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What changed in PROVIDENT FINANCIAL SERVICES INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PROVIDENT FINANCIAL SERVICES INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+502 added−530 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in PROVIDENT FINANCIAL SERVICES INC's 2024 10-K

502 paragraphs added · 530 removed · 383 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

212 edited+54 added−55 removed264 unchanged
Biggest changeThe allowance for credit losses for 2023, 2022, 2021 and 2020 were based upon the adoption of the current expected credit loss ("CECL") guidance, while credit losses for 2019 were based upon the incurred loss methodology: As of December 31, 2023 2022 2021 2020 2019 Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial mortgage loans $ 4,512,411 41.91 % $ 4,316,185 42.48 % $ 3,827,370 40.28 % $ 3,458,666 35.58 % $ 2,578,477 35.43 % Multi-family mortgage loans 1,812,500 16.83 1,513,818 14.90 1,364,397 14.36 1,484,515 15.27 1,225,675 16.84 Construction loans 653,246 6.07 715,494 7.04 683,166 7.19 541,939 5.57 429,812 5.91 Residential mortgage loans 1,164,956 10.82 1,177,698 11.59 1,202,638 12.66 1,294,702 13.32 1,078,227 14.82 Total mortgage loans 8,143,113 75.63 7,723,195 76.01 7,077,571 74.49 6,779,822 69.74 5,312,191 73.00 Commercial loans 2,442,406 22.69 2,233,670 21.98 2,188,866 23.04 2,567,470 26.41 1,634,759 22.46 Consumer loans 299,164 2.78 304,780 3.00 327,442 3.45 492,566 5.07 391,360 5.38 Total gross loans 10,884,683 101.10 10,261,645 100.99 9,593,879 100.98 9,839,858 101.22 7,338,310 100.84 Premiums on purchased loans 1,474 0.01 1,380 0.01 1,451 0.02 1,566 0.02 2,474 0.02 Net deferred fees (12,456) (0.12) (14,142) (0.14) (13,706) (0.15) (18,534) (0.20) (7,899) (0.10) Total loans 10,873,701 100.99 10,248,883 100.86 9,581,624 100.85 9,822,890 101.04 7,332,885 100.76 Allowance for credit losses (107,200) (0.99) (88,023) (0.86) (80,740) (0.85) (101,466) (1.04) (55,525) (0.76) Total loans, net $ 10,766,501 100.00 % $ 10,160,860 100.00 % $ 9,500,884 100.00 % $ 9,721,424 100.00 % $ 7,277,360 100.00 % Loan Maturity Schedule.
Biggest changeSet forth below is selected information concerning the composition of the loans held for investment portfolio by type (after deductions for deferred fees and costs, unearned discounts and premiums and allowances for credit losses) at the dates indicated. 4 As of December 31, 2024 2023 2022 2021 2020 Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial mortgage loans $ 7,228,078 39.14 % $ 4,512,411 41.91 % $ 4,316,185 42.48 % $ 3,827,370 40.28 % $ 3,458,666 35.58 % Multi-family mortgage loans 3,382,933 18.32 1,812,500 16.83 1,513,818 14.90 1,364,397 14.36 1,484,515 15.27 Construction loans 823,503 4.46 653,246 6.07 715,494 7.04 683,166 7.19 541,939 5.57 Residential mortgage loans 2,010,637 10.89 1,164,956 10.82 1,177,698 11.59 1,202,638 12.66 1,294,702 13.32 Total mortgage loans 13,445,151 72.81 8,143,113 75.63 7,723,195 76.01 7,077,571 74.49 6,779,822 69.74 Commercial loans 4,608,600 24.96 2,442,406 22.69 2,233,670 21.98 2,188,866 23.04 2,567,470 26.41 Consumer loans 613,819 3.32 299,164 2.78 304,780 3.00 327,442 3.45 492,566 5.07 Total gross loans held for investment 18,667,570 101.09 10,884,683 101.10 10,261,645 100.99 9,593,879 100.98 9,839,858 101.22 Premiums on purchased loans 1,338 0.01 1,474 0.01 1,380 0.01 1,451 0.02 1,566 0.02 Net deferred fees (9,538) (0.06) (12,456) (0.12) (14,142) (0.14) (13,706) (0.15) (18,534) (0.20) Total loans 18,659,370 101.04 10,873,701 100.99 10,248,883 100.86 9,581,624 100.85 9,822,890 101.04 Allowance for credit losses (193,432) (1.04) (107,200) (0.99) (88,023) (0.86) (80,740) (0.85) (101,466) (1.04) Total loans, net $ 18,465,938 100.00 % $ 10,766,501 100.00 % $ 10,160,860 100.00 % $ 9,500,884 100.00 % $ 9,721,424 100.00 % Loan Held for Investment Maturity Schedule.
The exercise of these lending, investment and activity powers is limited by federal law and the related regulations. See “Federal Banking Regulation” below. Loans-to-One-Borrower Limitations.
The exercise of these lending, investment and activity powers is limited by federal law and related regulations. See “Federal Banking Regulation” below. Loans-to-One-Borrower Limitations.
In addition, a transaction between a bank and an affiliate, including covered transactions, the sale of assets or the furnishing of services by a bank to an affiliate must be on terms and under circumstances that are substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with or involving a non-affiliate.
In addition, a transaction between a bank and an affiliate, including covered transactions, the sale of assets and the furnishing of services by a bank to an affiliate must be on terms and under circumstances that are substantially the same, or at least as favorable to the bank, as those prevailing at the time for comparable transactions with or involving a non-affiliate.
Federal law also establishes five categories, consisting of “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” The FDIC’s regulations define the five capital categories as follows: An institution will be treated as “well capitalized” if: • it has a leverage ratio of 5% or greater; • it has a common equity Tier 1 ratio of 6.5% or greater; • it has a Tier 1 risk-based capital ratio of 8% or greater; • it has a total risk-based capital ratio of 10% or greater; and • it is not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by the FDIC to meet and maintain a specific capital level for any capital measure.
Federal law also establishes five categories, consisting of “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” The FDIC’s regulations define the five capital categories as follows: An institution will be treated as “well capitalized” if: • it has a leverage ratio of 5% or greater; • it has a common equity Tier 1 capital ratio of 6.5% or greater; • it has a Tier 1 risk-based capital ratio of 8% or greater; • it has a total risk-based capital ratio of 10% or greater; and • it is not subject to any written agreement, order or capital directive, or prompt corrective action directive issued by the FDIC to meet and maintain a specific capital level for any capital measure.
An institution will be treated as “undercapitalized” if: • it has a leverage ratio of less than 4%; • it has a common equity Tier 1 ratio of less than 4.5%; • it has a Tier 1 risk-based capital ratio of less than 6%; or • it has a total risk-based capital ratio of less than 8%.
An institution will be treated as “undercapitalized” if: • it has a leverage ratio of less than 4%; • it has a common equity Tier 1 capital ratio of less than 4.5%; • it has a Tier 1 risk-based capital ratio of less than 6%; or • it has a total risk-based capital ratio of less than 8%.
An institution will be treated as “significantly undercapitalized” if: • it has a leverage ratio of less than 3%; • it has a common equity Tier 1 ratio of less than 3%; • it has a Tier 1 risk-based capital ratio of less than 4%; or • it has a total risk-based capital ratio of less than 6%.
An institution will be treated as “significantly undercapitalized” if: • it has a leverage ratio of less than 3%; • it has a common equity Tier 1 capital ratio of less than 3%; • it has a Tier 1 risk-based capital ratio of less than 4%; or • it has a total risk-based capital ratio of less than 6%.
Some federal consumer financial laws enforced by the CFPB that the Bank must comply with include the Equal Credit Opportunity Act, the Truth in Lending Act ("TILA"), the Truth in Savings Act, the Home Mortgage Disclosure Act, Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act.
Some federal consumer financial laws enforced by the CFPB that the Bank must comply with include the Equal Credit Opportunity Act, the Truth in Lending Act ("TILA"), the Truth in Savings Act, the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act.
In particular, the current examination and evaluation process focuses on three tests: • A lending test, to evaluate the institution’s record of making home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s), with consideration given towards, among other factors, borrower characteristics and geographic distribution; • An investment test, to evaluate the institution’s record of helping to meet the credit needs of its assessment area(s) through qualified investments characterized as a lawful investment, deposit, membership share, or grant that has as its primary purpose community development; and • A service test, to evaluate the institution’s systems for delivering retail banking services through its branches, ATMs and other offices and access facilities, including the distribution of its branches, ATMs and other offices/access facilities, and the institution’s record of opening and closing branches.
In particular, the current examination and evaluation process in effect focuses on three tests: • A lending test, to evaluate the institution’s record of making home mortgage, small business, small farm, and consumer loans, if applicable, in its assessment area(s), with consideration given towards, among other factors, borrower characteristics and geographic distribution; • An investment test, to evaluate the institution’s record of helping to meet the credit needs of its assessment area(s) through qualified investments characterized as a lawful investment, deposit, membership share, or grant that has as its primary purpose community development; and • A service test, to evaluate the institution’s systems for delivering retail banking services through its branches, ATMs and other offices and access facilities, including the distribution of its branches, ATMs and other offices/access facilities, and the institution’s record of opening and closing branches.
The FDIC may also appoint a conservator or receiver for an insured state bank on the basis of the institution’s financial condition or upon the occurrence of certain events, including: • Insolvency, or when the assets of the bank are less than its liabilities to depositors and others; • Substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; 32 • Existence of an unsafe or unsound condition to transact business; • Likelihood that the bank will be unable to meet the demands of its depositors or to pay its obligations in the normal course of business; and • Insufficient capital, or the incurring or likely incurring of losses that will substantially deplete all of the institution’s capital with no reasonable prospect of replenishment of capital without federal assistance.
The FDIC may also appoint a conservator or receiver for an insured state bank on the basis of the institution’s financial condition or upon the occurrence of certain events, including: • Insolvency, or when the assets of the bank are less than its liabilities to depositors and others; • Substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; • Existence of an unsafe or unsound condition to transact business; • Likelihood that the bank will be unable to meet the demands of its depositors or to pay its obligations in the normal course of business; and • Insufficient capital, or the incurring or likely incurring of losses that will substantially deplete all of the institution’s capital with no reasonable prospect of replenishment of capital without federal assistance.
Federal Reserve Board guidance sets forth the supervisory expectation that bank holding companies will inform and consult with Federal Reserve Board staff in advance of issuing a dividend that exceeds earnings for the quarter, 35 and should inform the Federal Reserve Board and should eliminate, defer or significantly reduce dividends if: (i) net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Federal Reserve Board guidance sets forth the supervisory expectation that bank holding companies will inform and consult with Federal Reserve Board staff in advance of issuing a dividend that exceeds earnings for the quarter, and should inform the Federal Reserve Board and should eliminate, defer or significantly reduce dividends if: (i) net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) prospective rate of earnings retention is not consistent with the bank holding company’s capital needs and overall current and prospective financial condition; or (iii) the bank holding company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios.
Assets which do not currently expose the Bank to sufficient risk to warrant classification in one of the aforementioned categories, but possess potential weaknesses, are designated “special mention.” When the Bank classifies one or more assets, or portions thereof, as “loss,” the Bank is required either to establish a specific allowance for losses equal to 100% of the amount of the asset so classified or to charge-off such amount.
Assets which do not 12 currently expose the Bank to sufficient risk to warrant classification in one of the aforementioned categories, but possess potential weaknesses, are designated “special mention.” When the Bank classifies one or more assets, or portions thereof, as “loss,” the Bank is required either to establish a specific allowance for losses equal to 100% of the amount of the asset so classified or to charge-off such amount.
These reports include information on impaired loans, delinquent loans, criticized and classified assets, and foreclosed assets. An impaired loan is defined as a non-homogeneous loan greater than $1.0 million for which it is probable, based on current 10 information, that the Bank will not collect all amounts due under the contractual terms of the loan agreement.
These reports include information on impaired loans, delinquent loans, criticized and classified assets, and foreclosed assets. An impaired loan is defined as a non-homogeneous loan greater than $1.0 million for which it is probable, based on current information, that the Bank will not collect all amounts due under the contractual terms of the loan agreement.
The contractual term excludes expected extensions, renewals and modifications unless either of the following applies at the reporting date: management has a reasonable expectation that a modification will be executed with an individual borrower; or when an extension or renewal option is included in the original contract and is not unconditionally cancellable by the Company.
The contractual term excludes expected extensions, renewals and modifications unless either of the following applies at the reporting date: management has a reasonable expectation that a modification will be executed with an individual borrower; or when an extension or renewal option is included in the original contract and is not unconditionally cancellable by 15 the Company.
In addition to sourcing clients through Beacon's existing 23 clients and other referrals, services are offered to existing customers through the Bank’s extensive branch, lending and insurance networks. Beacon focuses on delivering personalized solutions based on the needs and objectives for each client. The majority of the fee income generated by Beacon is based on total assets under management.
In addition to sourcing clients through Beacon's existing clients and other referrals, services are offered to existing customers through the Bank’s extensive branch, lending and insurance networks. Beacon focuses on delivering personalized solutions based on the needs and objectives for each client. The majority of the fee income generated by Beacon is based on total assets under management.
In recognition of our on-going commitment to creating a healthier workplace for our employees, our Discover Wellness program was again recognized as a gold award winner in Aetna’s Workplace Well-being program. 24 Employees can also engage with the Company-sponsored Employee Assistance Program for mental health and legal assistance, using both telephonic and chat options.
In recognition of our on-going commitment to creating a healthier workplace for our employees, our Discover Wellness program was again recognized as a gold award winner in Aetna’s Workplace Well-being program. Employees can also engage with the Company-sponsored Employee Assistance Program for mental health and legal assistance, using both telephonic and chat options.
In addition to establishing the minimum regulatory capital requirements, federal regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
In addition to establishing the minimum regulatory capital requirements, federal regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a “capital conservation buffer” 28 consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
Generally, for commercial real estate secured loans in excess of $1.0 million and for all other commercial real 5 estate loans where it is deemed appropriate, the Bank requires environmental professionals to inspect the property and ascertain any potential environmental risks. In accordance with regulatory guidelines, the Bank requires a full independent appraisal for commercial real estate properties.
Generally, for commercial real estate secured loans in excess of $1.0 million and for all other commercial real estate loans where it is deemed appropriate, the Bank requires environmental professionals to inspect the property and ascertain any potential environmental risks. In accordance with regulatory guidelines, the Bank requires a full independent appraisal for commercial real estate properties.
For all construction loans, the Bank requires an independent appraisal, which includes information on market rents and/or comparable sales for competing projects. The Bank also obtains personal guarantees, where appropriate, and conducts environmental due diligence as appropriate. 6 The Bank also employs other means to mitigate the risk of the construction lending process.
For all construction loans, the Bank requires an independent appraisal, which includes information on market rents and/or comparable sales for competing projects. The Bank also obtains personal guarantees, where appropriate, and conducts environmental due diligence as appropriate. The Bank also employs other means to mitigate the risk of the construction lending process.
Any charge-off recommendation of $500,000 or greater is submitted to executive management. Delinquent Loans and Non-performing Loans and Assets. Bank policy requires that the Chief Credit Officer continuously monitor the status of the loan portfolios and report to the board of directors on at least a quarterly basis.
Any charge-off recommendation of $500,000 or greater is submitted to executive management. 11 Delinquent Loans and Non-performing Loans and Assets. Bank policy requires that the Chief Credit Officer continuously monitor the status of the loan portfolios and report to the board of directors on at least a quarterly basis.
This process includes the review of delinquent and problem loans at the Company’s Delinquency, Credit, Credit Risk Management and Allowance Committees; or which may be identified through the Company’s loan review process. Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is greater than $1.0 million.
This process includes the review of delinquent and problem loans at the Company’s Credit, Credit Risk Management and Allowance Committees; or which may be identified through the Company’s loan review process. Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is greater than $1.0 million.
Equity securities are traded in active markets with readily accessible quoted market prices, carried at fair value. At the present time, there are no securities that are classified as held for trading. On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology.
Equity securities are traded in active markets with readily accessible quoted market prices, carried at fair value. At the present time, there are no securities that are classified as held for trading. 19 On January 1, 2020, the Company adopted CECL which replaces the incurred loss methodology with an expected loss methodology.
If, after being so notified, a bank fails to submit an acceptable compliance plan or fails in any material respect to implement an accepted compliance plan, the FDIC may issue an order directing corrective and other actions of the type to a significantly 31 undercapitalized institution under the "prompt corrective action" provisions discussed below.
If, after being so notified, a bank fails to submit an acceptable compliance plan or fails in any material respect to implement an accepted compliance plan, the FDIC may issue an order directing corrective and other actions of the type to a significantly undercapitalized institution under the "prompt corrective action" provisions discussed below.
The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial protection laws and regulations by institutions under its supervision and is authorized, individually or jointly with the federal bank regulatory agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations.
The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial laws and regulations by institutions under its supervision and is authorized, individually or jointly with the federal bank regulatory agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations.
Climate-Related Risk Management and Regulation. In recent years, the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve, and the broader financial system. In October 2023, the federal banking agencies finalized principles for climate-related financial risk management, intended for financial institutions with over $100 billion in total consolidated assets.
In recent years, the federal banking agencies have increased their focus on climate-related risks impacting the operations of banks, the communities they serve, and the broader financial system. In October 2023, the federal banking agencies finalized principles for climate-related financial risk management, intended for financial institutions with over $100 billion in total consolidated assets.
The corporate franchise tax is based on the combined entire net income of the Company and its affiliates allocable and apportionable to New York State and taxed at a rate of 7.25%. The amount of revenues that are sourced to New York State under the new legislation can be expected to fluctuate over time.
The corporate franchise tax is based on the combined entire net income of the Company and its affiliates allocable and apportionable to New York State and taxed at a rate of 7.25%. The amount of revenues that are sourced to New York State 39 under the new legislation can be expected to fluctuate over time.
The Bank has historically provided construction loans for commercial projects, including residential rental and industrial projects, that will be retained as investments by the borrowers and to a lesser extent single family and condominium projects 3 intended for sale. The Bank underwrites most construction loans for a term of three years or less.
The Bank has historically provided construction loans for commercial projects, including residential rental and industrial projects, that will be retained as investments by the borrowers and to a lesser extent single family and condominium projects intended for sale. The Bank underwrites most construction loans for a term of three years or less.
New Jersey savings banks may exercise those powers, rights, benefits or privileges authorized for national banks or out-of-state banks or for federal or out-of-state savings banks or savings associations, provided that before exercising any such power, right, benefit or privilege, prior approval by the Commissioner by regulation or by specific authorization is required.
New Jersey savings banks may exercise those powers, rights, benefits or 27 privileges authorized for national banks or out-of-state banks or for federal or out-of-state savings banks or savings associations, provided that before exercising any such power, right, benefit or privilege, prior approval by the Commissioner by regulation or by specific authorization is required.
In addition, the FDIC approved a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. As a result of this rule, the FDIC issued a special assessment of $775,000 for the year ended December 31, 2023.
In addition, the FDIC approved 30 a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closures of Silicon Valley Bank and Signature Bank. As a result of this rule, the FDIC issued a special assessment of $775,000 for the year ended December 31, 2023.
This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include failure to qualify as a bank for tax purposes, 37 distributions in complete or partial liquidation, stock redemptions and excess distributions to shareholders.
This amount represents an allocation of income to bad debt deductions for tax purposes only. Events that would result in taxation of these reserves include failure to qualify as a bank for tax purposes, distributions in complete or partial liquidation, stock redemptions and excess distributions to shareholders.
As part of its risk management processes, the Bank routinely stress tests the Bank’s capital under a variety of economic stress scenarios and manages its capital position accordingly. As a result of these amendments, the Bank and the Company currently are not subject to company-run stress testing requirements. The Volcker Rule.
As part of its risk management processes, the Bank routinely stress tests the 29 Bank’s capital under a variety of economic stress scenarios and manages its capital position accordingly. As a result of these amendments, the Bank and the Company currently are not subject to company-run stress testing requirements. The Volcker Rule.
Although we have benefited from significantly reduced compliance obligations due to the level of our trading assets being below the $20 billion threshold, we remain subject to the modified rules and requirements related to covered funds. 28 Activity Restrictions on State-Chartered Banks.
Although we have benefited from significantly reduced compliance obligations due to the level of our trading assets being below the $20 billion threshold, we remain subject to the modified rules and requirements related to covered funds. Activity Restrictions on State-Chartered Banks.
Management will assess the likelihood of the option being exercised by the borrower and appropriately extend the maturity for modeling purposes. 14 The Company considers qualitative adjustments to credit loss estimates for information not already captured in the quantitative component of the loss estimation process.
Management will assess the likelihood of the option being exercised by the borrower and appropriately extend the maturity for modeling purposes. The Company considers qualitative adjustments to credit loss estimates for information not already captured in the quantitative component of the loss estimation process.
Treasury and Agency obligations, U.S. Agency and privately-issued CMOs and corporate debt obligations. Sales of securities may occur from time to time in response to changes in market rates and liquidity needs and to facilitate balance sheet 18 reallocation to effectively manage interest rate risk.
Treasury and Agency obligations, U.S. Agency and privately-issued CMOs and corporate debt obligations. Sales of securities may occur from time to time in response to changes in market rates and liquidity needs and to facilitate balance sheet reallocation to effectively manage interest rate risk.
An institution’s failure to comply with the Equal Credit Opportunity Act and/or the Fair Housing Act could result in enforcement actions by the FDIC, or the CFPB, as well as other federal regulatory agencies and the Department of Justice. Safety and Soundness Standards.
An institution’s failure to comply with the Equal Credit Opportunity Act and/or the Fair Housing Act could result in enforcement actions by the FDIC, or the CFPB, as well as other federal or state regulatory agencies and the Department of Justice. Safety and Soundness Standards.
The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking organization does not hold a “capital conservation buffer” of 2.5% in addition to the amount necessary to meet its minimum risk-based capital requirements.
The rule limits a banking organization’s capital distributions and certain discretionary bonus payments if the banking 36 organization does not hold a “capital conservation buffer” of 2.5% in addition to the amount necessary to meet its minimum risk-based capital requirements.
The regulations provide that such notice and approval is not required for a bank holding company that would be treated as “well capitalized” under applicable regulations of the Federal Reserve Board, is well-managed, and that is not the subject of any unresolved supervisory issues.
The regulations provide that such notice and approval is not required for a bank holding company that would be treated as “well capitalized” under applicable regulations of the Federal Reserve Board, is well-managed, and that is not the 37 subject of any unresolved supervisory issues.
This law would potentially be applicable to the Company if it ever acquired as a separate subsidiary a depository institution in addition to the Bank. 36 New Jersey Regulation. Under the New Jersey Banking Act, a company owning or controlling a savings bank is regulated as a bank holding company.
This law would potentially be applicable to the Company if it ever acquired as a separate subsidiary a depository institution in addition to the Bank. New Jersey Regulation. Under the New Jersey Banking Act, a company owning or controlling a savings bank is regulated as a bank holding company.
The Bank’s focus on transaction accounts and expanded products and services has enabled it to generate significant non-interest income. In addition to traditional depository and lending fees, the Bank generates non-interest income from investment, insurance, wealth and asset management services it offers to generate non-interest income.
The Bank’s focus on transaction accounts and expanded products and services has enabled it to generate significant non-interest income. In addition to traditional depository and lending fees, the Bank generates non-interest 2 income from investment, insurance, wealth and asset management services it offers to generate non-interest income.
LENDING ACTIVITIES The Bank originates commercial real estate loans, commercial business loans, fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate and other consumer loans, for borrowers generally located within its primary market area.
LENDING ACTIVITIES 3 The Bank originates commercial real estate loans, commercial business loans, fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate and other consumer loans, for borrowers generally located within its primary market area.
A non-accrual loan is 11 returned to accrual status when factors indicating doubtful collection no longer exist, the loan has been brought current and the borrower demonstrates some period (generally six months) of timely contractual payments.
A non-accrual loan is returned to accrual status when factors indicating doubtful collection no longer exist, the loan has been brought current and the borrower demonstrates some period (generally six months) of timely contractual payments.
The Company exceeded $10 billion in total consolidated assets in 2020, which subjects the Company to increased supervision and regulation. In particular, the Company is now subject to the direct supervision of the Consumer Financial Protection Bureau (“CFPB”) with respect to federal consumer laws and regulations.
The Company exceeded $10 billion in total consolidated assets in 2020, which subjects the Company to increased supervision and regulation. In particular, the Company is subject to the direct supervision of the Consumer Financial Protection Bureau (“CFPB”) with respect to federal consumer laws and regulations.
Federal regulations require federally insured depository institutions to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a Tier 1 capital to total assets leverage ratio of 4.0%.
Federal regulations require federally insured depository institutions ("IDIs") to meet several minimum capital standards: a common equity Tier 1 capital to risk-based assets ratio of 4.5%, a Tier 1 capital to risk-based assets ratio of 6.0%, a total capital to risk-based assets ratio of 8.0%, and a Tier 1 capital to total assets leverage ratio of 4.0%.
Notable aspects of the rule include: (1) the establishment of bright-line standards for determining whether an entity meets the statutory definition of “deposit broker”; (2) the identification of a number of business relationships in which the agent or nominee is automatically not deemed to be a “deposit broker” because their primary purpose is not the placement of funds with depository institutions (the “primary purpose exception”); (3) the establishment of a more transparent application process for entities that seek the “primary purpose exception,” but do not qualify as one of the identified business relationships to which the exception is automatically applicable; and (4) the clarification that third parties that have an exclusive deposit-placement arrangement with only one IDI is not considered a “deposit broker.” The final rule took effect in April 2021 and full compliance with the rule has been required since January 1, 2022.
Notable aspects of the 2020 rule included: (1) the establishment of bright-line standards for determining whether an entity meets the statutory definition of “deposit broker”; (2) the identification of a number of business relationships in which the agent or nominee is automatically not deemed to be a “deposit broker” because their primary purpose is not the placement of funds with depository institutions (the “primary purpose exception”); (3) the establishment of a more transparent application process for entities that seek the “primary purpose exception,” but do not qualify as one of the identified business relationships to which the exception is automatically applicable; and (4) the clarification that third parties that have an exclusive deposit-placement arrangement with only one IDI is not considered a “deposit broker.” The final rule took effect in April 2021 and full compliance with the rule has been required since January 1, 2022.
An institution will be treated as “adequately capitalized” if: • it has a leverage ratio of 4% or greater; • it has a common equity Tier 1 ratio of 4.5% or greater; • it has a Tier 1 risk-based capital ratio of 6% or greater; and • it has a total risk-based capital ratio of 8% or greater.
An institution will be treated as “adequately capitalized” if: 33 • it has a leverage ratio of 4% or greater; • it has a common equity Tier 1 capital ratio of 4.5% or greater; • it has a Tier 1 risk-based capital ratio of 6% or greater; and • it has a total risk-based capital ratio of 8% or greater.
The Bank manages its exposure to interest rate risk through the origination and retention of adjustable rate and shorter-term loans, and its investments in securities. In addition, the Bank uses interest rate swaps as part of its interest rate risk management strategy.
Managing Interest Rate Risk. The Bank manages its exposure to interest rate risk through the origination and retention of adjustable rate and shorter-term loans, and its investments in securities. In addition, the Bank uses interest rate swaps as part of its interest rate risk management strategy.
The Company is incorporated under the laws of the State of Delaware. As a result, the rights of its stockholders are governed by the Delaware General Corporate Law and the Company’s Certificate of Incorporation and Bylaws. TAXATION Federal Taxation General.
The Company is incorporated under the laws of the State of Delaware. As a result, the rights of its stockholders are governed by the Delaware General Corporate Law and the Company’s Certificate of Incorporation and Bylaws. 38 TAXATION Federal Taxation General.
Bank holding companies that qualify and opt to become a financial holding company may engage in activities that are financial in nature or incident to activities which are financial in nature. Financial holding companies may engage in a broader array of activities including insurance and investment banking.
Bank holding companies that qualify and opt to become financial holding companies may engage in activities that are financial in nature or incident to activities which are financial in nature. Financial holding companies may engage in a broader array of activities including insurance and investment banking.
The New Jersey Banking Act also provides that a 26 savings bank that is in compliance with Regulation O is deemed to be in compliance with such provisions of the New Jersey Banking Act. Examination and Enforcement.
The New Jersey Banking Act also provides that a savings bank that is in compliance with Regulation O is deemed to be in compliance with such provisions of the New Jersey Banking Act. Examination and Enforcement.
Prior to the 1996 Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income should the Bank fail to meet certain asset and definitional tests. Federal legislation has eliminated these recapture rules. Retained earnings as of December 31, 2023 included approximately $51.8 million for which no provisions for income tax had been made.
Prior to the 1996 Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income should the Bank fail to meet certain asset and definitional tests. Federal legislation has eliminated these recapture rules. Retained earnings as of December 31, 2024 included approximately $51.8 million for which no provisions for income tax had been made.
As of December 31, 2023, the portfolio and class segments for the Company’s loan portfolio were: • Mortgage Loans – Residential, Commercial Real Estate, Multi-Family and Construction • Commercial Loans – Commercial Owner Occupied and Commercial Non-Owner Occupied • Consumer Loans – First Lien Home Equity and Other Consumer The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s normal loan monitoring process.
As of December 31, 2024, the portfolio and class segments for the Company’s loan portfolio were: • Mortgage Loans – Residential, Commercial Real Estate, Multi-Family and Construction • Commercial Loans – Commercial Owner Occupied and Commercial Non-Owner Occupied • Consumer Loans – First Lien Home Equity and Other Consumer The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s normal loan monitoring process.
The Inflation Reduction Act, which was signed into law on August 16, 2022, among other things, implements a new alternative minimum tax of 15% on corporations with profits in excess of $1 billion, a 1% excise tax on stock repurchases, and several tax incentives to promote clean energy and climate initiatives. These provisions are effective beginning January 1, 2023.
The Inflation Reduction Act, which was signed into law on August 16, 2022, among other things, implements a new alternative minimum tax of 15% on corporations with profits in excess of $1 billion, a 1% excise tax on stock repurchases, and several tax incentives to promote clean energy and climate initiatives. These provisions were effective beginning January 1, 2023.
While management believes that on the basis of information currently available to it, the allowance for credit losses is adequate as of December 31, 2023, actual losses are dependent upon future events and, as such, further additions to the level of allowances for credit losses may become necessary. Loans are classified in accordance with the risk rating system described previously.
While management believes that on the basis of information currently available to it, the allowance for credit losses is adequate as of December 31, 2024, actual losses are dependent upon future events and, as such, further additions to the level of allowances for credit losses may become necessary. Loans are classified in accordance with the risk rating system described previously.
The loan has a risk rating of “4” or of “acceptable quality” and was performing in accordance with its terms and conditions as of December 31, 2023. (For the Bank’s largest group borrower exposure —see discussion on “Loans to One Borrower”). Construction Loans. The Bank originates commercial construction loans.
The loan has a risk rating of “4” or of “acceptable quality” and was performing in accordance with its terms and conditions as of December 31, 2024. (For the Bank’s largest group borrower exposure —see discussion on “Loans to One Borrower”). Construction Loans. The Bank originates commercial construction loans.
Management completed its most recent development and evaluation of its quantitative loss factors in the fourth quarter of 2022. Qualitative adjustments give consideration to factors such as trends in industry conditions, effects of changes in credit concentrations, changes in the Company’s loan review process, changes in the Company's loan policies and procedures, economic forecast uncertainty and model imprecision.
Management completed its most recent development and evaluation of its quantitative loss factors in the fourth quarter of 2024. Qualitative adjustments give consideration to factors such as trends in industry conditions, effects of changes in credit concentrations, changes in the Company’s loan review process, changes in the Company's loan policies and procedures, economic forecast uncertainty and model imprecision.
FHLBNY advances are available pursuant to several credit programs, each of which has its own interest rate and range of maturities. 22 The following table sets forth the maximum month-end balance and average balance of FHLBNY advances, FED BTFP borrowings and securities sold under agreements to repurchase for the periods indicated.
FHLBNY advances are available pursuant to several credit programs, each of which has its own interest rate and range of maturities. 23 The following table sets forth the maximum month-end balance and average balance of FHLBNY advances, FED BTFP borrowings and securities sold under agreements to repurchase for the periods indicated.
The Bank and the Company do not invest in collateralized debt obligations, mortgage-related securities secured by sub-prime loans, or any preferred equity securities. 19 Amortized Cost and Fair Value of Securities. The following table sets forth certain information regarding the amortized cost and fair values of the Company’s securities as of the dates indicated.
The Bank and the Company do not invest in collateralized debt obligations, mortgage-related securities secured by sub-prime loans, or any preferred equity securities. 20 Amortized Cost and Fair Value of Securities. The following table sets forth certain information regarding the amortized cost and fair values of the Company’s securities as of the dates indicated.
The final rules direct stock exchanges to require listed companies to implement clawback policies to recover incentive-based compensation from current or former executive officers in the event of material noncompliance with any financial reporting requirement under the securities law and to disclose their clawback policies and their actions under those policies.
The final rules direct stock exchanges to require listed companies to implement clawback policies to recover incentive-based compensation from current or former executive officers in the event of material noncompliance with any financial reporting requirement under the securities laws and to disclose their clawback policies and their actions under those policies.
On commercial construction projects that the developer maintains for rental, the Bank typically holds back funds for tenant improvements until a lease is executed. For single family and condominium financing, the Bank generally requires payment for the release of a unit that exceeds the amount of the loan advance attributable to such unit.
On commercial construction projects that the developer maintains for rent, the Bank typically holds back funds for tenant improvements until a lease is executed. For single family and condominium financing, the Bank generally requires payment for the release of a unit that exceeds the amount of the loan advance attributable to such unit.
Automobile/ Direct Installment Term extension greater than three months. These modifications extend the term of the loan, which reduces the monthly payment requirement.
Direct Installment Term extension greater than three months. These modifications extend the term of the loan, which reduces the monthly payment requirement.
Regulations of the Commissioner impose on New Jersey chartered depository institutions, including the Bank, minimum capital requirements similar to those imposed by the FDIC on insured state banks. As of December 31, 2023, the Bank was considered “well capitalized” under FDIC guidelines. Loans to a Bank’s Insiders .
Regulations of the Commissioner impose on New Jersey chartered depository institutions, including the Bank, minimum capital requirements similar to those imposed by the FDIC on insured state banks. As of December 31, 2024, the Bank was considered “well capitalized” under FDIC guidelines. Loans to a Bank’s Insiders .
Among other things, the current CRA regulations rate an institution based upon its actual performance in meeting community needs.
Among other things, the current CRA regulations in effect rate an institution based upon its actual performance in meeting community needs.
The USA PATRIOT Act gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened AML requirements. The bank regulatory agencies have increased the regulatory scrutiny of the BSA and AML programs maintained by financial institutions.
The USA PATRIOT Act gives the federal government powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing, and broadened AML/CFT requirements. The bank regulatory agencies have increased the regulatory scrutiny of the AML/CFT programs maintained by financial institutions.
In connection with its adoption of CECL on January 1, 2020, the Company elected to utilize the five-year CECL transition. The following table shows the Company’s Tier 1 leverage capital ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio and the total risk-based capital ratio as of December 31, 2023.
In connection with its adoption of CECL on January 1, 2020, the Company elected to utilize the five-year CECL transition. The following table shows the Company’s Tier 1 leverage capital ratio, common equity Tier 1 risk-based capital ratio, Tier 1 risk-based capital ratio and the total risk-based capital ratio as of December 31, 2024.
For the year ended December 31, 2023, asset management fees constituted 82.4% of total wealth management income. INSURANCE AGENCY OPERATIONS Provident Protection Plus, Inc., formerly SB One Insurance Agency, Inc., is a retail insurance broker operating in the State of New Jersey.
For the year ended December 31, 2024, asset management fees constituted 82.4% of total wealth management income. INSURANCE AGENCY OPERATIONS Provident Protection Plus, Inc., formerly SB One Insurance Agency, Inc., is a retail insurance broker operating in the State of New Jersey.
In August 2020, the federal bank regulatory authorities issued a final rule providing banking institutions that had adopted the CECL accounting standard in the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total).
In August 2020, the federal banking agencies issued a final rule providing banking institutions that had adopted the CECL accounting standard in the 2020 calendar year with the option to delay for two years the estimated impact of CECL on regulatory capital, followed by a three-year transition period to phase out the aggregate amount of the capital benefit provided during the initial two-year delay (i.e., a five-year transition in total).
As of December 31, 2023, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.
As of December 31, 2024, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.
Information on our website should not be considered a part of this Annual Report on Form 10-K. Provident Bank Established in 1839, the Bank is a New Jersey-chartered capital stock savings bank operating full-service branch offices throughout northern and central New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Queens and Nassau Counties in New York.
Information on our website should not be considered a part of this Annual Report on Form 10-K. Provident Bank Established in 1839, the Bank is a New Jersey-chartered capital stock savings bank operating full-service branch offices throughout New Jersey, Bucks, Lehigh and Northampton counties in Pennsylvania, as well as Orange, Queens and Nassau Counties in New York.
On April 7, 2022, the FDIC issued a financial institution letter also requiring its supervised institutions to provide notice and obtain supervisory feedback prior to engaging in any crypto-related activities. 34 More recently, on January 3, 2023, the federal banking agencies issued additional guidance in the form of a joint statement addressing digital asset-related risks to banking organizations.
On April 7, 2022, the FDIC issued a financial institution letter also requiring its supervised institutions to provide notice and obtain supervisory feedback prior to engaging in any crypto-related activities. On January 3, 2023, the federal banking agencies issued additional guidance in the form of a joint statement addressing digital asset-related risks to banking organizations.
Management measures expected credit losses on held to maturity debt securities on a collective basis by security type. Management classifies the held to maturity debt securities portfolio into the following security types: • Agency-sponsored obligations; • Mortgage-backed securities; • State and municipal obligations; and • Corporate obligations.
Management measures expected credit losses on held to maturity debt securities on a collective basis by security type. Management classifies the held to maturity debt securities portfolio into the following security types: • Government-agency obligations; • Mortgage-backed securities; • State and municipal obligations; and • Corporate obligations.
The remaining 0.64% of the consumer loan portfolio includes personal loans and unsecured lines of credit, direct auto loans and recreational and marine vehicle loans. Interest rates on home equity loans are fixed for a term not to exceed 20 years, with the maximum loan amount being $1.0 million, which is dependent on lien position and credit score.
The remaining 25.7% of the consumer loan portfolio includes personal loans and unsecured lines of credit, direct auto loans and recreational and marine vehicle loans. Interest rates on home equity loans are fixed for a term not to exceed 20 years, with the maximum loan amount being $1.0 million, which is dependent on lien position and credit score.
In calculating common equity Tier 1 risk-based capital, Tier 1 risk-based capital and total risk-based capital, assets are based on total risk-weighted assets. As of December 31, 2023, the Bank was considered “well capitalized” under FDIC guidelines. Stress Testing.
In calculating common equity Tier 1 risk-based capital, Tier 1 risk-based capital and total risk-based capital, assets are based on total risk-weighted assets. As of December 31, 2024, the Bank was considered “well capitalized” under FDIC guidelines. Stress Testing.
The Company and the Bank file New Jersey Corporation Business Tax returns. Generally, the income of financial institutions in New Jersey, which is calculated based on federal taxable income subject to certain adjustments, is subject to New Jersey tax. The Company and the Bank are subject to the corporation business tax at 9% of apportioned taxable income.
Generally, the income of financial institutions in New Jersey, which is calculated based on federal taxable income subject to certain adjustments, is subject to New Jersey tax. The Company and the Bank are subject to the corporation business tax at 9% of apportioned taxable income.
Census Bureau’s most recent population data, the Bank’s New Jersey market area has a population of approximately 7.4 million, which was 79.2% of the state’s total population. The Bank’s Pennsylvania market area has a population of approximately 1.3 million, which was 10.4% of that state’s total population.
Census Bureau’s most recent population data, the Bank’s New Jersey market area has a population of approximately 7.4 million, which was 79.6% of the state’s total population. The Bank’s Pennsylvania market area has a population of approximately 1.3 million, which was 10.4% of that state’s total population.
In calculating common equity Tier 1 capital, Tier 1 risk-based capital and total risk-based capital, assets are based on total risk-weighted assets. As of December 31, 2023, the Company was “well capitalized” under Federal Reserve Board guidelines.
In calculating common equity Tier 1 capital, Tier 1 risk-based capital and total risk-based capital, assets are based on total risk-weighted assets. As of December 31, 2024, the Company was “well capitalized” under Federal Reserve Board guidelines.
On January 15, 2003, the Company issued an aggregate of 59,618,300 shares of its common stock, par value $0.01 per share in a subscription offering, and contributed $4.8 million in cash and 1,920,000 shares of its common stock to The Provident Bank Foundation, a charitable foundation established by the Bank.
On January 15, 2003, the Company issued an aggregate of 59,618,300 shares of its common stock, par value $0.01 per share in a subscription offering, and contributed $4.8 million in cash and 1,920,000 shares of its common stock, which amounted to $24.0 million in aggregate, to The Provident Bank Foundation, a charitable foundation established by the Bank.
On January 1, 2023, the Company adopted ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures," which addresses areas identified by the FASB as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model.
On January 1, 2023, the Company adopted ASU 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures," which addresses areas identified by the Financial Accounting Standards Board ("FASB") as part of its post-implementation review of the credit losses standard (ASU 2016-13) that introduced the CECL model.
As of December 31, 2023, 1.1 million shares remained eligible for repurchase under the board-approved stock repurchase program. The Company and the Bank were “well capitalized” as of December 31, 2023 under current regulatory standards. Available Information . The Company is a public company, and files interim, quarterly and annual reports with the Securities and Exchange Commission (“SEC”).
As of December 31, 2024, 3.1 million shares remained eligible for repurchase under the board-approved stock repurchase program. The Company and the Bank were “well capitalized” as of December 31, 2024 under current regulatory standards. Available Information . The Company is a public company, and files interim, quarterly and annual reports with the Securities and Exchange Commission (“SEC”).
The loan has a risk rating of “4” or of “acceptable quality” and was performing in accordance with its terms and conditions as of December 31, 2023. Residential Mortgage Loans .
The loan has a risk rating of “4” or of “acceptable quality” and was performing in accordance with its terms and conditions as of December 31, 2024. Residential Mortgage Loans .
In 2023, new employees were eligible for a cash 401(k) profit-sharing contribution while employees hired prior to December 31, 2022 were eligible to participate in the Employee Stock Ownership Plan, which enables employees to accumulate PFS, Inc. shares. The profit-sharing and ESOP contributions are 100% funded by the Company.
All employees are eligible for a cash 401(k) profit-sharing contribution, while employees hired prior to December 31, 2023 were eligible to participate in the Employee Stock Ownership Plan, which enables employees to accumulate PFS, Inc. shares. The profit-sharing and ESOP contributions are 100% funded by the Company.
The rule sought to clarify 29 and modernize the FDIC’s regulatory framework for brokered deposits.
The rule sought to clarify and modernize the FDIC’s regulatory framework for brokered deposits.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe Company's risk factors are categorized as follows: • Risks Related to the Pending Merger with Lakeland • Risks Related to the Economy, Financial Markets, and Interest Rates • Risks Related to Regulatory, Compliance, Environmental and Legal Matters • Risks Related to the Business Environment and Operations. • Risks Related to Technology and Security Risks Related to the Pending Merger with Lakeland Receipt of regulatory approvals has taken longer than expected and may not be received in the future, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company that results from the merger of the Company and Lakeland.
Biggest changeThe Company's risk factors are categorized as follows: • Risks Related to the Recent Merger with Lakeland • Risks Related to the Economy, Financial Markets, and Interest Rates • Risks Related to Regulatory, Compliance, Environmental and Legal Matters • Risks Related to the Business Environment and Operations. • Risks Related to Technology and Security • Risks Related to Our Common Stock Risks Related to the Recent Merger with Lakeland The ongoing integration of Lakeland with the Company may be more difficult, costly or time-consuming than expected, and the Company may fail to realize the anticipated benefits of the merger.
This type of collateral typically does not yield substantial recovery in the event we need to foreclose on it and may rapidly deteriorate, disappear, or be misdirected in advance of foreclosure. This adds to the potential that our charge-offs will be volatile, which could significantly negatively affect our earnings in any quarter.
This type of collateral typically does not yield substantial recovery in the event we need to foreclose on it and may rapidly deteriorate, disappear, or be misdirected in advance of foreclosure. This adds to the potential that our charge-offs will be volatile, which could significantly 42 negatively affect our earnings in any quarter.
Regulatory approvals could be delayed, impeded, restrictively conditioned or denied due to existing or new issues the Company has, or may have, with regulatory agencies, including, without limitation, issues related to BSA/AML compliance, CRA compliance, fair lending laws, fair housing laws, consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, and other similar laws and regulations.
Regulatory approvals could be delayed, impeded, restrictively conditioned or denied due to existing or new issues the Company has, or may have, with regulatory agencies, including, without limitation, issues related to BSA/AML compliance, CRA compliance, fair lending laws, fair housing laws, 44 consumer protection laws, unfair, deceptive, or abusive acts or practices regulations, and other similar laws and regulations.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could 47 have a material adverse impact on our liquidity, business, financial condition and results of operations.
Any decline in available funding could adversely impact our ability to originate loans, invest in securities, pay our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
While we have adopted policies and procedures aimed at detecting and preventing the use of our banking network for money laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities.
While we have adopted policies, procedures and systems aimed at detecting and preventing the use of our banking network for money laundering and related activities, those policies and procedures may not completely eliminate instances in which we may be used by customers to engage in money laundering and other illegal or improper activities.
While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area. Additionally, deposit balances can 46 decrease if customers perceive alternative investments as providing a better risk/return tradeoff.
If any of the following conditions or events actually occur, our business, financial condition or results of operations could be negatively 38 affected, the market price of your investment in the Company’s common stock could decline, and you could lose all or a part of your investment in the Company’s common stock.
If any of the following conditions or events actually occur, our business, financial condition or results of operations could be negatively affected, the market price of your investment in the Company’s common stock could decline, and you could lose all or a part of your investment in the Company’s common stock.
We rely on historical data to help build models. We seek to incorporate appropriate historical data in our models, but the range of market values and behaviors reflected in any period of historical data we incorporate into our models may turn out to be inappropriate for the future period being modeled.
We rely on historical data to help build models. We seek to incorporate appropriate historical data in our models, but the range of market values and behaviors reflected in any period of historical data we incorporate into our models may turn out to be inappropriate 47 for the future period being modeled.
The DOJ Consent Order requires Lakeland Bank to, among other things, invest $12 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic census tracts in Essex, Morris, Somerset, Sussex and Union Counties, New Jersey (the “Newark Lending Area”), and devote a minimum of $400,000 over five years toward community development partnership contributions in the Newark Lending Area, and $150,000 per year over five years toward advertising, community outreach, and credit repair and education in the Newark Lending Area.
The DOJ Consent Order required Lakeland Bank to, among other things, invest $12 million over five years in a loan subsidy fund to increase credit opportunities to residents of majority-Black and Hispanic census tracts in Essex, Morris, Somerset, Sussex and Union Counties, New Jersey (the “Newark Lending Area”), and devote a minimum of $400,000 over five years toward community development partnership contributions in the Newark Lending Area, and $150,000 per year over five years toward advertising, community outreach, and credit repair and education in the Newark Lending Area.
It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the companies’ ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.
It is possible that the integration process could result in the loss of key employees, the disruption of the Company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the Company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the merger.
The effects of changing strategies, policies, and investments as the global community transitions to a lower-carbon economy will impose additional operational and compliance burdens, and may result in market trends that alter business opportunities. Compliance with expected disclosure rules will require additional resources.
The effects of changing strategies, policies, and investments as the global community transitions to a lower-carbon economy will impose additional operational and compliance burdens, and may result in market trends that alter business opportunities. Compliance with any additional disclosure rules will require additional resources.
Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and consumers and potentially contribute to poor business and economic conditions generally, may also enhance or contribute to some of the risks discussed herein.
Volatility and uncertainty related to inflation and the effects of inflation, which may lead to increased costs for businesses and consumers and potentially contribute to poor business and economic conditions generally, may also heighten or contribute to some of the risks discussed herein.
Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, demographic patterns, changes in customer preferences, reductions in consumers' disposable income, the monetary policy of the Federal Reserve or regulatory actions that decrease customer access to particular products.
Further, the demand for deposits may be reduced due to a variety of factors such as negative trends in the banking sector, the level of and/or composition of our uninsured deposits, 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.
As the Federal Reserve raised and has maintained higher interest rates, our interest-bearing liabilities may continue to be subject to repricing or maturing more quickly than our interest-earning assets.
As the Federal Reserve has maintained higher interest rates, our interest-bearing liabilities may continue to be subject to repricing or maturing more quickly than our interest-earning assets.
Cyber security risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of technologies to conduct financial transactions, and coordinated efforts by nation-states to use cyber-attacks to obtain information or disrupt financial institutions in rival states.
Cyber security risks for financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, including artificial intelligence, the use of technologies to conduct financial transactions, and coordinated efforts by nation-states to use cyber-attacks to obtain information or disrupt financial institutions in rival states.
Actions taken to achieve compliance with the DOJ Consent Order may affect Lakeland Bank’s and the combined bank’s business or financial performance and may require Lakeland Bank or the combined bank to reallocate resources away from existing businesses or to undertake significant changes to their respective businesses, operations, products and services and risk management practices.
Actions taken to achieve compliance with the DOJ Consent Order may affect the Bank’s business or financial performance and may require the Bank to reallocate resources away from existing businesses or to undertake significant changes to its business, operations, products and services and risk management practices.
If the Company and Lakeland are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, the Company and Lakeland could face disruptions in their operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
If the Company is unable to retain key employees, including management, who are critical to the successful integration and future operations of the Company, the Company could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs.
In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses, including costs related to requests or requirements issued by regulatory agencies.
In addition, the actual cost savings of the merger could be less than anticipated, and integration may result in additional and unforeseen expenses, including costs related to requirements of regulatory agencies.
If the Company and Lakeland are not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected.
If the Company is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected.
Furthermore, these loans may be affected 43 by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy, declining rents, tenant defaults, or changes in government regulation. As of December 31, 2023, our CRE office portfolio totaled $483.1 million dollars, with approximately 16% being loans in New York.
Furthermore, these loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy, declining rents, tenant defaults, or changes in government regulation. As of December 31, 2024, our CRE office portfolio totaled $884.1 million dollars, with approximately 13% being loans in New York.
For example, higher inflation, or volatility and uncertainty related to inflation, could reduce demand for the Company’s products, adversely affect the creditworthiness of the Company’s borrowers or result in lower values for the Company’s investment securities and other interest-earning assets.
For example, higher inflation, or volatility and uncertainty related to inflation, could increase operating costs for the Company and reduce profitability, reduce demand for the Company’s products, adversely affect the creditworthiness of the Company’s borrowers or result in lower values for the Company’s investment securities and other interest-earning assets.
Pursuant to the terms of the consent order, Lakeland Bank will also establish two new full-service branches in majority-Black and Hispanic census tracts: one in Newark, New Jersey and one in the Newark Lending Area. In addition, Lakeland Bank must continue to maintain its full-time Community Development Officer position to oversee these efforts throughout the term of the consent order.
The DOJ Consent Order also required Lakeland Bank to establish two new full-service branches in majority-Black and Hispanic census tracts: one in Newark, New Jersey and one in the Newark Lending Area. In addition, Lakeland Bank was required to continue to maintain its full-time Community Development Officer position to oversee these efforts throughout the term of the consent order.
Generally, the value of securities fluctuates inversely with changes in interest rates. As of December 31, 2023, our available for sale debt securities portfolio totaled $1.69 billion. Unrealized gains and losses on securities available for sale are reported as a separate component of stockholders’ equity.
Generally, the value of securities fluctuates inversely with changes in interest rates. As of December 31, 2024, our available for sale debt securities portfolio totaled $2.77 billion. Unrealized gains and losses on securities available for sale are reported as a 41 separate component of stockholders’ equity.
On September 28, 2022, Lakeland Bank entered into a consent order with the DOJ to resolve allegations of violations of the Fair Housing Act and Equal Credit Opportunity Act within the Newark, NJ-PA Metro Division, as constituted in 2015 (the “DOJ Consent Order”). The DOJ Consent Order was approved by the U.S.
On September 29, 2022, the U.S. District Court for the District of New Jersey approved a consent order entered into by Lakeland Bank with the DOJ to resolve allegations of violations of the Fair Housing Act and Equal Credit Opportunity Act within the Newark, New Jersey-Pennsylvania Metro Division, as constituted in 2015 (the “DOJ Consent Order”).
To realize the anticipated benefits and cost savings from the merger, the Company and Lakeland must successfully integrate and combine their businesses in a manner that permits those cost savings to be realized without adversely affecting current revenues and future growth.
The Company completed its acquisition of Lakeland on May 16, 2024. To realize the anticipated benefits and cost savings from the merger, the Company must successfully integrate and combine the Company’s and Lakeland’s businesses in a manner that permits those cost savings to be realized without adversely affecting current revenues and future growth.
Acts of terrorism, severe weather, natural disasters, public health issues, geopolitical and other external events could impact our ability to conduct business. 46 Our business is subject to risk from external events that could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, and/or cause us to incur additional expenses.
Our business is subject to risk from external events that could affect the stability of our deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue, disrupt business operations and/or cause us to incur additional expenses.
In addition, following the merger, if key employees terminate their employment, the combined company’s human capital and business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business to suffer.
In addition, if key employees terminate their employment, the Company’s human capital and business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the Company’s business to suffer. The Company also may not be able to locate or retain suitable replacements for any key employees who leave.
We have taken measures to implement backup systems and other safeguards to support our operations, but our ability to conduct business may be adversely affected by any significant disruptions to third-parties with whom we interact. In addition, our ability to implement backup systems and other safeguards with respect to third-party systems is more limited than with our own systems.
We have taken measures to implement data backups of our systems and other safeguards to support our operations, but our ability to conduct business may be adversely affected by any significant disruptions to third-parties with whom we interact.
Some of the decisions that our regulators make, including those related to capital distributions to our stockholders, could be adversely affected due to their perception that the quality of the models used to generate the relevant information is insufficient. 48 Risks Related to Technology and Security A cyber-attack, data breach, or a technology failure of ours could adversely affect our ability to conduct our business or manage our exposure to risk, result in the disclosure or misuse of confidential or proprietary information, increase our costs to maintain and update our operational and security systems and infrastructure, and adversely impact our results of operations, liquidity and financial condition, as well as cause reputational harm.
Risks Related to Technology and Security A cyber-attack, data breach, or a technology failure of ours could adversely affect our ability to conduct our business or manage our exposure to risk, result in the disclosure or misuse of confidential or proprietary information, increase our costs to maintain and update our operational and security systems and infrastructure, and adversely impact our results of operations, liquidity and financial condition, as well as cause reputational harm.
Banks with assets in excess of $10 billion are subject to requirements imposed by the Dodd-Frank Act and its implementing regulations including being subject to the examination authority of the Consumer Financial Protection Bureau to assess our compliance with federal consumer financial laws, the imposition of higher FDIC premiums, reduced debit card interchange fees, and enhanced risk management frameworks, all of which increase operating costs and reduce earnings. 44 As we continue to grow in size, we can expect greater regulatory scrutiny and expectations requiring us to invest significant management attention and make additional investments in staff and other resources to comply with applicable regulatory expectations.
Banks with assets in excess of $10 billion are subject to requirements imposed by the Dodd-Frank Act and its implementing regulations including being subject to the examination authority of the Consumer Financial Protection Bureau to assess our compliance with federal consumer financial laws, the imposition of higher FDIC premiums, reduced debit card interchange fees, and enhanced risk management frameworks, all of which increase operating costs and reduce earnings.
Given that future deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur. As of December 31, 2023, we had approximately $259.0 million, $70.8 million and $1.29 billion invested in U.S.
Given that future deterioration in the U.S. credit and financial markets is a possibility, no assurance can be made that losses or significant deterioration in the fair value of our U.S. government issued or guaranteed investments will not occur.
As of December 31, 2023, our consolidated balance sheet included goodwill of $443.6 million and other intangible assets of $16.5 million. Our business acquisitions typically result in goodwill and other intangible assets, which affect the amount of future amortization expense and potential impairment expense. We make estimates and assumptions in valuing such intangible assets that affect our consolidated financial statements.
Our business acquisitions, including our acquisition of Lakeland, typically result in goodwill and other intangible assets, which affect the amount of future amortization expense and potential impairment expense. We make estimates and assumptions in valuing such intangible assets that affect our consolidated financial statements.
The combined company's human capital may be affected by inability to retain personnel of the Company and/or Lakeland successfully after the merger is completed. The success of the merger will depend in part on the combined company’s ability to manage its human capital and retain the talent and dedication of key employees currently employed by the Company and Lakeland.
The combined company's human capital may be affected by inability to retain personnel successfully. The success of the merger will depend in part on the combined company’s ability to manage its human capital and retain the talent and dedication of key employees. It is possible that these employees may decide not to remain with the Company going forward.
In addition, the effect of high rates continue to be compounded as deposit customers move funds into higher yielding accounts or are lost to competitors offering higher rates on their deposit products.
In addition, the effect of high rates continue to be compounded as deposit customers move funds into higher yielding accounts or are lost to competitors offering higher rates on their deposit products. We are unable to predict whether current rates will persist or if the Federal Reserve will cut interest rates going forward.
Adverse local economic conditions caused by inflation, recession, unemployment, state or local government action, or other factors beyond our control would impact these local economic conditions and could negatively affect the financial results of our business.
Adverse local economic conditions caused by inflation, recession, unemployment, state or local government action, or other factors beyond our control would impact these local economic conditions and could negatively affect the financial results of our business. Acts of terrorism, severe weather, natural disasters, public health issues, geopolitical and other external events could impact our ability to conduct business.
If these third-parties were to discontinue providing services to us, we may experience significant disruption to 49 our business. In addition, each of these third-parties faces the risk of cyber-attack, information breach or loss, or technology failure.
In addition, our ability to implement backup systems and other safeguards with respect to third-party systems is more limited than with our own systems. If these third-parties were to discontinue providing services to us, we may experience significant disruption to our business. In addition, each of these third-parties faces the risk of cyber-attack, information breach or loss, or technology failure.
Although both the Bank and Lakeland Bank are committed to full compliance with the DOJ Consent Order, achieving such compliance will require significant management attention from Lakeland Bank and, following the mergers, the combined bank and may cause Lakeland 41 Bank and, following the mergers, the combined bank to incur unanticipated costs and expenses.
Although the Bank is committed to full compliance with the DOJ Consent Order, achieving such compliance has required and will require significant management attention from the Bank and has caused and may continue to cause the Bank to incur significant costs and expenses.
Our results of operations substantially depend on our net interest income, which is the difference between the interest income we earn on our interest earning assets and the interest expense we pay on our interest-bearing liabilities. An inverted yield curve, which has persisted throughout 2023, has and may continue to negatively impact our net interest margin and earnings.
Our results of operations substantially depend on our net interest income, which is the difference between the interest income we earn on our interest earning assets and the interest expense we pay on our interest-bearing liabilities. A flattening yield curve, or one that inverts, could negatively impact our net interest margin and earnings.
Failure to successfully keep pace with technological change affecting the financial services industry and sustain a robust information security program through talent and human capital could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our customers, or attract sufficient human capital to engage in rapid implementation and marketing. 49 Failure to successfully keep pace with technological change affecting the financial services industry and sustain a robust information security program through talent and human capital could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
As required by the terms of the DOJ Consent Order, the Bank, as the resulting institution in the bank merger, has agreed to and will assume all obligations under the DOJ Consent Order in connection with the bank merger.
As required by the terms of the DOJ Consent Order, the Bank, as the resulting institution in the bank merger, assumed all obligations of Lakeland Bank under the DOJ Consent Order.
In addition, although the DOJ Consent Order resolved all claims by the DOJ against Lakeland Bank, Lakeland and its subsidiaries or, following the mergers, the combined company and its subsidiaries could be subject to other enforcement actions relating to the alleged violations resolved by the DOJ Consent Order.
In addition, although the DOJ Consent Order resolved all claims by the DOJ against Lakeland Bank, the Company and the Bank could be subject to other enforcement actions relating to the alleged violations resolved by the DOJ Consent Order as well as relating to any failure or delay to comply with one or more of the terms of the DOJ Consent Order.
As cyber threats and other fraudulent activity continues to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures, or to investigate and remediate any information security vulnerabilities or incidents.
Employee errors or misconduct could subject us to civil claims for negligence or regulatory enforcement actions, including fines and restrictions on our business. 48 As cyber threats and other fraudulent activity continues to evolve, we may be required to expend significant additional resources to continue to modify and enhance our protective measures, or to investigate and remediate any information security vulnerabilities or incidents.
The Company's total assets were $14.21 billion as of December 31, 2023.
The Company's total assets were $24.05 billion as of December 31, 2024.
While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations may have on us, these changes could be material. Bank regulators have signaled further review of regulatory requirements and the potential for changes to laws or regulations governing banks and bank holding companies.
While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations may have on us, these changes could be material.
In our CRE Multi-family portfolio, we hold loans collateralized by rent stabilized properties that totaled $117.4 million as of December 31, 2023. In the case of commercial and industrial loans, although we strive to maintain high credit standards and limit exposure to any one borrower, the collateral for these loans often consists of accounts receivable, inventory and equipment.
In the case of commercial and industrial loans, although we strive to maintain high credit standards and limit exposure to any one borrower, the collateral for these loans often consists of accounts receivable, inventory and equipment.
Changes resulting from these events could include increased regulatory oversight, higher capital requirements or changes in the way regulatory capital is calculated, and the impositions of additional restrictions through regulatory changes or supervisory or enforcement activities, each of which could have a material impact on our business. We face regulatory scrutiny based on our commercial real estate lending.
Changes resulting from updated regulations and laws could include increased regulatory oversight, higher capital requirements or changes in the way regulatory capital is calculated, and the impositions of additional restrictions through regulatory changes or supervisory or enforcement activities, each of which could have a material impact on our business. 43 The fiscal, monetary and regulatory policies of the federal government and its agencies could have an adverse effect on our results of operations.
Congress, state legislatures and federal and state regulatory agencies continue to propose numerous initiatives, legislation, and regulations to supplement the global effort to combat climate change.
The effects of climate change continue to create a level of concern for the state of the global environment. State legislatures and federal and state regulatory agencies have proposed, and may propose in the future, initiatives, legislation, and regulations to supplement the global effort to combat climate change.
In December 2015, the Agencies released a statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
Based on the size of our CRE Loan portfolio as a percentage of capital, regulatory oversight of our management of this CRE concentration is elevated. In December 2015, the Agencies released a statement on prudent risk management for commercial real estate lending (the “2015 Statement”).
The regulatory approvals may contain conditions on the completion of a merger which would adversely affect our business following the closing, or which were not anticipated or cannot be met.
The regulatory approvals may contain conditions on the completion of a merger which would adversely affect our business following the closing, or which were not anticipated or cannot be met. Difficulties associated with potential acquisitions that may result from these factors could have a material adverse impact on our business, and, in turn, our financial condition and results of operations.
An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company following the completion of the merger, which may adversely affect the value of the common stock of the combined company following the completion of the merger.
An inability to realize the full extent of the anticipated benefits of the merger, as well as any delays encountered in the integration process, could have an adverse effect upon the business, financial condition and results of operations of the Company.
As of December 31, 2023, our portfolio of commercial real estate loans, including multi-family loans, totaled $6.32 billion, or 58.7% of total loans, our commercial and industrial loans totaled $2.44 billion, or 22.7% of portfolio loans, and our construction loans totaled $653.2 million, or 6.1% of total loans.
As of December 31, 2024, our portfolio of commercial real estate loans, including multi-family loans, totaled $10.61 billion, or 57.5% of total loans, our commercial and industrial loans totaled $4.61 billion, or 25.0% of portfolio loans, and our construction loans totaled $823.5 million, or 4.5% of total loans.
Our level of CRE Loans equaled 489.6% of total risk-based capital as of December 31, 2023, while our CRE Loan portfolio has increased by 30.4% during the preceding 36 months. Based on the size of our CRE Loan portfolio as a percentage of capital, regulatory oversight of our management of this CRE concentration is elevated.
Our level of CRE Loans equaled 460.2% of total risk-based capital as of December 31, 2024, while our CRE Loan portfolio has increased by 72.2% during the preceding 36 months, primarily as a result of the addition of Lakeland.
Overall, climate change, its effects, and the resulting unknown impact could have a material adverse impact on our financial condition and results of operations. Risks Related to Business Environment and Operations. Our continuing concentration of business in a relatively confined region may increase our risk . Our success is significantly affected by general economic conditions in our market area.
Overall, climate change, its effects, and the resulting unknown impact could have a material adverse impact on our financial condition and results of operations. Risks Related to Business Environment, Operations and Strategy. We have incurred, and may incur in the future, significant costs related to acquisitions by merger and subsequent integration activities.
These costs include legal, financial advisory, accounting, consulting and other advisory fees, retention, severance and employee benefit-related costs, public company filing fees and other regulatory fees, financial printing and other printing costs, and closing, integration and other related costs. Some of these costs are payable by the Company regardless of whether or not the merger is completed.
We have incurred and expect to incur certain non-recurring costs associated with mergers. These costs include financial advisory, legal, accounting, consulting and other advisory fees, severance/employee benefit-related costs, public company filing fees and other regulatory fees, printing costs, and other related costs. We may incur substantial costs in connection with the integration of acquired companies.
Removed
Before the merger and bank merger may be completed, various approvals, consents and non-objections must be obtained from the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), the FDIC, the New Jersey Department of Banking and Insurance (the “NJDOBI”) and other regulatory authorities in the United States.
Added
If the Company is unable to retain key employees, including management, who are critical to the successful integration and future operations of the Company, the Company could face disruptions in its operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. The Company’s integration efforts may also divert management attention and resources.
Removed
In determining whether to grant these approvals, such regulatory authorities consider a variety of factors, including the regulatory standing of each company. Receipt of these approvals has taken longer than expected and, as a result, the Company and Lakeland have extended the merger deadline to March 31, 2024 to allow additional time to obtain the necessary regulatory approvals.
Added
The regulatory approvals received for the merger of the Company and Lakeland include conditions and commitments that could in the future have adverse effects on the Company.
Removed
These approvals could continue to be delayed or not obtained at all, including due to an adverse development in either company’s regulatory standing or in any other factors considered by regulators when granting such approvals; governmental, political or community group inquiries, investigations or opposition; or changes in legislation or the political environment generally.
Added
The approvals received by the Company and the Bank from the bank regulatory authorities to consummate the merger with Lakeland were subject to certain regulatory conditions which continue to apply following the closing of the merger.
Removed
The approvals that are granted may impose terms and conditions, limitations, obligations or costs, or place restrictions on the conduct of the combined company’s business or require changes to the terms of the transactions contemplated by the merger agreement between the Company and Lakeland.
Added
The regulatory conditions include, but are not limited to: for three years following consummation of the merger, the Bank must maintain regulatory capital ratios at or above 8.50% for Tier 1 Leverage Capital and 11.25% for Total Risk Based Capital; and the Bank must maintain its commercial real estate concentrations (as a percent of capital and reserves) at levels at or below those forecasted in the pro forma financial projections that the Bank submitted to the FDIC.
Removed
There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying the completion of any of the transactions contemplated by the merger agreement, imposing additional material costs on or materially limiting the revenues of the combined company following the merger or otherwise reducing the anticipated benefits of the merger if the merger were consummated successfully within the expected timeframe.
Added
The failure to continue to comply with the regulatory conditions could result in supervisory and enforcement actions against the Company and the Bank, including the issuance of a cease and desist order or the imposition of civil money penalties, and could constrain the Company’s business operations, which could materially and adversely affect our business, financial condition, results of operations and prospects. 40 As a result of the merger, the Bank has become subject to additional requirements imposed by the DOJ.
Removed
In addition, there can be no assurance that any such conditions, terms, obligations or restrictions will not result in the delay or abandonment of the merger.
Added
As of December 31, 2024, various economic indicators suggested that real gross domestic product had expanded throughout 2024. The unemployment rate had increased, on net, but remained low relative to historic levels. Consumer price inflation, as measured by the 12-month change in the price index for personal consumption expenditures, had moved lower compared to its peak level in 2023.
Removed
Additionally, the completion of the merger is conditioned on the absence of certain orders, injunctions or decrees by any court or regulatory agency of competent jurisdiction that would prohibit or make illegal the completion of any of the transactions contemplated by the merger agreement.
Added
In our CRE multi-family portfolio,loans that are collateralized by rent stabilized apartments comprise less than 0.80% of the total loan portfolio and are all performing.
Removed
In addition, despite the companies’ commitments to using their reasonable best efforts to comply with conditions imposed by regulators, under the terms of the merger agreement, neither the Company nor Lakeland, nor any of their respective subsidiaries, is permitted (without the written consent of the other party), to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining the required permits, consents, approvals and authorizations of governmental entities that would reasonably be expected to have a material adverse effect on the combined company and its subsidiaries, taken as a whole, after giving effect to the merger and the bank merger.
Added
As we continue to grow in size, we can expect greater regulatory scrutiny and expectations requiring us to invest significant management attention and make additional investments in staff and other resources to comply with applicable regulatory expectations.
Removed
The Company will be subject to business uncertainties and contractual restrictions while the merger is pending. Uncertainty about the effect of the merger on employees and customers may have an adverse effect on the Company.
Added
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the FRB. An important function of the FRB is to regulate the money supply and credit environment. Among the instruments used by the FRB to implement these objectives are open market purchases and sales of U.S.
Removed
These uncertainties may impair the Company’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with the Company to seek to change existing business relationships with the Company.
Added
Government securities, adjustments of the discount rate and changes in banks’ reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
Removed
In addition, subject to certain exceptions, the Company has agreed to operate its business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect its ability to consummate the transactions contemplated by the merger agreement on a timely basis without the consent of Lakeland.
Added
The FRB’s policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect our net interest margin. Its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans.
Removed
These restrictions may prevent the Company from pursuing attractive business opportunities that may arise prior to the completion of the merger. The merger agreement may be terminated in accordance with its terms and the merger may not be completed. The merger agreement is subject to a number of conditions which must be fulfilled in order to complete the merger.
Added
The monetary policies and regulations of the FRB have had a significant effect on the overall economy and the operating results of financial institutions in the past and are expected to continue to do so in the future. Additionally, Congress and the administration through executive orders controls fiscal policy through decisions on taxation and expenditures.
Removed
Those conditions include, among other things: (i) authorization for listing on the New York Stock Exchange of the shares of the Company’s common stock to be issued in the merger, subject to official notice of issuance; (ii) the receipt of required regulatory approvals, including the approval of the Federal Reserve Board, the FDIC and the NJDOBI, and (iii) the absence of any order, injunction, decree or other legal restraint preventing the completion of the merger, the bank merger or any of the 39 other transactions contemplated by the merger agreement or making the completion of the merger, the bank merger or any of the other transactions contemplated by the merger agreement illegal.
Added
Depending on industries and markets involved, changes to tax law and increased or reduced public expenditures could affect us directly or the business operations of our customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed27 unchanged
Biggest changeThe CIRP is coordinated through Incident Management Teams that involve the Bank’s Incident Management Lead, Chief Digital & Innovation Officer, Chief Information Security Officer, and other key departments. 51 The CIRP facilitates coordination across multiple parts of our organization and is evaluated by the Chief Risk Officer and legal department at least annually.
Biggest changeThe CIRP is coordinated through Incident Management Teams that involve the Bank’s Incident Management Lead, Chief Digital & Innovation Officer, Chief Information Security Officer, and other key departments. The CIRP facilitates coordination across multiple parts of our organization and is evaluated by the Chief Risk Officer and legal department at least annually.
The management committees are chaired by managers within the information technology and information security departments and include the Chief Risk Officer, Chief Information Security Officer, and Chief Digital & Innovation Officer as well as their direct reports and other key departmental managers from throughout the entire company.
The management committees are chaired by managers within the information technology and information security departments and include the Chief Risk Officer, Chief Information Security 51 Officer, and Chief Digital & Innovation Officer as well as their direct reports and other key departmental managers from throughout the entire company.
In addition, we leverage certain industry and government associations, vendors, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
In addition, we leverage certain industry and government associations, vendors, third-party benchmarking, audits, and threat intelligence 50 feeds to facilitate and promote program effectiveness.
The Incident Management Team would leverage the expertise of team members to work together to respond to the incident and take appropriate measures. The Senior Risk Committee would oversee the team and receive quartelry reporting on the incident and any relevant updates.
The Incident Management Team would leverage the expertise of team members to work together to respond to the incident and take appropriate measures. The Senior Risk Committee would oversee the team and receive quarterly reporting on the incident and any relevant updates.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−1 removed0 unchanged
Biggest changeThe Bank maintains satellite loan production offices in Convent Station, Flemington, Paramus, and Sea Girt, New Jersey, as well as in Bethlehem, Newtown and Plymouth Meeting, Pennsylvania and Nassau and Queens County, New York.
Biggest changeAdditionally, the Bank maintains satellite loan production offices throughout New Jersey, as well as in Bethlehem, Philadelphia and Plymouth Meeting, Pennsylvania and Nassau and Orange County, New York. The aggregate net book value of premises and equipment was $119.6 million as of December 31, 2024.
Item 2. Properties Property As of December 31, 2023, the Bank conducted business through 94 full-service branch offices located throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania and Nassau and Queens counties in New York.
Item 2. Properties Property As of December 31, 2024, the Bank conducted business through 140 full-service branch offices located throughout New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania and Orange, Nassau and Queens counties in New York.
The Company's and Bank’s administrative offices are located in a leased facility at 111 Wood Avenue South, Iselin, New Jersey. 53
The Company’s executive offices are located in a leased facility at 239 Washington Street, Jersey City, New Jersey, which is also the Bank’s Main Office. The Company's and Bank’s administrative offices are located in a leased facility at 111 Wood Avenue South, Iselin, New Jersey.
Removed
The aggregate net book value of premises and equipment was $71.0 million as of December 31, 2023. 52 The Company’s executive offices are located in a leased facility at 239 Washington Street, Jersey City, New Jersey, which is also the Bank’s Main Office.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−5 removed1 unchanged
Biggest changeAs a result of this, a $3.0 million charge was recorded in the fourth quarter of 2023 for estimated contingent litigation reserves.
Biggest changeAs a result of a pending claim, a $1.4 million charge was recorded in the fourth quarter of 2024 for estimated contingent litigation reserves, which increased our total contingent litigation reserves to $2.0 million as of December 31, 2024.
Removed
On May 2, 2022, a purported class action complaint was filed against the Bank in the Superior Court of New Jersey, which alleges that the Bank wrongfully assessed overdraft fees related to debit card transactions.
Removed
The complaint asserts claims for breach of contract and breach of the covenant of good faith and fair dealing as well as an alleged violation of the New Jersey Consumer Fraud Act.
Removed
Plaintiff seeks to represent a proposed class of all the Bank's checking account customers who were charged overdraft fees on transactions that were authorized into a positive available balance. Plaintiff seeks unspecified damages, costs, attorneys’ fees, pre-judgment interest, an injunction, and other relief as the Court deems proper for the plaintiff and the proposed class.
Removed
The Bank denies the allegations and is vigorously defending the matter. The parties had an initial mediation meeting on October 20, 2023, and the matter remains pending.
Removed
Although we are vigorously defending the litigation, the ultimate outcome of this litigation described in this section, such as whether the likelihood of loss is remote, reasonably possible, or probable, or if and when the reasonably possible range of loss is estimable, is inherently uncertain.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+1 added−0 removed1 unchanged
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Maximum Number of Shares that May Yet Be Purchased Under the Programs (1) October 1, 2023 through October 31, 2023 58 $ 15.21 58 1,062,566 November 1, 2023 through November 30, 2023 104 15.77 104 1,062,462 December 1, 2023 through December 31, 2023 262 16.08 262 1,062,200 Total 424 $ 15.88 424 (1) On December 28, 2020, the Company’s board of directors approved the purchase of up to 3,900,000 shares of its common stock under a ninth general repurchase program to commence upon completion of the eighth repurchase program.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) (2) Maximum Number of Shares that May Yet Be Purchased Under the Programs (1) (2) October 1, 2024 through October 31, 2024 644 $ 17.83 644 3,072,955 November 1, 2024 through November 30, 2024 104 21.40 104 3,072,851 December 1, 2024 through December 31, 2024 — — — 3,072,851 Total 748 $ 18.33 748 (1) On December 28, 2020, the Company’s board of directors approved the purchase of up to 3,900,000 shares of its common stock under a ninth general repurchase program to commence upon completion of the eighth repurchase program.
SmallCap Banks Index over such period. This Index, produced by S&P Global, contains all thrift institutions traded on the NYSE and NASDAQ stock exchange. Cumulative return assumes the reinvestment of dividends and is expressed in dollars based on an assumed investment of $100 on December 31, 2018.
SmallCap Banks Index over such period. This Index, produced by S&P Global, contains all thrift institutions traded on the NYSE and NASDAQ stock exchange. Cumulative return assumes the reinvestment of dividends and is expressed in dollars based on an assumed investment of $100 on December 31, 2019.
The Company’s board of directors intends to review the payment of dividends quarterly and plans to continue to maintain a regular quarterly cash dividend in the future, subject to financial condition, results of operations, tax considerations, industry standards, economic conditions, regulatory restrictions, including those that affect the payment of dividends by the Bank to the Company; and other relevant factors. 54 Stock Performance Graph Set forth below is a stock performance graph comparing (a) the cumulative total return on the Company’s common stock for the period December 31, 2018 through December 31, 2023, (b) the cumulative total return on stocks included in the Russell 2000 Index over such period, and (c) the cumulative total return of the S&P U.S.
The Company’s board of directors intends to review the payment of dividends quarterly and plans to continue to maintain a regular quarterly cash dividend in the future, subject to financial condition, results of operations, tax considerations, industry standards, economic conditions, regulatory restrictions, including those that affect the payment of dividends by the Bank to the Company; and other relevant factors. 52 Stock Performance Graph Set forth below is a stock performance graph comparing (a) the cumulative total return on the Company’s common stock for the period December 31, 2019 through December 31, 2024, (b) the cumulative total return on stocks included in the Russell 2000 Index over such period, and (c) the cumulative total return of the S&P U.S.
On January 25, 2024, the board of directors declared a quarterly cash dividend of $0.24 per common share which was paid on February 23, 2024, to common stockholders of record as of the close of business on February 9, 2024.
On January 28, 2025, the board of directors declared a quarterly cash dividend of $0.24 per common share which was paid on February 28, 2025, to stockholders of record as of the close of business on February 14, 2025.
The Company repurchased 71,781 shares of its common stock at a cost of $1.7 million in 2023. As of December 31, 2023, 1.1 million shares were eligible for repurchase under the board approved stock repurchase program.
The Company repurchased 89,569 shares of its common stock at a cost of $1.3 million in 2024. As of December 31, 2024, 3.1 million shares were eligible for repurchase under the board approved stock repurchase program.
SmallCap Banks Index 100.00 125.46 113.94 158.62 139.85 140.55 55 The following table reports information regarding purchases of the Company’s common stock during the fourth quarter of 2023 under the stock repurchase plan approved by the Company’s board of directors: ISSUER PURCHASES OF EQUITY SECURITIES The Company repurchased 424 shares of its common stock at a cost of $6,735 during the fourth quarter of 2023 under the stock repurchase program approved by the Company’s board of directors.
SmallCap Banks Index 100.00 90.82 126.43 111.47 112.03 132.44 53 The following table reports information regarding purchases of the Company’s common stock during the fourth quarter of 2024 under the stock repurchase plan approved by the Company’s board of directors: ISSUER PURCHASES OF EQUITY SECURITIES The Company repurchased 748 shares of its common stock at a cost of $14,000 during the fourth quarter of 2024 under the stock repurchase program approved by the Company’s board of directors.
As of February 1, 2024, there were 83,209,012 shares of the Company’s common stock issued and 75,601,505 shares outstanding, and approximately 4,523 stockholders of record.
As of February 3, 2025, there were 137,565,966 shares of the Company’s common stock issued and 130,489,493 shares outstanding, and approximately 6,178 stockholders of record.
Period Ending Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 Provident Financial Services, Inc. 100.00 106.72 82.67 116.13 106.80 95.28 Russell 2000 Index 100.00 125.53 150.58 172.90 137.56 160.85 S&P U.S.
Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 Provident Financial Services, Inc. 100.00 77.47 108.82 100.08 89.28 98.86 Russell 2000 Index 100.00 119.96 137.74 109.59 128.14 142.93 S&P U.S.
Added
The repurchase program has no expiration date. (2) On April 25, 2024, shares available for stock awards and stock options under the Amended and Restated Long-Term Incentive Plan were reserved for issuance under the new 2024 Equity Plan. The new plan authorized the issuance of up to 2,100,000 shares of Company common stock to be issued as stock awards.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

91 edited+29 added−32 removed74 unchanged
Biggest changeAverage balances are daily averages. 59 For the Years Ended December 31, 2023 2022 2021 Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost (Dollars in thousands) Interest-earning assets: Deposits $ 65,991 $ 3,421 5.18 % $ 102,505 $ 809 0.79 % $ 421,898 $ 533 0.13 % Federal funds sold and short-term investments 255 12 4.55 84,969 1,208 1.42 181,982 2,192 1.20 Held to maturity debt securities, net 375,436 9,362 2.49 407,236 9,894 2.43 437,994 10,743 2.45 Available for sale debt securities 1,745,105 40,678 2.33 1,975,641 34,612 1.75 1,539,811 21,515 1.40 Equity Securities, At Fair Value 1,020 — — 999 — — 1,063 — — Federal Home Loan Bank NY stock 81,797 6,112 7.47 42,658 2,008 4.71 41,671 2,283 5.48 Net loans (2) 10,367,620 556,235 5.37 9,798,822 417,650 4.26 9,556,702 365,073 3.82 Total interest-earning assets 12,637,224 615,820 4.87 12,412,830 466,181 3.76 12,181,121 402,339 3.30 Non-interest earning assets 1,278,243 1,230,019 1,157,790 Total assets $ 13,915,467 $ 13,642,849 $ 13,338,911 Interest-bearing liabilities: Savings deposits $ 1,282,062 $ 2,184 0.17 % $ 1,492,046 $ 1,276 0.09 % $ 1,414,560 $ 1,604 0.11 % Demand deposits 5,747,671 125,471 2.18 6,076,653 32,047 0.53 5,794,398 20,458 0.35 Time deposits 994,901 31,804 3.20 690,140 5,381 0.78 868,185 4,451 0.51 Borrowed funds 1,636,572 55,856 3.41 756,275 9,310 1.23 789,838 8,614 1.09 Subordinated debentures 10,588 1,051 9.92 10,381 615 5.92 24,794 1,189 4.79 Total interest-bearing liabilities 9,671,794 216,366 2.24 9,025,495 48,629 0.54 8,891,775 36,316 0.41 Non-interest bearing liabilities: Non-interest bearing deposits 2,328,557 2,749,562 2,543,287 Other non-interest bearing liabilities 270,587 249,702 230,134 Total non-interest bearing liabilities 2,599,144 2,999,264 2,773,421 Total liabilities 12,270,938 12,024,759 11,665,196 Stockholders’ equity 1,644,529 1,618,090 1,673,715 Total liabilities and equity $ 13,915,467 $ 13,642,849 $ 13,338,911 Net interest income $ 399,454 $ 417,552 $ 366,023 Net interest rate spread 2.63 % 3.22 % 2.89 % Net interest earning assets $ 2,965,430 $ 3,387,335 $ 3,289,346 Net interest margin (3) 3.16 % 3.37 % 3.00 % Ratio of interest-earning assets to total interest-bearing liabilities 1.31x 1.38x 1.37x (1) Average outstanding balance amounts are at amortized cost.
Biggest changeAverage balances are daily averages. 57 For the Years Ended December 31, 2024 2023 2022 Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost Average Outstanding Balance Interest Earned/ Paid Average Yield/ Cost (Dollars in thousands) Interest-earning assets: Deposits $ 36,932 $ 7,062 5.23 % $ 65,991 $ 3,421 5.18 % $ 102,505 $ 809 0.79 % Federal funds sold and short-term investments — — — 255 12 4.55 84,969 1,208 1.42 Held to maturity debt securities, net 344,903 8,885 2.58 375,436 9,362 2.49 407,236 9,894 2.43 Available for sale debt securities 2,323,158 77,617 3.32 1,745,105 40,678 2.33 1,975,641 34,612 1.75 Equity securities, at fair value 12,367 — — 1,020 — — 999 — — Federal Home Loan Bank NY stock 85,358 8,278 9.70 81,797 6,112 7.47 42,658 2,008 4.71 Net loans (2) 15,600,431 944,296 6.05 10,367,620 556,235 5.37 9,798,822 417,650 4.26 Total interest-earning assets 18,403,149 1,046,138 5.68 12,637,224 615,820 4.87 12,412,830 466,181 3.76 Non-interest earning assets 1,978,999 1,278,243 1,230,019 Total assets $ 20,382,148 $ 13,915,467 $ 13,642,849 Interest-bearing liabilities: Savings deposits $ 1,502,852 $ 3,443 0.23 % $ 1,282,062 $ 2,184 0.17 % $ 1,492,046 $ 1,276 0.09 % Demand deposits 8,480,380 245,874 2.90 5,747,671 125,471 2.18 6,076,653 32,047 0.53 Time deposits 2,367,144 100,206 4.23 994,901 31,804 3.20 690,140 5,381 0.78 Borrowed funds 1,983,674 73,523 3.71 1,636,572 55,856 3.41 756,275 9,310 1.23 Subordinated debentures 262,275 22,478 8.57 10,588 1,051 9.92 10,381 615 5.92 Total interest-bearing liabilities 14,596,325 445,524 3.05 9,671,794 216,366 2.24 9,025,495 48,629 0.54 Non-interest bearing liabilities: Non-interest bearing deposits 3,120,571 2,328,557 2,749,562 Other non-interest bearing liabilities 385,727 270,587 249,702 Total non-interest bearing liabilities 3,506,298 2,599,144 2,999,264 Total liabilities 18,102,623 12,270,938 12,024,759 Stockholders’ equity 2,279,525 1,644,529 1,618,090 Total liabilities and equity $ 20,382,148 $ 13,915,467 $ 13,642,849 Net interest income $ 600,614 $ 399,454 $ 417,552 Net interest rate spread 2.63 % 2.63 % 3.22 % Net interest earning assets $ 3,806,824 $ 2,965,430 $ 3,387,335 Net interest margin (3) 3.26 % 3.16 % 3.37 % Ratio of interest-earning assets to total interest-bearing liabilities 1.26x 1.31x 1.38x (1) Average outstanding balance amounts are at amortized cost.
Provisions for credit losses are charged to operations in order to maintain the allowance for credit losses at a level management considers necessary to absorb projected credit losses that may arise over the expected term of each loan in the portfolio.
Provisions for credit losses are charged to operations in order to maintain the allowance for credit losses at a level management considers necessary to absorb projected credit losses that may arise over the expected term of each loan in the portfolio.
In determining the level of the allowance for credit losses, management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and a reasonable and supportable forecast.
In determining the level of the allowance for credit losses, management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and a reasonable and supportable forecast.
Historical credit loss experience for both the Company and peers provides the basis for the estimation of expected credit losses, where observed credit losses are converted to probability of default rate (“PDR”) curves through the use of segment-specific loss given default (“LGD”) risk factors that convert default 57 rates to loss severity based on industry-level, observed relationships between the two variables for each segment, primarily due to the nature of the underlying collateral.
Historical credit loss experience for both the Company and peers provides the basis for the estimation of expected credit losses, where observed credit losses are converted to probability of default rate (“PDR”) curves through the use of segment-specific loss given default (“LGD”) risk factors that convert default rates to loss severity based on industry-level, observed relationships between the two variables for each segment, primarily due to the nature of the underlying collateral.
The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) non-accrual status; (2) modification designation; (3) risk ratings of special mention, substandard or doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on acquisition date, but had been previously delinquent.
The Company evaluates acquired loans for deterioration in credit quality based on any of, but not limited to, the following: (1) non-accrual status; (2) modification designation; (3) risk ratings of special mention, substandard or 56 doubtful; (4) watchlist credits; and (5) delinquency status, including loans that are current on acquisition date, but had been previously delinquent.
Transaction costs related to our pending merger with Lakeland totaled $7.8 million, for the year ended December 31, 2023, compared with transaction costs of $4.1 million for the respective 2022 period. In addition, prior year earnings for the year ended December 31, 2022, included an $8.6 million gain on the sale of a foreclosed property. Net Interest Income.
Transaction costs related to our pending merger with Lakeland totaled $7.8 million, for the year ended December 31, 2023, compared with transaction costs of $4.1 million for the respective 2022 period. In addition, prior year earnings for the year ended December 31, 2022, included an $8.6 million gain on the sale of a foreclosed property. 64 Net Interest Income.
The average balance of interest-bearing liabilities increased $646.3 million to $9.67 billion for 2023, compared to $9.03 billion for 2022. Average outstanding borrowings increased $880.3 million to $1.64 billion for 2023, compared to 2022. Average non-interest bearing demand deposits increased $421.0 million to $2.33 billion for 2023, from $2.75 billion for 2022.
The average balance of interest-bearing liabilities increased $646.3 million to $9.67 billion for 2023, compared to $9.03 billion for 2022. Average outstanding borrowings increased $880.3 million to $1.64 billion for 2023, compared to 2022. Average non-interest bearing demand deposits decreased $421.0 million to $2.33 billion for 2023, from $2.75 billion for 2022.
For the year ended December 31, 2023, the Company recorded a $27.9 million provision for credit losses on loans, compared to a $8.4 million provision for 2022. The Company, f or the year ended December 31, 2023, had net loan charge-offs 65 of $8.1 million, compared to net charge-offs of $1.1 million for 2022.
For the year ended December 31, 2023, the Company recorded a $27.9 million provision for credit losses on loans, compared to a $8.4 million provision for 2022. The Company, f or the year ended December 31, 2023, had net loan charge-offs of $8.1 million, compared to net charge-offs of $1.1 million for 2022.
Non-interest expense totaled $275.6 million for the year ended December 31, 2023, an increase of $18.8 million, compared to $256.8 million for the year ended December 31, 2022. Other operating expense increased $8.5 million to $47.4 million for the year ended December 31, 2023, compared to $38.9 million for the year ended December 31, 2022.
Non-interest expense totaled $275.6 million for the year ended December 31, 2023, an increase of $18.8 million, compared to $256.8 million for the year ended December 31, 2022. Other operating expense increased $8.5 65 million to $47.4 million for the year ended December 31, 2023, compared to $38.9 million for the year ended December 31, 2022.
In a rapidly rising interest rate environment, changes in interest rates have an adverse effect on net interest income as the Company’s interest-bearing assets 56 and interest-bearing liabilities reprice or mature at different times or relative interest rates.
In a rapidly rising interest rate environment, changes in interest rates have an adverse effect on net interest income as the Company’s interest-bearing assets and interest-bearing liabilities reprice or mature at different times or relative interest rates.
As of December 31, 2023, the portfolio and class segments for the Company’s loan portfolio were: • Mortgage Loans – Residential, Commercial Real Estate, Multi-Family and Construction • Commercial Loans – Commercial Owner-Occupied and Commercial Non-Owner Occupied • Consumer Loans – First Lien Home Equity and Other Consumer The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s normal loan monitoring process.
As of December 31, 2024, the portfolio and class segments for the Company’s loan portfolio were: • Mortgage Loans – Residential, Commercial Real Estate, Multi-Family and Construction • Commercial Loans – Commercial Owner-Occupied and Commercial Non-Owner Occupied • Consumer Loans – First Lien Home Equity and Other Consumer The allowance for credit losses on loans individually evaluated for impairment is based upon loans that have been identified through the Company’s normal loan monitoring process.
This process includes the review of delinquent and problem loans at the Company’s Delinquency, Credit, Credit Risk Management and Allowance Committees; or which may be identified 58 through the Company’s loan review process. Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is greater than $1.0 million.
This process includes the review of delinquent and problem loans at the Company’s Credit, Credit Risk Management and Allowance Committees; or which may be identified through the Company’s loan review process. Generally, the Company only evaluates loans individually for impairment if the loan is non-accrual, non-homogeneous and the balance is greater than $1.0 million.
Although management uses the best information available, the level of the allowance for credit losses remains an estimate that is subject to significant judgment and short-term volatility. Material changes to these and other relevant factors creates greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings.
Although management uses the best information available, the level of the allowance for credit losses remains an estimate that is subject to significant judgment and short-term volatility. Material changes to these and other relevant factors create greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings.
For loans acquired that have experienced more-than-insignificant deterioration in credit quality since their origination are considered PCD loans.
Loans acquired that have experienced more-than-insignificant deterioration in credit quality since their origination are considered PCD loans.
Net interest income depends on the relative amounts of interest-earning assets and interest-bearing liabilities and the rates of interest earned on such assets and paid on such liabilities. Average Balance Sheet. The following table sets forth certain information for the years ended December 31, 2023, 2022 and 2021.
Net interest income depends on the relative amounts of interest-earning assets and interest-bearing liabilities and the rates of interest earned on such assets and paid on such liabilities. Average Balance Sheet. The following table sets forth certain information for the years ended December 31, 2024, 2023 and 2022.
(2) Average outstanding balances are net of the allowance for credit losses, deferred loan fees and expenses, and loan premiums and discounts and include non-accrual loans. (3) Net interest income divided by average interest-earning assets. 60 Rate/Volume Analysis.
(2) Average outstanding balances are net of the allowance for credit losses, deferred loan fees and expenses, and loan premiums and discounts and include non-accrual loans. (3) Net interest income divided by average interest-earning assets. 58 Rate/Volume Analysis.
As of December 31, 2023, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.
As of December 31, 2024, the model incorporated Moody’s baseline economic forecast, as adjusted for qualitative factors, as well as an extensive review of classified loans and loans that were classified as impaired with a specific reserve assigned to those loans.
The total capital to risk-weighted assets requirement, taking into account the capital conservation buffer, is 10.50%. 68 Off-balance sheet commitments consist of unused commitments to borrowers for term loans, unused lines of credit and outstanding letters of credit.
The total capital to risk-weighted assets requirement, taking into account the capital conservation buffer, is 10.50%. 66 Off-balance sheet commitments consist of unused commitments to borrowers for term loans, unused lines of credit and outstanding letters of credit.
On January 1, 2020, the Company adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with the CECL methodology. It also applies to off-balance sheet credit exposures, including loan commitments and lines of credit.
Allowance for Credit Losses on Loans On January 1, 2020, the Company adopted ASU 2016-13, "Measurement of Credit Losses on Financial Instruments,” which replaces the incurred loss methodology with the CECL methodology. It also applies to off-balance sheet credit exposures, including loan commitments and lines of credit.
The primary source of repayment on the permanent loan portion of these loans, approximately 93.4%, is generally expected to come from the cash flow stream of the underlying leases which are dependent on the successful operations of the respective tenants.
The primary source of repayment on the permanent loan portion of these loans is generally expected to come from the cash flow stream of the underlying leases which are dependent on the successful operations of the respective tenants.
The Bank manages liquidity on a daily basis and expects to have sufficient cash to meet all of its funding requirements. As of December 31, 2023, the Bank exceeded all minimum regulatory capital requirements. As of December 31, 2023, the Bank’s leverage (Tier 1) capital ratio was 9.84%.
The Bank manages liquidity on a daily basis and expects to have sufficient cash to meet all of its funding requirements. As of December 31, 2024, the Bank exceeded all minimum regulatory capital requirements. As of December 31, 2024, the Bank’s leverage (Tier 1) capital ratio was 9.72%.
Within total impaired loans, there were $37.1 million of loans for which the present value of expected future cash flows or current collateral valuations exceeded the carrying amounts of the loans and for which no specific reserves were required in accordance with GAAP.
Within total impaired loans, there were $39.0 million of loans for which the present value of expected future cash flows or current collateral valuations exceeded the carrying amounts of the loans and for which no specific reserves were required in accordance with GAAP.
These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment. The Company has identified the allowance for credit losses on loans as a critical accounting policy.
These assumptions, estimates and judgments made by management can be influenced by a number of factors, including the general economic environment. The Company has identified the allowance for credit losses on loans and the acquisition method of accounting as critical accounting policies.
Purchasing securities for the investment portfolio is a secondary use of funds and the investment portfolio is structured to complement and facilitate the Company’s lending activities and ensure adequate liquidity. Loan originations and purchases totaled $3.34 billion for the year ended December 31, 2023, compared to $3.95 billion for the year ended December 31, 2022.
Purchasing securities for the investment portfolio is a secondary use of funds and the investment portfolio is structured to complement and facilitate the Company’s lending activities and ensure adequate liquidity. Loan originations and purchases totaled $4.82 billion for the year ended December 31, 2024, compared to $3.34 billion for the year ended December 31, 2023.
There were no security purchases in 2023 and 2022 which settled in January 2024 or January 2023, respectively.
There were no security purchases in 2024 and 2023 which settled in January 2025 or January 2024, respectively.
Retail loans, which consist of one- to four-family residential mortgage and consumer loans, such as fixed-rate home equity loans and lines of credit, totaled $1.46 billion and accounted for 13.5% of the loan portfolio as of December 31, 2023, compared to $1.48 billion, or 14.4%, of the loan portfolio as of December 31, 2022.
Retail loans, which consist of one- to four-family residential mortgage and consumer loans, such as fixed-rate home equity loans and lines of credit, totaled $2.62 billion and accounted for 14.1% of the loan portfolio as of December 31, 2024, compared to $1.46 billion, or 13.5%, of the loan portfolio as of December 31, 2023.
For the year ended December 31, 2023, loan fundings, including advances on lines of credit, totaled $3.34 billion, compared with $3.95 billion for 2022. The Bank’s lending activities, though concentrated in the communities surrounding its offices, extend predominantly throughout New Jersey, eastern Pennsylvania and Nassau and Queens County, New York.
For the year ended December 31, 2024, loan fundings, including advances on lines of credit, totaled $4.82 billion, compared with $3.34 billion for 2023. The Bank’s lending activities, though concentrated in the communities surrounding its offices, extend predominantly throughout New Jersey, eastern Pennsylvania and Nassau and Orange County, New York.
Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit flows. For each of the years ended December 31, 2023 and 2022, loan repayments totaled $2.68 billion and $3.24 billion, respectively.
Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit flows. For each of the years ended December 31, 2024 and 2023, loan repayments totaled $4.88 billion and $2.68 billion, respectively.
Certificate of deposit accounts that are scheduled to mature within one year totaled $1.02 billion as of December 31, 2023. Based on its current pricing strategy and customer retention experience, the Bank expects to retain a significant share of these accounts.
Certificate of deposit accounts that are scheduled to mature within one year totaled $3.05 billion as of December 31, 2024. Based on its current pricing strategy and customer retention experience, the Bank expects to retain a significant share of these accounts.
Our total estimated uninsured deposits, including collateralized deposits as of December 31, 2023 was $5.16 billion. Commercial real estate loans, multi-family loans, commercial loans, one- to four-family residential loans and consumer loans are the primary investments of the Company.
Our total estimated uninsured deposits, including collateralized deposits as of December 31, 2024 was $9.87 billion. Commercial real estate loans, multi-family loans, commercial loans, one- to four-family residential loans and consumer loans are the primary investments of the Company.
FDIC regulations require banks to maintain a minimum leverage ratio of Tier 1 capital to adjusted total assets of 4.00%. As of December 31, 2023, the Bank’s total risk-based capital ratio was 11.95%.
FDIC regulations require banks to maintain a minimum leverage ratio of Tier 1 capital to adjusted total assets of 4.00%. As of December 31, 2024, the Bank’s total risk-based capital ratio was 12.40%.
As of December 31, 2023, savings and demand deposits were 89.4% of total deposits. The Company’s results of operations are primarily dependent upon net interest income, the difference between interest earned on interest-earning assets and the interest paid on interest-bearing liabilities.
As of December 31, 2024, savings and demand deposits were 83.0% of total deposits. 54 The Company’s results of operations are primarily dependent upon net interest income, the difference between interest earned on interest-earning assets and the interest paid on interest-bearing liabilities.
The Bank’s lending policy focuses on quality underwriting standards and close monitoring of the loan portfolio. As of December 31, 2023, these commercial loan types accounted for 86.5% of the loan portfolio and retail loans accounted for 13.5%. The Company intends to continue to focus on commercial mortgage, multi-family, construction, and commercial lending relationships.
The Bank’s lending policy focuses on quality underwriting standards and close monitoring of the loan portfolio. As of December 31, 2024, these commercial loan types accounted for 85.9% of the loan portfolio and retail loans accounted for 14.1%. The Company intends to continue to focus on commercial mortgage, multi-family, construction, and commercial lending relationships.
These loans are particularly sensitive to economic conditions. As of December 31, 2023, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $6.98 billion, or 64.81% of total loans. The Company believes the CRE loans it originates are appropriately collateralized under its credit standards.
These loans are particularly sensitive to economic conditions. As of December 31, 2024, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $11.43 billion, or 61.92% of total loans. The Company believes the CRE loans it originates are appropriately collateralized under its credit standards.
The largest non-performing commercial mortgage loan was a $3.0 million loan secured by a first mortgage on a retail building located in Wayne, New Jersey. Non-performing commercial loans increased $17.3 million to $41.5 million as of December 31, 2023, from $24.2 million as of December 31, 2022.
The largest non-performing commercial mortgage loan was a $7.3 million loan secured by a first mortgage on a retail building located in Atlantic City, New Jersey. Non-performing commercial loans decreased $17.2 million, to $24.2 million as of December 31, 2024, from $41.5 million as of December 31, 2023.
For the year ended December 31, 2023, common stock repurchases totaled 71,781 shares at an average cost of $23.28 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. As of December 31, 2023, approximately 1.1 million shares remained eligible for repurchase under the current stock repurchase authorization.
For the year ended December 31, 2024, common stock repurchases totaled 89,569 shares at an average cost of $14.90 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At December 31, 2024, approximately 3.1 million shares remained eligible for repurchase under the current stock repurchase authorization.
Total deposits decreased $270.5 million for the year ended December 31, 2023. Deposit activity is affected by changes in interest rates, competitive pricing and product offerings in the marketplace, local economic conditions, customer confidence and other factors such as stock market volatility.
Total deposits increased $8.33 billion for the year ended December 31, 2024. Deposit activity is affected by changes in interest rates, competitive pricing and product offerings in the marketplace, local economic conditions, customer confidence and other factors such as stock market volatility.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General The Company conducts business through its subsidiary, the Bank, a community- and customer-oriented bank currently operating full-service branches and loan production offices throughout northern and central New Jersey, as well as Bucks, Lehigh and Northampton counties in Pennsylvania and Nassau and Queens counties in New York.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General The Company conducts business through its subsidiary, the Bank, a community- and customer-oriented bank currently operating full-service branches and loan production offices throughout New Jersey, as well as in Bethlehem, Philadelphia and Plymouth Meeting, Pennsylvania and Nassau and Orange County, New York.
All commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 86.5% of the loan portfolio as of December 31, 2023, compared to 85.6% as of December 31, 2022.
Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans, represented 85.9% of the loan portfolio at December 31, 2024, compared to 86.5% at December 31, 2023.
The decrease in tax expense for the year ended December 31, 2023, compared with the same period last year was largely the result of a decrease in taxable income. Comparison of Operating Results for the Years Ended December 31, 2022 and December 31, 2021 General.
The decrease in tax expense for the year ended December 31, 2023, compared with the same period last year was largely the result of a decrease in taxable income.
As of December 31, 2023, impaired loans totaled $42.3 million with related specific reserves of $2.9 million, compared with impaired loans totaling $68.8 million with related specific reserves of $2.4 million as of December 31, 2022.
As of December 31, 2024, impaired loans totaled $55.4 million with related specific reserves of $7.5 million, compared with impaired loans totaling $42.3 million with related specific reserves of $2.9 million as of December 31, 2023.
Purchases for the investment portfolio totaled $57.2 million for the year ended December 31, 2023, compared to $317.5 million for the year ended December 31, 2022. As of December 31, 2023, the Bank had outstanding loan commitments to borrowers of $2.09 billion, including undisbursed home equity lines and personal credit lines of $273.0 million.
Purchases for the investment portfolio totaled $422.4 million for the year ended December 31, 2024, compared to $57.2 million for the year ended December 31, 2023. As of December 31, 2024, the Bank had outstanding loan commitments to borrowers of $2.73 billion, including undisbursed home equity lines and personal credit lines of $382.1 million.
Annual appraisals are generally obtained for loans graded substandard or worse where real estate is a material portion of the collateral value and/or the income from the real estate or sale of the real estate is the primary source of debt service.
Annual appraisals are generally obtained for loans graded substandard or worse where real estate is a material portion of the collateral value and/or the income from the real estate or sale of the real estate is the primary source of debt service. Appraisals are, in substantially all cases, reviewed by a third-party to determine the reasonableness of the appraised value.
Total non-performing loans as of December 31, 2023 were $49.6 million, or 0.46% of total loans, compared with $58.5 million, or 0.57% of total loans as of December 31, 2022.
Total non-performing loans as of December 31, 2024 were $72.1 million, or 0.39% of total loans, compared with $49.6 million, or 0.46% of total loans as of December 31, 2023.
For the year ended December 31, 2023, the Company recorded a provision of $27.9 million for credit losses related to loans, compared to $8.4 million for the year ended December 63 31, 2022. The Company had net charge-offs of $8.1 million for the year ended December 31, 2023, compared to net charge-offs of $1.1 million in 2022.
For the year ended December 31, 2024, the Company recorded a provision of $83.6 million for credit losses related to loans, compared to $28.2 million for the year ended December 61 31, 2023. The Company had net charge-offs of $14.6 million for the year ended December 31, 2024, compared to net charge-offs of $8.1 million in 2023.
The Company’s results of operations are also affected by general economic conditions, changes in market interest rates, changes in asset quality, changes in asset values, actions of regulatory agencies and government policies.
The Company’s results of operations are also affected by general economic conditions, changes in market interest rates, changes in asset quality, changes in asset values, actions of regulatory agencies and government policies. Acquisitions Lakeland Bancorp On May 16, 2024, the Company completed its merger with Lakeland Bancorp, Inc.
These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the relationship between the Company’s historical default and loss severity deviate from that of the wider industry. The historical PDR curves, together with corresponding economic conditions, establish a quantitative relationship between economic conditions and loan performance through an economic cycle.
These risk factors were assessed for reasonableness against the Company’s own loss experience and adjusted in certain cases when the relationship between the Company’s historical default and loss severity deviate from that of the wider industry.
Total off-balance sheet obligations were $2.09 billion as of December 31, 2023, an increase of $32.4 million, from $2.06 billion as of December 31, 2022. Contractual obligations consist of certificate of deposit liabilities. Total certificate of deposits as of December 31, 2023 were $1.10 billion, an increase of $344.5 million, compared to $751.4 million as of December 31, 2022.
Total off-balance sheet obligations were $2.73 billion as of December 31, 2024, an increase of $644.7 million, from $2.09 billion as of December 31, 2023. Contractual obligations consist of certificate of deposit liabilities. Total certificate of deposits as of December 31, 2024 were $3.17 billion, an increase of $2.07 billion, compared to $1.10 billion as of December 31, 2023.
Non-performing commercial loans as of December 31, 2023 consisted of 26 loans, of which 14 loans were under 90 days accruing. Of these non-performing commercial loans, four were PCD loans totaling $1.2 million. The largest non-performing commercial loan relationship consisted of three loans with aggregate outstanding balances of $19.7 million as of December 31, 2023.
Non-performing commercial loans as of December 31, 2024 consisted of 65 loans, of which 16 loans were under 90 days past-due. Of these non-performing commercial loans, 37 were PCD loans totaling $4.9 million. The largest non-performing commercial loan relationship consisted of three loans with aggregate outstanding balances of $4.1 million as of December 31, 2024.
Insurance agency income increased $1.2 million to $11.4 million for the year ended December 31, 2022, compared to $10.2 million for the same period in 2021, largely due to increases in contingent commissions, retention revenue and new business activity.
Additionally, insurance agency income increased $2.3 million to $16.2 million for the year ended December 31, 2024, compared to $13.9 million for 2023, largely due to increases in contingent commissions, retention revenue and new business activity.
As deposits have declined, the Company has continued to monitor and focus on depositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $1.48 billion and $1.22 billion, respectively as of December 31, 2023. Our estimated uninsured and uncollateralized deposits at December 31, 2023 totaled $2.52 billion, or 24.5% of deposits.
The Company has continued to monitor and focus on depositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $2.57 billion and $3.79 billion, respectively at December 31, 2024. Our estimated uninsured and uncollateralized deposits at December 31, 2024 totaled $4.42 billion, or 23.7% of deposits.
For the year ended December 31, 2023, the Company experienced net increases of $298.7 million in multi-family loans, $208.7 million in commercial loans and $196.2 million in commercial mortgage loans, partially offset by net decreases of $62.2 million in construction loans and net decreases in residential mortgage and consumer loans of $12.7 million and $5.6 million, respectively.
For the year ended December 31, 2024, the Company experienced net increases of $1.57 billion in multi-family loans, $2.17 billion in commercial loans and $2.72 billion in commercial mortgage loans, partially offset by net decreases of $170.3 million in construction loans and net decreases in residential mortgage and consumer loans of $845.7 million and $314.7 million, respectively.
The increase in interest income was primarily driven by the favorable repricing of adjustable-rate loans and an increase in rates on new loan originations. Average interest-earning assets increased $231.8 million to $12.41 billion for 2022, compared to $12.18 billion for 2021.
Interest income increased $430.3 million to $1.05 billion for 2024, compared to $615.8 million for 2023. The increase in interest income was primarily driven by assets acquired from Lakeland, combined with favorable repricing of adjustable-rate loans and an increase in rates on new loan originations.
Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line, time-based methodology. The Company's current forecast period is six quarters, with a four-quarter reversion period to historical average macroeconomic factors. The Company's economic forecast is approved by the Company's ACL Committee.
This forecast is applied over a period that management has determined to be reasonable and supportable. Beyond the period over which management can develop or source a reasonable and supportable forecast, the model will revert to long-term average economic conditions using a straight-line, time-based methodology.
The amount of the allowance is based on estimates, and the ultimate losses may vary from such estimates as more information becomes available or later events change. Management assesses the adequacy of the allowance for credit losses on a quarterly basis and makes provisions for credit losses, if necessary, in order to maintain the valuation of the allowance.
The amount of the allowance is based on estimates, and the ultimate losses may vary from such estimates as more information becomes available or later events change.
The table below summarizes the Company’s commercial real estate portfolio as of December 31, 2023, as segregated by the geographic region in which the property is located (dollars in thousands): Amount Percentage of Total New Jersey $ 3,794,529 54.4 % Pennsylvania 1,322,448 18.9 % New York 986,096 14.1 % Other states 881,692 12.6 % Total commercial real estate loans $ 6,984,765 100.0 % The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”).
The table below summarizes the Company’s commercial real estate portfolio as of December 31, 2024, as segregated by the geographic region in which the property is located (dollars in thousands): Amount Percentage of Total New Jersey $ 7,087,027 61.1 % New York 1,797,415 15.5 Pennsylvania 1,586,518 13.7 Other states 1,130,168 9.7 Total commercial real estate loans $ 11,601,128 100.0 % The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”).
The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist.
The Company's current forecast period is six quarters, with a four-quarter reversion period to historical average macroeconomic factors. The Company's economic forecast is approved by the Company's ACL Committee. The allowance for credit losses is measured on a collective (pool) basis, with both a quantitative and qualitative analysis that is applied on a quarterly basis, when similar risk characteristics exist.
For the year ended December 31, 2022, the Company's income tax expense was $64.5 million with an effective tax rate of 26.8%, compared with $59.2 million with an effective tax rate of 26.1% for the year ended December 31, 2021.
For the year ended December 31, 2024, the Company's income tax expense was $34.1 million with an effective tax rate of 22.8% , compared with $47.4 million with an effective tax rate of 27.0% for the year ended December 31, 2023.
Within time deposits, $100.0 million or 9.1% was uninsured as of December 31, 2023. Borrowed funds increased $632.7 million during the year ended December 31, 2023, to $1.97 billion. The increase in borrowings was largely due to asset funding requirements.
Within time deposits, $637.2 million or 20.1% was uninsured as of December 31, 2024. 62 Borrowed funds increased $50.4 million during the year ended December 31, 2024, to $2.02 billion. The increase in borrowings was largely due to the addition of Lakeland.
There were two non-performing construction loans in 2022. Non-performing multi-family mortgage loans consisted of one loan totaling $744,000 as of December 31, 2023, compared to two non-performing multi-family mortgage loans totaling $1.6 million as of December 31, 2022. As of December 31, 2023, the Company held $11.7 million of foreclosed assets, compared with $2.1 million as of December 31, 2022.
Non-performing multi-family mortgage loans consisted of six loans totaling $7.5 million as of December 31, 2024, compared to one non-performing multi-family mortgage loan totaling $744,000 as of December 31, 2023. Of these six loans, four loans totaling $2.1 million were PCD loans.
Borrowed funds represented 13.9% of total assets as of December 31, 2023, an increase from 9.7% as of December 31, 2022. 64 Stockholders’ equity increased $92.9 million during the year ended December 31, 2023 to $1.69 billion, primarily due to net income earned for the period and a decrease in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.
Stockholders’ equity increased $910.6 million during the year ended December 31, 2024 to $2.60 billion, primarily due to common stock issued for the purchase of Lakeland, net income earned for the period and a slight improvement in unrealized losses on available for sale debt securities, partially offset by cash dividends paid to stockholders.
Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Increase/(Decrease) Due to Total Increase/ (Decrease) Increase/(Decrease) Due to Total Increase/ (Decrease) Volume Rate Volume Rate (In thousands) Interest-earning assets: Deposits, Federal funds sold and short-term investments $ (8,646) $ 10,061 $ 1415 $ (10,187) $ 9,479 $ (708) Investment securities (787) 254 (533) (749) (100) (849) Securities available for sale (4,387) 10,454 6,067 6,905 6,192 13,097 Federal Home Loan Bank Stock 2,501 1604 4,105 53 (328) (275) Loans 25,394 113,191 138,585 9,444 43,133 52,577 Total interest-earning assets 14,075 135,564 149,639 5,466 58,376 63,842 Interest-bearing liabilities: Savings deposits (202) 1110 908 84 (412) (328) Demand deposits (1,827) 95,250 93,423 1,041 10,548 11,589 Time deposits 3,294 23,130 26,424 (1,047) 1,977 930 Borrowed funds 18,450 28,096 46,546 (378) 1,074 696 Subordinated debentures 13 423 436 (807) 233 (574) Total interest-bearing liabilities 19,728 148,009 167,737 (1,107) 13,420 12,313 Net interest income $ (5,653) $ (12,445) $ (18,098) $ 6,573 $ 44,956 $ 51,529 There were no out-of-period items and/or adjustments that had a material impact on the rate/volume analysis for the periods aforementioned in the table above.
Years Ended December 31, 2024 vs. 2023 2023 vs. 2022 Increase/(Decrease) Due to Total Increase/ (Decrease) Increase/(Decrease) Due to Total Increase/ (Decrease) Volume Rate Volume Rate (In thousands) Interest-earning assets: Deposits, Federal funds sold and short-term investments $ (9,867) $ 13,497 $ 3,630 $ (8,646) $ 10,061 $ 1,415 Investment securities (780) 303 (477) (787) 254 (533) Securities available for sale 16,177 20,762 36,939 (4,387) 10,454 6,067 Federal Home Loan Bank Stock 276 1,890 2,166 2,501 1,604 4,105 Loans 309,447 78,614 388,061 25,394 113,191 138,585 Total interest-earning assets 315,253 115,066 430,319 14,075 135,564 149,639 Interest-bearing liabilities: Savings deposits 419 840 1,259 (202) 1,110 908 Demand deposits 71,237 49,167 120,404 (1,827) 95,250 93,423 Time deposits 55,383 13,019 68,402 3,294 23,130 26,424 Borrowed funds 12,571 5,096 17,667 18,450 28,096 46,546 Subordinated debentures 21,590 (163) 21,427 13 423 436 Total interest-bearing liabilities 161,200 67,959 229,159 19,728 148,009 167,737 Net interest income $ 154,053 $ 47,107 $ 201,160 $ (5,653) $ (12,445) $ (18,098) There were no out-of-period items and/or adjustments that had a material impact on the rate/volume analysis for the periods aforementioned in the table above.
As of December 31, 2023, the Company’s allowance for credit losses related to the loan portfolio was 0.99% of total loans, compared to 0.86% of total loans as of December 31, 2022.
The Company’s gross commitments and outstanding balances as a participant in SNCs were $168.4 million and $86.8 million, respectively, as of December 31, 2024. As of December 31, 2024, the Company’s allowance for credit losses related to the loan portfolio was 1.04% of total loans, compared to 0.99% of total loans as of December 31, 2023.
The decrease in savings and demand deposits was largely attributable to a $440.6 million decrease in non-interest-bearing demand deposits, a $262.9 million decrease in savings deposits and a $216.8 million decrease in money market deposits, partially offset by a $305.3 million increase in interest-bearing demand deposits.
The increase in savings and demand deposits was largely attributable to a $3.13 billion increase in interest-bearing demand deposits, a $1.59 billion increase in non-interest-bearing demand deposits, a $1.04 billion increase in money market deposits and a $504.0 million increase in savings deposits.
For the year ended December 31, 2022, the Company recorded an $8.4 million provision for credit losses on loans, compared to a $24.3 million negative provision for 2021. The Company, f or the year ended December 31, 2022, had net loan charge-offs of $1.1 million, compared to net recoveries of $3.6 million for 2021.
The Company, f or the year ended December 31, 2024, had net loan charge-offs of $14.6 million, compared to net charge-offs of $8.1 million for 2023. Total charge-offs for the year ended December 31, 2024 were $17.8 million, compared to $10.4 million for the year ended December 31, 2023.
During the year ended December 31, 2023, there were four additions to foreclosed assets with an aggregate carrying value of $15.1 million, four properties sold with an aggregate carrying value of $3.7 million and one write-down of $2.0 million.
Foreclosed assets are carried at the lower of the outstanding loan balance at the time of foreclosure or fair value, less estimated costs to sell. During the year ended December 31, 2024, there were four properties sold with an aggregate carrying value of $861,000 and one write-down of a foreclosed commercial property of $1.3 million.
Using the historical relationship between economic conditions and loan performance, management’s expectation of future loan performance is incorporated using an externally developed economic forecast. This forecast is applied over a period that management has determined to be reasonable and supportable.
The historical PDR curves, together with corresponding economic conditions, establish a quantitative relationship between economic conditions and loan performance through an economic cycle. 55 Using the historical relationship between economic conditions and loan performance, management’s expectation of future loan performance is incorporated using an externally developed economic forecast.
Both of these services are provided by the bank to increase the level of customers' deposit insurance. Our estimated uninsured and uncollateralized deposits at December 31, 2023 totaled $2.52 billion, or 24.5% of deposits. Our total estimated uninsured deposits, including collateralized deposits as of December 31, 2023 was $5.16 billion.
Within total deposits, brokered deposits totaled $1.40 billion as of December 31, 2024, compared to $689.3 million as of December 31, 2023. Our brokered deposits are made up primarily of ICS deposits and CDARS. Both of these services are provided by the bank to increase the level of customers' deposit insurance.
Non-performing commercial mortgage loans decreased $23.1 million to $5.2 million as of December 31, 2023, from $28.2 million as of December 31, 2022. As of December 31, 2023, non-performing commercial mortgage loans consisted of seven loans. Of these seven loans, one loan totaling $95,600 was a PCD loan.
Non-performing commercial mortgage loans increased $15.7 million to $20.9 million as of December 31, 2024, from $5.2 million as of December 31, 2023. As of December 31, 2024, non-performing commercial mortgage loans consisted of 17 loans. Of these 17 loans, nine loans totaling $5.9 million were PCD loans.
The table below summarizes the collateral concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments ("PAA") as of December 31, 2023 (in thousands): 62 Amount Percentage of Total Multi-family $ 2,310,795 33.1 % Retail 1,801,837 25.8 % Industrial 1,329,168 19.0 % Office 505,906 7.2 % Mixed 456,160 6.5 % Special use property 231,056 3.3 % Residential 161,945 2.3 % Hotel 151,156 2.2 % Land 36,742 0.5 % Total CRE, multi-family and construction loans $ 6,984,765 100.0 % The determination of collateral value is critically important when financing real estate.
As a result, the performance of these loans is generally impacted by fluctuations in collateral values, the ability of the borrower to obtain permanent financing, and, in the case of loans to residential builder/developers, volatility in consumer demand. 60 The table below summarizes the collateral concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments ("PAA") as of December 31, 2024 (dollars in thousands): Amount Percentage of Total Multi-family $ 3,901,860 33.5 % Retail 2,563,414 22.1 Industrial 2,202,543 19.0 Office 892,842 7.7 Mixed 831,853 7.2 Special use property 616,149 5.3 Residential 400,607 3.5 Hotel 125,956 1.1 Land 65,904 0.6 Total CRE, multi-family and construction loans $ 11,601,128 100.0 % The determination of collateral value is critically important when financing real estate.
The loan portfolio consists of the following: 61 2023 2022 Mortgage loans: Commercial $ 4,512,411 4,316,185 Multi-family 1,812,500 1,513,818 Construction 653,246 715,494 Residential 1,164,956 1,177,698 Total mortgage loans 8,143,113 7,723,195 Commercial loans (1) 2,442,406 2,233,670 Consumer loans 299,164 304,780 Total gross loans 10,884,683 10,261,645 Premiums on purchased loans 1,474 1,380 Net deferred fees and unearned discounts (12,456) (14,142) Total loans $ 10,873,701 10,248,883 (1) Commercial loans consist of owner-occupied real estate and commercial & industrial loans.
The loan portfolio consists of the following (dollars in thousands): 2024 2023 Mortgage loans: Commercial $ 7,228,078 4,512,411 Multi-family 3,382,933 1,812,500 Construction 823,503 653,246 Residential 2,010,637 1,177,698 Total mortgage loans 13,445,151 8,143,113 Commercial loans (1) 4,608,600 2,440,621 Consumer loans 613,819 299,164 Total gross loans 18,667,570 10,882,898 Premiums on purchased loans 1,338 1,474 Net deferred fees and unearned discounts (9,538) (12,456) Total loans $ 18,659,370 10,871,916 (1) Commercial loans consist of owner-occupied real estate and commercial & industrial loans.
Non-performing assets totaled $61.3 million, or 0.43% of total assets as of December 31, 2023, compared to $60.6 million, or 0.44% of total assets as of December 31, 2022. If the non-accrual loans had performed in accordance with their original terms, interest income would have increased by $1.6 million during the year ended December 31, 2023.
If the non-accrual loans had performed in accordance with their original terms, interest income would have increased by $2.8 million during the year ended December 31, 2024. The amount of cash basis interest income that was recognized on impaired loans during the year ended December 31, 2024 was not material.
These loans are secured by real estate and all business assets. These loans have matured and the borrower is in the process of an orderly wind-down of their operations. Non-performing construction loans decreased $1.1 million to $771,000 as of December 31, 2023. Non-performing construction loans as of December 31, 2023 consisted of one PCD loan.
These loans are secured by all business assets. Non-performing construction loans increased $12.5 million to $13.2 million as of December 31, 2024, from $771,000 as of December 31, 2023. Non-performing construction loans as of December 31, 2024 consisted of two loans, of which one was a PCD loan. There were two non-performing construction loans in 2023.
During the year ended December 31, 2023, our Certificate of Deposit Account Registry Services ("CDARS") product decreased $21.9 million to $163.9 million as of December 31, 2023, from $185.8 million as of December 31, 2022. Within total deposits, brokered deposits totaled $689.3 million as of December 31, 2023. Our brokered deposits are made up primarily of ICS deposits and CDARS.
The increase in time deposits consisted of a $1.98 billion increase in retail time deposits and a $91.1 million increase in brokered time deposits. During the year ended December 31, 2024, our Certificate of Deposit Account Registry Services ("CDARS") product increased $51.7 million to $215.6 million as of December 31, 2024, from $163.9 million as of December 31, 2023.
Total savings and demand deposit accounts decreased $615.0 million to $9.20 billion as of December 31, 2023, while total time deposits increased $344.5 million to $1.10 billion as of December 31, 2023.
Total savings and demand deposit accounts increased $6.26 billion to $15.46 billion as of December 31, 2024, while total time deposits increased $2.07 billion to $3.17 billion as of December 31, 2024.
Management believes the allowance for credit losses allocated to the commercial real estate non-owner occupied portfolio segment accurately represents the estimated inherent losses, factoring in the qualitative adjustment and other assumptions, including the selection of the baseline forecast within the model.
Management believes the allowance for credit losses accurately represents the estimated inherent losses, factoring in the qualitative adjustment and other assumptions, including the selection of the baseline forecast within the model. If the Company used a more severe outlook, the provision would have risen by approximately $16.0 million, leading to an overall coverage ratio of approximately 112 basis points.
Total charge-offs for the year ended December 31, 2022 were $6.5 million, compared to $5.5 million for the year ended December 31, 2021. Recoveries for the year ended December 31, 2022 , were $5.4 million, compared to $9.0 million for the year ended December 31, 2021.
Recoveries for the year ended December 31, 2024, were $3.3 million, compared to $2.3 million for the year ended December 31, 2023.
The Company’s loan portfolio totaled $10.87 billion as of December 31, 2023 and $10.25 billion as of December 31, 2022.
The increase in total assets was primarily due to the addition of Lakeland. 59 The Company’s loan held for investment portfolio totaled $18.66 billion as of December 31, 2024 and $10.87 billion as of December 31, 2023.
Non-Interest Expense. Non-interest expense totaled $256.8 million for the year ended December 31, 2022, an increase of $6.8 million, compared to $250.1 million for the year ended December 31, 2021.
Non-Interest Income . For the year ended December 31, 2024, non-interest income totaled $94.1 million, an increase of $14.3 million, compared to 2023. Fee income increased $9.7 million to $34.1 million for the year ended December 31, 2024, compared to 2023, primarily due to the addition of Lakeland.
On December 20, 2023, the Company, along with Lakeland, agreed to extend their merger agreement to March 31, 2024, to provide additional time to obtain the required regulatory approvals. Critical Accounting Policies The Company considers certain accounting policies to be critically important to the fair presentation of its financial condition and results of operations.
In connection with the acquisition, Lakeland Bank, a wholly owned subsidiary of Lakeland, was merged with and into the Bank. Critical Accounting Policies The Company considers certain accounting policies to be critically important to the fair presentation of its financial condition and results of operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChange in Interest Rates in Basis Points Present Value of Equity Present Value of Equity as Percent of Present Value of Assets Amount Change Percent Change Present Value Ratio Percent Change (Dollars in thousands) -300 $ 1,423,320 $ (315,089) (18.1) % 9.7 % (24.0) % -200 1,563,756 (174,653) (10.0) 11.0 (14.4) -100 1,669,286 (69,123) (4.0) 12.0 (6.4) Flat 1,738,409 — — 12.8 — +100 1,759,732 21,323 1.2 13.3 3.8 The preceding table indicates that as of December 31, 2023, in the event of an immediate and sustained 100 basis point increase in interest rates, the Company would experience a 1.2%, or $21.3 million increase in the present value of equity.
Biggest changeChange in Interest Rates in Basis Points Present Value of Equity Present Value of Equity as Percent of Present Value of Assets Amount Change Percent Change Present Value Ratio Percent Change (Dollars in thousands) -300 $ 2,948,544 $ (373,412) (11.2) % (11.2) % 11.5 % -200 3,108,374 (213,582) (6.4) (6.4) 12.3 -100 3,230,258 (91,698) (2.8) (2.8) 13.0 Flat 3,321,956 — — — 13.5 +100 3,357,980 36,024 1.1 1.1 13.9 The preceding table indicates that as of December 31, 2024, in the event of an immediate and sustained 100 basis point increase in interest rates, the Company would experience a 1.1%, or $36.0 million increase in the present value of equity.
Accordingly, although the net interest income table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results. 70
Accordingly, although the net interest income table provides an indication of the Company’s interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on the Company’s net interest income and will differ from actual results. 68
Specific assumptions used in the simulation model include: • Parallel yield curve shifts for market rates; • Current asset and liability spreads to market interest rates are fixed; • Traditional savings and interest-bearing demand accounts move at 10% of the rate ramp in either direction; • Retail Money Market and Business Money Market accounts move at 25% and 75% of the rate ramp in either direction, respectively; and • Higher-balance demand deposit tiers and promotional demand accounts move at 50% to 75% of the rate ramp in either direction. 69 The following table sets forth the results of the twelve month projected net interest income model as of December 31, 2023.
Specific assumptions used in the simulation model include: • Parallel yield curve shifts for market rates; • Current asset and liability spreads to market interest rates are fixed; • Traditional savings and interest-bearing demand accounts move at 10% of the rate ramp in either direction; • Retail Money Market and Business Money Market accounts move at 25% and 75% of the rate ramp in either direction, respectively; and • Higher-balance demand deposit tiers and promotional demand accounts move at 50% to 75% of the rate ramp in either direction. 67 The following table sets forth the results of the twelve month projected net interest income model as of December 31, 2024.
Another measure of interest rate sensitivity is to model changes in economic value of equity through the use of immediate and sustained interest rate shocks. The following table illustrates the economic value of equity model results as of December 31, 2023.
Another measure of interest rate sensitivity is to model changes in economic value of equity through the use of immediate and sustained interest rate shocks. The following table illustrates the economic value of equity model results as of December 31, 2024.
The Company’s strategy for liabilities has been to maintain a stable core-funding base by focusing on core deposit account acquisition and increasing products and services per household. Certificate of deposit accounts as a percentage of total deposits were 10.6% as of December 31, 2023, compared to 7.1% as of December 31, 2022. Certificate of deposit accounts are generally short-term.
The Company’s strategy for liabilities has been to maintain a stable core-funding base by focusing on core deposit account acquisition and increasing products and services per household. Certificate of deposit accounts as a percentage of total deposits were 17.0% as of December 31, 2024, compared to 10.6% as of December 31, 2023. Certificate of deposit accounts are generally short-term.
As of December 31, 2023, 93.1% of all certificates of deposit had maturities of one year or less compared to 77.7% as of December 31, 2022. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace.
As of December 31, 2024, 96.1% of all certificates of deposit had maturities of one year or less compared to 93.1% as of December 31, 2023. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace.
The preceding table indicates that, as of December 31, 2023, in the event of a 100 basis point increase in interest rates, whereby rates ramp up evenly over a twelve-month period, there would be a 0.4% or $1.6 million increase to net interest income.
The preceding table indicates that, as of December 31, 2024, in the event of a 100 basis point increase in interest rates, whereby rates ramp up evenly over a twelve-month period, there would be a 0.3% or $2.3 million decrease to net interest income.
If rates were to decrease 300 basis points, the present value of equity would decrease 18.1% or $315.1 million. Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
If rates were to decrease 300 basis points, the present value of equity would decrease 11.2% or $373.4 million. Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements.
In the event of a 300 basis point decrease in interest rates, whereby rates ramp down evenly over a twelve-month period, the Company would experience a 2.6%, or $10.3 million decrease in net interest income. In this downward rate scenario, rates on deposits have a repricing floor of zero.
In the event of a 300 basis point decrease in interest rates, whereby rates ramp down evenly over a twelve-month period, the Company would experience a 0.1%, or $710,000 decrease in net interest income. In this downward rate scenario, rates on deposits have a repricing floor of zero.
Change in Interest Rates in Basis Points - (Rate Ramp) Net Interest Income Amount Change Percent Change (Dollars in thousands) -300 $ 382,222 $ (10,274) (2.6) % -200 385,863 (6,633) (1.7) -100 388,948 (3,548) (0.9) Static 392,496 — — +100 394,098 1,602 0.4 The interest rate risk position of the Company remains slightly asset sensitive.
Change in Interest Rates in Basis Points - (Rate Ramp) Net Interest Income Amount Change Percent Change (Dollars in thousands) -300 $ 769,050 $ (710) (0.1) % -200 767,087 (2,673) (0.3) -100 767,848 (1,912) (0.2) Static 769,760 — — +100 767,494 (2,266) (0.3) The interest rate risk position of the Company remains slightly asset sensitive.

Other PFS 10-K year-over-year comparisons