.7 million. The increase in average interest-earning assets during the six months ended June 30, 2025 when compared to the same period of 2024 included an increase in average loans of $337.2 million, as well as increases in the average balance of investments of $237.2 million and interest-earning deposits of $63.2 million.

Current wording

The average balance of interest-earning assets increased to $7.17 billion during the third quarter of 2025 from $6.45 billion for the same 2024 period, reflecting an increase of $725.3 million, or 11 percent. Average interest-earning assets were $7.04 billion for the nine months ended September 30, 2025 compared to $6.37 billion in the same 2024 period, representing an increase of $667.3 million, or 10 percent. The increase in average interest-earning assets during the third quarter of 2025 when compared to the same quarter of 2024 included an increase in average loans of $649.5 million, as well as an increase in the average balance of investments of $97.8 million, which was partially offset by a decrease in interest-earning deposits of $22.0 million. The increase in average interest-earning assets during the nine months ended September 30, 2025 when compared to the same period of 2024 included an increase in the average balance of loans of $442.3 million, investments of $190.3 million and interest-earning deposits of $34.6 million.

Previous wording

The increase in the average balance of outstanding loans for the three and six months ended June 30, 2025 was primarily driven by an increase in commercial loans, residential mortgages and installment loans, partially offset by a decline in commercial construction. The average balance of commercial loans increased by $348.6 million, or 16 percent, to $2.54 billion for the quarter ended June 30, 2025 when compared to $2.19 billion for the same 2024 period. The average balance of residential mortgages increased by $64.0 million, or 11 percent, to $641.0 million for the quarter ended June 30, 2025 while the average balance of installment loans increased by $73.1 million, or 109 percent, to $140.1 million for the same period. There was no average balance of commercial construction for the three months ended June 30, 2025 compared to $21.6 million for the same 2024 period. The average balance of commercial loans increased by $270.9 million, or 12 percent, to $2.49 billion for the six months ended June 30, 2025 when compared to $2.22 billion for the same period in 2024. The average balance of residential mortgages increased by $51.8 million, or 9 percent, to $629.1 million for the six months ended June 30, 2025 when compared to $577.3 million for the same period in 2024. The average balance of installment loans for the six months ended June 30, 2025 increased by $57.7 million, or 87 percent, when compared to the same period in 2024. The increase in the average balance of loans for the three- and six-month periods were mostly a result increasing loan demand from customers due to a lower interest rate environment and improving economic conditions.

Current wording

The increase in the average balance of outstanding loans for the nine months ended September 30, 2025 was primarily driven by an increase in commercial loans, commercial mortgages, residential mortgages and installment loans, partially offset by a decline in commercial construction. The average balance of residential mortgages increased by $70.4 million, or 12 percent, to $650.3 million for the quarter ended September 30, 2025, while the average balance of installment loans increased by $83.0 million, or 113 percent, to $156.5 million for the same period. The average balance of commercial loans increased by $323.5 million, or 15 percent, to $2.52 billion for the nine months ended September 30, 2025 when compared to $2.20 billion for the same period in 2024. The average balance of residential mortgages increased by $58.1 million, or 10 percent, to $636.3 million for the nine months ended September 30, 2025 when compared to $578.2 million for the same period in 2024. The average balance of installment loans for the nine months ended September 30, 2025 increased by $66.3 million, or 97 percent, when compared to the same period in 2024. The increase in the average balance of loans for the three- and nine-month periods was primarily a result of increasing loan demand from customers due to a lower interest rate environment, our expansion into New York City and Long Island and improving economic conditions.

Previous wording

The average yields earned on interest-earning assets increased when comparing the three and six months ended June 30, 2025 to the same periods in 2024. For the quarters ended June 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.12 percent and 5.03 percent, respectively, an increase of 9 basis points. For the six months ended June 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.07 percent and 5.02 percent, respectively, an increase of 5 basis points.

Current wording

The average yields earned on interest-earning assets remained stable when comparing the three and nine months ended September 30, 2025 to the same periods in 2024. For the quarters ended September 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.17 percent and 5.18 percent, respectively, a decrease of 1 basis point. For the nine months ended September 30, 2025 and 2024, the average yields earned on interest-earning assets were 5.10 percent and 5.08 percent, respectively, an increase of 2 basis points.

Previous wording

The increase in the average yield on total investments for the three and six months ended June 30, 2025 compared to the same 2024 periods was primarily driven by the purchase of securities at higher yields than the yields in the existing portfolio. The yield on investments increased 65 basis points to 3.23 percent for the three months ended June 30, 2025, as compared to 2.58 percent for the same 2024 period. The average yield on investments increased by 62 basis points to 3.20 percent for the six months ended June 30, 2025 as compared to 2.58 percent for the same period in 2024.

Current wording

The increase in the average yield on total investments for the three and nine months ended September 30, 2025 compared to the same 2024 periods reflected purchases of higher-yielding securities. The yield on investments increased 29 basis points to 3.11 percent for the three months ended September 30, 2025, as compared to 2.82 percent for the same 2024 period. The average yield on investments increased by 51 basis points to 3.18 percent for the nine months ended September 30, 2025 as compared to 2.67 percent for the same period in 2024.

Previous wording

The average yield on total loans for the three and six months ended June 30, 2025 compared to the same 2024 period was primarily driven by an increase in the average yields on residential mortgages and, for the three-month period commercial mortgages, partially offset by a decline in the average yield on commercial loans. The yield on residential mortgages increased 58 basis points to 4.45 percent for the three months ended June 30, 2025, as compared to 3.87 percent for the same 2024 period. The increase in the average yield for residential mortgages for the three-month period was driven by the origination of loans with higher yields than the yields on the existing portfolio. The average yield on commercial mortgages for the three months ended June 30, 2025, increased 8 basis points to 4.52 percent as compared to 4.44 percent for the same period in 2024. The average yield on commercial loans for the three months ended June 30, 2025 decreased 15 basis points to 6.62 percent from 6.77 percent at June 30, 2024. For the six months ended June 30, 2025, the average yield on residential mortgages increased 58 basis points to 4.39 percent from 3.81 percent for the same period in 2024. The average yield on commercial loans decreased by 14 basis points to 6.60 percent from 6.74 percent for the six months ended June 30, 2025. The average yield on commercial loans decreased for both the three and six-month periods due to a decrease in the target Federal Funds rate during the second half of 2024, which had a greater impact on these loans, that are typically floating rates with short repricing periods.

Current wording

The average yield on total loans for the three and nine months ended September 30, 2025 remained stable when compared to the same 2024 periods. The yield on residential mortgages increased 49 basis points to 4.51 percent for the three months ended September 30, 2025, as compared to 4.02 percent for the same 2024 period. The increase in the average yield for residential mortgages for the three-month period was driven by the origination of higher-yielding loans. The average yield on commercial mortgages for the three months ended September 30, 2025, increased 3 basis points to 4.63 percent as compared to 4.60 percent for the same period in 2024. The average yield on commercial loans for the three months ended September 30, 2025 decreased 34 basis points to 6.62 percent from 6.96 percent at September 30, 2024. The slight increase of the average yield for the nine months ended September 30, 2025 when compared to the same period in 2024 was primarily driven by an increase in the average yields on residential mortgages, partially offset by a decline in the average yield on commercial loans. For the nine months ended September 30, 2025, the average yield on residential mortgages increased 55 basis points to 4.43 percent from 3.88 percent for the same period in 2024. The average yield on commercial loans decreased by 20 basis points to 6.61 percent from 6.81 percent for the nine months ended September 30, 2025. The average yield on commercial loans decreased for both the three- and nine-month periods due to a decrease in the target Federal Funds rate during the second half of 2024, which had a greater impact on these loans, that are typically floating rates with short repricing periods.

Previous wording

For the three months ended June 30, 2025, the average balance of interest-bearing liabilities totaled $5.21 billion representing an increase of $446.5 million from $4.77 billion for the same 2024 period due to an increase in interest-bearing deposits of $465.1 million to $5.07 billion for the three months ended June 30, 2025. This increase was partially offset by a decrease in subordinated debt of $34.5 million to $98.9 million due to the redemption of $35.0 million of such debt in the first quarter of 2025. For the six months ended June 30, 2025, the average balance of interest-bearing liabilities totaled $5.18 billion representing an increase of $389.6 million from $4.79 billion for the same 2024 period due to an increase in interest-bearing deposits of $520.4 million to $5.04 billion for the six months ended June 30, 2025. This increase was partially offset by a decrease in brokered certificates of deposit of $113.5 million and a decrease in short term borrowings of $108.4 million for the six months ended June 30, 2025.

Current wording

For the three months ended September 30, 2025, the average balance of interest-bearing liabilities totaled $5.28 billion representing an increase of $462.7 million from $4.82 billion for the same 2024 period due to an increase in interest-bearing deposits of $497.4 million to $5.18 billion for the three months ended September 30, 2025. This increase was partially offset by a decrease in subordinated debt of $34.5 million to $99.0 million due to the redemption of $35.0 million of such debt in the first quarter of 2025. For the nine months ended September 30, 2025, the average balance of interest-bearing liabilities totaled $5.21 billion representing an increase of $414.3 million from $4.80 billion for the same 2024 period due to an increase in interest-bearing deposits of $512.8 million to $5.09 billion for the nine months ended September 30, 2025. This increase was partially offset by a decrease in brokered certificates of deposit of $78.0 million, a decrease in short term borrowings of $72.0 million and a decrease of $25.3 million in subordinated debt for the nine months ended September 30, 2025.

Previous wording

The increase in the average balance of interest-bearing deposits for the three months ended June 30, 2025 compared to the 2024 comparable period was primarily due to an increase in the average balances of interest-bearing checking deposits of $463.7 million and money market accounts of $159.5 million, partially offset by a decline in the average balance of brokered certificates of deposit of $98.6 million and certificates of deposit of $56.9 million. For the six months ended June 30, 2025 when compared to the same period in 2024, the average balance of interest-bearing checking deposits increased by $477.8 million and money market accounts of $191.9 million, partially offset by a decrease in the average balance of brokered certificate of deposits by $113.5 and retail certificates of deposit of $33.3 million. The increase in interest-bearing checking deposits for the three and six months ended June 30, 2025 was principally attributable to our expansion into New York City and client demand for FDIC insured products, which we offer through a reciprocal deposit program. The expansion into New York City allowed us to grow lower cost, relationship deposits, while reducing the Company's reliance on overnight borrowings, brokered deposits and other high-cost funding sources.

Current wording

The increase in the average balance of interest-bearing deposits for the three months ended September 30, 2025 compared to the 2024 comparable period was primarily due to an increase in the average balances of interest-bearing checking deposits of $425.9 million and money market accounts of $172.3 million, partially offset by a decline in the average balance of brokered certificates of deposit of $7.9 million, interest-bearing brokered demand deposits of $10.0 million and certificates of deposit of $83.4 million. For the nine months ended September 30, 2025 when compared to the same period in 2024, the average balance of interest-bearing checking deposits increased by $460.5 million and money market accounts by $185.4 million, partially offset by decreases in the average balance of brokered certificate of deposits of $78.0 million and retail certificates of deposit of $50.2 million. The increase in interest-bearing checking deposits for the three and nine months ended September 30, 2025 was due to our continued expansion into the New York City market and client demand for FDIC insured products, which we offer through a reciprocal deposit program. Our expansion into the New York City market has allowed us to grow lower cost, relationship deposits, while reducing the Company's reliance on overnight borrowings, brokered deposits and other high-cost funding sources.

Previous wording

The Company is a participant in the Reich & Tang Demand Deposit Marketplace program and the Promontory Program. The Company uses these deposit sweep services to place customer funds into interest-bearing demand (checking) accounts issued by other participating banks. Customer funds are placed at one or more participating banks to increase the level of FDIC insurance available to deposit customers. As a participant, the Company receives reciprocal amounts of deposits from other participating banks. Average reciprocal deposit balances for the quarters ended June 30, 2025 and 2024 were $1.82 billion and $1.20 billion, respectively. Average reciprocal deposit balances for the six months ended June 30, 2025 and 2024 were $1.81 billion and $1.14 billion, respectively. The growth for the three and six months ended June 30, 2025 was due to clients' desire for the increased level of FDIC insurance offered by these programs.

Current wording

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 September 30, 2025 and 2024 were $1.97 billion and $1.32 billion, respectively. Average reciprocal deposit balances for the nine months ended September 30, 2025 and 2024 were $1.86 billion and $1.20 billion, respectively. The growth for the three and nine months ended September 30, 2025 was due to clients' desire for the increased level of FDIC insurance offered by these programs.

Previous wording

At June 30, 2025, uninsured/unprotected deposits were approximately $1.7 billion, or 26 percent of total deposits. This amount was adjusted to exclude $311 million of public fund deposit balances, which are fully-collateralized and protected with securities and an FHLBNY letter of credit.

Current wording

At September 30, 2025, uninsured/unprotected deposits were approximately $1.83 billion, or 28 percent of total deposits. This amount was adjusted to exclude $315 million of public fund deposit balances, which are fully-collateralized and protected with securities and an FHLBNY letter of credit.

Previous wording

The Company had $44.7 million in average short-term borrowings during the second quarter of 2025 compared to $27.2 million for the same 2024 period. The Company had $22.9 million in average short-term borrowings during the six months ended June 30, 2025 compared to $131.3 million in the same 2024 period. The decrease in borrowings for the six-month period was driven by the growth in client deposits led by the Company’s expansion into New York City, which were used to pay down borrowings.

Current wording

The Company had no short-term borrowings during the third quarters of 2025 and 2024. The Company had $15.2 million in average short-term borrowings during the nine months ended September 30, 2025 compared to $87.2 million in the same 2024 period. The decrease in borrowings for the nine-month period was driven by the growth in client deposits led by the Company’s continued expansion into New York City, which were used to pay down borrowings.

Previous wording

For the quarters ended June 30, 2025 and 2024, the cost of interest-bearing liabilities was 3.17 percent and 3.71 percent, respectively, reflecting a decrease of 54 basis points. The cost of interest-bearing liabilities was 3.17 percent and 3.72 percent for the six months ended June 30, 2025 and 2024, respectively, reflecting a decrease of 55 basis points. The decreases for the three and six months ended June 30, 2025 was driven by a decrease in the average cost of interest-bearing deposits of 51 basis points to 3.15 percent for the second quarter of 2025 and 47 basis points to 3.15 for the six months ended June 30, 2025. The Company also benefited from lower short-term borrowing costs in the second quarter of 2025 of 4.52 percent compared to an average cost of 5.59 percent for the same 2024 period. The cost of short-term borrowing for the six months ended June 30, 2025 decreased by 136 basis points to 4.50 percent when compared to 5.86 for the same period in 2024. The decrease in deposit and borrowing rates was due to the Federal Reserve lowering the target Federal Funds rate by 100 basis points during the latter half of 2024 and a change in the composition of the deposit portfolio with a greater concentration of lower-cost core relationship deposits.

Current wording

For the quarters ended September 30, 2025 and 2024, the cost of interest-bearing liabilities was 3.18 percent and 3.78 percent, respectively, reflecting a decrease of 60 basis points. The cost of interest-bearing liabilities was 3.18 percent and 3.74 percent for the nine months ended September 30, 2025 and 2024, respectively, reflecting a decrease of 56 basis points. The decreases for the three and nine months ended September 30, 2025 was driven by a decrease in the average cost of interest-bearing deposits of 57 basis points to 3.17 percent for the third quarter of 2025 and 51 basis points to 3.15 percent for the nine months ended September 30, 2025. The Company also benefited from lower short-term borrowing costs for the nine months ended September 30, 2025, which decreased by 135 basis points to 4.53 percent when compared to 5.88 percent for the same period in 2024. The decrease in deposit and borrowing rates was due to the Federal Reserve lowering the target Federal Funds rate by 100 basis points during the latter half of 2024 and a change in the composition of the deposit portfolio with a greater concentration of lower-cost core relationship deposits.

Previous wording

INVESTMENT SECURITIES: Investment securities available for sale are purchased, sold and/or maintained as a part of the Company’s overall balance sheet, liquidity and interest rate risk management strategies, and in response to changes in interest rates, liquidity needs, prepayment speeds and/or other factors. These securities are carried at estimated fair value, and unrealized changes in fair value are recognized as a separate component of shareholders’ equity, net of income taxes. Realized gains and losses are recognized in income at the time the securities are sold. Investment securities held to maturity are those securities that the Company has both the ability and intent to hold to maturity. These securities are carried at amortized cost. Equity securities are carried at fair value with unrealized gains and losses recorded in noninterest income as incurred.

Current wording

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.

Previous wording

At June 30, 2025, the Company had investment securities available for sale with a fair value of $767.5 million compared with $784.5 million at December 31, 2024. A net unrealized loss (net of income tax) of $58.2 million and $72.1 million related to these securities were included in shareholders’ equity at June 30, 2025 and December 31, 2024, respectively.

Current wording

At September 30, 2025, the Company had investment securities available for sale with a fair value of $756.6 million compared with $784.5 million at December 31, 2024. A net unrealized loss (net of income tax) of $52.6 million and $72.1 million related to these securities were included in shareholders’ equity at September 30, 2025 and December 31, 2024, respectively.

Previous wording

At June 30, 2025, the Company had investment securities held to maturity with a carrying cost of $98.6 million and an estimated fair value of $88.1 million compared with a carrying cost of $101.6 million and an estimated fair value of $88.7 million at December 31, 2024.

Current wording

At September 30, 2025, the Company had investment securities held to maturity with a carrying cost of $97.4 million and an estimated fair value of $88.3 million compared with a carrying cost of $101.6 million and an estimated fair value of $88.7 million at December 31, 2024.

Previous wording

The Company had one equity security (a CRA investment security) with a fair value of $13.3 million and $13.0 million at June 30, 2025 and December 31, 2024, respectively, with changes in fair value recognized in the Consolidated Statements of Income. The

Current wording

The Company had one equity security (a CRA investment security) with a fair value of $13.4 million and $13.0 million at September 30, 2025 and December 31, 2024, respectively, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded unrealized gains of $125,000 and $362,000 for the three and nine months ended September 30, 2025, respectively, as compared to unrealized gains of $474,000 and $279,000 for the three and nine months ended September 30, 2024, respectively.

Previous wording

The Company recorded total other income, excluding wealth management fee income, of $5.5 million for the second quarter of 2025 compared to $5.1 million for the same 2024 period, reflecting an increase of $372,000. The increase was primarily due to income related to loan level, back-to-back swaps as well as an increase in the fair value adjustment for the CRA equity security. The Company recorded $8.9 million of total other income, excluding wealth management fee income, for the six months ended June 30, 2025 compared to $9.4 million for the same 2024 period, reflecting a decrease of $503,000. The decrease was primarily due to lower corporate advisory fee income and service charges and fees, which was partially offset by an increase in the fair value adjustment for the CRA equity security and increased income related to loan level, back-to-back swaps.

Current wording

The Company recorded total other income, excluding wealth management fee income, of $4.3 million for the third quarter of 2025 compared to $3.8 million for the same 2024 period, reflecting an increase of $535,000. The increase was primarily due to increases in corporate advisory fee income and other income. The Company recorded $13.3 million of total other income, excluding wealth management fee income, for the nine months ended September 30, 2025 compared to $13.2 million for the same 2024 period, reflecting an increase of $32,000.

Previous wording

The Company provides loans that are partially guaranteed by the SBA to provide working capital and/or finance the purchase of equipment, inventory or commercial real estate that could be used for start-up businesses. All SBA loans are underwritten and documented as prescribed by the SBA. The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $521,000 and $449,000 for the quarters ended June 30, 2025 and 2024, respectively. For the six months ended June 30, 2025 and 2024, the Company recorded a gain on the sale of SBA loans of $823,000 and $849,000, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.

Current wording

The Company provides loans that are partially guaranteed by the SBA to provide working capital and/or finance the purchase of equipment, inventory or commercial real estate that could be used for start-up businesses. All SBA loans are underwritten and documented as prescribed by the SBA. The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $203,000 and $365,000 for the quarters ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, the Company recorded a gain on the sale of SBA loans of $1.0 million and $1.2 million, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.

Previous wording

The Company recorded corporate advisory fee income for the second quarter of 2025 of $30,000 compared to $103,000 for the same period ended June 30, 2024. The six months ended June 30, 2025 included corporate advisory fee income of $120,000 compared to $921,000 for the same 2024 period. The higher amount for the six months ended June 30, 2024 was related to a corporate advisory/investment banking acquisition transaction completed in the first quarter of 2024.

Current wording

The Company recorded corporate advisory fee income for the third quarter of 2025 of $692,000 compared to $55,000 for the same period ended September 30, 2024. The higher amount for the three months ended September 30, 2025 was related to a corporate advisory/investment banking acquisition transaction completed in the third quarter of 2025. The nine months ended September 30, 2025 included corporate advisory fee income of $812,000 compared to $976,000 for the same 2024 period.

Previous wording

Income from the SBA programs, and corporate advisory fee income are dependent on volume, and thus are typically not consistent from quarter to quarter.

Current wording

Income from the SBA programs, and corporate advisory fee income are dependent on volume, and may vary from quarter to quarter.

Previous wording

For the quarter ended June 30, 2025, income from the sale of newly originated residential mortgage loans was $27,000 compared to $34,000 for the same period in 2024. The Company recorded income of $90,000 from the sale of newly originated residential mortgage loans for both the six months ended June 30, 2025 and 2024, respectively.

Current wording

For the quarter ended September 30, 2025, income from the sale of newly originated residential mortgage loans was $6,000 compared to $15,000 for the same period in 2024. The Company recorded income of $96,000 and $105,000 from the sale of newly originated residential mortgage loans for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

Other income included a gain of $875,000 in the second quarter of 2025 for the termination of a lease agreement for a branch location that was no longer in use. Also included in other income were gains of $482,000 and $1.6 million recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases for the second quarter of 2025 and 2024. The six months ended June 30, 2025 and 2024 included income of $67,000 and $1.7 million, respectively. Additionally, the Company recorded $869,000 of unused commercial line fees for the quarter ended June 30, 2025 compared to $786,000 for the same 2024 period. The six months ended June 30, 2025 included $1.8 million of unused commercial line fees compared to $1.6 million for the same 2024 period.

Current wording

Included in other income were gains of $398,000 and $225,000 recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases for the third quarter of 2025 and 2024. The nine months ended September 30, 2025 and 2024 included income of $465,000 and $1.9 million related to the termination of leases, respectively. Additionally, the Company recorded $825,000 of unused commercial line fees for the quarter ended September 30, 2025 compared to $845,000 for the same 2024 period. The nine months ended September 30, 2025 included $2.6 million of unused commercial line fees compared to $2.5 million for the same 2024 period. Other income included a gain of $875,000 in the first nine months of 2025 for the termination of a lease agreement for a branch location that was no longer in use. Other income also included $213,000 and $770,000 of SBIC income for the three and nine months ended September 30, 2025.

Previous wording

The Company recorded a $42,000 positive fair value adjustment and an $84,000 negative fair value adjustment for CRA equity securities in the second quarters of 2025 and 2024, respectively. The Company recorded a $237,000 positive fair value adjustment and a $195,000 negative fair value adjustment for CRA equity securities for the six months ended June 30, 2025 and 2024, respectively. The increase in 2025 was due to a decline in medium-term rates during the six months of 2025.

Current wording

The Company recorded a $125,000 positive fair value adjustment and a $474,000 positive fair value adjustment for CRA equity securities in the third quarters of 2025 and 2024, respectively. The Company recorded a $362,000 positive fair value adjustment and a $279,000 positive fair value adjustment for CRA equity securities for the nine months ended September 30, 2025 and 2024, respectively. The increase in 2025 was due to a decline in medium-term rates during the nine months of 2025.

Previous wording

Operating expenses for the quarter ended June 30, 2025 and 2024 totaled $51.9 million and $43.1 million, respectively, reflecting an increase of $8.8 million, or 20 percent. Operating expenses for the six months ended June 30, 2025 increased $18.2 million or 22 percent, to $101.3 million from $83.2 million for the same 2024 period. Increased operating expenses for the three and six months ended June 30, 2025 were principally attributable to the Company's ongoing expansion into New York City, increased health insurance costs, and annual merit increases. The addition of production teams in Long Island during the second quarter of 2025 also contributed to the growth in operating expenses. The increase in loan expense for both the three- and six-month periods ended June 30, 2025 was primarily due to expenses of $441,000 and $506,000, respectively, related to the workout of several equipment finance problem loans.

Current wording

Operating expenses for the quarter ended September 30, 2025 and 2024 totaled $52.3 million and $44.6 million, respectively, reflecting an increase of $7.6 million, or 17 percent. FDIC assessment expense increased for both the three and nine months ended September 30, 2025 due primarily to higher assessment rates implemented by the FDIC and an increase in the Bank's average total assets subject to assessment. Our expansion into New York City and Long Island resulted in increased advertising fees for the three and nine months ended September 30, 2025. Operating expenses for the nine months ended September 30, 2025 increased $25.8 million or 20 percent, to $153.6 million from $127.8 million for the same 2024 period. Increased operating expenses for the three and nine months ended September 30, 2025 were principally attributable to the Company's ongoing expansion into New York City and Long Island, increased health insurance costs, and annual merit increases. The addition of production teams in Long Island and the expansion of our equipment financing team also contributed to the growth in operating expenses. The increase in loan expense for the nine-month period ended September 30, 2025 was primarily due to expenses of $551,000 related to the workout of several equipment finance problem loans.

Previous wording

WEALTH MANAGEMENT DIVISION: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services. Officers from the wealth management division are available to provide wealth management, trust and investment services at the Bank’s headquarters in Bedminster, New Jersey, at private banking locations in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey, in New York City and at the Bank’s subsidiary, PGB Trust & Investments of Delaware, in Greenville, Delaware.

Current wording

WEALTH MANAGEMENT DIVISION: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services. Officers from the wealth management division are available to provide wealth management, trust and investment services at the Bank’s headquarters in Bedminster, New Jersey, at private banking locations in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey, in New York City and Long Island and at the Bank’s subsidiary, PGB Trust & Investments of Delaware, in Greenville, Delaware.

Previous wording

The market value of the assets under management and/or administration (“AUM/AUA”) was $12.3 billion at June 30, 2025, reflecting a 3 percent increase from $11.9 billion at December 31, 2024 and an increase of 7 percent from $11.5 billion at June 30, 2024 due primarily to improved market conditions and new client inflows.

Current wording

The market value of the assets under management and/or administration (“AUM/AUA”) was $12.9 billion at September 30, 2025, reflecting a $1.0 billion, or 8 percent increase from $11.9 billion at December 31, 2024 and an increase of $800 million, or 7 percent from $12.1 billion at September 30, 2024 due primarily to improved market conditions and new client inflows.

Previous wording

In the June 2025 quarter, the Wealth Management Division generated $15.9 million in fee income compared to $16.4 million for the June 2024 quarter, reflecting a 3 percent decrease. The decrease in fee income during the second quarter of 2025 was due to a large estate termination fee of $1.1 million, recognized in the second quarter of 2024. For the six months ended June 30, 2025, the Wealth Management Division generated $31.4 million in fee income compared to $30.8 million in fee income for the same period in 2024, reflecting a 2 percent increase. The increase in fee income for the six months ended June 30, 2025 was due to strong client inflows driven by new accounts and client additions and solid equity market performance.

Current wording

In the September 2025 quarter, the Wealth Management Division generated $15.8 million in fee income compared to $15.2 million for the September 2024 quarter, reflecting a 4 percent increase. For the nine months ended September 30, 2025, the Wealth Management Division generated $47.2 million in fee income compared to $46.0 million in fee income for the same period in 2024, reflecting a 3 percent increase. The increase in fee income for the three and nine months ended September 30, 2025 was due to strong client inflows driven by new accounts and client additions and solid equity market performance. New business inflows for the nine months ended September 30, 2025 totaled $751 million, compared to $547 for the nine months ended September 30, 2024.

Previous wording

Operating expenses relative to the Wealth Management Division, for the three months ended June 30, 2025, decreased to $10.5 million as compared to $10.7 million for the second quarter of 2024. Operating expenses relative to the Wealth Management Division were relatively flat at $20.2 million and $20.1 million, for the six months ended June 30, 2025 and June 30, 2024. Expenses are in line with the Company’s Strategic Plan, particularly the hiring of key management and revenue-producing personnel.

Current wording

Operating expenses relative to the Wealth Management Division, for the three months ended September 30, 2025, decreased to $8.2 million as compared to $10.0 million for the third quarter of 2024. Operating expenses relative to the Wealth Management Division for the nine months ended September 30, 2025, decreased to $28.4 million as compared to $30.1 million for the same period in 2024. Expenses are in line with the Company’s Strategic Plan.