PEAPACK GLADSTONE FINANCIAL CORP

Previous wording

declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;

Current wording

declines in our net interest margin caused by the interest rate environment, the shape of the yield curve and/or our highly competitive market;

Previous wording

our inability to successfully generate new business in new geographic markets, including our expansion into New York City and Long Island;

Current wording

our inability to successfully generate new business in new geographic markets;

Previous wording

EXECUTIVE SUMMARY: The following tables present certain key aspects of our performance for the three and six months ended June 30, 2026 and 2025.

Current wording

EXECUTIVE SUMMARY: The following tables present certain key aspects of our performance for the three and nine months ended September 30, 2026 and 2025.

Previous wording

For the quarter ended June 30, 2026, the Company recorded total revenue of $86.1 million, pretax income of $22.3 million, net income available to common shareholders of $15.8 million and diluted earnings per share of $0.86, compared to revenue of $69.7 million, pretax income of $11.3 million, net income available to common shareholders of $7.9 million and diluted earnings per share of $0.45 for the same period last year.

Current wording

For the quarter ended September 30, 2026, the Company recorded total revenue of $87.5 million, pretax income of $23.8 million, net income available to common shareholders of $18.5 million and diluted earnings per share of $0.99, compared to revenue of $70.7 million, pretax income of $13.6 million, net income available to common shareholders of $9.6 million and diluted earnings per share of $0.54 for the same period last year.

Previous wording

The increase in net income for the second quarter of 2026 was primarily due to higher net interest income of $15.6 million partially offset by increases in operating expenses and provision for credit losses. The increase in operating expenses was principally attributable to the strategic addition of new employees related to the Company's expansion into New York City and Long Island and the expansion of the equipment financing team, increased health insurance costs and annual merit increases. The implementation of our strategy, including our metro New York City expansion, continues to deliver lower-cost core deposit relationships resulting in consistent improvement in our cost of funds and net interest margin. During the second quarter of 2026, deposits grew $230.8 million, which included $79.7 million in noninterest-bearing demand deposits. Net interest margin improved to 3.32 percent for the second quarter of 2026 as compared to 2.77 percent for the same period in 2025. Wealth management fee income continues to be a consistent and steady revenue stream for the Company and represented 20 percent of total revenue for the second quarter of 2026.

Current wording

The increase in net income for the third quarter of 2026 was primarily due to a $16.9 million increase in net interest income, reflecting growth in commercial and commercial mortgage loans and improved yields on average interest-earning assets, and a lower cost of average interest-bearing liabilities. This was partially offset by a $2.9 million increase in operating expenses and a $3.7 million increase in the provision for credit losses. The increase in operating expenses was principally attributable to the strategic addition of employees supporting the Company's expansion in New York City and Long Island, the expansion of the equipment financing team, increased health insurance costs and annual merit increases. Net interest margin improved to 3.34 percent for the third quarter of 2026 as compared to 2.81 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 third quarter of 2026.

Previous wording

For the six months ended June 30, 2026, the Company recorded total revenue of $168.5 million, pretax income of $42.0 million, net income available to common shareholders of $29.9 million and diluted earnings per share of $1.65 compared to revenue of $134.1 million, pretax income of $21.7 million, net income available to common shareholders of $15.5 million and diluted earnings per share of $0.87 for the same period in 2025.

Current wording

For the nine months ended September 30, 2026, the Company recorded total revenue of $256.0 million, pretax income of $65.9 million, net income available to common shareholders of $48.4 million and diluted earnings per share of $2.65 compared to revenue of $204.8 million, pretax income of $35.3 million, net income available to common shareholders of $25.2 million and diluted earnings per share of $1.42 for the same period in 2025.

Previous wording

The increase in total revenue was primarily driven by strong net interest income growth due to improvements in yield on average interest earning assets (primarily due to growth in commercial and commercial mortgage loans) and cost on average interest-bearing liabilities. The Company has seen positive momentum in net interest margin, which increased to 3.29 percent for the first six months of 2026 as compared to 2.73 percent for the same period in 2025. Both wealth management fee income and other income also contributed to growth in revenue with increases of $2.3 million and $2.1 million for the six months ended June 30, 2026, respectively. Net income for the six months ended June 30, 2026 was impacted by increased operating expenses, principally attributable to the addition of new employees related to the Company's expansion into New York City and Long Island and the expansion of the equipment financing team, increased health insurance costs and annual merit increases.

Current wording

The increase in total revenue was primarily driven by higher net interest income, which was a result of growth in average interest earning assets, along with a lower cost of interest-bearing liabilities. Net interest margin, increased to 3.30 percent for the first nine months of 2026 from 2.76 percent for the same period in 2025. Wealth management fee income and other income also contributed to revenue growth, increasing $3.8 million and $472,000 for the nine months ended September 30, 2026, respectively. These revenue increases were partially offset by higher operating expenses and a higher provision for credit losses. Operating expenses increased principally due to the employee additions supporting the Company's expansion into New York City and Long Island, expansion of the equipment financing team, increased health insurance costs and annual merit increases.

Previous wording

Residential mortgage, commercial real estate, C&I and wealth lines of credit loan originations increased by $20.3 million, $112.0 million, $182.5 million, and $20.9 million, respectively, for the three months ended June 30, 2026, as compared to the same period in 2025. Residential mortgage, commercial real estate, C&I and wealth lines of credit loan originations increased by $25.2 million, $203.3 million, $199.4 million, and $16.2 million, respectively, for the six months ended June 30, 2026 as compared to the same period in 2025. Loan growth for both periods was driven primarily by strategic business development initiatives, including the hiring of a new head of commercial real estate and the Company's expansion into the New York City and Long Island markets, along with continued customer demand across key lending categories.

Current wording

Loan growth for both periods was driven primarily by strategic business development initiatives, including the hiring of a new head of commercial real estate and the Company's expansion into the New York City and Long Island, the expansion of our equipment financing team and continued customer demand across key lending categories.

Previous wording

Total CRE concentration increased to 403 percent of the Bank's total regulatory capital at June 30, 2026 from 367 percent at December 31, 2025. The increase was primarily attributable to growth in non-owner occupied commercial real estate lending, reflecting increased loan originations resulting from the Company's strategic business development initiatives, including the hiring of a new head of commercial real estate partially offset by growth in the Bank's regulatory capital. Total CRE concentration as a percentage of regulatory capital is monitored by Management. Management believes it satisfactorily addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.

Current wording

Total CRE concentration increased to 402 percent of the Bank's total regulatory capital at September 30, 2026 from 367 percent at December 31, 2025. The increase was primarily attributable to growth in non-owner occupied commercial real estate lending, reflecting increased loan originations resulting from the Company's strategic business development initiatives, including the hiring of a new head of commercial real estate. In addition, the Bank's regulatory capital declined as a result of the Company's decision to redeem its outstanding subordinated debt in the first quarter of 2026. Total CRE concentration as a percentage of regulatory capital is monitored by Management. Management believes it satisfactorily addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.

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, 2026 compared to June 30, 2025 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, 2026 compared to September 30, 2025 are shown below:

Previous wording

Net interest income increased $15.6 million, or 32 percent, for the second quarter of 2026 to $63.9 million from $48.3 million in the second quarter of 2025. The net interest margin ("NIM") was 3.32 percent and 2.77 percent for the three months ended June 30, 2026 and 2025, respectively, an increase of 55 basis points year over year. For the six months ended June 30, 2026 the Company recorded net interest income of $123.8 million compared to $93.8 million for the same 2025 period. The NIM was 3.29 percent and 2.73 percent for the six months ended June 30, 2026 and 2025, respectively, an increase of 56 basis points. Net interest income, on a fully tax-equivalent basis, and NIM improved for the three and six months ended June 30, 2026 primarily due to growth in average loan balances, which increased interest income, coupled with continued growth in lower-cost client deposit relationships, which were used to fund consistent loan production. The Bank also benefited from the 175 basis-point reduction in the target federal funds rate by the Federal Reserve from the latter half of 2024 through 2025, which lowered deposit costs and supported margin expansion.

Current wording

Net interest income increased $16.9 million, or 33 percent, for the third quarter of 2026 to $67.5 million from $50.6 million in the third quarter of 2025. Net interest margin ("NIM") was 3.34 percent and 2.81 percent for the three months ended September 30, 2026 and 2025, respectively, an increase of 53 basis points year over year. For the nine months ended September 30, 2026 the Company recorded net interest income of $191.3 million compared to $144.4 million for the same 2025 period. NIM was 3.30 percent and 2.76 percent for the nine months ended September 30, 2026 and 2025, respectively, an increase of 54 basis points. The improvement in net interest income, on a fully tax-equivalent basis, and NIM for both periods reflected strong loan growth and higher loan yields, together with lower average funding costs relative to the comparable 2025 periods, primarily reflected in lower costs of interest-bearing checking accounts. Continued growth in lower-cost client deposit relationships, including noninterest-bearing demand deposits and interest-bearing checking accounts, drove an increase in deposit balances, while reducing the Company's overall cost of funds relative to the comparable 2025 periods. Although market interest rates increased during the third quarter of 2026, average funding costs for the three- and nine-month periods remained below the comparable prior-year periods, which supported margin expansion.

Previous wording

The average balance of interest-earning assets increased to $7.76 billion during the second quarter of 2026 from $7.02 billion for the second quarter of 2025, reflecting an increase of $739.2 million, or 11 percent. Average interest-earning assets were $7.62 billion for the six months ended June 30, 2026 compared to $6.97 billion in the same 2025 period, reflecting an increase of $658.0 million, or 9 percent. The increase in the average balance of interest-earning assets during the second quarter of 2026 when compared to the same quarter of 2025 was due to an increase in the average balance of loans of $736.6 million and an increase in interest-earning deposits of $137.7 million, partially offset by a decrease in the average balance of investments of $135.2 million. The increase in the average balance of interest-earning assets during the six months ended June 30, 2026 when compared to the same period of 2025 was due to an increase in the average balance of loans of $756.4 million and an increase in interest-earning deposits of $18.4 million, partially offset by a decrease in the average balance of investments of $116.8 million.

Current wording

The average balance of interest-earning assets increased to $8.05 billion during the third quarter of 2026 from $7.17 billion for the third quarter of 2025, reflecting an increase of $872.3 million, or 12 percent. Average interest-earning assets were $7.77 billion for the nine months ended September 30, 2026 compared to $7.04 billion in the same 2025 period, reflecting an increase of $730.2 million, or 10 percent. The increase in the average balance of interest-earning assets during the third quarter of 2026 when compared to the same quarter of 2025 was due to an increase in the average balance of outstanding loans of $975.5 million, partially offset by decreases in the average balance of investments of $24.6 million and the average balance of interest-earning deposits of $78.6 million. The increase in the average balance of interest-earning assets during the nine months ended September 30, 2026 when compared to the same period of 2025 was due to an increase in the average balance of loans of $830.2 million, partially offset by decreases in the average balance of investments of $85.7 million and the average balance of interest-earning deposits of $14.3 million.

Previous wording

The increase in the average balance of outstanding loans for the three and six months ended June 30, 2026 was primarily driven by an increase in commercial loans, commercial mortgages, residential mortgages and installment loans. The average balance of commercial loans increased by $314.4 million, or 12 percent, to $2.85 billion for the quarter ended June 30, 2026 when compared to $2.54 billion for the quarter ended June 30, 2025. The average balance of commercial mortgages increased by $301.9 million, or 12 percent, to $2.73 billion for the quarter ended June 30, 2026 when compared to $2.43 billion during the quarter ended June 30, 2025. The average balance of installment loans increased by $79.2 million, or 57 percent, to $219.4 million for the quarter ended June 30, 2026 when compared to $140.1 million during the quarter ended June 30, 2025. The average balance of commercial loans increased by $327.5 million, or 13 percent, to $2.81 billion for the quarter ended June 30, 2026 when compared to $2.49 billion for the six months ended June 30, 2025. The average balance of commercial mortgages increased $297.8 million, or 12 percent, to $2.70 billion for the six months ended June 30, 2026 when compared to $2.41 billion for the same period in 2025. The average balance of installment loans increased by $85.4 million, or 69 percent, to $209.3 million when compared to $123.9 million for the six months ended June 30, 2025. The increase in the average balance of loans for the three and six month periods was primarily driven by the Company's strategic business development initiatives which included the addition of a new head of the commercial real estate lending team, along with our continued expansion into New York City and Long Island with continued customer demand across key lending categories.

Current wording

The average balance of commercial loans increased by $359.4 million, or 14 percent, to $2.88 billion for the nine months ended September 30, 2026 when compared to $2.52 billion for the nine months ended September 30, 2025. The average balance of commercial mortgages increased $326.0 million, or 13 percent, to $2.75 billion for the nine months ended September 30, 2026 when compared to $2.42 billion for the same period in 2025. The average balance of installment loans increased by $107.4 million, or 80 percent, to $242.2 million for the nine months ended September 30, 2026 when compared to $134.9 million for the nine months ended September 30, 2025. The increase in the average balance of loans for the three- and nine-month periods was primarily driven by the Company's strategic business development initiatives which included the addition of a new head of the commercial real estate lending team, along with our expansion into New York City and Long Island, the expansion of our equipment financing team and continued customer demand across key lending categories.

Previous wording

The average yield on total loans for the three months ended June 30, 2026 increased to 5.58 percent when compared to 5.51 percent for the three months ended June 30, 2025. The yield on residential mortgages increased 37 basis points to 4.82 percent for the three months ended June 30, 2026, as compared to 4.45 percent for the same 2025 period. The yield on residential mortgages increased to 4.83 percent for the six months ended June 30, 2026, when compared to 4.39 percent for the same 2025 period. The increase in the average yield for residential mortgages for the three-month period was driven by the origination of loans at higher rates than the existing portfolio. The average yield on commercial mortgages for the three months ended June 30, 2026, increased 35 basis points to 4.87 percent as compared to 4.52 percent for the same period in 2025. The average yield on commercial mortgages for the six months ended June 30, 2026, increased to 4.82 percent when compared to 4.45 percent for the same 2025 period. The increase in the average yield on commercial mortgages for the three and six months ended June 30, 2026, compared to the same periods in 2025, was primarily attributable to changes in portfolio mix and loan repricing characteristics. During the period, higher-yielding new originations and the runoff of lower-yielding legacy loans, more than offset the impact of Federal Reserve rate reductions. The average yield on commercial loans for the three months ended June 30, 2026 decreased 28 basis points to 6.34 percent from 6.62 percent at June 30, 2025. The average yield on commercial loans for the six months ended June 30, 2026, decreased 30 basis points to 6.30 percent from 6.60 percent at June 30, 2025. The average yield on commercial loans decreased due to a decrease in the target Federal Funds rate of 175 basis points from the second half of 2024 through December 31, 2025, which had a greater impact on these loans, which are typically floating rate loans with shorter repricing periods. As of June 30, 2026, 29 percent of loans will reprice within one month, 34 percent within three months and 51 percent within one year.

Current wording

The average yield on total loans for the three months ended September 30, 2026 increased to 5.65 percent when compared to 5.58 percent for the three months ended September 30, 2025. The average yield on total loans for the nine months ended September 30, 2026 increased to 5.59 percent when compared to 5.50 percent for the same 2025 period. The yield on residential mortgages increased 22 basis points to 4.73 percent for the three months ended September 30, 2026, as compared to 4.51 percent for the same 2025 period. The yield on residential mortgages increased to 4.80 percent for the nine months ended September 30, 2026, when compared to 4.43 percent for the same 2025 period. The increase in the average yield for residential mortgages both periods was driven by the origination of loans at higher rates than the existing portfolio.

Previous wording

Interest-earning deposits are an additional part of the Company's liquidity and interest rate risk management strategies. The combined average balance of these deposits for the three months ended June 30, 2026 was $321.3 million with an average yield of 3.18 percent as compared to $183.6 million and an average yield of 3.53 percent for the same period in 2025. The average balance of interest-earning deposits for the six months ended June 30, 2026 was $255.2 million with an average yield of 3.06 percent as compared to $236.8 million and an average yield of 3.71 percent for the same period in 2025. The increase in the average balance was due to an increase in deposits and from the receipt of proceeds from the sale of securities in the first quarter. The decrease in the rate was a result of the lower interest rate environment.

Current wording

Interest-earning deposits are an additional component of the Company's liquidity and interest rate risk management strategies. The combined average balance of these deposits for the three months ended September 30, 2026 was $226.1 million with an average yield of 2.95 percent as compared to $304.7 million and an average yield of 3.89 percent for the same period in 2025. The average balance of interest-earning deposits for the nine months ended September 30, 2026 was $245.4 million with an average yield of 3.03 percent as compared to $259.7 million and an average yield of 3.78 percent for the same period in 2025. The lower average balances for both periods reflected the deployment of available liquidity to fund loan growth. The decline in average yields was a result of the lower interest rate environment relative to the comparable 2025 periods.

Previous wording

The average balance of total investments declined by $135.2 million to $902.4 million for the three months ended June 30, 2026 as compared to $1.04 billion for the three months ended June 30, 2025. The yield on investments decreased by 15 basis points to 3.08 percent for the three months ended June 30, 2026, compared to 3.23 percent for the same period a year ago. The average balance on total investments declined by $116.8 million to $918.2 million for the six months ended June 30, 2026 as compared to $1.03 billion for the six months ended June 30, 2025. The yield on investments decreased by 13 basis points to 3.07 percent for the six months ended June 30, 2026, compared to 3.20 percent for the same period in 2025. The decreases in the average balance and average yield on total investments were a result of a security sale of $97.0 million of higher-yielding investments, as part of a portfolio repositioning completed during the first quarter of 2026.

Current wording

The average balance of total investments declined by $24.6 million to $939.1 million for the three months ended September 30, 2026 as compared to $963.7 million for the three months ended September 30, 2025. The yield on investments increased by five basis points to 3.16 percent for the three months ended September 30, 2026, compared to 3.11 percent for the same period a year ago. For the nine months ended September 30, 2026, the average balance on total investments declined by $85.7 million to $925.2 million compared to $1.01 billion for the comparable 2025 period, while the average yield decreased eight basis points to 3.10 percent from 3.18 percent for the same period in 2025. The lower average balances were primarily the result of a security sale of $97.0 million as part of a portfolio repositioning completed during the first quarter of 2026. The Company purchased $114.3 million of investment securities during the third quarter of 2026, partially offsetting the reduction in average balances. The increase in investment yields during the third quarter of 2026 reflected the sale of lower-yielding securities during the first quarter of 2026 and the purchase of higher-yielding securities during the third quarter of 2026. The lower average yield of the nine-month period primarily reflected the decline in market interest rates through the end of 2025, following reductions in the target federal funds rate.

Previous wording

For the quarters ended June 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.19 percent and 5.12 percent, respectively, an increase of 7 basis points year over year. For the six months ended June 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.18 percent and 5.07 percent, respectively, an increase of 11 basis points year over year.

Current wording

For the quarters ended September 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.28 percent and 5.17 percent, respectively, an increase of 11 basis points year over year. For the nine months ended September 30, 2026 and 2025, the average yields earned on interest-earning assets were 5.21 percent and 5.10 percent, respectively, an increase of 11 basis points year over year.

Previous wording

For the three months ended June 30, 2026, the average balance of interest-bearing liabilities totaled $5.53 billion representing an increase of $315.8 million from $5.21 billion for the three month period ended June 30, 2025 primarily due to an increase in interest-bearing deposits of $444.5 million to $5.51 billion for the three months ended June 30, 2026. This increase was partially offset by a decrease in average FHLB advances and borrowings of $29.6 million to $15.1 million from $44.7 million for the same 2025 period and in average outstanding subordinated debt of $98.9 million due to the redemption of $100.0 million of such debt in March 2026. For the six months ended June 30, 2026, the average balance of interest-bearing liabilities totaled $5.48 billion representing an increase of $297.5 million from $5.18 billion for the six-month period ended June 30, 2025 primarily due to an increase in interest-bearing deposits of $370.4 million to $5.41 billion for the six months ended June 30, 2026, partially offset by a decrease in the average balance of subordinated debt of $79.9 million to $32.8 million.

Current wording

For the three months ended September 30, 2026, the average balance of interest-bearing liabilities totaled $5.72 billion representing an increase of $442.7 million from $5.28 billion for the three month period ended September 30, 2025 primarily due to an increase in interest-bearing deposits and FHLB advances and borrowings. The increase primarily reflected a $430.2 million increase in average interest-bearing deposits to $5.61 billion and an $111.6 million increase in average FHLB advances and borrowings to $111.6 million. These increases were partially offset by a $99.0 million decrease in average subordinated debt resulting from the redemption of $100.0 million of subordinated debt in March 2026.

Previous wording

The increase in the average balance of interest-bearing deposits for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $252.6 million and money market accounts of $244.0 million, partially offset by a decline in the average balance of certificates of deposit of $51.1 million and interest-bearing brokered demand deposits of $9.1 million. The increase in average balance of interest-bearing deposits for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $260.2 million and money market accounts of $166.6 million, partially offset by the decline in the average balance of certificates of deposit of $53.8 million and interest-bearing brokered deposits of $9.6 million. The increase in interest-bearing checking deposits for the three and six months ended June 30, 2026 was due to our continued expansion into the New York City and Long Island markets and client demand for FDIC insured products, which we offer through reciprocal deposit programs. Our expansion around metro NY has allowed us to grow lower cost, relationship-based deposits, while reducing the Company's reliance on overnight borrowings, brokered deposits and other high-cost funding sources.

Current wording

The increase in average balance of interest-bearing deposits for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $230.5 million and money market accounts of $214.8 million, partially offset by the decline in the average balance of certificates of deposit of $53.4 million and interest-bearing brokered deposits of $6.3 million. The increase in interest-bearing checking deposits for the three and nine months ended September 30, 2026 was due to our continued expansion into the New York City and Long Island markets and client demand for FDIC-insured products, which we offer through reciprocal deposit programs. Our expansion around metro NY has allowed us to grow lower cost, relationship-based deposits, while reducing the Company's reliance on 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, 2026 and 2025 were $2.37 billion and $1.82 billion, respectively. Average reciprocal deposit balances for the six months ended June 30, 2026 and 2025 were $2.31 billion and $1.81 billion, respectively.

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 three months ended September 30, 2026 and 2025 were $2.34 billion and $1.97 billion, respectively. Average reciprocal deposit balances for the nine months ended September 30, 2026 and 2025 were $2.32 billion and $1.86 billion, respectively.

Previous wording

At June 30, 2026, uninsured/unprotected deposits were approximately $2.44 billion, or 35 percent of total deposits. This amount was adjusted to exclude $126 million of public fund deposit balances, which are fully-collateralized and protected with investment securities and an FHLB of New York letter of credit.

Current wording

At September 30, 2026, uninsured/unprotected deposits were approximately $2.49 billion, or 34 percent of total deposits. This amount was adjusted to exclude $144 million of public fund deposit balances, which are fully-collateralized and protected with an FHLB of New York letter of credit.

Previous wording

For the quarters ended June 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.63 percent and 3.17 percent, respectively, reflecting a decrease of 54 basis points. For the six months ended June 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.63 percent and 3.17 percent, respectively, reflecting a decrease of 54 basis points. The decrease for the three and six month periods ended June 30, 2026 was driven by a decrease in the average cost of interest-bearing deposits. The Company also benefited from lower short-term borrowing costs for the three and six months ended June 30, 2026 and 2025, which decreased by 43 basis points to 4.09 percent when compared to 4.52 percent and decreased by 57 basis points to 3.93 percent when compared to 4.50 percent, respectively. The decrease in deposit and borrowing rates was due to the Federal Reserve lowering the target Federal Funds rate by 175 basis points during the latter half of 2024 through the end of 2025, and a change in the composition of the deposit portfolio with a greater concentration of lower-cost, core relationship deposits.

Current wording

For the three months ended September 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.73 percent and 3.18 percent, respectively, reflecting a decrease of 45 basis points. For the nine months ended September 30, 2026 and 2025, the cost of interest-bearing liabilities was 2.67 percent and 3.18 percent, respectively, reflecting a decrease of 51 basis points. The decrease for the three- and nine-month periods ended September 30, 2026 was driven by a decrease in the average cost of interest-bearing deposits. The Company also benefited from lower short-term borrowing costs for the nine months ended September 30, 2026, which decreased by 54 basis points to 3.99 percent when compared to 4.53 percent for the same 2025 period. 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 June 30, 2026, the Company had investment securities available for sale with a fair value of $752.4 million compared with $774.2 million at December 31, 2025. The decline in investment securities was primarily due to the sale of $97.0 million of mostly mortgage-backed securities during the six months ended June 30, 2026. A net unrealized loss (net of income tax) of $52.3 million and $49.3 million related to these securities were included in shareholders’ equity at June 30, 2026 and December 31, 2025, respectively.

Current wording

At September 30, 2026, the Company had investment securities available for sale with a fair value of $812.0 million compared with $774.2 million at December 31, 2025. The increase in investment securities was primarily due to the purchase of $114.3 million in the third quarter of 2026 partially offset by the sale of $97.0 million of mostly lower-yielding mortgage-backed securities during the nine months ended September 30, 2026 for a loss of $81,000. A net unrealized loss (net of income tax) of $72.4 million and $49.3 million related to these securities were included in shareholders’ equity at September 30, 2026 and December 31, 2025, respectively.

Previous wording

At June 30, 2026, the Company had investment securities held to maturity with a carrying cost of $78.6 million and an estimated fair value of $69.9 million compared with a carrying cost of $95.9 million and an estimated fair value of $87.5 million at December 31, 2025.

Current wording

At September 30, 2026, the Company had investment securities held to maturity with a carrying cost of $77.4 million and an estimated fair value of $66.7 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 $13.3 million at June 30, 2026 compared to $13.5 million at December 31, 2025, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded unrealized losses of $55,000 and $139,000 for the three and six months ended June 30, 2026, respectively, compared to unrealized gains of $42,000 and $237,000 for the three and six months ended June 30, 2025.

Current wording

The Company had one equity security (a CRA investment security) with a fair value of $12.8 million at September 30, 2026 compared to $13.5 million at December 31, 2025, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded unrealized losses of $502,000 and $641,000 for the three and nine months ended September 30, 2026, respectively, compared to unrealized gains of $125,000 and $362,000 for the three and nine months ended September 30, 2025.

Previous wording

Service charges and fee income increased $196,000 to $1.4 million during the quarter ended June 30, 2026 from $1.2 million for the same period in 2025. For the six months ended June 30, 2026 and 2025, the Company recorded service charges and fee income of $2.7 million and $2.3 million, respectively. The increases for both periods reflected an increase in our commercial client base, which has generated higher fee activity during the first half of 2026.

Current wording

Service charges and fee income increased $259,000 to $1.4 million during the quarter ended September 30, 2026 from $1.2 million for the same period in 2025. For the nine months ended September 30, 2026 and 2025, the Company recorded service charges and fee income of $4.2 million and $3.5 million, respectively. The increases for both periods reflected an increase in our commercial client base and the related increase in fee-generating activity.

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 and retains the non-guaranteed portion of SBA loans in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $444,000 for the quarter ended June 30, 2026, compared to $521,000 in gains during the quarter ended June 30, 2025. For the six months ended June 30, 2026 and 2025, the Company recorded gains on the sale of SBA loans of $847,000 and $823,000, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.

Current wording

The Company exited the SBA lending business during the first half of 2026 and no longer originates new SBA loans. Historically, the Company originated loans that are partially guaranteed by the SBA to provide working capital and/or finance the purchase of equipment, inventory or commercial real estate. All SBA loans were underwritten and documented as prescribed by the SBA. The Company generally sold the guaranteed portion of the SBA loans in the secondary market and retained the non-guaranteed portion of SBA loans in its loan portfolio. Gain on the sale of SBA loans was $84,000 for the quarter ended September 30, 2026, compared to $203,000 in gains for the quarter ended September 30, 2025. For the nine months ended September 30, 2026 and 2025, the Company recorded gains on the sale of SBA loans of $931,000 and $1.0 million, respectively. Gains recorded during 2026 primarily related to the sale of guaranteed portions of loans originated before the Company exited the SBA lending business. As a result of the exit, SBA loan sale activity and related gains are expected to decline in future periods.

Previous wording

For the quarter ended June 30, 2026, income from the sale of newly originated residential mortgage loans was $62,000 compared to $27,000 for the same period in 2025. While the interest rate environment has improved following rate reductions by the Federal Reserve, residential mortgage activity continues to be constrained by limited housing inventory and affordability considerations, which have tempered both refinancing and home purchase volumes.

Current wording

Gain on the sale of newly originated residential mortgage loans was $28,000 for the three months ended September 30, 2026 as compared to $6,000 for the comparable 2025 period. For the nine months ended September 30, 2026, gain on the sale of newly originated residential mortgage loans was $162,000 compared to $96,000 for the same period in 2025. Residential mortgage activity continues to be influenced by prevailing interest rates, limited housing inventory and affordability considerations, which moderated both refinancing and home purchase volumes.

Previous wording

Loan fee income increased to $2.1 million for the second quarter of 2026 as compared to $1.9 million for the quarter ended June 30, 2025. Loan fee income increased to $5.9 million for the six months ended June 30, 2026 compared to $2.9 million for the same period in 2025. Loan fee income included gains of $1.0 million and $3.7 million for the three and six months ended June 30, 2026, respectively, as compared to gains of $482,000 and $67,000 for the same periods in 2025 related to equipment transfers to lessees upon the termination of leases recorded by the Equipment Finance Division. The period-over-period change was primarily driven by differences in the volume and timing of lease terminations and the underlying fair value of the equipment at the end of the lease term, which can vary based on market conditions and asset-specific factors. Additionally, the Company recorded $730,000 of unused commercial line fees for the quarter ended June 30, 2026 compared to $869,000 for the same 2025 period. The six months ended June 30, 2026 included $1.5 million of unused commercial line fees compared to $1.8 million for the same 2025 period. The six months ended June 30, 2026 included $473,000 of letter of credit fee income compared to $290,000 for the same 2025 period.

Current wording

Loan fee income decreased to $1.5 million for the third quarter of 2026 as compared to $1.9 million for the quarter ended September 30, 2025. Loan fee income increased to $7.4 million for the nine months ended September 30, 2026 compared to $4.8 million for the same period in 2025. Loan fee income included gains of $190,000 and $3.8 million for the three and nine months ended September 30, 2026, respectively, as compared to gains of $398,000 and $465,000 for the same periods in 2025 related to equipment transfers to lessees upon the termination of leases recorded by the Equipment Finance Division. The changes primarily reflected differences in the volume and timing of lease terminations and the underlying fair value of the equipment at lease end, which can vary based on market conditions and asset-specific factors. Loan fee income also included unused commercial line fees of $885,000 and $2.4 million for the three and nine months ended September 30, 2026, respectively, compared to $825,000 and $2.6 million for the comparable 2025 periods. Letter of credit fee income was $614,000 for the nine months ended September 30, 2026, compared to $503,000 for the comparable 2025 period, reflecting increased trade-finance product utilization amount the Company's growing commercial client base in the metropolitan New York market.

Previous wording

The Company completed a security sale of $97.0 million resulting in a loss of $81,000 during the first six months of 2026 and a $53.2 million sale with a gain of $7,000 during the same period in 2025. These sales were completed as part of a portfolio repositioning.

Current wording

The Company completed a security sale of $97.0 million resulting in a loss of $81,000 during the first nine months of 2026 and a $53.2 million security sale with a gain of $7,000 during the same period in 2025. These sales were completed as part of a portfolio repositioning.

Previous wording

Operating expenses for the quarter ended June 30, 2026 and 2025 totaled $55.7 million and $51.9 million, respectively, reflecting an increase of $3.8 million, or 7 percent year over year. Operating expenses for the six months ended June 30, 2026 and 2025 totaled $111.1 million and $101.3 million, respectively, reflecting an increase of $9.8 million, or 10 percent. Increased operating expenses for the three and six months ended June 30, 2026 were principally attributable to the Company's ongoing expansion into New York City and Long Island, in addition to annual merit increases across the Company. The addition of production teams in Long Island, including the opening of two new Long Island offices during the latter half of 2025, and the expansion of our equipment financing team, also contributed to the growth in premises and equipment and other operating expenses. FDIC assessment expense increased for the three and six months ended June 30, 2026 due primarily to higher assessment rates implemented by the FDIC and an increase in the Bank's average total assets subject to assessment. The increase in professional and legal fees for the six months ended June 30, 2026 was primarily due to expenses related to the subordinated debt redemption and the issuance of preferred stock during the first quarter of 2026.

Current wording

Premises and equipment expense increased $514,000 and $1.6 million for the three and nine months ended September 30, 2026, respectively, compared to the corresponding prior-year periods, primarily reflecting additional occupancy and infrastructure costs associated with the Company's continued geographic expansion, including two Long Island offices opened during the latter half of 2025. FDIC assessment expense increased for the three and nine months ended September 30, 2026 due primarily to higher assessment rates implemented by the FDIC and an increase in the Bank's average total assets subject to assessment.

Previous wording

The market value of the assets under management and/or administration (“AUM/AUA”) was $13.9 billion at June 30, 2026, reflecting a 6 percent increase from $13.1 billion at December 31, 2025, and an increase of 13 percent from $12.3 billion at June 30, 2025 due primarily to improved market conditions and new client inflows.

Current wording

The market value of the assets under management and/or administration (“AUM/AUA”) was $13.6 billion at September 30, 2026, reflecting a 4 percent increase from $13.1 billion at December 31, 2025, and an increase of 5 percent from $12.9 billion at September 30, 2025. The increases primarily reflected improved market conditions and new client inflows.

Previous wording

In the June 2026 quarter, the Wealth Management Division generated $17.2 million in fee income compared to $15.9 million for the June 2025 quarter, reflecting an 8 percent increase. For the six months ended June 30, 2026, the Wealth Management Division generated $33.7 million in fee income compared to $31.4 million in fee income for the same period in 2025, reflecting a 7 percent increase. The increase in fee income for both the three and six months ended June 30, 2026 was due to strong client inflows driven by new accounts and client additions and solid equity market performance. New business inflows for the second quarter ended June 30, 2026 totaled $205 million, as compared to $193 million for the second quarter ended June 30, 2025. New business inflows for the six months ended June 30, 2026 totaled $432 million, as compared to $537 million for the six months ended June 30, 2025.

Current wording

Wealth Management fee income was $17.3 million for the September 2026 quarter compared to $15.8 million for the September 2025 quarter, an increase of 9 percent. For the nine months ended September 30, 2026, Wealth Management fee income was $51.0 million compared to $47.2 million in fee income for the same period in 2025, an increase of 8 percent. The increase in both periods was due to strong client inflows driven by new accounts and client additions and as well as favorable equity market performance. New business inflows for the third quarter ended September 30, 2026 totaled $346 million, as compared to $214 million for the third quarter ended September 30, 2025. New business inflows for the nine months ended September 30, 2026 totaled $779 million, as compared to $751 million for the nine months ended September 30, 2025.

Previous wording

Operating expenses relative to the Wealth Management Division, for the three months ended June 30, 2026, increased to $10.9 million as compared to $10.5 million for the second quarter of 2025. Operating expenses relative to the Wealth Management Division were $20.4 million and $20.2 million, for the six months ended June 30, 2026 and June 30, 2025, respectively. The increase in operating expenses reflected the overall growth in the business and new hires. Expenses are in line with the Company’s strategic plan, particularly the hiring of key management and revenue-producing personnel.

Current wording

Operating expenses relative to the Wealth Management Division, for the three months ended September 30, 2026 increased to $9.9 million as compared to $8.2 million for the third quarter of 2025. Operating expenses relative to the Wealth Management Division were $30.3 million and $28.4 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The increase in operating expenses reflected business growth and strategic investments in key management and revenue-producing personnel.

Previous wording

Excludes modifications included in nonaccrual loans of $21.6 million at June 30, 2026, $19.6 million at March 31, 2026, $36.0 million at December 31, 2025, $37.6 million at September 30, 2025, and $38.1 million at June 30, 2025.

Current wording

Excludes modifications included in nonaccrual loans of $24.7 million at September 30, 2026, $21.6 million at June 30, 2026, $19.6 million at March 31, 2026, $36.0 million at December 31, 2025, and $37.6 million at September 30, 2025.

Previous wording

Loans past due 30 through 89 days and still accruing increased to $48.1 million, or 0.72 percent of total loans at June 30, 2026 compared to $26.6 million, or 0.42 percent, at December 31, 2025. The increase in past due loans at June 30, 2026 was primarily due to six multifamily loans with an aggregate outstanding balance of $29.8 million and one equipment finance loan with a balance of $10.3 million that matured and was in the process of modification at quarter end. The persistent nature of inflationary pressures has presented challenges for certain borrowers as operating expenses, including insurance, utilities and maintenance costs continue to rise.

Current wording

Loans past due 30 through 89 days and still accruing increased to $39.4 million, or 0.56 percent of total loans at September 30, 2026 compared to $26.6 million, or 0.42 percent, at December 31, 2025. The increase in past due loans at September 30, 2026 was primarily due to six multifamily loans with an aggregate outstanding balance of $30.3 million, partially offset by the return of one commercial and industrial loan of $10.3 million to current status. The persistent nature of inflationary pressures has presented challenges for certain borrowers as operating expenses, including insurance, utilities and maintenance costs continue to rise faster than revenue streams.

Previous wording

The decrease in performing modifications was primarily related to ten multifamily loans totaling $54.9 million that are no longer classified as loan modifications because they have performed in accordance with their modified terms for at least twelve consecutive months and therefore no longer meet the reporting criteria for loan modifications. Additionally, $19.0 million in multifamily loans were moved to nonaccrual status.

Current wording

The decrease in performing modifications was primarily related to ten multifamily loans totaling $52.8 million that had performed in accordance with their modified terms for at least twelve consecutive months and accordingly no longer meet the reporting criteria for loan modifications. Additionally, $15.5 million in multifamily loans and one commercial and industrial loan with a balance of $3.9 million were placed on nonaccrual status.

Previous wording

The increase in special mention loans was primarily due to four multifamily loans totaling $23.8 million and $2.3 million in commercial loans. The increase was partially offset by multifamily loans totaling $12.8 million that are no longer classified as special mention. This increase was partially offset by the sale of one multifamily loan of $8.3 million, the payoff of one investment commercial real estate loan of $2.6 million and the upgrade of one multifamily loan of $4.5 million. The decrease in classified loans was primarily due to five multifamily loans totaling $29.9 million that are no longer classified as substandard as of June 30, 2026, as four such loans totaling $22.7 million were upgraded and one multifamily loan with a balance of $7.2 million was liquidated.

Current wording

The increase in special mention loans was primarily due to five multifamily loans totaling $28.3 million and eight commercial and industrial loans totaling $3.1 million. This increase was partially offset by the sale of one multifamily loan of $8.3 million, the payoff of one investment commercial real estate loan of $2.6 million, the downgrade of five commercial and industrial loans of $8.5 million and the upgrade of one multifamily loan totaling $4.5 million.

Previous wording

PROVISION FOR CREDIT LOSSES: The provision for credit losses was $8.1 million and $6.6 million for the second quarters of 2026 and 2025, respectively. The increase was primarily attributable to continued loan growth, changes in economic forecast assumptions incorporated into the Company's allowance methodology, and higher specific reserves established on certain individually evaluated loans. During the second quarter of 2026, approximately $4.2 million of the provision was attributable to loan growth and changes in economic data, while $3.9 million related to increases in specific reserves. For the six months ended June 30, 2026 and 2025, the provision for loan losses was $15.4 million and $11.1 million, respectively. Similar to the quarterly results, the year-over-year increase primarily reflected continued loan growth and higher specific reserves established on certain individually evaluated loans. In addition, the Company's ACL methodology incorporates forward-looking economic factors, and during the quarter, the quantitative reserve reflected weakened macroeconomic expectations coupled with loan growth, drove the higher provision level.

Current wording

PROVISION FOR CREDIT LOSSES: The provision for credit losses was $8.5 million and $4.8 million for the third quarters of 2026 and 2025, respectively. The increase primarily reflected continued loan growth and higher specific reserves established on certain individually evaluated loans. Of the third quarter 2026 provision, approximately $3.9 million was attributable to loan growth and changes in economic data, while $4.6 million related to increases in specific reserves related to $3.0 million of commercial and industrial loans. Although improved macroeconomic forecast assumptions favorably affected the quantitative component of the allowance during the third quarter, this benefit was more than offset by loan growth and the increase in specific reserves.

Previous wording

The allowance for credit losses (“ACL”) was $69.2 million as of June 30, 2026, compared to $71.0 million at December 31, 2025. Although the Company recorded a $15.4 million provision during the first six months of 2026, the ACL declined as net charge-offs exceeded the provision recorded during the period. Net charge-offs totaled $17.2 million during the first six months of 2026 compared to net charge-offs of $2.3 million during the first six months of 2025. For 2026, charge-offs of $7.8 million were related to the liquidation of one commercial and industrial relationship with an additional $8.3 million associated with the sale of two multifamily loans. The commercial and industrial loan charge-off in the current period was tied to a specific provision recorded in previous periods. For the six-month period, net charge-offs were primarily attributable to $7.8 million associated with the resolution of one commercial and industrial lending relationship and $8.3 million related to the sale of two multifamily loans.

Current wording

The allowance for credit losses (“ACL”) was $73.0 million as of September 30, 2026, compared to $71.0 million at December 31, 2025. During the first nine months of 2026, the Company recorded a $23.9 million provision for credit losses and net charge-offs totaled $21.9 million compared to net charge-offs of $20.3 million during the comparable 2025 period. Third quarter 2026 charge-offs included $1.7 million which were related to one commercial and industrial relationship and $1.7 million associated with the sale and payoff of two multifamily loans. The related charge-offs had been substantially reserved for through specific provisions recorded in prior periods. For the nine-month period, net charge-offs included $10.7 million associated with several commercial and industrial lending relationships and $10.0 million related to four multifamily loans.