PEAPACK GLADSTONE FINANCIAL CORP

Previous wording

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

Current wording

an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions, which could affect the demand for loans and deposits or have an adverse effect on the ability of consumers and businesses to pay debts;

Previous wording

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;

Current wording

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;

Previous wording

the imposition of tariffs or other domestic or international governmental policies and potential retaliatory responses;

Current wording

the imposition of tariffs or other domestic or international governmental policies and retaliatory responses;

Previous wording

demands for loans and deposits in our market areas;

Current wording

demand for loans and deposits in our market areas;

Previous wording

changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;

Current wording

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;

Previous 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.

Current wording

EXECUTIVE SUMMARY: The following table presents certain key aspects of our performance for the three months ended March 31, 2026 and 2025.

Previous 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.

Current wording

For the quarter ended March 31, 2026, the Company recorded total revenue of $82.5 million, pretax income of $19.7 million, net income of $14.2 million and diluted earnings per share of $0.80, compared to revenue of $64.4 million, pretax income of $10.4 million, net income of $7.6 million and diluted earnings per share of $0.43 for the same period last year.

Previous 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.

Current wording

The increase in total revenue for the first quarter of 2026 was primarily due to higher net interest income of $14.4 million offset by increases in operating expenses and provision for credit losses. The increase in operating expenses was 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. The implementation of the 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 first quarter of 2026, deposits grew $237.8 million, which included $115.8 million in noninterest-bearing demand deposits. Net interest margin improved to 3.26 percent for the first quarter of 2026 as compared to 2.68 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 first quarter of 2026.

Previous wording

The primary source of the Company’s operating income is net interest income, which is the difference between interest and dividends earned on interest-earning assets and fees earned on loans, and interest paid on interest-bearing liabilities. Earning assets include loans, investment securities, interest-earning deposits and federal funds sold. Interest-bearing liabilities include interest-bearing checking, savings and time deposits, Federal Home Loan Bank advances, subordinated debt and other borrowings. Net interest income is determined by the difference between the average yields earned on earning assets and the average cost of interest-bearing liabilities (“net interest spread”) and the relative amounts of earning assets and interest-bearing liabilities. Net interest margin is net interest income as a percent of total interest-earning assets on an annualized basis. The Company’s net interest income, spread and margin are affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows and general levels of nonperforming assets.

Current wording

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.

Previous wording

The following table summarizes the loans that the Company closed during the periods indicated:

Current wording

Outstanding loan balances are the primary driver of the yields on interest-earning assets. The following table summarizes the loans that the Company closed during the periods indicated:

Previous wording

Commercial real estate, multifamily and C&I loan originations increased by $74.5 million, $36.7 million and $210.7 million, respectively, for the three months ended September 30, 2025 as compared to the same period in 2024. Residential mortgage, commercial real estate, multifamily and C&I loan originations increased by $21.8 million, $131.8 million, $110.6 million and $419.8 million, respectively, for the nine months ended September 30, 2025. Loan growth has been fueled by lower market interest rates coupled with the Company's expansion into the New York City and Long Island markets.

Current wording

Residential mortgage, commercial real estate, multifamily, C&I, and SBA loan originations increased by $4.8 million, $91.3 million, $25.0 million, $17.0 million, and $5.5 million, respectively, for the three months ended March 31, 2026 as compared to the same period in 2025. Loan growth has been fueled by lower market interest rates, the hiring of a new head of commercial real estate and the Company's expansion into the New York City and Long Island markets.

Previous 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:

Current wording

The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the three month periods ended March 31, 2026 compared to March 31, 2025 are shown below:

Previous 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.

Current wording

Net interest income, on a fully tax-equivalent basis, increased $14.4 million, or 31 percent, for the first quarter of 2026 to $60.1 million from $45.7 million in the first quarter of 2025. The net interest margin ("NIM") was 3.26 percent and 2.68 percent for the three months ended March 31, 2026 and 2025, respectively, an increase of 58 basis points year over year. Net interest income, on a fully tax-equivalent basis, and NIM improved primarily due to 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.

Previous 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.

Current wording

The average balance of interest-earning assets increased to $7.49 billion during the first quarter of 2026 from $6.91 billion in the first quarter of 2025, reflecting an increase of $575.9 million, or 8 percent. The increase in the average balance of interest-earning assets during the first quarter of 2026 when compared to the same quarter of 2025 was due to an increase in the average balance of loans of $776.4 million, which was partially offset by a decrease in the average balance of investments of $98.2 million and a decrease in interest-earning deposits of $102.3 million.

Previous 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.

Current wording

The increase in the average balance of outstanding loans for the three months ended March 31, 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 $340.9 million, or 14 percent, to $2.77 billion for the quarter ended March 31, 2026 when compared to $2.43 billion for the quarter ended March 31, 2025. The average balance of commercial mortgages increased by $293.7 million, or 12 percent, to $2.68 billion for the quarter ended March 31, 2026 when compared to $2.38 billion during the quarter ended March 31, 2025. The increase in the average balance of loans for the three-month period was primarily a result of increasing loan demand from customers due to a lower interest rate environment and improving economic conditions. Growth was also driven by the addition of a new leader of the commercial real estate lending team, along with our continued expansion into New York City and Long Island.

Previous 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.

Current wording

The average yield on total loans for the three months ended March 31, 2026 increased slightly to 5.46 percent when compared to 5.41 percent for the three months ended March 31, 2025. The yield on residential mortgages increased 53 basis points to 4.85 percent for the three months ended March 31, 2026, as compared to 4.32 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 higher-yielding loans. The average yield on commercial mortgages for the three months ended March 31, 2026, increased 32 basis points to 4.71 percent as compared to 4.39 percent for the same period in 2025. The increase in the average yield on commercial mortgages for the three months ended March 31, 2026, compared to March 31, 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 March 31, 2026 decreased 34 basis points to 6.25 percent from 6.59 percent at March 31, 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 rates with short repricing periods. As of March 31, 2026, 29 percent of all loans will reprice within one month, 35 percent within three months and 51 percent within one year.

Previous 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.

Current wording

The increase in the average balance of interest-bearing deposits for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $268.0 million and money market accounts of $88.4 million, partially offset by a decline in the average balance of certificates of deposit of $56.5 million and interest-bearing brokered demand deposits of $10.0 million. The increase in interest-bearing checking deposits for the three months ended March 31, 2026 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-based 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 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.

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 March 31, 2026 and 2025 were $2.25 billion and $1.37 billion, respectively.

Previous 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.

Current wording

At March 31, 2026, uninsured/unprotected deposits were approximately $2.10 billion, or 31 percent of total deposits. This amount was adjusted to exclude $194 million of public fund deposit balances, which are fully-collateralized and protected with investment securities and an FHLBNY letter of credit.

Previous 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.

Current wording

For the quarters ended March 31, 2026 and 2025, the cost of interest-bearing liabilities was 2.59 percent and 3.18 percent, respectively, reflecting a decrease of 59 basis points. The decrease for the three month period ended March 31, 2026 was driven by a decrease in the average cost of interest-bearing deposits of 62 basis points to 2.52 percent during the first quarter of 2026. The Company also benefited from lower short-term borrowing costs for the three months ended March 31, 2026, which decreased by 72 basis points to 3.82 percent when compared to 4.54 percent for the same period in 2025. 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.

Previous 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.

Current wording

At March 31, 2026, the Company had investment securities available for sale with a fair value of $710.0 million compared with $774.2 million at December 31, 2025. A net unrealized loss (net of income tax) of $51.8 million and $49.3 million related to these securities were included in shareholders’ equity at March 31, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

At March 31, 2026, the Company had investment securities held to maturity with a carrying cost of $79.5 million and an estimated fair value of $70.8 million compared with a carrying cost of $95.9 million and an estimated fair value of $87.5 million at December 31, 2025.

Previous 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.

Current wording

The Company had one equity security (a CRA investment security) with a fair value of $13.4 million at March 31, 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 an unrealized loss of $84,000 for the three months ended March 31, 2026 compared to an unrealized gain of $195,000 for the three months ended March 31, 2025.

Previous 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.

Current wording

The Company recorded total other income, excluding wealth management fee income, of $6.1 million for the first quarter of 2026 compared to $3.4 million for the same 2025 period, reflecting an increase of $2.7 million. The increase was primarily due to increases in loan fee income and service charges and fees.

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 $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.

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 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 $403,000 and $302,000 for the quarters ended March 31, 2026 and 2025, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.

Previous wording

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

Current wording

The Company recorded corporate advisory fee income for the first quarter of 2026 of $69,000 compared to $90,000 for the same period ended March 31, 2025. 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 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.

Current wording

For the quarter ended March 31, 2026, income from the sale of newly originated residential mortgage loans was $72,000 compared to $63,000 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.

Previous 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.

Current wording

The Company recorded an $84,000 negative fair value adjustment and a $195,000 positive fair value adjustment for CRA equity securities in the first quarters of 2026 and 2025, respectively. The negative fair value adjustment during the first quarter of 2026 was due to an increase in medium-term rates during the first quarter of 2026.

Previous 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.

Current wording

Operating expenses for the quarter ended March 31, 2026 and 2025 totaled $55.4 million and $49.4 million, respectively, reflecting an increase of $6.0 million, or 12 percent. Increased operating expenses for the three months ended March 31, 2026 were principally attributable to the Company's ongoing expansion into New York City and Long Island, in addition to annual merit increases. 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 months ended March 31, 2026 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 months March 31, 2026. The increase in professional and legal fees was partially due to expenses related to the subordinated debt redemption and the issuance of preferred stock during the first quarter of 2026. The increase in loan expense for the three-month period ended March 31, 2026 was primarily related to the workout of several problem loans.

Previous 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.

Current wording

The market value of the assets under management and/or administration (“AUM/AUA”) was $13.1 billion at both March 31, 2026 and December 31, 2025, but grew by $1.3 billion, or 11 percent from $11.8 billion at March 31, 2025 due primarily to improved market conditions and new client inflows.

Previous 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.

Current wording

In the March 2026 quarter, the Wealth Management Division generated $16.5 million in fee income compared to $15.4 million for the March 2025 quarter, reflecting a 7 percent increase. The increase in fee income for the three months ended March 31, 2026 was due to strong client inflows driven by new accounts and client additions and solid equity market performance. New business inflows for the three months ended March 31, 2026 totaled $227 million, compared to $341 million for the three months ended March 31, 2025.

Previous 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.

Current wording

Operating expenses relative to the Wealth Management Division, for the three months ended March 31, 2026, was stable at $9.5 million as compared to $9.6 million for the first quarter of 2025. Expenses are in line with the Company’s strategic plan.

Previous wording

NONPERFORMING ASSETS: OREO, loans past due in excess of 90 days and still accruing, and nonaccrual loans are considered nonperforming assets.

Current wording

NONPERFORMING ASSETS: Loans past due in excess of 90 days and still accruing, nonaccrual loans, and other real estate owned are considered nonperforming assets.

Previous wording

Excludes modifications included in nonaccrual loans of $37.6 million at September 30, 2025, $38.1 million at June 30, 2025, $3.9 million at March 31, 2025, $3.6 million at December 31, 2024 and $3.7 million at September 30, 2024.

Current wording

Excludes modifications included in nonaccrual loans of $19.6 million at March 31, 2026, $36.0 million at December 31, 2025, $37.6 million at September 30, 2025, $38.1 million at June 30, 2025 and $3.9 million at March 31, 2025.

Previous wording

The Company had increases in performing modifications, loans past due 30 through 89 days and still accruing and loans subject to special mention at September 30, 2025 compared to December 31, 2024. The persistent nature of the elevated interest rate environment combined with inflationary pressures have presented challenges for certain borrowers, which is reflected in the trend of asset quality data in recent quarters. The decrease in nonperforming assets during the first nine months of 2025 was driven by the resolution of an equipment financing relationship with a loan balance of $20.1 million and three multifamily loans with balances totaling $11.8 million. Multifamily loans represented approximately 52 percent of nonperforming assets as of September 30, 2025. The increase in performing modifications was primarily related to multifamily loans of $80.7 million and C&I loans of $3.0 million during the nine-month period ended September 30, 2025. This was partially offset by $22.4 million in C&I loans that are no longer classified as loan modifications. The increase in loans past due 30 through 89 days and still accruing compared to December 31,

Current wording

Loans past due 30 through 89 days and still accruing increased to $47.1 million, or 0.73 percent of total loans at March 31, 2026 compared to $26.6 million, or 0.42 percent, at December 31, 2025. The increase in past due loans at March 31, 2026 was primarily due to one multifamily loan relationship with an aggregate outstanding balance of $36.2 million. The persistent nature of inflationary pressures have presented challenges for certain borrowers as operating expenses, including insurance, utilities and maintenance costs continue to rise. The decrease in nonperforming assets and individually evaluated loans during the first three months of 2026 was driven by the liquidation of one commercial loan with a balance of $9.6 million. Multifamily loans represented approximately 53 percent of nonperforming assets as of March 31, 2026. The decrease in performing modifications was primarily related to two multifamily loans of $12.8 million that are no longer classified as loan modifications. The increase in special mention loans was primarily due to the previously mentioned $36.2 million multifamily relationship. The increase was partially offset by multifamily loans of $12.8 million that are no longer classified as special mention. The decrease in classified loans was primarily due to one multifamily relationship of $16.7 million and the liquidation of the above mentioned commercial loan of $9.6 million that are no longer classified as substandard as of March 31, 2026.

Previous wording

Excludes a credit of $81,000 at September 30, 2025, a provision of $9,000 at June 30, 2025, a credit of $23,000 at March 31, 2025, a credit of $15,000 at December 31, 2024 and a credit of $3,000 at September 30, 2024 related to off-balance sheet commitments.

Current wording

Excludes 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, provision of $9,000 at June 30, 2025, and a credit of $23,000 at March 31, 2025 related to off-balance sheet commitments.

Previous wording

The increase in the allowance for credit losses as a percentage of nonperforming loans was primarily due to a decrease in nonperforming loans of $16.0 million to $84.1 million at September 30, 2025, as compared to nonperforming loans of $100.2 million at December 31, 2024, partially offset by a decrease in the ACL of $4.4 million to $68.6 million at September 30, 2025.

Current wording

The increase in the allowance for credit losses as a percentage of nonperforming loans was primarily due to a decrease in nonperforming loans of $8.9 million to $59.3 million at March 31, 2026, as compared to nonperforming loans of $68.2 million at December 31, 2025, partially offset by a decrease in the ACL of $4.0 million to $67.0 million at March 31, 2026. The decrease in nonperforming assets during the first quarter of 2026 was largely driven by the liquidation of one commercial loan with a balance of $9.6 million.

Previous wording

INCOME TAXES: Income tax expense for the quarter ended September 30, 2025 was $4.0 million as compared to $3.2 million for the same period in 2024. Income tax expense for the nine months ended September 30, 2025 was $10.2 million as compared to $9.0 million for the same period in 2024.

Current wording

INCOME TAXES: Income tax expense for the quarter ended March 31, 2026 was $5.6 million as compared to $2.9 million for the same period in 2025. The increase in income tax expense reflected higher pretax income of $27.1 million for the quarter ended March 31, 2026 as compared to $14.9 million for the same period in 2025.

Previous wording

The effective tax rate for the three months ended September 30, 2025 was 29.22 percent compared to 29.40 percent for the same quarter in 2024. The effective tax rate for the nine months ended September 30, 2025 was 28.74 percent compared to 27.41 percent for the same period in 2024. The nine months ended September 30, 2024 included a benefit related to the Company's deferred tax asset associated with a surtax imposed by the State of New Jersey. This benefit was partially offset by adjustments related to the vesting of restricted stock at prices lower than original grant prices in 2024.

Current wording

The effective tax rate for the three months ended March 31, 2026 was 28.3 percent compared to 27.3 percent for the same quarter in 2025.

Previous wording

Capital increased as a result of net income of $25.2 million for the nine months ended September 30, 2025. Capital also improved as a result of a decline in accumulated other comprehensive losses of $15.9 million, net of tax. Total accumulated other comprehensive loss decreased to $50.5 million as of September 30, 2025 ($52.6 million loss related to the available for sale securities portfolio partially offset by a $2.1 million gain on the cash flow hedges), as compared to $66.4 million at December 31, 2024. This was partially offset by share repurchases of $5.4 million and cash dividends of $2.7 million during the first nine months of 2025.

Current wording

Capital increased as a result of net income of $14.2 million and the issuance of 30,000 shares of Series B Preferred Stock totaling $30.0 million for the three months ended March 31, 2026. These increases were partially offset by cash dividends of $879,000 and an increase in accumulated other comprehensive loss of $2.1 million during the first quarter of 2026. Total accumulated other comprehensive loss grew to $49.6 million as of March 31, 2026 ($51.8 million loss related to the available for sale securities portfolio partially offset by a $2.2 million gain on the cash flow hedges), as compared to $47.6 million at December 31, 2025.