PGC 10-K & 10-Q changes, risk factors and insider trading

Our businesses and operations, which primarily consist of lending money, accepting deposits and investing in securities,securities and wealth management and financial advisory services, are sensitive to general business and economic conditions in the United States. If the U.S. economy weakens, our growth and profitability from our lending, depositdeposit, investment and investmentwealth management operations could be constrained. Uncertainty about the federal fiscal policymaking process and the mediummedium- and long-term fiscal outlook of the federal government is a concern for businesses, consumers and investors in the United States. In addition, economic conditions in foreign countries could affect the stability of global financial markets, which could hinder U.S. economic growth. Weak economic conditions or a return of recessionary conditions and/or negative developments in the domestic and international credit markets are often characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity and/or depressed prices in the secondary market for mortgage loans, increased loan delinquencies, real estate price declines and lower home sales and commercial activity.

Further, a U.S. government debt default would have a material adverse impact on our business and financial performance, including a decrease in the value of Treasury bonds and other government securities held by us, which could negatively impact the Bank’s capital position and its ability to meet regulatory requirements. Other negative impacts could be volatile capital markets, an adverse impact on the U.S. economy and the U.S. dollar, as well as increased default rates among borrowers in light of increased economic uncertainty. Some of these impacts might occur even in the absence of an actual default but as a consequence of extended political negotiations around the threat of such a default and/or a government shutdown.

Unlike larger regional banks that operate in large geographies, much of our business is with clients located within Central and Northern New Jersey, Pennsylvania, as well as metropolitan New York City.York. Our business loans are generally made to small to mid-sized businesses, most of whose success depends on the regional economy. These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities. Due to our geographic concentration, a downturn in the local economy could make it more difficult to attract deposits and could cause higher losses and delinquencies on our loans than if the loans were more geographically diversified. Adverse economic and business conditions in our market area could reduce our growth, affect our borrowers' ability to repay their loans and, consequently, adversely affect our financial condition and performance. Further, we place substantial reliance on real estate as collateral for our loan portfolio. A sharp downturn in real estate values in our market area could leave our loans under-secured, which could adversely affect our earnings.

Inflation risk iscan thenegatively risk thatimpact the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. TheInflation rose sharply at the end of 2021 and remained elevated through the first half of calendar 2024, before beginning to moderate in the latter half of 2024 and into calendar 2025. However, inflation levels continue to exceed the Federal Reserve BoardBoard’s raisedlong-term certaintarget benchmarkof interest rates to combat inflation. However, in September, the FRB reduced rates by 50 basis points and by an additional 25 basis points in November and December.2.0%. As inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be more pronounced for floating rate instruments. In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. A deterioration in economic conditions in the United States and our markets could result in an increase in loan delinquencies and non-performing assets, decreases in loan collateral values and a decrease in demand for our products and services, any of which, could adversely affect our business, financial condition and results of operations.

New York enacted legislation increasing the restrictions on rent increases in a rent-regulated apartment building, including, among other provisions, (i) repealing the vacancy bonus and longevity bonus, which allowed a property owner to raise rents as much as 20 percent each time a rental unit became vacant, (ii) eliminating high rent vacancy deregulation and high-income deregulation, which allowed a rental unit to be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon renewal. This legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rate apartments. For example, the New York City Rent Guidelines Board established that on certain apartments, for a one-year lease beginning on or after September 30, 2024, the maximum rent increase is 3.0%, even though the overall inflation rate increased at a higher rate. As a result, the value of the collateral located in New York securing our multifamily loans or the future net operating income of such properties could potentially become impaired. Further restrictions on rent-regulated properties may be enacted or existing restrictions strengthened as a result of the outcome of the recent New York City mayoral election. Moreover, following Covid,COVID, New York City rent regulated buildings have had an increased level of non-paying tenants with a very protracted eviction process, which has negatively impacted rent collections. At December 31, 2024,2025, our total multifamily rent regulated exposure in New York was approximately $939$854.1 million, or 1713.7 percent, of the total loan portfolio.

We maintain allowances for credit losses on loans and off-balance sheet credit exposures. The amount of each allowance account represents management's best estimate of current expected credit losses on these financial instruments considering available information, from internal and external sources, relevant to assessing exposure to credit loss over the contractual term of the instrument. Relevant available information includes historical credit loss experience, current economic conditions, and reasonable and supportable economic forecasts. The determination of the appropriate level of allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates related to current and expected future credit risks and trends, all of which may undergo material changes. Continuing deterioration in economic conditions affecting borrowers and securities issuers; inflation; changes in interest rates; new information regarding existing loans, credit commitments and securities holdings; identification of additional problem loans ratings and downgrades, and other factors, may require an increase in the allowances for credit losses on loans and off-balance sheet credit exposures. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in credit loss expense or the recognition of further loan charge-offs, based on judgments different than those of management. Furthermore, if anywe charge-offsincur related to loans or off-balance sheet credit exposures in future periods exceed our allowances for credit losses on loans or off-balance sheet credit exposures,charge-offs, we willmay need to recognize additional credit loss expense to increase the applicable allowance. Any increase in the allowance for credit losses on loans and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations.

Federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under the guidance, a financial institution that, like the Bank, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. A financial institution may be subject to this guidance if, among other factors, (i) total reported loans for construction, land acquisition and development and other land represent 100 percent or more of total capital, or (ii) total reported loans secured by multifamily and non-farm residential properties, loans for construction, land acquisition and development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300 percent or more of total capital. Based on these factors, the Bank had a concentration in commercial real estate lending, as such loans represented 347367 percent of total bank capital as of December 31, 2024.2025. The guidance focuses on exposure to commercial real estate loans that are dependent on the cash flowflows from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or in an abundance of caution). The guidance assists banks in developing risk management practices and determining capital levels commensurate with the level and nature of real estate concentrations. The guidance states that management should employ heightened risk management practices including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. While it is management’s belief that policies and procedures with respect to the Bank’s commercial real estate loan portfolio have been implemented consistent with this guidance, bank regulators could require that additional policies and procedures be implemented consistent with their interpretation of the guidance that may result in additional costs or that may result in the curtailment of commercial real estate lending that would adversely affect the Bank’s loan originations and profitability.

In the course of our business, we may purchase real estate or foreclose on and take title to real estate. As a result, we could be subject to environmental liabilities with respect to these properties. We may be held liable to a governmental entity or to third parties for property damage, personal injury, investigation or clean-up costs incurred by these parties in connection with environmental contamination. The costs associated with investigation or remediation activities could be substantial. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. In addition, future laws or more stringent interpretations or enforcement policies with respect to existing laws may increase our exposure to environmental liability. Any significant environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations and prospects.

Different types of assets and liabilities may react differently, and at different times, to changes in market interest rates. WeWhen short-term rates are higher than long-term rates, that is referred to as an inverted yield curve. If the yield curve inversion re-occurs, the difference between rates paid on deposits and received on loans could narrow significantly resulting in a decrease in net interest income and our profitability. Our interest-bearing liabilities generally have shorter contractual maturities than our interest-earning assets. Furthermore, the rates we earn on our other interest-earning assets and the rates we pay on our interest-bearing liabilities are generally fixed for a contractual period of time. This imbalance can create significant earnings volatility because market interest rates change over time and we expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities. That means either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa. When interest-bearing liabilities mature or reprice more quickly than interest-earning assets, an increase in market rates of interest could reduce our net interest income. Conversely, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce our net interest income. We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, unemployment, money supply, governmental policy, the imposition of tariffs, domestic and international events and changes in the United States and other financial markets.

At December 31, 2024,2025, the Company maintained a debt securities portfolio of $886.2$870.1 million, of which $784.5$774.2 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors. Stockholders’ equity increases or decreases by the amount of the change in the unrealized gain or loss (the difference between the estimated fair value and the amortized cost) of the available-for-sale debt securities portfolio, net of the related tax expense or benefit, under the category of accumulated other comprehensive income (loss). At December 31, 2025, accumulated other comprehensive losses were $47.6 million, net of tax, primarily related to unrealized holding losses in the available-for- sale investment securities portfolio, which negatively impacted stockholders’ equity, as well as book value per common share. A decrease can occur even though the securities are not sold.

Our ability to engage in routine transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interconnected as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, investment banks, commercial banks, and other institutional clients. Defaults by, or even rumors or questions about, one or more financial services institutions, or the financial services industry generally, could lead to market-wide liquidity problems and losses or defaults by us or by other institutions and organizations. Some of these transactions expose us to credit risk if there is a default by our client or counterparty. Additionally, our credit risk may be impaired when collateral held by us cannot be realized or is liquidated at prices insufficient to recover the full amount of the credit or derivative exposure due us. Any such losses could have a material adverse effect on our financial condition and results of operations.

Additionally, Congress and the administration through executive orders controls fiscal policy through decisions on taxation and expenditures. Depending on industries and markets involved, changes to tax law and increaseincreased or reduced public expenditures could affect us directly or the business operations of our customers.

We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We may at some point need to raise additional capital to support continued growth. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on its financial performance. Accordingly, we cannot be assured of our ability to raise additional capital if needed or on terms acceptable to us. If we cannot raise additional capital when needed, the ability to further expand itsour operations could be materially impaired. Further, if we raise capital through the issuance of additional shares of our common stock, it would dilute the ownership interests of existing shareholders and may dilute the per share book value of our common stock. New investors may also have rights, preferences and privileges senior to our current shareholders, which may adversely impact our current shareholders.

We regularly evaluate opportunities to acquire and invest in banks and in other complementary businesses. As a result, we may engage in negotiations or discussions that, if they were to result in a transaction, could have a material effect on our operating results and financial condition, including on our short- and long-term liquidity and capital structure. Our acquisition activities could be material to us. For example, we could issue additional shares of common stock in a merger transaction, which could dilute current shareholders'shareholders’ ownership interest and the per share book value of our common stock. Further, an acquisition could require us to use a substantial amount of cash, other liquid assets, and/or incur debt.

Since the principal source of income for the Company is dividends paid to the Company by the Bank, the Company’s ability to pay dividends to its shareholders will depend on whether the Bank pays dividends to it. As a practical matter, restrictions on the ability of the Bank to pay dividends act as restrictions on the amount of funds available for the payment of dividends by the Company. As a New Jersey-chartered commercial bank, the Bank is subject to the restrictions on the payment of dividends contained in the New Jersey Banking Act of 1948, aswhich amended. Underprovides that Act, the Bank may pay dividends only out of retained earnings, and out of surplus to the extent that surplus exceeds 50 percent of stated capital. The Company is also subject to Federal Reserve Board policies, which may, in certain circumstances, limit its ability to pay dividends. The Federal Reserve Board policies require, among other things, that a bank holding company maintain a minimum capital base and the Federal Reserve Board in supervisory guidance has cautioned bank holding companies about paying out too much of their earnings in dividends and has stated that banks should not pay out more in dividends than they earn. The Federal Reserve Board would most likely seek to prohibit any dividend payment that would reduce a holding company's capital below these minimum amounts.

Liquidity is essential to the Company’s business. The Company relies on its ability to generate deposits and effectively manage the repayment and maturity schedules of loans to ensure that there is adequate liquidity to fund its operations. An inability to raise funds through deposits, borrowings, the sale and maturities of loans and other sources could have a substantial negative effect on liquidity. The Company’s most important source of funds is deposits. Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which areis strongly influenced by such external factors as the direction and level of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments. Further, the demand for deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the FRB or regulatory actions that decrease customer access to particular products. If customers move money out of bank deposits and into other investments such as money market funds, the Company would lose a relatively low-cost source of funds, which would increase its funding costs and reduce net interest income. Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity.

Many financial institutions and companies engaged in data processing have reported significant breaches in the security of their websites or other systems, some of which have involved sophisticated and targeted attacks intended to obtain unauthorized access to confidential information, destroy data, disable or degrade service, or sabotage systems, often through the introduction of computer viruses or malware, cyber-attacks and other means. We are subject to such cyber-attacks or other information security breaches, which could result in losses. Additionally, our risk exposure to security matters may remain elevated or increase in the future due to, among other things, the increasing size and prominence of the Company in the financial services industry, our continued expansion of our footprint; our expansion of Internet and mobile banking tools and products based on customer needs and an increased level of employees working remotely. As cyber threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities. Disruptions or failures in the physical infrastructure or operating systems that support our businesses, customers or third parties, or cyber-attacks or security breaches of the networks, systems or devices that our customers or third parties use to access our products and services could result in customer attrition, financial losses, the inability of our customers or vendors to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or intervention, reputational damage, reimbursement or other costs, and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.

Although we take protective measures to maintain the confidentiality, integrity and availability of information, our computer systems, software and networks may be vulnerable to unauthorized access, loss or destruction of data (including confidential client information), account takeovers, unavailability of service, computer viruses or other malicious code, cyber-attacks and other events that could have an adverse security impact. Furthermore, we may not be able to ensure that all of our clients, suppliers, counterparties and other third parties have appropriate controls in place to protect themselves from cyber-attacks or to protect the confidentiality of the information that they exchange with us, particularly where such information is transmitted by electronic means. Although we have developed, and continue to invest in, systems and processes that are designed to detect and prevent security breaches and cyber-attacks, a breach of our systems and/or global payments infrastructure of those of our fintech partners and processors could result in: losses to us and our customers; loss of business and/or customers; damage to itsour reputation; the incurrence of additional expenses (including the cost of investigation and remediation and the cost of notification to consumers, credit monitoring and forensics, and fees and fines imposed by the card networks); disruption to our business; an inability to grow our online services or other businesses; additional regulatory scrutiny, investigation or penalties; and/or exposure to civil litigation and possible financial liability - any of which could have a material adverse effect on our reputation, business, financial condition and results of operations. Although the impact to date for these types of events has not had a material impact on us, we cannot be sure this will be the case in the future.

We rely heavily on information technology systems to conduct our business, including the systems of third-party service providers. Any failure, interruption, or breach in security or operational integrity of these systems could result in failures or disruptions in our customer relationship management and general ledger, deposit, loan, and other systems. While we have policies and procedures designed to prevent or limit the impact of any failure, interruption, or breach in our security systems (including privacy and cyber-attacks), there can be no assurance that such events will not occur or if they do occur, that they will be adequately addressed. Information security and cyber-securitycybersecurity risks have increased significantly in recent years because of new technologies, the use of the Internet and other electronic delivery channels (including mobile devices) to conduct financial transactions. Accordingly, we may be required to expend additional resources to continue to enhance our protective measures or to investigate and remediate any information security vulnerabilities or exposures. The occurrence of any system failures, interruptions, or breaches in security could expose us to reputation risk, litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition and results of operations.

The Company has a standing Information Technology Committee. The Chief Information Officer is the primary management liaison to the committee. The committee meets quarterly, or more frequently if needed, and reports to the board of directors after each meeting through committee minutes. The Company also engages outside consultants to support its cybersecurity efforts. One of our directors has significant experience in cybersecurity, security engineering and compliance. Our other directors do not have significant experience in cybersecurity risk management in other business entities comparable to the Company and rely on the Chief Information Officer and other consultants for cybersecurity guidance. During the first quarter of 2026, management established a bank level Technology Committee to provide focused oversight of technology-related matters and associated risks.

Our performance is largely dependent on the talents and efforts of highly skilled individuals. There is intense competition in the financial services industry for qualified employees. In addition, we face increasing competition with businesses outside the financial services industry for the most highly skilled individuals. The process of recruiting personnel with the combination of skills and attributes required to carry out our strategies is often lengthy. Our business operations could be adversely affected if we were unable to attract new employees and retain and motivate our existing employees.

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

impact from a pandemic event on our business, operations, customers, allowance for credit losses and/or capital levels;

higher than expected increases in our allowance for credit losses;

higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;

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

higher than expectedincreased FDIC insurance premiums;

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

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

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;

On January 1, 2022, the Company adopted ASU 2016-13 (Topic 326), which replaced the incurred loss methodology with current expected credit losses ("CECL") for financial instruments measured at amortized cost and other commitments to extend credit. The allowance for credit losses is a valuation allowanceallowance, ofwhich represents Management’s estimate of expected credit losses in the loan portfolio.portfolio calculated in accordance with ASC 326, "Credit Losses". The process to determine expected credit losses utilizes analytic tools and Management judgment and is reviewed on a quarterly basis. When Management is reasonably certain that a loan balance is not fully collectable, an analysis is completed whereby a specific reserve may be established or a full or partial charge offcharge-off is recorded against the allowance. Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis, which considers available information from internal and external sources related to past loan loss and prepayment experience and current economic conditions, as well as the incorporation of reasonable and supportable economic forecasts. Management evaluates a variety of factors, including available published economic information, in arriving at its forecasts. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the allowance for credit losses are qualitative reserves that are expected, but, in the Management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above. Factors may include, among others, changes in lending policies and procedures, size and composition of the portfolio, experience and depth of Management and the effect of external factors such as competition and legal and regulatory requirements, among others.requirements. The allowance is available for any loan that, in Management’s judgment, should be charged off.

Although Management uses the best information available, the level of the allowance for credit losses remains an estimate, which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. Furthermore, the majority of the Company’s loans are secured by real estate in New Jersey and the boroughs of New York City. Accordingly, the collectability of a substantial portion of the carrying value of the Company’s loan portfolio is susceptible to changes in local market conditionsconditions, rent control regulations and any adverse economic conditions. Future adjustments to the provision for credit losses and the allowance for credit losses may be necessary due to economic, operating, regulatory and other conditions beyond the Company’s control.

For the year ended December 31, 2024,2025, the Company recorded net income of $33.0$37.3 million, and diluted earnings per share of $1.85,$2.10, compared to $48.9$33.0 million and $2.71,$1.85, respectively, for 2023,2024, reflecting decreasesincreases of $15.9$4.3 million, or 3213 percent, and $0.86$0.25 per share, or 3214 percent, respectively. During 2024,2025, the Company continued to focus on executing its Strategicexpansion Plan,into whichthe includedmetro ongoingNew investmentYork in our private banking model.region. During 2024,2025, the Company hiredadded asix teamnew ofproduction experiencedteams professionalsin toLong gain entry into the New York City market.Island. The Company's metro New York City initiative has resulted in approximately $950$1.9 millionbillion in new customercore relationship deposits.deposits, 31 percent of which is in noninterest-bearing accounts. The StrategicCompany Planalso calls for expansion ofgrew the Company’s wealth management business, organically and through acquisitions, and also expansion of the Company’s commercial and industrial (“C&I”) lending platform,team through the useaddition of privateexperienced bankers,advisers whoto leadhelp withserve depositthe gatheringexpanded andgeography wealththroughout managementthe discussions.metro NY market.

At December 31, 2024,2025, the market value of assets under management and/orin administration, through the Peapack Privateour Wealth Management Team,Division wasgrew $11.9by $1.2 billion to $13.1 billion, reflecting an increase of 910 percent from $10.9$11.9 billion at December 31, 2023.2024.

Wealth Management fee income was $61.5$63.2 million in 2024,2025, which comprised 2722 percent of the Company's total revenue for the year.

Noninterest-bearing demandTotal deposits comprised increased by $155$460 million, or 168 percent, to $1.1$6.6 billion asat ofDecember 31, 2025 compared to $6.1 billion at December 31, 2024.

Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaledrepresent 9294 percent of total deposits at December 31, 2024.2025.

(B) Net interest income on a fully tax equivalent basisbasis, using a 21 percent federal income tax rate, as a percentage of total average interest-earning assets.

Net interest income, on a fully tax-equivalent basis, declinedincreased $7.6$51.8 million, or 535 percent, in 20242025 to $201.9 million compared to $150.1 million compared to $157.7 million in 2023.2024. The net interest margin ("NIM") was 2.322.84 percent and 2.482.32 percent for the years ended December 31, 20242025 and 2023,2024, respectively, aan decreaseincrease of 1652 basis points year over year. The decrease in netNet interest income, on a fully tax-equivalent basis, and NIM forimproved 2024 when compared to 2023 was predominatelyprimarily due to acontinued rapid increasegrowth in interestlower-costing expense mostly driven by higherclient deposit rates,relationships, partiallywhich offsetwere byused ato decreasefund loan production and investment purchases and allowed less reliance on higher-costing deposit balances and borrowed funds. The Bank also benefited from the 175 basis-point reduction in the averagetarget balance of borrowedfederal funds andrate an increase in loan yields andby the average balance of interest-earning deposits. The Federal Reserve monetary policy intended to slow inflation led to a significant increase in interest rates, particularly rates impacting short term investments and deposits. This resulted in an inversion of the U.S. Treasury yield curve for an extended period of time, driving an increase in deposit and borrowing costs at a faster rate than the yields on interest-earning assets. The Federal Reserve decreased the target Federal Funds rate by 100 basis points duringfrom the latter half of 2024,2024 thoughthrough the2025, impactwhich oflowered thesedeposit ratecosts cutsand hadsupported minimalmargin immediate impacts on financial results.expansion.

The average balance of interest-earning assets increased by $123.4$625.4 million to $6.5$7.11 billion at December 31, 20242025 compared to $6.4$6.48 billion at 2023.2024. The increase was predominately driven by growth in the average balance of loans of $512.1 million, and investments of $47.9 million to $849.9 million and the growth in the average balance of interest-earning deposits of $150.5$147.8 million, which waspartially offset by a decline in the average balance of loansinterest earnings deposits of $75.0$34.5 million. The decline in the average balance of loans coupled with an increase of $378.1 million in the average balance of deposits contributed to growth in investments and interest-earning deposits in 2024.

The declineincrease in average balance of loans was primarily driven by aan declineincrease in commercial mortgagesloans, residential and commercial mortgages, and installment loans, offset slightly by growtha decline in residential mortgages and installment loans. The average balance of commercial mortgages declined by $87.7 million to $2.4 billion in 2024 compared to $2.5 billion in 2023.construction. The average balance of commercial loans declinedincreased by $38.2$342.9 million to $2.2$2.56 billion in 2024 as2025 compared to $2.3$2.22 billion in 2023.2024. The average balancebalances of residential mortgages grew $19.5$56.8 million to $582.0$638.9 million for the year ended December 31, 20242025 from $562.5$582.0 million forin 2023.2024. The average balances of commercial mortgages grew $41.4 million to $2.45 billion in 2025 compared to $2.41 billion in 2024. Additionally, the average balance of installment loans grewincreased $18.9by $75.7 million to $146.6 million in 2025 as compared to $70.9 million forin the year ended December 31, 2024 from $51.9 million for 2023.2024. The declineincrease in the average balance of loans for 2024 was mostlyprimarily a result of theincreasing Companyloan tighteningdemand underwritingfrom guidelines, pay downs of higher rate lines of credit and lower originationscustomers due to thea higherlower interest rate environment.environment, our expansion into the metro New York region and improving economic conditions.

The average yield on total loans for 2025 remained stable up four basis points to 5.51 percent for 2025 when compared to 5.47 percent for 2024. The average yield on residential mortgages increased 53 basis points to 4.48 percent for the year ended December 31, 20242025, when compared to 20233.95 waspercent drivenfor by2024. anThe increase in theaverage yield on commercial loans,mortgages commercialincreased nine basis points to 4.56 percent for the year ended December 31, 2025, when compared to 2024. Mortgage-related yields rose in 2025 despite Federal Funds rate cuts, as rates remained elevated at the longer end of the yield curve, along with more seasoned lower-coupon mortgages andbeing residentialreplaced mortgages.with higher-yielding originations. The yield on commercial loans for the year ended December 31, 20242025 increaseddecreased 4528 basis points to 6.846.56 percent from 6.396.84 percent for the year ended December 31, 2023.2024. The average yield on commercial loans increaseddecreased for 20242025 due to ana increasedecrease in the target Federal Funds rate,rate of 175 basis points from the second half of 2024 through December 31, 2025, which had a greater impact on these loans, thatwhich are typically floating rates with short repricing periods. The average yield on commercial mortgages increased 11 basis points to 4.47 percent for the year ended December 31, 2024, when compared to 2023. The average yield on residential mortgages increased 44 basis points to 3.95 percent for the year ended December 31, 2024, when compared to 3.51 percent for 2023. The increase for both commercial and residential mortgages for 2024 were driven by the originations of loans with higher yields in the current higher interest rate environment. As of December 31, 2024,2025, 3230 percent of all loans will reprice within one month, 3735 percent within three months and 4951 percent within one year.

The average balance of interest-bearing liabilities totaled $4.9$5.24 billion for 20242025 representing an increase of $146.0$368.1 million, or 38 percent, from $4.7$4.87 billion in 2023.2024. The increase in interest-bearing liabilities was primarily due to an increase in the average balance of interest-bearing deposits of $420.0$449.9 million to $5.12 billion in 2025 from $4.67 billion in 2024 from $4.23 billion in 2023.2024. This increase was partially offset by a decrease in overnight borrowings of $272.5$53.2 million to $12.1 million in 2025 from $65.3 million in 2024 fromand $337.8a decrease in subordinated debt of $27.6 million to $105.8 million in 2023.2025 from $133.4 million in 2024.

The increase in the average balance of interest-bearing deposits was primarily due to an increase in the average balance of interest-bearing checking accounts of $372.2$424.2 million to $3.15 billion from $2.78$3.57 billion and anmoney increasemarkets of certificates of deposits of $91.1$157.3 million to $559.3 million from $468.2$999.9 million, partially offset by decreasesa decrease in the average balance of money market and savings depositscertificates of $39.3deposit of $67.2 million in 2024.2025. The increase in interest-bearing checking deposits was principally attributable to our continued expansion into the metro New York region and client demand for FDIC insured products, which we can offer through a reciprocal deposit program. The Company added short-term customer CDs to provide additional liquidity and replace brokered deposit run-off. The decrease in savings and money market accounts included clients shifting balances into higher-yielding short-term Treasuries and interest-bearing checking accounts. TheOur expansion into the metro New York Citymarket washas aallowed significantus driverto ofgrow depositlower-cost, growthrelationship anddeposits, reducedwhile reducing the Company's reliance on overnight borrowings, brokered deposits and other high costhigh-cost funding sources while shifting funding into lower cost, relationship deposits.sources.

For the years ended December 31, 20242025 and 2023,2024, the cost of interest-bearing liabilities was 3.673.09 percent and 3.133.67 percent, respectively, reflecting ana increasedecrease of 5458 basis points. The increasedecrease was driven by ana increasedecrease in the average cost of interest-bearing deposits of 7154 basis points to 3.603.06 percent for 2025 and a decrease in the average cost of certificates of deposit of 74 basis points to 3.45 percent for 2025. The Company also benefited from lower short-term borrowing costs for the year ended December 31, 2025, which decreased by 139 basis points to 4.50 percent when compared to 5.89 percent for the same period in 2024. The increasedecrease in deposit and borrowing rates was due to the Federal Reserve raisinglowering the target Federal Funds rate by 525175 basis points sinceduring Marchthe 2022latter half of 2024 through the end of 2025, and a change in the composition of the deposit portfolio.portfolio Thewith costa greater concentration of borrowingslower-cost increasedcore byrelationship 50 basis points to 5.89 percent in 2024 from 5.39 percent for 2023.deposits.

At December 31, 2024,2025, the Company had investment securities held to maturity with aan carryingamortized cost of $95.9 million and an estimated fair value of $87.5 million compared with an amortized cost of $101.6 million and an estimated fair value of $88.7 million compared with a carrying cost of $107.8 million and an estimated fair value of $94.4 million at December 31, 2023.2024.

At December 31, 2024,2025, the Company had investment securities available for sale with an estimated fair value of $784.5$774.2 million compared with $550.6$784.5 million at December 31, 2023. The increase was due to the use of excess liquidity for purchases, primarily of residential mortgage-backed securities, as deposit growth outpaced loan growth during 2024. A net unrealized loss (net of income tax) of $72.1$49.3 million and a net unrealized loss (net of income tax) of $69.2$72.1 million related to these securities were included in shareholders’ equity at December 31, 20242025 and 2023,2024, respectively.

The Company had one equity security (a CRA investment security) with a fair value of $13.0$13.5 million and $13.2$13.0 million at December 31, 20242025 and 2023,2024, respectively, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded an unrealized lossgain of $125,000$418,000 for the year ended December 31, 2024,2025, as compared to a $181,000$125,000 unrealized gainloss for the year ended December 31, 2023.2024. Additionally, the Company sold its Visa B shares, which resulted in a positive fair value adjustment to equity securities of $953,000 recognized in the Consolidated StatementStatements of Income during the year ended December 31, 2024.

LOANS: The loan portfolio represents the largest portion of the Company’s interest-earning assets and is the primary source of interest income. Loans are primarily originated in New Jersey and the boroughs of New York City and, to a lesser extent, Pennsylvania and Delaware.Pennsylvania. The Company also offers equipment financing loan and leases that are originated nationally. As of December 31, 2024,2025, 4344 percent of the total loan portfolio consisted of C&I loans (including equipment financing), 3330 percent of multifamily loans, 1112 percent of commercial mortgages and 1110 percent of residential mortgages.

Total loans were $5.5$6.3 billion and $5.4$5.5 billion at December 31, 20242025 and 2023,2024, respectively, an increase of $83.0$741.4 million, over the previous year. Residential loans increased $36.5$32.9 million to $647.8 million at December 31, 2025 from $614.8 million at December 31, 2024 from $578.3 million at December 31, 2023.2024. Multifamily mortgage loans were $1.8$1.9 billion at December 31, 2024,2025, aan decreaseincrease of $36.6$62.8 million, or 23 percent, when compared to $1.8 billion at December 31, 2023.2024. During 2024,2025, commercial mortgages decreasedincreased $49.5$186.3 million to $588.1$774.4 million when compared to $637.6$588.1 million forat 2023.December 31, 2024. The increase in commercial mortgages was bolstered by our focus on attracting clients that bring a full relationship to the Bank coupled with improved lender liquidity. Commercial loans, which includes equipment financing, totaled $2.4$2.7 billion at December 31, 2024.2025. This was an increase of $128.6$332.3 million, or 614 percent, when compared to December 31, 2023.2024. Commercial loan growth was driven by business expansion and capital investment.

The Company originates loans that are partially guaranteed by the SBA, to provide working capital and/or, finance the purchase of equipment, inventory or commercial real estate and that could be used for start-up and smaller 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 held in the loan portfolio. During 2024,2025, the Bank sold $15.0$19.2 million of the guaranteed portion of SBA loans into the secondary market. As of December 31, 2024,2025, the balance of the non-guaranteed portion of SBA loans held on our balance sheet totaled $41.9$36.7 millionmillion, which, and was included in commercial loans.

The BankCRE 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.

At December 31, 20242025 and 2023,2024, the Company reported total deposits of $6.1$6.6 billion and $5.3$6.1 billion, an increase of $854.9$460.0 million, or 168 percent. The Company’s strategy is to fund a majority of its loan growth with core deposits, which is an important factor in the generation of net interest income. The Company intentionally allowed $365 million in high cost, non-core relationship deposits to roll off during 2024. The increase in deposits was primarily due to increases of $155.0$316.0 million in noninterest-bearing demand deposits, $452.1$114.2 million in interest-bearing checking and $337.5$120.0 million in money market deposits. The growth in new client relationships was mainlydue drivento byour thecontinued expansion into the metro New York City,City anmarket; increaseclient indemand retailfor depositsFDIC frominsured products offered through our branchreciprocal networkdeposit program; a focus on providing high-touch client service; and a full array of treasury management products that support core deposit growth. The Company has also successfully focused on:

Growth in deposits associated with its private banking relationships and Business and personal core deposit generation, particularly noninterest-bearing checking accounts.

At December 31, 2024,2025, the Company carried $ 1.90 billion in deposits that exceed the FDIC insurance limit of $250,000. At December 31, 2024,2025, we had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance.

The Company had $73.3 million of overnight borrowings at the FHLB at a rate of 3.96 percent at December 31, 2025. At December 31, 2024, the Company had no overnight borrowings. The Company had $403.8 million of overnight borrowings at the FHLB at a rate of 5.62 percent at December 31, 2023 compared to $379.5 million of overnight borrowings at the FHLB at a rate of 4.61 percent at December 31, 2022.2023.

SUBORDINATED DEBT: In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors. The 2017 Notes havehad a stated maturity of December 15, 2027, and an interest rate that resetsreset quarterly to a level equal to the then current three-month LIBOR rate plus 254 basis points, payable quarterly in arrears (which was 7.75 percent at December 31, 2024). Debt issuance costs incurred totaled $875,000 and are being amortized to maturity. The Company intends to fully redeemredeemed these notes,notes plus any$627,000 accrued andin unpaid interest on the redemption date of March 15, 2025. The remaining net issuance costs of $259,000 were written-off during the quarter ended March 31, 2025.

In December 2020, the Company issued $100.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of December 22, 2030, and bear interest athad a fixed rate of 3.50 percent per year until December 22, 2025. From December 23, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month SOFR plus 326 basis points, payable quarterly in arrears.arrears (which was 6.93 percent at December 31, 2025). Debt issuance costs incurred totaled $1.9 million and are being amortized to maturity. The Company fully redeemed these notes, plus any accrued and unpaid interest on March 2, 2026.

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 debtsconditions;

declines in the value inof our investment portfolio;

declinedeclines in real estate values within our market areas;

the imposition of tariffs or other domestic or international governmental policiespolicies, trade restrictions and retaliatory responsesmeasures impacting our borrowers and the broader economy;

the impact of any federal government shutdownshutdown, debt ceiling impasses or fiscal uncertainty;

the failure to maintain current technologies and/or to successfully implement future information technology enhancements and the operational risks associated with the adoption of artificial intelligence and other emerging technologies;

our inability to attract and retain key employees;

changes in New York City rent regulation lawand real estate tax laws;

EXECUTIVE SUMMARY: The following tabletables presentspresent certain key aspects of our performance for the three and six months ended MarchJune 31,30, 2026 and 2025.

For the quarter ended MarchJune 31,30, 2026, the Company recorded total revenue of $82.5$86.1 million, pretax income of $19.7$22.3 million, net income available to common shareholders of $14.2$15.8 million and diluted earnings per share of $0.80,$0.86, compared to revenue of $64.4$69.7 million, pretax income of $10.4$11.3 million, net income available to common shareholders of $7.6$7.9 million and diluted earnings per share of $0.43$0.45 for the same period last year.

The increase in totalnet revenueincome for the firstsecond quarter of 2026 was primarily due to higher net interest income of $14.4$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 theour 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 firstsecond quarter of 2026, deposits grew $237.8$230.8 million, which included $115.8$79.7 million in noninterest-bearing demand deposits. Net interest margin improved to 3.263.32 percent for the firstsecond quarter of 2026 as compared to 2.682.77 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 firstsecond quarter of 2026.

NET INTEREST INCOME (“NII”) / NET INTEREST MARGIN (“NIM”) / AVERAGE BALANCE SHEETSHEETS:

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

Residential mortgage, commercial real estate, multifamily, C&I,I and SBAwealth lines of credit loan originations increased by $4.8$20.3 million, $91.3$112.0 million, $25.0 million, $17.0$182.5 million, and $5.5$20.9 million, respectively, for the three months ended MarchJune 31,30, 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 hasfor beenboth fueledperiods was driven primarily by lowerstrategic marketbusiness interestdevelopment rates,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.markets, along with continued customer demand across key lending categories.

At MarchJune 31,30, 2026, December 31, 2025 and MarchJune 31,30, 2025, the Bank had a concentration in commercial real estate (“CRE”) loans as defined by applicable regulatory guidance as follows:

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.

The following tabletables reflectsreflect the components of the average balance sheet and of net interest income for the periods indicated:

The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the three and six month periods ended MarchJune 31,30, 2026 compared to MarchJune 31,30, 2025 are shown below:

Net interest income, on a fully tax-equivalent basis,income increased $14.4$15.6 million, or 3132 percent, for the firstsecond quarter of 2026 to $60.1$63.9 million from $45.7$48.3 million in the firstsecond quarter of 2025. The net interest margin ("NIM") was 3.263.32 percent and 2.682.77 percent for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of 5855 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.

The average balance of interest-earning assets increased to $7.49$7.76 billion during the firstsecond quarter of 2026 from $6.91$7.02 billion infor the firstsecond quarter of 2025, reflecting an increase of $575.9$739.2 million, or 811 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 firstsecond 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$736.6 million and an increase in interest-earning deposits of $137.7 million, which was partially offset by a decrease in the average balance of investments of $98.2$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 aan decreaseincrease in interest-earning deposits of $102.3$18.4 million, partially offset by a decrease in the average balance of investments of $116.8 million.

The increase in the average balance of outstanding loans for the three and six months ended MarchJune 31,30, 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 $340.9$314.4 million, or 1412 percent, to $2.77$2.85 billion for the quarter ended MarchJune 31,30, 2026 when compared to $2.43$2.54 billion for the quarter ended MarchJune 31,30, 2025. The average balance of commercial mortgages increased by $293.7$301.9 million, or 12 percent, to $2.68$2.73 billion for the quarter ended MarchJune 31,30, 2026 when compared to $2.38$2.43 billion during the quarter ended MarchJune 31,30, 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-monththree periodand six month periods 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 Company's strategic business development initiatives which included the addition of a new leaderhead of the commercial real estate lending team, along with our continued expansion into New York City and Long Island.Island with continued customer demand across key lending categories.

The average yield on total loans for the three months ended MarchJune 31,30, 2026 increased slightly to 5.465.58 percent when compared to 5.415.51 percent for the three months ended MarchJune 31,30, 2025. The yield on residential mortgages increased 5337 basis points to 4.854.82 percent for the three months ended MarchJune 31,30, 2026, as compared to 4.324.45 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 higher-yieldingloans loans.at higher rates than the existing portfolio. The average yield on commercial mortgages for the three months ended MarchJune 31,30, 2026, increased 3235 basis points to 4.714.87 percent as compared to 4.394.52 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 MarchJune 31,30, 2026, compared to Marchthe 31,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 MarchJune 31,30, 2026 decreased 3428 basis points to 6.256.34 percent from 6.596.62 percent at MarchJune 31,30, 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 ratesrate loans with shortshorter repricing periods. As of MarchJune 31,30, 2026, 29 percent of all loans will reprice within one month, 3534 percent within three months and 51 percent within one year.

For the three months ended MarchJune 31,30, 2026, the average balance of interest-bearing liabilities totaled $5.42$5.53 billion representing an increase of $279.0$315.8 million from $5.14$5.21 billion for the three month period ended MarchJune 31,30, 2025 primarily due to an increase in interest-bearing deposits of $295.6$444.5 million to $5.31$5.51 billion for the three months ended MarchJune 31,30, 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 $60.6 million to $66.0$98.9 million due to the redemption of $100.0 million of such debt in March 2026. For the six months ended June 30, 2026, the average balance of interest-bearing liabilities totaled $5.48 billion representing an increase of $297.5 million from $5.18 billion for the six-month period ended June 30, 2025 primarily due to an increase in interest-bearing deposits of $370.4 million to $5.41 billion for the six months ended June 30, 2026, partially offset by a decrease in the average balance of subordinated debt of $79.9 million to $32.8 million.

The increase in the average balance of interest-bearing deposits for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to an increase in the average balances of interest-bearing checking deposits of $268.0$252.6 million and money market accounts of $88.4$244.0 million, partially offset by a decline in the average balance of certificates of deposit of $56.5$51.1 million and interest-bearing brokered demand deposits of $10.0$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 MarchJune 31,30, 2026 was due to our continued expansion into the New York City marketand Long Island markets and client demand for FDIC insured products, which we offer through a reciprocal deposit program.programs. Our expansion intoaround themetro New York City marketNY has allowed us to grow lower cost, relationship-based deposits, while reducing the Company's reliance on overnight borrowings, brokered deposits and other high-cost funding sources.

The Company is a participant in the Reich & Tang Demand Deposit Marketplace program and the Promontory program. The Company uses these deposit sweep services to place customer funds into interest-bearing demand (checking) accounts issued by other participating banks. Customer funds are placed at one or more participating banks to increase the level of FDIC insurance available to deposit customers. As a participant, the Company receives reciprocal amounts of deposits from other participating banks. Average reciprocal deposit balances for the quarters ended MarchJune 31,30, 2026 and 2025 were $2.25$2.37 billion and $1.37$1.82 billion, respectively. Average reciprocal deposit balances for the six months ended June 30, 2026 and 2025 were $2.31 billion and $1.81 billion, respectively.

At MarchJune 31,30, 2026, uninsured/unprotected deposits were approximately $2.10$2.44 billion, or 3135 percent of total deposits. This amount was adjusted to exclude $194$126 million of public fund deposit balances, which are fully-collateralized and protected with investment securities and an FHLBNYFHLB of New York letter of credit.

For the quarters ended MarchJune 31,30, 2026 and 2025, the cost of interest-bearing liabilities was 2.592.63 percent and 3.183.17 percent, respectively, reflecting a decrease of 5954 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 periodperiods ended MarchJune 31,30, 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.deposits. The Company also benefited from lower short-term borrowing costs for the three and six months ended MarchJune 31,30, 2026,2026 and 2025, which decreased by 7243 basis points to 3.824.09 percent when compared to 4.544.52 percent forand thedecreased sameby period57 inbasis 2025.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.

At MarchJune 31,30, 2026, the Company had investment securities available for sale with a fair value of $710.0$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 $51.8$52.3 million and $49.3 million related to these securities were included in shareholders’ equity at MarchJune 31,30, 2026 and December 31, 2025, respectively.

At MarchJune 31,30, 2026, the Company had investment securities held to maturity with a carrying cost of $79.5$78.6 million and an estimated fair value of $70.8$69.9 million compared with a carrying cost of $95.9 million and an estimated fair value of $87.5 million at December 31, 2025.

The Company had one equity security (a CRA investment security) with a fair value of $13.4$13.3 million at MarchJune 31,30, 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 an unrealized losslosses of $84,000$55,000 and $139,000 for the three and six months ended MarchJune 31,30, 20262026, respectively, compared to an unrealized gaingains of $195,000$42,000 and $237,000 for the three and six months ended MarchJune 31,30, 2025.

The carrying value of investment securities available for sale and held to maturity as of MarchJune 31,30, 2026 and December 31, 2025 are shown below:

The following table presents the contractual maturities and yields of debt securities available for sale and held to maturity as of MarchJune 31,30, 2026. The weighted average yield is a computation of income within each maturity range based on the amortized cost of securities:

OTHER INCOME: The following tabletables presentspresent further detail on other income, excluding income from wealth management services, which is summarized and discussed subsequently:

Service charges and fee income increased $247,000$196,000 to $1.4 million during the quarter ended MarchJune 31,30, 2026 from $1.1$1.2 million for the same period in 20252025. reflectingFor 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.activity during the first half of 2026.

The Company provides loans that are partially guaranteed by the SBA to provide working capital and/or finance the purchase of equipment, inventory or commercial real estate that could be used for start-up businesses. All SBA loans are underwritten and documented as prescribed by the SBA. The Company generally sells the guaranteed portion of the SBA loans in the secondary market and retains the non-guaranteed portion of SBA loans in the loan portfolio. The Company recorded a gain on the sale of SBA loans of $403,000 and $302,000$444,000 for the quartersquarter ended MarchJune 31,30, 2026, compared to $521,000 in gains during the quarter ended June 30, 2025. For the six months ended June 30, 2026 and 2025, the Company recorded gains on the sale of SBA loans of $847,000 and $823,000, respectively. The Company continues to see pressure from market volatility resulting in lower sale premiums and origination volumes associated with SBA loans.

The Company recorded corporate advisory fee income for the firstsecond quarter of 2026 of $69,000$34,000 compared to $90,000$30,000 for the same period ended MarchJune 31,30, 2025. The six months ended June 30, 2026 included corporate advisory fee income of $103,000 compared to $120,000 for the same 2025 period. Income from the SBA programs, and corporate advisory fee income are dependent on volume, and may vary from quarter to quarter.

For the quarter ended MarchJune 31,30, 2026, income from the sale of newly originated residential mortgage loans was $72,000$62,000 compared to $63,000$27,000 for the same period in 2025. While the interest rate environment has improved following rate reductions by the Federal Reserve, residential mortgage activity continues to be constrained by limited housing inventory and affordability considerations, which have tempered both refinancing and home purchase volumes.

Loan fee income increased to $3.8$2.1 million for the firstsecond quarter of 2026 as compared to $989,000$1.9 million for the quarter ended MarchJune 31,30, 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 a gaingains of $2.6$1.0 million and a$3.7 lossmillion for the three and six months ended June 30, 2026, respectively, as compared to gains of $415,000$482,000 recordedand by$67,000 for the Equipmentsame Financeperiods Divisionin 2025 related to equipment transfers to lessees upon the termination of leases forrecorded by the firstEquipment quarterFinance of 2026 and 2025, respectively.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 $758,000$730,000 of unused commercial line fees for the quarter ended MarchJune 31,30, 2026 compared to $932,000$869,000 for the same 2025 period. LetterThe six months ended June 30, 2026 included $1.5 million of creditunused commercial line fees totaled $342,000 for the quarter ended March 31, 2026 as compared to $123,000$1.8 million for the same period2025 inperiod. 2025.The Lettersix months ended June 30, 2026 included $473,000 of letter of credit fee income increasedcompared asto a$290,000 result offor the Company’ssame expansion2025 into the metro New York area, which has driven higher utilization of trade finance products among a growing commercial client base.period.