UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023March 31, 2024
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to

Commission File Number: 001-31566
PROVIDENT FINANCIAL SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)  
Delaware42-1547151
(State or Other Jurisdiction of Incorporation or Organization)(I.R.S. Employer Identification No.)
239 Washington StreetJersey CityNew Jersey07302
(Address of Principal Executive Offices)(City)(State)(Zip Code)
(732) 590-9200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Symbol(s)
Name of each exchange on which registered
CommonPFSNew York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    NO  ¨

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  ý    NO  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated Filer
Non-Accelerated FilerSmaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ☐    NO  ý
As of August 1, 2023April 19, 2024 there were 83,209,012 shares issued and 75,614,51175,984,175 shares outstanding of the Registrant’s Common Stock, par value $0.01 per share, including 75,34156,149 shares held by the First Savings Bank Directors’ Deferred Fee Plan not otherwise considered outstanding under U.S. generally accepted accounting principles.
1



PROVIDENT FINANCIAL SERVICES, INC.
INDEX TO FORM 10-Q
 
Item NumberItem NumberPage NumberItem NumberPage Number
11
1
1
Consolidated Statements of Financial Condition as of March 31, 2024 (unaudited) and December 31, 2023
Consolidated Statements of Financial Condition as of June 30, 2023 (unaudited) and December 31, 2022
Consolidated Statements of Financial Condition as of March 31, 2024 (unaudited) and December 31, 2023
Consolidated Statements of Financial Condition as of March 31, 2024 (unaudited) and December 31, 2023
Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022 (unaudited)
Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Comprehensive Income for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022 (unaudited)
Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (unaudited)
Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022 (unaudited)
Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited)
2
2
22
33
3
3
4
4
44
1
1
11
1A.1A.
1A.
1A.
2
2
22
33Defaults Upon Senior Securities
3
3Defaults Upon Senior Securities
4
4
44
55
5
5
6
6
66ExhibitsExhibits



2


PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
June 30, 2023March 31, 2024 (Unaudited) and December 31, 20222023
(Dollars in Thousands)
 
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
ASSETSASSETS
Cash and due from banks
Cash and due from banks
Cash and due from banksCash and due from banks$208,842 $186,490 
Short-term investmentsShort-term investments30 18 
Total cash and cash equivalentsTotal cash and cash equivalents208,872 186,508 
Available for sale debt securities, at fair valueAvailable for sale debt securities, at fair value1,749,889 1,803,548 
Held to maturity debt securities, net (fair value of $365,029 at June 30, 2023 (unaudited) and $373,468 at December 31, 2022)378,894 387,923 
Held to maturity debt securities, net (fair value of $341,459 as of March 31, 2024 and $352,601 as of December 31, 2023)
Equity securities, at fair valueEquity securities, at fair value1,238 1,147 
Federal Home Loan Bank stockFederal Home Loan Bank stock93,330 68,554 
LoansLoans10,530,531 10,248,883 
Less allowance for credit lossesLess allowance for credit losses102,073 88,023 
Net loansNet loans10,428,458 10,160,860 
Foreclosed assets, netForeclosed assets, net13,697 2,124 
Banking premises and equipment, netBanking premises and equipment, net70,602 79,794 
Accrued interest receivableAccrued interest receivable53,845 51,903 
Intangible assetsIntangible assets459,383 460,892 
Bank-owned life insuranceBank-owned life insurance241,107 239,040 
Other assetsOther assets330,288 341,143 
Total assetsTotal assets$14,029,603 $13,783,436 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Deposits:
Deposits:Deposits:
Demand depositsDemand deposits$7,965,529 $8,373,005 
Demand deposits
Demand deposits
Savings depositsSavings deposits1,275,262 1,438,583 
Certificates of deposit of $100,000 or more666,276 504,627 
Certificates of deposit of $250,000 or more
Other time depositsOther time deposits354,053 246,809 
Total depositsTotal deposits10,261,120 10,563,024 
Mortgage escrow depositsMortgage escrow deposits44,280 35,705 
Borrowed fundsBorrowed funds1,849,714 1,337,370 
Subordinated debenturesSubordinated debentures10,596 10,493 
Other liabilitiesOther liabilities221,422 239,141 
Total liabilitiesTotal liabilities12,387,132 12,185,733 
Stockholders’ Equity:Stockholders’ Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issuedPreferred stock, $0.01 par value, 50,000,000 shares authorized, none issued— — 
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,012 shares issued and 75,530,425 shares outstanding at June 30, 2023 and 75,169,196 outstanding at December 31, 2022832 832 
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued
Preferred stock, $0.01 par value, 50,000,000 shares authorized, none issued
Common stock, $0.01 par value, 200,000,000 shares authorized, 83,209,012 shares issued and 75,928,193 shares outstanding as of March 31, 2024 and 75,537,186 outstanding as of December 31, 2023
Additional paid-in capitalAdditional paid-in capital986,150 981,138 
Retained earningsRetained earnings954,403 918,158 
Accumulated other comprehensive (loss) income(162,493)(165,045)
Accumulated other comprehensive loss
Treasury stockTreasury stock(127,818)(127,154)
Unallocated common stock held by the Employee Stock Ownership PlanUnallocated common stock held by the Employee Stock Ownership Plan(8,603)(10,226)
Common stock acquired by deferred compensation plansCommon stock acquired by deferred compensation plans(3,150)(3,427)
Deferred compensation plansDeferred compensation plans3,150 3,427 
Total stockholders’ equityTotal stockholders’ equity1,642,471 1,597,703 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$14,029,603 $13,783,436 
See accompanying notes to unaudited consolidated financial statements.
3



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and six months ended June 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(Dollars in Thousands, except per share data)
 
Three months ended June 30,Six months ended June 30,
2023202220232022
Interest income:
Three months ended March 31,
Three months ended March 31,
Three months ended March 31,
2024
2024
2024
Interest and dividend income:
Interest and dividend income:
Interest and dividend income:
Real estate secured loans
Real estate secured loans
Real estate secured loansReal estate secured loans$99,302 $69,073 $195,290 $132,908 
Commercial loansCommercial loans31,426 22,363 60,109 45,184 
Commercial loans
Commercial loans
Consumer loans
Consumer loans
Consumer loansConsumer loans4,431 3,344 8,673 6,483 
Available for sale debt securities, equity securities and Federal Home Loan Bank stockAvailable for sale debt securities, equity securities and Federal Home Loan Bank stock11,432 8,454 22,862 16,406 
Available for sale debt securities, equity securities and Federal Home Loan Bank stock
Available for sale debt securities, equity securities and Federal Home Loan Bank stock
Held to maturity debt securities
Held to maturity debt securities
Held to maturity debt securitiesHeld to maturity debt securities2,357 2,489 4,725 5,085 
Deposits, Federal funds sold and other short-term investmentsDeposits, Federal funds sold and other short-term investments948 562 1,793 1,209 
Total interest income149,896 106,285 293,452 207,275 
Deposits, Federal funds sold and other short-term investments
Deposits, Federal funds sold and other short-term investments
Total interest and dividend income
Total interest and dividend income
Total interest and dividend income
Interest expense:
Interest expense:
Interest expense:Interest expense:
DepositsDeposits36,447 5,576 63,957 10,763 
Deposits
Deposits
Borrowed funds
Borrowed funds
Borrowed fundsBorrowed funds14,088 1,104 21,564 2,272 
Subordinated debtSubordinated debt255 130 501 239 
Subordinated debt
Subordinated debt
Total interest expense
Total interest expense
Total interest expenseTotal interest expense50,790 6,810 86,022 13,274 
Net interest incomeNet interest income99,106 99,475 207,430 194,001 
Provision charge (benefit) for credit losses10,397 2,996 16,398 (3,409)
Net interest income after provision charge (benefit) for credit losses88,709 96,479 191,032 197,410 
Net interest income
Net interest income
Provision charge for credit losses
Provision charge for credit losses
Provision charge for credit losses
Net interest income after provision charge for credit losses
Net interest income after provision charge for credit losses
Net interest income after provision charge for credit losses
Non-interest income:
Non-interest income:
Non-interest income:Non-interest income:
FeesFees5,775 7,424 12,162 14,313 
Fees
Fees
Wealth management income
Wealth management income
Wealth management incomeWealth management income6,919 7,024 13,834 14,489 
Insurance agency incomeInsurance agency income3,847 2,850 7,950 6,270 
Insurance agency income
Insurance agency income
Bank-owned life insuranceBank-owned life insurance1,534 1,563 3,018 2,741 
Net gains on securities transactions29 141 24 157 
Bank-owned life insurance
Bank-owned life insurance
Net loss on securities transactions
Net loss on securities transactions
Net loss on securities transactions
Other income
Other income
Other incomeOther income1,283 1,930 4,552 3,108 
Total non-interest incomeTotal non-interest income19,387 20,932 41,540 41,078 
Total non-interest income
Total non-interest income
Non-interest expense:
Non-interest expense:
Non-interest expense:Non-interest expense:
Compensation and employee benefitsCompensation and employee benefits35,283 37,437 74,021 74,503 
Compensation and employee benefits
Compensation and employee benefits
Net occupancy expense
Net occupancy expense
Net occupancy expenseNet occupancy expense7,949 8,479 16,360 17,810 
Data processing expenseData processing expense5,716 5,632 11,224 10,976 
Data processing expense
Data processing expense
FDIC insurance
FDIC insurance
FDIC insuranceFDIC insurance2,125 1,350 4,061 2,555 
Amortization of intangiblesAmortization of intangibles749 873 1,511 1,732 
Amortization of intangibles
Amortization of intangibles
Advertising and promotion expenseAdvertising and promotion expense1,379 1,222 2,589 2,326 
Provision (benefit) charge for credit losses on off-balance sheet credit exposures(647)(973)92 (3,363)
Advertising and promotion expense
Advertising and promotion expense
Provision charge (benefit) for credit losses on off-balance sheet credit exposures
Provision charge (benefit) for credit losses on off-balance sheet credit exposures
Provision charge (benefit) for credit losses on off-balance sheet credit exposures
Merger-related expenses
Merger-related expenses
Merger-related expensesMerger-related expenses1,960 — 3,060 — 
Other operating expensesOther operating expenses9,949 9,826 21,032 19,191 
Other operating expenses
Other operating expenses
Total non-interest expense
Total non-interest expense
Total non-interest expenseTotal non-interest expense64,463 63,846 133,950 125,730 
Income before income tax expenseIncome before income tax expense43,633 53,565 98,622 112,758 
Income before income tax expense
Income before income tax expense
Income tax expense
Income tax expense
Income tax expenseIncome tax expense11,630 14,337 26,083 29,567 
Net incomeNet income$32,003 $39,228 $72,539 $83,191 
Net income
Net income
Basic earnings per share
Basic earnings per share
Basic earnings per shareBasic earnings per share$0.43 $0.53 $0.97 $1.11 
Weighted average basic shares outstandingWeighted average basic shares outstanding74,823,272 74,328,632 74,734,795 75,068,154 
Weighted average basic shares outstanding
Weighted average basic shares outstanding
Diluted earnings per share
Diluted earnings per share
Diluted earnings per shareDiluted earnings per share$0.43 $0.53 $0.97 $1.11 
Weighted average diluted shares outstandingWeighted average diluted shares outstanding74,830,187 74,400,788 74,766,848 75,152,286 
Weighted average diluted shares outstanding
Weighted average diluted shares outstanding

See accompanying notes to unaudited consolidated financial statements.
4



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
Three and six months ended June 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(Dollars in Thousands)
 
Three months ended June 30,Six months ended June 30,
2023202220232022
Three months ended March 31,
Three months ended March 31,
Three months ended March 31,
2024
2024
2024
Net income
Net income
Net incomeNet income$32,003 $39,228 $72,539 $83,191 
Other comprehensive income (loss), net of tax:Other comprehensive income (loss), net of tax:
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss), net of tax:
Unrealized gains and losses on available for sale debt securities:
Unrealized gains and losses on available for sale debt securities:
Unrealized gains and losses on available for sale debt securities:Unrealized gains and losses on available for sale debt securities:
Net unrealized (losses) gains arising during the periodNet unrealized (losses) gains arising during the period(14,726)(45,733)6,138 (130,704)
Net unrealized (losses) gains arising during the period
Net unrealized (losses) gains arising during the period
Reclassification adjustment for gains included in net income
Reclassification adjustment for gains included in net income
Reclassification adjustment for gains included in net incomeReclassification adjustment for gains included in net income— (42)— (42)
TotalTotal(14,726)(45,775)6,138 (130,746)
Total
Total
Unrealized gains and losses on derivatives:Unrealized gains and losses on derivatives:
Net unrealized gains arising during the period3,650 2,276 3,033 12,227 
Reclassification adjustment for (gains) losses included in net income(3,010)(118)(6,089)369 
Unrealized gains and losses on derivatives:
Unrealized gains and losses on derivatives:
Net unrealized gains (losses) arising during the period
Net unrealized gains (losses) arising during the period
Net unrealized gains (losses) arising during the period
Reclassification adjustment for gains included in net income
Reclassification adjustment for gains included in net income
Reclassification adjustment for gains included in net income
Total
Total
TotalTotal640 2,158 (3,056)12,596 
Amortization related to post-retirement obligationsAmortization related to post-retirement obligations(261)(236)(530)(512)
Amortization related to post-retirement obligations
Amortization related to post-retirement obligations
Total other comprehensive (loss) incomeTotal other comprehensive (loss) income(14,347)(43,853)2,552 (118,662)
Total comprehensive income (loss)$17,656 $(4,625)$75,091 $(35,471)
Total other comprehensive (loss) income
Total other comprehensive (loss) income
Total comprehensive income
Total comprehensive income
Total comprehensive income

See accompanying notes to unaudited consolidated financial statements.

5



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the three and sixThree months ended June 30, 2022March 31, 2023 (Unaudited)
(Dollars in Thousands)
For the three months ended June 30, 2022COMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED EARNINGSACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOMETREASURYSTOCKUNALLOCATED ESOP SHARESCOMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL STOCKHOLDERS’ EQUITY
Balance at March 31, 2022$832 $972,552 $839,807 $(67,946)$(109,581)$(14,533)$(3,844)$3,844 $1,621,131 
Net income— — 39,228 — — — — — 39,228 
Other comprehensive loss, net of tax— — — (43,853)— — — — (43,853)
Cash dividends paid— — (18,058)— — — — — (18,058)
Distributions from deferred comp plans— 41 — — — — 139 (139)41 
Purchases of treasury stock— — — — (17,505)— — — (17,505)
Purchase of employee restricted shares to fund statutory tax withholding— — — — (5)— — — (5)
Allocation of ESOP shares— 250 — — — 812 — — 1,062 
Allocation of Stock Award Plan ("SAP") shares— 3,174 — — — — — — 3,174 
Allocation of stock options— 50 — — — — — — 50 
Balance at June 30, 2022$832 $976,067 $860,977 $(111,799)$(127,091)$(13,721)$(3,705)$3,705 $1,585,265 

For the six months ended June 30, 2022COMMONSTOCKADDITIONAL
PAID-IN CAPITAL
RETAINEDEARNINGSACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)TREASURYSTOCKUNALLOCATED
 ESOP SHARES
COMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL
STOCKHOLDERS’ EQUITY
Balance at December 31, 2021$832 $969,815 $814,533 $6,863 $(79,603)$(15,344)$(3,984)$3,984 $1,697,096 
Net income— — 83,191 — — — — — 83,191 
Other comprehensive loss, net of tax— — — (118,662)— — — — (118,662)
Cash dividends paid— — (36,747)— — — — — (36,747)
Distributions from deferred comp plans— 86 — — — — 279 (279)86 
Purchases of treasury stock— — — — (46,530)— — — (46,530)
Purchase of employee restricted shares to fund statutory tax withholding— — — — (958)— — — (958)
Stock option exercises— — — — — — — — — 
Allocation of ESOP shares— 582 — — — 1,623 — — 2,205 
Allocation of SAP shares— 5,485 — — — — — — 5,485 
Allocation of stock options— 99 — — — — — — 99 
Balance at June 30, 2022$832 $976,067 $860,977 $(111,799)$(127,091)$(13,721)$(3,705)$3,705 $1,585,265 

For the three months ended March 31, 2023COMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED EARNINGSACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOMETREASURYSTOCKUNALLOCATED ESOP SHARESCOMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL STOCKHOLDERS’ EQUITY
Balance as of December 31, 2022$832 $981,138 $918,158 $(165,045)$(127,154)$(10,226)$(3,427)$3,427 $1,597,703 
Net income— — 40,536 — — — — — 40,536 
Other comprehensive income net of tax— — — 16,899 — — — — 16,899 
Cash dividends paid— — (18,594)— — — — — (18,594)
Cumulative effect of adopting Accounting Standards Update ("ASU") No. 2022-02, net of tax— — 433 — — — — — 433 
Distributions from deferred comp plans— 47 — — — — 138 (138)47 
Purchase of employee restricted shares to fund statutory tax withholding— — — — (1,667)— — — (1,667)
Stock option exercises— (217)— — 1,007 — — — 790 
Allocation of ESOP shares— 244 — — — 812 — — 1,056 
Allocation of Stock Award Plan ("SAP") shares— 2,833 — — — — — — 2,833 
Treasury shares issued due to acquisition— — — — — — — — — 
Allocation of stock options— 44 — — — — — — 44 
Balance as of March 31, 2023$832 $984,089 $940,533 $(148,146)$(127,814)$(9,414)$(3,289)$3,289 $1,640,080 
See accompanying notes to unaudited consolidated financial statements.









6



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the three and sixThree months ended June 30, 2023March 31, 2024 (Unaudited)
(Dollars in Thousands)
For the three months ended June 30, 2023COMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED EARNINGSACCUMULATED OTHER COMPREHENSIVE LOSSTREASURY STOCKUNALLOCATED ESOP SHARESCOMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL STOCKHOLDERS’ EQUITY
Balance at March 31, 2023832 984,089 940,533 (148,146)(127,814)(9,414)(3,289)3,289 1,640,080 
Net income— — 32,003 — — — — — 32,003 
Other comprehensive loss, net of tax— — — (14,347)— — — — (14,347)
Cash dividends paid— — (18,133)— — — — — (18,133)
Distributions from deferred comp plans— 32 — — — — 139 (139)32 
Purchases of treasury stock— — — — — — — — — 
Purchase of employee restricted shares to fund statutory tax withholding— — — — (4)— — — (4)
Stock option exercises— — — — — — — — — 
Allocation of ESOP shares— (1)— — — 811 — — 810 
Allocation of SAP shares— 1,997 — — — — — — 1,997 
Allocation of stock options— 33 — — — — — — 33 
Balance at June 30, 2023$832 $986,150 $954,403 $(162,493)$(127,818)$(8,603)$(3,150)$3,150 $1,642,471 
For the six months ended June 30, 2023COMMONSTOCKADDITIONAL
PAID-IN
CAPITAL
RETAINED EARNINGSACCUMULATED
OTHER
COMPREHENSIVE
LOSS
TREASURY
STOCK
UNALLOCATED
ESOP
SHARES
COMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL STOCKHOLDERS’ EQUITY
Balance at December 31, 2022$832 $981,138 $918,158 $(165,045)$(127,154)$(10,226)$(3,427)$3,427 $1,597,703 
For the three months ended March 31, 2024For the three months ended March 31, 2024COMMON STOCKADDITIONAL PAID-IN CAPITALRETAINED EARNINGSACCUMULATED OTHER COMPREHENSIVE LOSSTREASURY STOCKUNALLOCATED ESOP SHARESCOMMON STOCK ACQUIRED BY DEFERRED COMP PLANSDEFERRED COMPENSATION PLANSTOTAL STOCKHOLDERS’ EQUITY
Balance as of December 31, 2023
Net incomeNet income— — 72,539 — — — — — 72,539 
Other comprehensive income, net of tax— — — 2,552 — — — — 2,552 
Other comprehensive loss, net of tax
Cash dividends paidCash dividends paid— — (36,727)— — — — — (36,727)
Cumulative effect of adopting Accounting Standards Update ("ASU") No. 2022-02, net of tax— — 433 — — — — — 433 
Distributions from deferred comp plans
Distributions from deferred comp plans
Distributions from deferred comp plansDistributions from deferred comp plans— 79 — — — — 277 (277)79 
Purchase of employee restricted shares to fund statutory tax withholdingPurchase of employee restricted shares to fund statutory tax withholding— — — — (1,671)— — — (1,671)
Purchase of employee restricted shares to fund statutory tax withholding
Purchase of employee restricted shares to fund statutory tax withholding
Stock option exercises
Stock option exercises
Stock option exercisesStock option exercises— (217)— — 1,007 — — — 790 
Allocation of ESOP sharesAllocation of ESOP shares— 243 — — — 1,623 — — 1,866 
Allocation of SAP sharesAllocation of SAP shares— 4,830 — — — — — — 4,830 
Allocation of stock optionsAllocation of stock options— 77 — — — — — — 77 
Balance at June 30, 2023$832 $986,150 $954,403 $(162,493)$(127,818)$(8,603)$(3,150)$3,150 $1,642,471 
Allocation of stock options
Allocation of stock options
Balance as of March 31, 2024

See accompanying notes to unaudited consolidated financial statements.

7
6



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
SixThree months ended June 30,March 31, 2024 and 2023 and 2022 (Unaudited)
(Dollars in Thousands)
 
Six months ended June 30,
20232022
Three months ended March 31,Three months ended March 31,
202420242023
Cash flows from operating activities:Cash flows from operating activities:
Net income
Net income
Net incomeNet income$72,539 $83,191 
Adjustments to reconcile net income to net cash provided by operating activities:Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of intangiblesDepreciation and amortization of intangibles5,953 6,579 
Provision charge (benefit) for credit losses on loans and securities16,398 (3,409)
Provision charge (benefit) for credit losses on off-balance sheet credit exposures92 (3,363)
Deferred tax (benefit) expense(2,332)3,393 
Depreciation and amortization of intangibles
Depreciation and amortization of intangibles
Provision charge for credit losses on loans and securities
Provision (benefit) charge for credit losses on off-balance sheet credit exposures
Deferred tax expense
Amortization of operating lease right-of-use assetsAmortization of operating lease right-of-use assets5,257 5,393 
Income on Bank-owned life insurance
Income on Bank-owned life insurance
Income on Bank-owned life insuranceIncome on Bank-owned life insurance(3,018)(2,741)
Net amortization of premiums and discounts on securitiesNet amortization of premiums and discounts on securities4,012 7,665 
Accretion of net deferred loan feesAccretion of net deferred loan fees(4,691)(4,801)
Amortization of premiums on purchased loans, netAmortization of premiums on purchased loans, net120 154 
Originations of loans held for saleOriginations of loans held for sale(11,490)(16,197)
Proceeds from sales of loans originated for saleProceeds from sales of loans originated for sale11,938 9,881 
ESOP expenseESOP expense1,866 2,205 
Allocation of stock award expenseAllocation of stock award expense4,830 5,485 
Allocation of stock option expenseAllocation of stock option expense77 99 
Net gain on sale of loansNet gain on sale of loans(972)(824)
Net gain on securities transactions(24)(157)
Net gain on sale of loans
Net gain on sale of loans
Net loss on securities transactions
Net gain on sale of premises and equipmentNet gain on sale of premises and equipment(197)(22)
Net gain on sale of foreclosed assetsNet gain on sale of foreclosed assets(2,789)(16)
Increase in accrued interest receivable(1,942)(868)
Decrease (increase) in other assets7,490 (12,691)
(Decrease) increase in other liabilities(17,719)22,578 
Decrease (increase) in accrued interest receivable
(Increase) decrease in other assets
Increase (decrease) in other liabilities
Net cash provided by operating activitiesNet cash provided by operating activities85,398 101,534 
Cash flows from investing activities:Cash flows from investing activities:
Net increase in loans(285,500)(396,236)
Net decrease in loans
Net decrease in loans
Net decrease in loans
Purchases of loansPurchases of loans(3,394)(3,422)
Proceeds from sales of foreclosed assetsProceeds from sales of foreclosed assets3,485 280 
Proceeds from maturities, calls and paydowns of held to maturity debt securitiesProceeds from maturities, calls and paydowns of held to maturity debt securities17,545 37,009 
Purchases of investment securities held to maturityPurchases of investment securities held to maturity(9,130)(12,369)
Proceeds from maturities, calls and paydowns of available for sale debt securitiesProceeds from maturities, calls and paydowns of available for sale debt securities92,681 166,855 
Proceeds from maturities, calls and paydowns of available for sale debt securities
Proceeds from maturities, calls and paydowns of available for sale debt securities
Purchases of available for sale debt securitiesPurchases of available for sale debt securities(34,802)(241,725)
Proceeds from redemption of Federal Home Loan Bank stockProceeds from redemption of Federal Home Loan Bank stock112,279 31,134 
Purchases of Federal Home Loan Bank stockPurchases of Federal Home Loan Bank stock(137,055)(51,680)
BOLI claim benefits receivedBOLI claim benefits received2,347 — 
BOLI claim benefits received
BOLI claim benefits received
Proceeds from sales of premises and equipmentProceeds from sales of premises and equipment62 22 
Proceeds from sales of premises and equipment
Proceeds from sales of premises and equipment
Purchases of premises and equipmentPurchases of premises and equipment(2,959)(5,944)
Net cash used in investing activities(244,441)(476,076)
Net cash provided by investing activities
Cash flows from financing activities:Cash flows from financing activities:
Net decrease in deposits
Net decrease in deposits
Net decrease in depositsNet decrease in deposits(301,904)(359,788)
Increase in mortgage escrow depositsIncrease in mortgage escrow deposits8,575 7,906 
Cash dividends paid to stockholdersCash dividends paid to stockholders(36,727)(36,747)
87


Six months ended June 30,
20232022
Purchase of treasury stock— (46,530)
Three months ended March 31,Three months ended March 31,
202420242023
Purchase of employee restricted shares to fund statutory tax withholdingPurchase of employee restricted shares to fund statutory tax withholding(1,671)(958)
Stock options exercisedStock options exercised790 — 
Proceeds from long-term borrowingsProceeds from long-term borrowings446,531 964,000 
Payments on long-term borrowingsPayments on long-term borrowings(32,500)(579,111)
Net increase (decrease) in short-term borrowingsNet increase (decrease) in short-term borrowings98,313 (9,161)
Net cash provided by (used in) financing activities181,407 (60,389)
Net increase (decrease) in cash and cash equivalents22,364 (434,931)
Net cash used in financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period186,438 685,163 
Restricted cash at beginning of periodRestricted cash at beginning of period70 27,300 
Total cash, cash equivalents and restricted cash at beginning of periodTotal cash, cash equivalents and restricted cash at beginning of period186,508 712,463 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period208,802 277,462 
Restricted cash at end of periodRestricted cash at end of period70 70 
Total cash, cash equivalents and restricted cash at end of periodTotal cash, cash equivalents and restricted cash at end of period$208,872 $277,532 
Cash paid during the period for:Cash paid during the period for:
Cash paid during the period for:
Cash paid during the period for:
Interest on deposits and borrowings
Interest on deposits and borrowings
Interest on deposits and borrowingsInterest on deposits and borrowings$81,490 $14,308 
Income taxesIncome taxes$26,591 $7,760 
Non-cash investing activities:
Transfer of loans receivable to foreclosed assets
Transfer of loans receivable to foreclosed assets
Transfer of loans receivable to foreclosed assetsTransfer of loans receivable to foreclosed assets$12,341 $624 
See accompanying notes to unaudited consolidated financial statements.
98



PROVIDENT FINANCIAL SERVICES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
A. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements include the accounts of Provident Financial Services, Inc. (the "Company") and its wholly owned subsidiary, Provident Bank (the “Bank") and its wholly owned subsidiaries.
In preparing the interim unaudited consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated statements of financial condition and the consolidated statements of income for the periods presented. Actual results could differ from these estimates. The allowance for credit losses is a material estimate that is particularly susceptible to near-term change.
The interim unaudited consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, considered necessary for a fair presentation of the financial condition and results of operations for the periods presented. The results of operations for the three and six months ended June 30, 2023March 31, 2024 are not necessarily indicative of the results of operations that may be expected for all of 2023.2024.
Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Additionally, certain comparative balances on the interim unaudited consolidated financial statements have been reclassified to conform to the current year’s presentation.
These unaudited consolidated financial statements should be read in conjunction with the December 31, 20222023 Annual Report to Stockholders on Form 10-K.
B. Earnings Per Share
The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share calculations for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (dollars in thousands, except per share amounts):
Three months ended June 30,
20232022
Net
Income
Weighted
Average
Common
Shares
Outstanding
Per
Share
Amount
Net
Income
Weighted
Average
Common
Shares
Outstanding
Per
Share
Amount
Net income$32,003 $39,228 
Basic earnings per share:
Income available to common stockholders$32,003 74,823,272 $0.43 $39,228 74,328,632 $0.53 
Dilutive shares6,915 72,156 
Diluted earnings per share:
Income available to common stockholders$32,003 74,830,187 $0.43 $39,228 74,400,788 $0.53 
10


Six months ended June 30,
20232022
Net
Income
Weighted
Average
Common
Shares
Outstanding
Per
Share
Amount
Net
Income
Weighted
Average
Common Shares Outstanding
Per
Share
Amount
Three months ended March 31,
2024
2024
2024
Net
Income
Net
Income
Net
Income
Net income
Net income
Net incomeNet income$72,539 $83,191 
Basic earnings per share:Basic earnings per share:
Basic earnings per share:
Basic earnings per share:
Income available to common stockholders
Income available to common stockholders
Income available to common stockholdersIncome available to common stockholders$72,539 74,734,795 $0.97 $83,191 75,068,154 $1.11 
Dilutive sharesDilutive shares32,053 84,132 
Dilutive shares
Dilutive shares
Diluted earnings per share:
Diluted earnings per share:
Diluted earnings per share:Diluted earnings per share:
Income available to common stockholdersIncome available to common stockholders$72,539 74,766,848 $0.97 $83,191 75,152,286 $1.11 
Income available to common stockholders
Income available to common stockholders
Anti-dilutive stock options and awards at June 30,as of March 31, 2024 and 2023, and 2022, totaling 1.31.4 million shares and 1.0 million984,877 shares, respectively, were excluded from the earnings per share calculations.
C. Loans Receivable and Allowance for Credit Losses
The impact of utilizing the current expected credit loss ("CECL") methodology approach to calculate the allowance for credit losses on loans is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized. Material changes to these and other relevant factors may result in greater volatility to the allowance for credit losses, and therefore, greater volatility to the Company’s reported earnings. For the three and six months ended June 30, 2023, a worsened March 31, 2024, an increase in specific reserves on impaired credits, partially offset by an improved
9


economic forecast and related deterioration infor the projected commercial property price indices over the expected life of the loan portfoliocurrent quarter within our CECL model, led to increases to thea provisions charge for credit losses, while a decrease in loans approved and awaiting closing led to a provision benefit for credit losses on off-balance sheet credit exposures. See Notes 4 and 910 to the Consolidated Financial Statements for more information on the allowance for credit losses on loans and off-balance sheet credit exposures.
D. Goodwill
Goodwill represents the excess of the purchase price over the estimated fair value of identifiable net assets acquired through purchase acquisitions. In accordance with GAAP, goodwill with an indefinite useful life is not amortized, but is evaluated for impairment on an annual basis, or more frequently if events or changes in circumstances indicate potential impairment between annual measurement dates. Goodwill is analyzed for impairment at least once a year. As permitted by GAAP, the Company prepares a qualitative assessment in determining whether goodwill may be impaired. The factors considered in the assessment include macroeconomic conditions, industry and market conditions and overall financial performance of the Company, among others. The Company completed its most recent annual goodwill impairment test as of July 1, 2023. At June 30, 2023,As of March 31, 2024, the Company performed an interima qualitative analysis of goodwill impairment analysis and concluded that no triggering considerationsevents were metidentified and therefore a test for impairment between annual tests was not required.
Note 2. Business Combinations
Lakeland Bancorp, Inc. - Merger Agreement
On September 26, 2022, theThe Company entered into a definitive merger agreement pursuant to which it will merge (the “merger”) withreceived all regulatory approvals for its previously announced acquisition of Lakeland Bancorp, Inc. ("Lakeland"), subject to certain conditions and commitments (referred to as the “Regulatory Conditions”). The Regulatory Conditions include, but are not limited to: prior to consummation of the merger, the Company must complete the issuance of $200.0 million of Tier 2 qualifying subordinated debt; for three years following consummation of the merger, Provident 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 Provident 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 Provident Bank submitted to the FDIC. In connection with the acquisition, Lakeland Bank, a wholly owned subsidiary of Lakeland, will mergebe merged with and into Provident Bank, a wholly owned subsidiary of the Company. The merger agreement has been unanimously approved by the boardsAs of both companiesMarch 31, 2024, Lakeland had, on a consolidated basis, $11.00 billion in total assets, which included $8.30 billion in total loans and shareholder approval has also been received for both companies. The actual value of the Company’s common stock to be recorded as consideration$8.50 billion in the merger will be based on the closing price of Company’s common stock at the time of the merger completion date.total deposits, and operated 67 full-service banking offices in New Jersey. Under the merger agreement, each share of Lakeland common stock will be exchanged for 0.8319 shares, or approximately 55 million shares, of the Company's common stock plus cash in lieu of fractional shares. Provident stockholders will own approximately 58% and Lakeland shareholders will own approximately 42% of the combined company.
Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $2.2 million for the three months ended March 31, 2024 compared with $1.1 million for the three months ended March 31, 2023.
Note 3. Investment Securities
At June 30, 2023,As of March 31, 2024, the Company had $1.75$1.67 billion and $378.9$354.7 million in available for sale debt securities and held to maturity debt securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, changes in interest rates, regulatory actions, changes in the business environment or any changes in the
11


competitive marketplace, could have an adverse effect on the Company’s investment portfolio. The total number of available for sale and held to maturity debt securities in an unrealized loss position at June 30, 2023as of March 31, 2024 totaled 937,954, compared with 914 at808 as of December 31, 2022.2023. The increase in the number of securities in an unrealized loss position at June 30, 2023as of March 31, 2024 was due to higher current market interest rates compared to rates atas of December 31, 2022.2023.
10


Available for Sale Debt Securities
The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for available for sale debt securities at June 30, 2023as of March 31, 2024 and December 31, 20222023 (in thousands):
June 30, 2023
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
March 31, 2024March 31, 2024
Amortized
cost
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
U.S. Treasury obligationsU.S. Treasury obligations$276,106 — (29,039)247,067 
Agency obligations31,452 301 — 31,753 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,549,842 84 (203,202)1,346,724 
Asset-backed securitiesAsset-backed securities34,351 379 (224)34,506 
State and municipal obligationsState and municipal obligations64,939 — (9,214)55,725 
Corporate obligationsCorporate obligations40,495 — (6,381)34,114 
$1,997,185 764 (248,060)1,749,889 
$
$
$
December 31, 2022
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
December 31, 2023December 31, 2023
Amortized
cost
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
U.S. Treasury obligationsU.S. Treasury obligations$275,620 — (29,804)245,816 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,636,913 209 (209,983)1,427,139 
Asset-backed securitiesAsset-backed securities37,706 278 (363)37,621 
State and municipal obligationsState and municipal obligations67,706 — (10,842)56,864 
Corporate obligationsCorporate obligations40,540 50 (4,482)36,108 
$2,058,485 537 (255,474)1,803,548 
$
$
$
Accrued interest on available for sale debt securities, which is excluded from the amortized cost, totaled $5.2 million and $4.9 million as of March 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.
The amortized cost and fair value of available for sale debt securities at June 30, 2023,as of March 31, 2024, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
June 30, 2023
Amortized
cost
Fair
value
March 31, 2024March 31, 2024
Amortized
cost
Amortized
cost
Fair
value
Due in one year or lessDue in one year or less$— — 
Due after one year through five yearsDue after one year through five years242,910 218,600 
Due after five years through ten yearsDue after five years through ten years82,226 70,318 
Due after ten yearsDue after ten years56,404 47,988 
$381,540 336,906 
$
Investments which pay principal on a periodic basis totaling $1.62$1.50 billion at amortized cost and $1.41$1.31 billion at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.
ThereFor the three months ended March 31, 2024 and March 31, 2023, no securities were no sales of securitiessold or called from the available for sale debt securities portfolio for the three and six months ended June 30, 2023 and 2022. For the three and six months ended June 30, 2023, there were no proceeds from calls on securities in the available for sale debt securities portfolio. For the three and six months ended June 30, 2022, proceeds from calls on securities in the available for sale debt securities portfolio totaled $5.4 million with gains of $58,000 and no losses recognized.
12


The number of available for sale debt securities in an unrealized loss position at June 30, 2023as of March 31, 2024 totaled 464,434, compared with 475 at436 as of December 31, 2022. The decline in the number of securities in an unrealized loss position at June 30, 2023 was due to maturities and calls of securities in the quarter.2023. All securities in an unrealized loss position were investment grade at June 30, 2023.as of March 31, 2024.
11


Held to Maturity Debt Securities
The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for held to maturity debt securities at June 30, 2023as of March 31, 2024 and December 31, 20222023 (in thousands):
June 30, 2023
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Agency obligations$12,096 — (929)11,167 
State and municipal obligations357,003 168 (12,510)344,661 
Corporate obligations9,820 — (619)9,201 
$378,919 168 (14,058)365,029 
December 31, 2022
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Agency obligations$9,997 — (1,033)8,964 
March 31, 2024
March 31, 2024
March 31, 2024
Amortized
cost
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Treasury Obligations
Agency-sponsored obligations
State and municipal obligationsState and municipal obligations366,164 268 (13,015)353,417 
State and municipal obligations
State and municipal obligations
Corporate obligationsCorporate obligations11,789 (703)11,087 
$387,950 269 (14,751)373,468 
$
December 31, 2023
Amortized
cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair
value
Treasury Obligations$5,146 — 5,147 
Agency-sponsored obligations11,058 — (652)10,406 
State and municipal obligations339,816 244 (9,700)330,360 
Corporate obligations7,091 — (403)6,688 
$363,111 245 (10,755)352,601 
The allowance for credit losses on held to maturity debt securities as of March 31, 2024 and December 31, 2023 was $17,000 and $31,000, respectively, and are excluded from amortized cost in the tables above.
Accrued interest on held to maturity debt securities, which is excluded from the amortized cost, totaled $2.4 million and $3.1 million as of March 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.
The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair value may fluctuate during the investment period. There were no sales of securities from the held to maturity debt securities portfolio for the three and six months ended June 30, 2023March 31, 2024 and 2022.2023. For the three and six months ended June 30,March 31, 2024, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $1.2 million. As to these calls on securities, for the three months ended March 31, 2024, there were no gross gains and gross losses of $1,200. For the three months ended March 31, 2023, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $3.5$3.1 million and $6.6 million, respectively. As to these calls on securities, for the three months ended June 30, 2023, there were gross gains of $28,000 and no gross losses, while for the six months ended June 30, 2023, gross gains totaled $24,000, with no gross losses. For the threegains and six months ended June 30, 2022, proceeds from calls on securities in the held to maturity debt securities portfolio totaled $10.3 million and $26.2 million, respectively. As to these calls on securities for the three and six months ended June 30, 2022, gross gains totaled $83,000 and $99,000, respectively, with no gross losses.losses of $5,000.
The amortized cost and fair value of investment securities in the held to maturity debt securities portfolio at June 30, 2023as of March 31, 2024 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.
June 30, 2023
Amortized
cost
Fair
value
March 31, 2024March 31, 2024
Amortized
cost
Amortized
cost
Fair
value
Due in one year or lessDue in one year or less$25,283 25,199 
Due after one year through five yearsDue after one year through five years169,684 166,605 
Due after five years through ten yearsDue after five years through ten years153,491 148,121 
Due after ten yearsDue after ten years30,461 25,104 
$378,919 365,029 
$
The allowance for credit losses on held to maturity debt securities at June 30, 2023as of March 31, 2024 and December 31, 20222023 was $25,000$17,000 and $27,000,$31,000, respectively, and are excluded from amortized cost in the tablestable above.
12


The number of held to maturity debt securities in an unrealized loss position at June 30, 2023as of March 31, 2024 totaled 473,520, compared with 439 at372 as of December 31, 2022.2023. The increase in the number of securities in an unrealized loss position at June 30, 2023,as of March 31, 2024, was due to higher current market interest rates compared to rates atas of December 31, 2022.2023.
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:
13


AgencyAgency-sponsored obligations;
Mortgage-backed securities;
State and municipal obligations; and
Corporate obligations.

All of the agency obligations held by the Company are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The majority of the state and municipal and corporate obligations carry credit ratings from the rating agencies at June 30, 2023as of March 31, 2024, that were no lower than an A rating and the Company had no securities rated BBB or worse by Moody’s Investors Service.
Credit Quality Indicators. The following table provides the amortized cost of held to maturity debt securities by credit rating at June 30, 2023as of March 31, 2024 and December 31, 20212023 (in thousands):
June 30, 2023
March 31, 2024March 31, 2024
Total PortfolioTotal PortfolioAAAAAABBBNot RatedTotalTotal PortfolioAAAAAABBBNot RatedTotal
Agency obligations$12,096 — — — — 12,096 
Treasury obligations
Agency-sponsored obligations
State and municipal obligationsState and municipal obligations47,125 166,596 142,830 — 452 357,003 
State and municipal obligations
State and municipal obligations
Corporate obligationsCorporate obligations505 2,073 6,146 — 1,096 9,820 
$
$59,726 168,669 148,976 — 1,548 378,919 
December 31, 2022
December 31, 2023
December 31, 2023
December 31, 2023
Total PortfolioTotal PortfolioAAAAAABBBNot RatedTotalTotal PortfolioAAAAAABBBNot RatedTotal
Agency obligations$9,997 — — — — 9,997 
Treasury obligations
Agency-sponsored obligations
State and municipal obligationsState and municipal obligations48,453 171,934 143,829 770 1,178 366,164 
State and municipal obligations
State and municipal obligations
Corporate obligationsCorporate obligations507 3,592 7,415 — 275 11,789 
$
$58,957 175,526 151,244 770 1,453 387,950 
Credit quality indicators are metrics that provide information regarding the relative credit risk of debt securities. At June 30, 2023,As of March 31, 2024, the held to maturity debt securities portfolio was comprised of 16%18% rated AAA, 45%72% rated AA, 39%10% rated A, and less than 1% either below an A rating or not rated by Moody’s Investors Service or Standard and Poor’s. Securities not explicitly rated, such as U.S. Government mortgage-backed securities, were grouped where possible under the credit rating of the issuer of the security.


1413


Note 4. Loans Receivable and Allowance for Credit Losses
Loans receivable at June 30, 2023as of March 31, 2024 and December 31, 20222023 are summarized as follows (in thousands):
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Mortgage loans:Mortgage loans:
Commercial
Commercial
CommercialCommercial$4,373,436 4,316,185 
Multi-familyMulti-family1,645,770 1,513,818 
ConstructionConstruction707,234 715,494 
ResidentialResidential1,166,159 1,177,698 
Total mortgage loansTotal mortgage loans7,892,599 7,723,195 
Commercial loansCommercial loans2,348,447 2,233,670 
Commercial loans
Commercial loans
Consumer loansConsumer loans301,306 304,780 
Total gross loans
Total gross loans
Total gross loansTotal gross loans10,542,352 10,261,645 
Premiums on purchased loansPremiums on purchased loans1,374 1,380 
Net deferred feesNet deferred fees(13,195)(14,142)
Net deferred fees
Net deferred fees
Total loansTotal loans$10,530,531 10,248,883 
Accrued interest on loans totaled $51.0 million and $50.9 million as of March 31, 2024 and December 31, 2023, respectively, and is presented within total accrued interest receivable on the consolidated statements of financial condition.
The following tables summarize the aging of loans receivable by portfolio segment and class of loans (in thousands):
June 30, 2023
30-59 Days60-89 DaysNon-accrualRecorded
Investment
> 90 days
accruing
Total Past
Due
CurrentTotal Loans
Receivable
Non-accrual loans with no related allowance
Mortgage loans:
Commercial$1,445 1,137 7,279 — 9,861 4,363,575 4,373,436 4,276 
Multi-family3,853 — 2,314 — 6,167 1,639,603 1,645,770 2,314 
Construction— — 1,874 — 1,874 705,360 707,234 1,874 
Residential1,427 1,171 1,698 — 4,296 1,161,863 1,166,159 1,698 
Total mortgage loans6,725 2,308 13,165 — 22,198 7,870,401 7,892,599 10,162 
Commercial loans3,021 90 31,885 — 34,996 2,313,451 2,348,447 19,504 
Consumer loans957 147 878 — 1,982 299,324 301,306 878 
Total gross loans$10,703 2,545 45,928 — 59,176 10,483,176 10,542,352 30,544 
December 31, 2022
30-59 Days60-89 DaysNon-accrualRecorded
Investment
> 90 days
accruing
Total Past
Due
CurrentTotal Loans ReceivableNon-accrual loans with no related allowance
Mortgage loans:
Commercial$2,300 412 28,212 — 30,924 4,285,261 4,316,185 22,961 
Multi-family790 — 1,565 — 2,355 1,511,463 1,513,818 1,565 
Construction905 1,097 1,878 — 3,880 711,614 715,494 1,878 
Residential1,411 1,114 1,928 — 4,453 1,173,245 1,177,698 1,928 
Total mortgage loans5,406 2,623 33,583 — 41,612 7,681,583 7,723,195 28,332 
Commercial loans964 1,014 24,188 — 26,166 2,207,504 2,233,670 21,156 
Consumer loans885 147 738 — 1,770 303,010 304,780 739 
Total gross loans$7,255 3,784 58,509 — 69,548 10,192,097 10,261,645 50,227 
March 31, 2024
30-59 Days60-89 DaysNon-accrualRecorded
Investment
> 90 days
accruing
Total Past
Due
CurrentTotal Loans
Receivable
Non-accrual loans with no related allowance
Mortgage loans:
Commercial$5,052 1,148 5,938 — 12,138 4,341,661 4,353,799 5,938 
Multi-family12,069 — 2,355 — 14,424 1,811,464 1,825,888 2,355 
Construction— — — — — 711,417 711,417 — 
Residential3,568 804 1,647 — 6,019 1,146,166 1,152,185 1,647 
Total mortgage loans20,689 1,952 9,940 — 32,581 8,010,708 8,043,289 9,940 
Commercial loans4,493 332 36,892 — 41,717 2,472,833 2,514,550 25,989 
Consumer loans803 755 760 — 2,318 292,807 295,125 760 
Total gross loans$25,985 3,039 47,592 — 76,616 10,776,348 10,852,964 36,689 
December 31, 2023
30-59 Days60-89 DaysNon-accrualRecorded
Investment
> 90 days
accruing
Total Past
Due
CurrentTotal Loans ReceivableNon-accrual loans with no related allowance
Mortgage loans:
Commercial$825 — 5,151 — 5,976 4,506,435 4,512,411 5,151 
Multi-family3,815 1,635 744 — 6,194 1,806,306 1,812,500 744 
Construction— — 771 — 771 652,475 653,246 771 
Residential3,429 1,208 853 — 5,490 1,159,466 1,164,956 853 
Total mortgage loans8,069 2,843 7,519 — 18,431 8,124,682 8,143,113 7,519 
Commercial loans998 198 41,487 — 42,683 2,399,723 2,442,406 36,281 
Consumer loans875 275 633 — 1,783 297,381 299,164 633 
Total gross loans$9,942 3,316 49,639 — 62,897 10,821,786 10,884,683 44,433 
Included in loans receivable are loans for which the accrual of interest income has been discontinued due to deterioration in the financial condition of the borrowers. The principal amounts of these non-accrual loans were $45.9$47.6 million and $58.5$49.6 million at June 30, 2023as of March 31, 2024 and December 31, 2022,2023, respectively. Included in non-accrual loans were $17.4$4.6 million and $42.9$23.2 million of
14


loans which were less than 90 days past due at June 30, 2023as of March 31, 2024 and December 31, 2022,2023, respectively. There were no loans 90 days or greater past due and still accruing interest at June 30, 2023as of March 31, 2024 and December 31, 2022.
15


2023.
The activity in the allowance for credit losses by portfolio segment for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 was as follows (in thousands):
Three months ended June 30,Mortgage loansCommercial loansConsumer loansTotal
2023
Balance at beginning of period$63,195 27,117 2,446 92,758 
Provision charge (benefit) to operations6,742 3,769 (111)10,400 
Recoveries of loans previously charged-off134 173 310 
Loans charged-off— (1,313)(82)(1,395)
Balance at end of period$69,940 29,707 2,426 102,073 
2022
Balance at beginning of period$50,096 23,799 2,380 76,275 
Provision charge (benefit) to operations5,593 (2,710)117 3,000 
Recoveries of loans previously charged-off361 443 109 913 
Loans charged-off(986)(145)(41)(1,172)
Balance at end of period$55,064 21,387 2,565 79,016 
Six months ended June 30,Mortgage loansCommercial loansConsumer loansTotal
2023
Three months ended March 31,Three months ended March 31,Mortgage loansCommercial loansConsumer loansTotal
2024
Balance at beginning of periodBalance at beginning of period$58,218 27,413 2,392 88,023 
Cumulative effect of adopting Accounting Standards Update ("ASU") No. 2022-02(510)(43)(41)(594)
Balance at beginning of period
Balance at beginning of period
Provision charge (benefit) to operationsProvision charge (benefit) to operations12,954 3,461 (15)16,400 
Provision charge (benefit) to operations
Provision charge (benefit) to operations
Recoveries of loans previously charged-off
Recoveries of loans previously charged-off
Recoveries of loans previously charged-offRecoveries of loans previously charged-off301 258 565 
Loans charged-offLoans charged-off(728)(1,425)(168)(2,321)
Balance at end of periodBalance at end of period$69,940 29,707 2,426 102,073 
2022
2023
2023
2023
Balance at beginning of periodBalance at beginning of period$52,104 26,343 2,293 80,740 
Provision charge (benefit) charge to operations3,599 (7,115)116 (3,400)
Balance at beginning of period
Balance at beginning of period
Cumulative effect of adopting ASU 2022-02
Provision charge to operations
Recoveries of loans previously charged-offRecoveries of loans previously charged-off371 2,304 275 2,950 
Recoveries of loans previously charged-off
Recoveries of loans previously charged-off
Loans charged-offLoans charged-off(1,010)(145)(119)(1,274)
Balance at end of periodBalance at end of period$55,064 21,387 2,565 79,016 
For the three and six months ended June 30, 2023,March 31, 2024, the Company recorded a $10.4 million and a $16.4 million$200,000 provision for credit losses on loans, respectively. The increase in provision was attributablecompared to a worsened$6.0 million provision for the same period in 2023. The decrease in the provision for credit losses was largely a function of the period-over-period improvement in the economic forecast and related deterioration in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model.






16


For the three months ended March 31, 2024, net charge-offs totaled $971,000.
The following table summarizes the Company's gross charge-offs recorded during the three months ended June 30, 2023March 31, 2024 by year of origination (in thousands):
202420242023202220212020Prior to 2020Total Loans
20232022202120202019Prior to 2019Total Loans
Commercial loans
Commercial loans
Commercial loansCommercial loans$— — — — — 1,313 1,313 
Consumer loans (1)
Consumer loans (1)
— — — — 
Total gross loansTotal gross loans$— — — — 1,316 1,320 
(1) During the three months ended June 30, 2023,March 31, 2024, charge-offs on consumer overdraft accounts totaled $75,000,$65,000, which is not included in the table above.
The following table summarizes the Company's gross charge-offs recorded during the six months ended June 30, 2023 by year of origination (in thousands):
20232022202120202019Prior to 2019Total Loans
Mortgage loans:
Commercial$— — — — — 707 707 
Residential— — — — — 21 21 
Total mortgage loans— — — — — 728 728 
Commercial loans— — — — — 1,425 1,425 
Consumer loans (1)
— — — — 13 22 
Total gross loans$— — — — 2,166 2,175 
(1) Duringthe six months ended June 30, 2023, charge-offs on consumer overdraft accounts totaled $146,000, which isare not included in the table above.
The Company defines a loan individually evaluated for impairment as a non-homogeneous loan greater than $1.0 million, for which, based on current information, it is not expected to collect all amounts due under the contractual terms of the loan agreement. At June 30, 2023,As of March 31, 2024, there were 14 loans totaling $40.1 million, compared to 17 loans totaling $37.1$42.3 million compared to 10 loans totaling $42.8 million atas of December 31, 2022,2023, that were individually evaluated for impairment.
A financial asset is considered collateral-dependent when the debtor is experiencing financial difficulty and repayment is expected to be provided substantially through the sale or operation of the collateral. For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the collateral’s fair value less any selling costs. A specific allocation of the allowance for credit losses is established for each collateral-dependent loan with a carrying balance greater than the collateral’s fair value, less estimated selling costs. In most cases, the Company records a partial charge-off to reduce the loan’s carrying value to the collateral’s fair value less estimated selling costs. The Company uses third-party appraisals to determine the fair value of the underlying collateral in its analysis of collateral-dependent loans. A third-party appraisal is generally ordered as soon as a loan is designated as a collateral-dependent loan and updated annually, or more frequently if required. At each fiscal quarter end, if a loan is designated as collateral-dependent and the third-party appraisal has not yet been received, an evaluation of all available collateral is made using the best information available at the time, including rent rolls, borrower financial statements and tax returns, prior appraisals, management’s knowledge of the market and collateral, and
15


internally prepared collateral valuations based upon market assumptions regarding vacancy and capitalization rates, each as and where applicable. Once the appraisal is received and reviewed, the specific reserves are adjusted to reflect the appraised value and evaluated for charge offs. The Company believes there have been no significant time lapses resulting from this process.
At June 30, 2023As of March 31, 2024 and December 31, 2022,2023, the Company had $14.6collateral-dependent loans with fair values of $20.9 million and $24.0$24.1 million related to the fair value of collateral-dependent loans individually evaluated for impairment,secured by commercial real estate, respectively. These loans at June 30, 2023 consisted of $14.6 million in commercial loans.
Loan modifications to borrowers experiencing financial difficulty may include interest rate reductions, principal or interest forgiveness, forbearance, term extensions, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. In addition, management attempts to obtain additional collateral or guarantor support when modifying such loans. If the borrower has demonstrated performance under the previous terms and our underwriting process shows the borrower has the capacity to continue to perform under the restructured terms, the loan will continue to accrue
17


interest. Non-accruing restructured loans may be returned to accrual status when there has been a sustained period of repayment performance (generally six consecutive months of payments) and both principal and interest are deemed collectible.
The following illustrates the most common loan modifications by loan classes offered by the Company that are required to be disclosed pursuant to the requirements of ASU 2022-02:
Loan ClassesModification types
CommercialTerm extension, interest rate reductions, payment delay, or combination thereof. These modifications extend the term of the loan, lower the payment amount, or otherwise delay payments during a defined period for the purpose of providing borrowers additional time to return to compliance with the original loan term.
Residential Mortgage/ Home EquityForbearance period greater than six months. These modifications require reduced or no payments during the forbearance period for the purpose of providing borrowers additional time to return to compliance with the original loan term. Asterm, as well as term extension and rate adjustment. These modifications extend the term of the loan and provides for an adjustment to the interest rate, which reduces the monthly payment requirement.
Automobile/ Direct InstallmentTerm extension greater than three months. These modifications extend the term of the loan, which reduces the monthly payment requirement.
Effective January 1,In 2023, the Company adopted ASU 2022-02, “Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures” (“ASU 2022-02”), which eliminated the accounting guidance for troubled debt restructurings (“TDRs”) while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty. This guidance was applied on a modified retrospective basis. Upon adoption of this guidance, the Company no longer establishes a specific reserve for loan modifications to borrowers experiencing financial difficulty. Instead, these loan modifications are included in their respective pool and a historicalprojected loss rate is applied to the current loan balance to arrive at the quantitative and qualitative baseline portion of the allowance for credit losses. As a result, Thethe Company recorded a $594,000 reduction to the allowance for credit losses, which resulted in a $433,000 cumulative effect adjustment increase, net of tax, to retained earnings.
There were no loan modifications made to borrowers experiencing financial difficulty during the three months ended June 30, 2023.
The following table presents the amortized cost basis of loan modifications made to borrowers experiencing financial difficulty during the sixthree months ended June 30, 2023March 31, 2024 (in thousands):
Term ExtensionInterest Rate ReductionInterest Rate Reduction and Term Extension% of Total Class of Loans and Leases
For the three months ended March 31, 2024For the three months ended March 31, 2024
Term ExtensionTerm ExtensionInterest Rate IncreaseInterest Rate Reduction and Term Extension% of Total Class of Loans and Leases
Commercial loansCommercial loans$3,771 — 1,250 0.21 %
Commercial loans
Commercial loans$— 7,187 — 0.29 %
Total gross loansTotal gross loans$3,771 — 1,250 0.05 %
Total gross loans
Total gross loans$— 7,187 — 0.07 %

The following table presents the financial effect of loan modifications made to borrowers experiencing financial difficulty during the sixthree months ended June 30, 2023March 31, 2024 (in thousands):
Weighted-Average Months of Term ExtensionWeight-Average Rate Change
Commercial loans100.28 %
Total gross loans100.28 %
16


Weighted-Average Months of Term ExtensionWeighted-Average Rate Increase
Commercial loans02.00 %
Total gross loans02.00 %
There were no loan modifications made to borrowers experiencing financial difficulty during the three or six months ended June 30, 2023,March 31, 2024, that subsequently defaulted.
18


The following table presents the aging analysis of loan modifications made to borrowers experiencing financial difficulty during the sixthree months ended June 30, 2023March 31, 2024 (in thousands):
Current30-59 Days Past Due60-89 Days Past Due90 days or more Past DueNon- AccrualTotal
Commercial loans$5,021 — — — — 5,021 
Total gross loans$5,021 — — — — 5,021 
Prior to our adoption of ASU 2022-02, we accounted for a modification to the contractual terms of a loan that resulted in granting a concession to a borrower experiencing financial difficulties as a TDR. However, our TDR accounting described herein was suspended for most of our loss mitigation activities through our election to account for certain eligible loss mitigation activities occurring between March 2020 and January 1, 2022 under the COVID-19 relief granted pursuant to the CARES Act and the Consolidated Appropriations Act of 2021. Effective January 1, 2023, we adopted ASU 2022-02, which eliminated TDR accounting prospectively for all restructurings occurring on or after January 1, 2023.
The following table presents the number of loans modified as TDRs during the three and six months ended June 30, 2022, along with their balances immediately prior to the modification date and post-modification as of June 30, 2022 (in thousands):
For the three and six months ended
June 30, 2022
Troubled Debt RestructuringsNumber of
Loans
Pre-Modification
Outstanding
Recorded 
Investment
Post-Modification
Outstanding
Recorded Investment
Mortgage loans:
Residential$265 206 
Multi Family1,618 1,601 
Total mortgage loans1,883 1,807 
Commercial loans378 274 
Total restructured loans$2,261 2,081 
During the three and six months ended June 30, 2022, $921,000 of charge-offs were recorded on collateral-dependent impaired loans. There was one loan totaling $209,000 which had a payment default (90 days or more past due) for a loan modified as a TDR within the 12 month period ending June 30, 2023. For TDRs that subsequently defaulted, the Company determined the amount of the allowance for the respective loans in accordance with the accounting policy for the allowance for credit losses on loans individually evaluated for impairment.
Current30-59 Days Past Due60-89 Days Past Due90 days or more Past DueNon- AccrualTotal
Commercial loans$7,187 — — — — 7,187 
Total gross loans$7,187 — — — — 7,187 
As allowed by CECL, loans acquired by the Company that experience more-than-insignificant deterioration in credit quality after origination, are classified as Purchased Credit Deteriorated ("PCD") loans. At June 30, 2023,As of March 31, 2024, the balance of PCD loans totaled $173.3$160.6 million with a related allowance for credit losses of $1.6 million. The balance of PCD loans atas of December 31, 20222023 was $193.0$165.1 million with a related allowance for credit losses of $1.7 million.
Management utilizes an internal nine-point risk rating system to summarize its loan portfolio into categories with similar risk characteristics. Loans deemed to be “acceptable quality” are rated 1 through 4, with a rating of 1 established for loans with minimal risk. Loans that are deemed to be of “questionable quality” are rated 5 (watch) or 6 (special mention). Loans with adverse classifications (substandard, doubtful or loss) are rated 7, 8 or 9, respectively. Commercial mortgage, commercial, multi-family and construction loans are rated individually, and each lending officer is responsible for risk rating loans in their portfolio. These risk ratings are then reviewed by the department manager and/or the Chief Lending Officer and by the Credit Department. The risk ratings are also reviewed periodically through loan review examinations which are currently performed by an independent third-party. Reports by the independent third-party are presented to the Audit Committee of the Board of Directors.
The Company participated in the Paycheck Protection Program (“PPP”) through the United States Department of the Treasury and Small Business Administration. PPP loans were fully guaranteed by the SBA and were eligible for forgiveness by the SBA to the extent that the proceeds were used to cover eligible payroll costs, interest costs, rent, and utility costs over a period of up
19


to 24 weeks after the loan was made as long as certain conditions were met regarding employee retention and compensation levels. PPP loans deemed eligible for forgiveness by the SBA are to be repaid by the SBA to the Company. Eligibility ended for this program in May of 2021. PPP loans are included in our commercial loan portfolio. Under the PPP, the Company secured 2,067 PPP loans for its customers totaling $682.0 million. As of June 30, 2023, 2,054 PPP loans totaling $679.4 million were forgiven and repaid by the SBA. The balance of PPP loans at June 30, 2023 was $2.6 million.
The following table summarizes the Company's gross loans held for investment by year of origination and internally assigned credit grades as of June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):
Gross Loans Held for Investment by Year of Origination
at June 30, 2023
20232022202120202019Prior to 2019Revolving LoansRevolving loans to term loansTotal Loans
Gross Loans Held for Investment by Year of Origination
as of March 31, 2024
Gross Loans Held for Investment by Year of Origination
as of March 31, 2024
202420242023202220212020Prior to 2020Revolving LoansRevolving loans to term loansTotal Loans
Commercial MortgageCommercial Mortgage
Special mention
Special mention
Special mentionSpecial mention$— — — 2,713 2,346 33,436 485 — 38,980 
SubstandardSubstandard— — — 376 — 7,785 434 — 8,595 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — — 3,089 2,346 41,221 919 — 47,575 
Pass/WatchPass/Watch290,713 910,869 670,781 511,239 513,150 1,318,607 96,163 14,339 4,325,861 
Total commercial mortgage$290,713 910,869 670,781 514,328 515,496 1,359,828 97,082 14,339 4,373,436 
Total Commercial Mortgage
Total Commercial Mortgage
Total Commercial Mortgage
Multi-familyMulti-family
Multi-family
Multi-family
Special mention
Special mention
Special mentionSpecial mention$— — — — — 9,608 — — 9,608 
SubstandardSubstandard— — — — — 3,211 — — 3,211 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classified— — — — — 12,819 — — 12,819 
Pass/Watch132,991 170,856 198,427 279,117 232,748 614,456 3,223 1,133 1,632,951 
Total multi-family$132,991 170,856 198,427 279,117 232,748 627,275 3,223 1,133 1,645,770 
Construction
Special mention$— — — — — — — — — 
Substandard— — — — 1,097 777 — — 1,874 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— — — — 1,097 777 — — 1,874 
Pass/Watch33,795 276,155 266,520 105,078 8,456 13,346 2,010 705,360 
Total construction$33,795 276,155 266,520 105,078 9,553 14,123 — 2,010 707,234 
Residential (1)
Special mention$— — — — — 1,172 — — 1,172 
Substandard— — — — — 2,142 — — 2,142 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— — — — — 3,314 — — 3,314 
Pass/Watch42,524 147,449 205,949 205,123 92,537 469,263 — — 1,162,845 
Total residential$42,524 147,449 205,949 205,123 92,537 472,577 — — 1,166,159 
2017


Gross Loans Held for Investment by Year of Origination
as of March 31, 2024
Gross Loans Held for Investment by Year of Origination
as of March 31, 2024
202420242023202220212020Prior to 2020Revolving LoansRevolving loans to term loansTotal Loans
Total criticized and classified
Pass/Watch
Total Multi-Family
Gross Loans Held for Investment by Year of Origination
at June 30, 2023
Construction
Construction
Construction
Special mention
Special mention
Special mention
Substandard
Doubtful
Loss
Total criticized and classified
Pass/Watch
Total Construction
Residential (1)
Residential (1)
Residential (1)
Special mention
Special mention
Special mention
Substandard
Doubtful
Loss
Total criticized and classified
Pass/Watch
Total Residential
20232022202120202019Prior to 2019Revolving LoansRevolving loans to term loansTotal Loans
Total MortgageTotal Mortgage
Total Mortgage
Total Mortgage
Special mention
Special mention
Special mentionSpecial mention$— — — 2,713 2,346 44,216 485 — 49,760 
SubstandardSubstandard— — — 376 1,097 13,915 434 — 15,822 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — — 3,089 3,443 58,131 919 — 65,582 
Pass/WatchPass/Watch500,023 1,505,329 1,341,677 1,100,557 846,891 2,415,672 99,386 17,482 7,827,017 
Total MortgageTotal Mortgage$500,023 1,505,329 1,341,677 1,103,646 850,334 2,473,803 100,305 17,482 7,892,599 
CommercialCommercial
Commercial
Commercial
Special mention
Special mention
Special mentionSpecial mention$— 70 387 577 54 11,490 9,714 — 22,292 
SubstandardSubstandard— — 14,966 17,133 3,974 14,473 13,837 352 64,735 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— 70 15,353 17,710 4,028 25,963 23,551 352 87,027 
Pass/WatchPass/Watch154,852 379,855 308,290 148,648 151,902 552,747 538,651 26,475 2,261,420 
Total commercial$154,852 379,925 323,643 166,358 155,930 578,710 562,202 26,827 2,348,447 
Total Commercial
Consumer (1)
Consumer (1)
Consumer (1)
Consumer (1)
Special mention
Special mention
Special mentionSpecial mention$— — — — — 145 — 147 
SubstandardSubstandard— — — — — 709 90 803 
DoubtfulDoubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— — — — — 149 709 92 950 
Pass/Watch14,243 29,064 19,513 3,328 15,341 93,900 112,425 12,542 300,356 
Total consumer$14,243 29,064 19,513 3,328 15,341 94,049 113,134 12,634 301,306 
Total Loans
Special mention$— 70 387 3,290 2,400 55,851 10,199 72,199 
Substandard— — 14,966 17,509 5,071 28,392 14,980 442 81,360 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— 70 15,353 20,799 7,471 84,243 25,179 444 153,559 
Pass/Watch669,118 1,914,248 1,669,480 1,252,533 1,014,134 3,062,319 750,462 56,499 10,388,793 
Total gross loans$669,118 1,914,318 1,684,833 1,273,332 1,021,605 3,146,562 775,641 56,943 10,542,352 
18


Gross Loans Held for Investment by Year of Origination
as of March 31, 2024
20242023202220212020Prior to 2020Revolving LoansRevolving loans to term loansTotal Loans
Loss— — — — — — — — — 
Total criticized and classified— — — — — 332 1,050 133 1,515 
Pass/Watch3,566 27,452 25,786 17,943 3,397 95,074 107,303 13,089 293,610 
Total Consumer$3,566 27,452 25,786 17,943 3,397 95,406 108,353 13,222 295,125 
Total Loans
Special mention$— — 30,219 5,056 29,177 47,547 12,870 1,853 126,722 
Substandard440 1,813 16,153 20,520 11,123 28,697 20,224 586 99,556 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified440 1,813 46,372 25,576 40,300 76,244 33,094 2,439 226,278 
Pass/Watch240,542 1,232,158 1,895,722 1,614,202 1,156,277 3,670,024 704,818 112,943 10,626,686 
Total Gross Loans$240,982 1,233,971 1,942,094 1,639,778 1,196,577 3,746,268 737,912 115,382 10,852,964 
(1) For residential and consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.

Gross Loans Held for Investment by Year of Origination
at December 31, 2022
20222021202020192018Prior to 2018Revolving LoansRevolving loans to term loansTotal Loans
Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
202320232022202120202019Prior to 2019Revolving LoansRevolving loans to term loansTotal Loans
Commercial MortgageCommercial Mortgage
Special mentionSpecial mention$— — 3,071 26,809 52,509 14,740 — — 97,129 
Special mention
Special mention
Substandard
Doubtful
Loss
Total criticized and classified
Pass/Watch
Total Commercial Mortgage
Multi-family
Multi-family
Multi-family
Special mention
Special mention
Special mention
Substandard
Doubtful
Loss
Total criticized and classified
Pass/Watch
Total Multi-Family
Construction
Construction
Construction
2119


Gross Loans Held for Investment by Year of Origination
at December 31, 2022
20222021202020192018Prior to 2018Revolving LoansRevolving loans to term loansTotal Loans
Substandard— — — — 18,020 11,774 434 — 30,228 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— — 3,071 26,809 70,529 26,514 434 — 127,357 
Pass/Watch951,367 630,584 567,448 546,474 218,620 1,164,854 94,716 14,765 4,188,828 
Total commercial mortgage$951,367 630,584 570,519 573,283 289,149 1,191,368 95,150 14,765 4,316,185 
Multi-family
Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
202320232022202120202019Prior to 2019Revolving LoansRevolving loans to term loansTotal Loans
Special mentionSpecial mention$— — — — — 9,730 — — 9,730 
SubstandardSubstandard— — — — — 2,356 — — 2,356 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — — — — 12,086 — — 12,086 
Pass/WatchPass/Watch142,550 150,293 282,228 234,953 187,499 502,177 887 1,145 1,501,732 
Total multi-family$142,550 150,293 282,228 234,953 187,499 514,263 887 1,145 1,513,818 
Total Construction
Construction
Residential (1)
Residential (1)
Residential (1)
Special mention
Special mention
Special mentionSpecial mention$— — — — 19,728 905 — — 20,633 
SubstandardSubstandard— — — 2,197 777 — — — 2,974 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — — 2,197 20,505 905 — — 23,607 
Pass/WatchPass/Watch168,674 362,542 103,067 38,639 16,917 62 1,986 691,887 
Total construction$168,674 362,542 103,067 40,836 37,422 967 — 1,986 715,494 
Total Residential
Residential (1)
Total Mortgage
Total Mortgage
Total Mortgage
Special mention
Special mention
Special mentionSpecial mention$— — — — — 1,114 — — 1,114 
SubstandardSubstandard— — — — 264 4,417 — — 4,681 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — — — 264 5,531 — — 5,795 
Pass/WatchPass/Watch151,077 212,697 211,445 95,872 58,226 442,586 — — 1,171,903 
Total residential$151,077 212,697 211,445 95,872 58,490 448,117 — — 1,177,698 
Total Mortgage
Total Mortgage
Commercial
Commercial
Commercial
Special mention
Special mention
Special mentionSpecial mention$— — 3,071 26,809 72,237 26,489 — — 128,606 
SubstandardSubstandard— — — 2,197 19,061 18,547 434 — 40,239 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified— — 3,071 29,006 91,298 45,036 434 — 168,845 
Pass/Watch
Total Commercial
Consumer (1)
Consumer (1)
Consumer (1)
Special mention
Special mention
Special mention
Substandard
Doubtful
Loss
Total criticized and classified
2220


Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
Gross Loans Held for Investment by Year of Origination
as of December 31, 2023
202320232022202120202019Prior to 2019Revolving LoansRevolving loans to term loansTotal Loans
Pass/Watch
Total Consumer
Gross Loans Held for Investment by Year of Origination
at December 31, 2022
20222021202020192018Prior to 2018Revolving LoansRevolving loans to term loansTotal Loans
Pass/Watch1,413,668 1,356,116 1,164,188 915,938 481,262 2,109,679 95,603 17,896 7,554,350 
Total Mortgage$1,413,668 1,356,116 1,167,259 944,944 572,560 2,154,715 96,037 17,896 7,723,195 
Commercial
Total Loans
Total Loans
Total Loans
Special mention
Special mention
Special mentionSpecial mention$75 1,148 444 201 10,156 4,379 14,530 140 31,073 
SubstandardSubstandard— 7,605 10,230 4,391 3,561 13,734 7,604 364 47,489 
DoubtfulDoubtful— — — — — — — — — 
LossLoss— — — — — — — — — 
Total criticized and classifiedTotal criticized and classified75 8,753 10,674 4,592 13,717 18,113 22,134 504 78,562 
Pass/WatchPass/Watch377,662 320,334 162,175 161,150 87,396 522,798 492,717 30,876 2,155,108 
Total commercial$377,737 329,087 172,849 165,742 101,113 540,911 514,851 31,380 2,233,670 
Consumer (1)
Special mention$— — — — — 146 — — 146 
Substandard— — 109 332 209 — 658 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified— — — 109 478 209 — 804 
Pass/Watch30,132 20,671 2,909 16,682 16,156 88,173 115,777 13,476 303,976 
Total consumer$30,132 20,671 2,917 16,682 16,265 88,651 115,986 13,476 304,780 
Total Loans
Special mention$75 1,148 3,515 27,010 82,393 31,014 14,530 140 159,825 
Substandard— 7,605 10,238 6,588 22,731 32,613 8,247 364 88,386 
Doubtful— — — — — — — — — 
Loss— — — — — — — — — 
Total criticized and classified75 8,753 13,753 33,598 105,124 63,627 22,777 504 248,211 
Pass/Watch1,821,462 1,697,121 1,329,272 1,093,770 584,814 2,720,650 704,097 62,248 10,013,434 
Total gross loans$1,821,537 1,705,874 1,343,025 1,127,368 689,938 2,784,277 726,874 62,752 10,261,645 
Total Gross Loans
(1) For residential and consumer loans, the Company assigns internal credit grades based on the delinquency status of each loan.
Note 5. Deposits
Deposits at June 30, 2023as of March 31, 2024 and December 31, 20222023 are summarized as follows (in thousands):
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
SavingsSavings$1,275,262 1,438,583 
Money marketMoney market2,272,648 2,542,160 
NOW3,334,509 3,186,926 
NOW (1)
Non-interest bearingNon-interest bearing2,358,372 2,643,919 
Certificates of deposit1,020,329 751,436 
Certificates of deposit (2)
Total depositsTotal deposits$10,261,120 10,563,024 

(1)
Our insured cash sweep ("ICS") product totaled $512.2 million as of March 31, 2024 and are located within NOW accounts.

(2)
Time deposits equal to or in excess of $250,000, were $223.6 million and $218.5 million as of March 31, 2024 and December 31, 2023, respectively. Additionally, our reciprocal Certificate of Deposit Account Registry Service ("CDARS") product totaled $3.3 million as of March 31, 2024 and December 31, 2023.
Within total deposits, brokered deposits totaled $75.7 million as of March 31, 2024.
23


Note 6. Borrowed Funds
Borrowed funds at June 30, 2023as of March 31, 2024 and December 31, 20222023 are summarized as follows (in thousands):
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Securities sold under repurchase agreementsSecurities sold under repurchase agreements$82,470 98,000 
FHLB line of creditFHLB line of credit179,000 486,000 
FHLB advancesFHLB advances1,588,244 753,370 
Total borrowed funds$1,849,714 1,337,370 
FRB BTFP Borrowing
Total Borrowed Funds
At June 30,Total long-term borrowings totaled $305.2 million and $534.8 million as of March 31, 2024 and December 31, 2023, respectively, while total short-term borrowings totaled $1.75 billion and $1.44 billion for the same periods.
As of March 31, 2024, FHLB advances were at fixed rates and mature between July 2023April 2024 and September 2026,2027, and atas of December 31, 2022,2023, FHLB advances were at fixed rates with maturities between January 20232024 and July 2025.September 2027. These advances are secured by loans receivable under a blanket collateral agreement.
21


In March 2023, the Bank established a facility under the Bank Term Funding Program ("BTFP" or "Program") with the Federal Reserve Bank of New York ("FRBNY"). As of March 31, 2024, the Company had $550.0 million of advances under the Program. We elected to participate in the BTFP due to significant cost savings compared to other wholesale funding sources. The funding was used to pay off existing wholesale borrowings. The ability to prepay at any time without penalty also enhances our ability to manage our interest rate risk position.
Scheduled maturities of FHLB advances and overnight borrowings at June 30, 2023lines of credit as of March 31, 2024 are as follows (in thousands):
 20232024
Due in one year or less$1,020,6481,363,650 
Due after one year through two years514,492272,762 
Due after two years through three years174,660282,445 
Due after three years through four years57,44450,000 
Thereafter— 
Total FHLB advances and overnight borrowings$1,767,2441,968,857 
Scheduled maturities of securities sold under repurchase agreements at June 30, 2023as of March 31, 2024 are as follows (in thousands):
 20232024
Due in one year or less$82,47089,241 
Thereafter— 
Total securities sold under repurchase agreements$82,47089,241 
The following tables set forth certain information as to borrowed funds for the periods ended June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):
Maximum
balance
Average
balance
Weighted average
interest rate
June 30, 2023
Maximum
balance
Maximum
balance
Average
balance
Weighted average
interest rate
March 31, 2024
Securities sold under repurchase agreements
Securities sold under repurchase agreements
Securities sold under repurchase agreementsSecurities sold under repurchase agreements$99,669 93,066 1.41 %$89,241 77,928 77,928 1.86 1.86 %
FHLB overnight borrowingsFHLB overnight borrowings402,000 223,980 4.87 
FHLB advancesFHLB advances1,588,245 1,125,698 2.78 
December 31, 2022
FRB BTFP Borrowing
December 31, 2023
Securities sold under repurchase agreements
Securities sold under repurchase agreements
Securities sold under repurchase agreementsSecurities sold under repurchase agreements$125,506 113,550 0.38 %$99,669 87,227 87,227 1.69 1.69 %
FHLB overnight borrowingsFHLB overnight borrowings486,000 139,012 3.32 
FHLB advancesFHLB advances753,370 503,713 0.85 
FRB BTFP Borrowing
Securities sold under repurchase agreements include arrangements with deposit customers of the Bank to sweep funds into short-term borrowings. The Bank uses available for sale debt securities to pledge as collateral for the repurchase agreements.
At June 30, 2023 As of March 31, 2024 and December 31, 2022, available for sale debt2023, the fair value of securities pledged as collateral forto secure public deposits, repurchase agreements, lines of credit and FHLB advances, totaled $95.5$993.4 million and $116.5$924.6 million, respectively. Additionally, as of March 31, 2024 and December 31, 2023, the par value of securities pledged to secure the BTFP was $580.0 million and $589.1 million.
Interest expense on borrowings for the three and six months ended June 30,March 31, 2024 and 2023, amounted to $14.1was $17.4 million and $21.6 million, respectively. Interest expense on borrowings for the three and six months ended June 30, 2022 amounted to $1.1 million and $2.3$7.5 million, respectively.

Note 7. Components of Net Periodic Benefit Cost
24


The Bank has a noncontributory defined benefit pension plan covering its full-time employees who had attained age 21 with at least one year of service as of April 1, 2003. The pension plan was frozen on April 1, 2003. All participants in the Plan are 100% vested. The pension plan’s assets are invested in investment funds and group annuity contracts currently managed by the Principal Financial Group and Allmerica Financial.
22


In addition to pension benefits, certain health care and life insurance benefits are currently made available to certain of the Bank’s retired employees. The costs of such benefits are accrued based on actuarial assumptions from the date of hire to the date the employee is fully eligible to receive the benefits. Effective January 1, 2003, eligibility for retiree health care benefits was frozen as to new entrants, and benefits were eliminated for employees with less than ten years of service as of December 31, 2002. Effective January 1, 2007, eligibility for retiree life insurance benefits was frozen as to new entrants and retiree life insurance benefits were eliminated for employees with less than ten years of service as of December 31, 2006.
Net periodic (benefit) increase cost for pension benefits and other post-retirement benefits for the three and sixthree months ended June 30,March 31, 2024 and 2023, and 2022 includes the following components (in thousands):
Three months ended June 30,Six months ended June 30,
Pension benefitsOther post-retirement benefitsPension benefitsOther post-retirement benefits
20232022202320222023202220232022
Three months ended March 31,
Three months ended March 31,
Three months ended March 31,
Pension benefits
Pension benefits
Pension benefits
2024
2024
2024
Service cost
Service cost
Service costService cost$— — $— — 14 
Interest costInterest cost302 214 150 111 604 428 300 222 
Interest cost
Interest cost
Expected return on plan assets
Expected return on plan assets
Expected return on plan assetsExpected return on plan assets(706)(864)— — (1,412)(1,728)— — 
Amortization of prior service costAmortization of prior service cost— — — — — — — — 
Amortization of prior service cost
Amortization of prior service cost
Amortization of the net loss (gain)
Amortization of the net loss (gain)
Amortization of the net loss (gain)Amortization of the net loss (gain)177 — (533)(326)354 — (1,066)(652)
Net periodic (decrease) increase in benefit costNet periodic (decrease) increase in benefit cost$(227)(650)(380)(208)$(454)(1,300)(760)(416)
Net periodic (decrease) increase in benefit cost
Net periodic (decrease) increase in benefit cost
In its consolidated financial statements for the year ended December 31, 2022,2023, the Company previously disclosed that it does not expect to contribute to the pension plan in 2023.2024. As of June 30, 2023,March 31, 2024, no contributions have been made to the pension plan.
The changes in net periodic benefit cost for pension benefits and other post-retirement benefits for the three and six months ended June 30, 2023March 31, 2024 were calculated using the January 1, 2023 pension and other post-retirement benefits actuarial valuations.
Note 8. Impact of Recent Accounting Pronouncements
Accounting Pronouncements Adopted This Year
In MarchJune 2022, FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”. The amendments in this ASU clarify that a contractual restriction on the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-02, "Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures," whichaddresses areas identified by the FASB assale of an equity security is not considered part of its post-implementation reviewthe unit of account of the credit losses standard (ASU 2016-13) that introduced the CECL model.equity security and, therefore, is not considered in measuring fair value. The amendments eliminate the accounting guidance for troubled debt restructurings by creditorsalso clarify that have adopted the CECL modelan entity cannot, as a separate unit of account, recognize and enhance themeasure a contractual sale restriction. In addition, this update introduces new disclosure requirements for loan refinancingto provide information about the contractual sales restriction including the nature and restructurings made with borrowers experiencing financial difficulty. In addition,remaining duration of the amendments require a public business entity to disclose current-period gross write-offs for financing receivables and net investment in leases by year of origination in the vintage disclosures. For entities that have adopted ASU 2016-13, ASU 2022-02 wasrestriction. This update will be effective for financial statements issued for fiscal years and interim periods beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption was permitted if an entity had adopted ASU 2016-13. The Company adopted this ASU on January 1, 2023, using the modified retrospective method for all financial assets measured at amortized cost. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be recorded with previously applicable GAAP. The Company recorded a $594,000 reduction to the allowance for credit losses, which resulted in a $433,000 cumulative effect adjustment increase, net of tax, to retained earnings.
In March 2022, the FASB issued Accounting Standards Update (ASU) 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022-01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period permitted. The Company adopted this standard on January 1, 2023 on a prospective basis,basis; with no impact to the consolidated financial statements.
25


Accounting Pronouncements Not Yet Adopted
In March 2020, theDecember 2023, FASB issued ASU 2020-04, "Reference Rate Reform2023-09, “Income Taxes (Topic 848)," which provides optional expedients and exceptions for applying GAAP740): Improvements to loan and lease agreements, derivative contracts, and other transactions affected by the anticipated transition away from LIBOR toward new interest rate benchmarks. For transactions that are modified because of reference rate reform and that meet certain scope guidance: (i) modifications of loan agreements should be accounted for by prospectively adjusting the effective interest rate and the modification will be considered "minor" so that any existing unamortized origination fees/costs would carry forward and continue to be amortized; and (ii) modifications of lease agreements should be accounted for as a continuation of the existing agreement with no reassessments of the lease classification and the discount rate or re-measurements of lease payments that otherwise would be required for modifications not accounted for as separate contracts. ASU 2020-04 also provides numerous optional expedients for derivative accounting. ASU 2020-04 is effective March 12, 2020 through December 31, 2022. An entity may elect to apply ASU 2020-04 for contract modifications as of January 1, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic within the Codification, theIncome Tax Disclosures”. The amendments in this ASU mustrequire improved annual income tax disclosures surrounding rate reconciliation, income taxes paid, and other disclosures. This update will be applied prospectivelyeffective for all eligible contract modificationsfinancial statements issued for that Topic or Industry Subtopic.fiscal years beginning after December 15, 2024, with early adoption in the interim period permitted. The Company anticipatesis currently evaluating the impact of this ASU will simplify any modifications we execute betweenstandard on the selected start date (yet toconsolidated financial statements.


Note 9. Contingencies
The Company is involved in various litigation and claims arising in the normal course of business. Liabilities for loss contingencies arising from such litigation and claims are recorded when it is probable that a liability has been incurred and the amount can be determined) and December 31,reasonably estimated.
23


On May 2, 2022, a purported class action complaint was filed against the Bank in the Superior Court of New Jersey, which alleges that are directlythe Bank wrongfully assessed overdraft fees related to LIBOR transition by allowing prospective recognitiondebit card transactions. The complaint asserts claims for breach of contract and breach of the continuationcovenant of good faith and fair dealing as well as an alleged violation of the contract, rather thanNew Jersey Consumer Fraud Act. Plaintiff seeks to represent a proposed class of all the extinguishmentBank'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. 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.
Although the Bank is vigorously defending the litigation, the ultimate outcome of this litigation, such as whether the old contract resultinglikelihood of loss is remote, reasonably possible, or probable, or if and when the reasonably possible range of loss is estimable, is inherently uncertain. As a result of this analysis, a $3.0 million charge was recorded in writing off unamortized fees/costs. In addition, in January 2021, the FASB issued ASU No. 2021-01 “Reference Rate Reform — Scope,” which clarified the scope of ASC 848 relating to contract modifications. In the fourth quarter of 2019, the Company formed a cross-functional team to develop transition plans2023 for the LIBOR cessation to address potential revisions to documentation, as well as customer management and communication, internal training, financial, operational and risk management implications, and legal and contract management. The working group is comprised of individuals from various functional areas including lending, risk management, finance and credit, among others. In addition, the Company has engaged with its regulators and with industry working groups and trade associations to develop strategies for transitioning away from LIBOR. The Company is currently in the process of transitioning from LIBOR and plans to move to the Secured Overnight Financing Rate ("SOFR") and no longer offers LIBOR as an option to customers. The Company has determined that the LIBOR transition and this guidance will not have a material effect on the Company's business operations and consolidated financial statements.estimated contingent litigation reserves.

Note 9.10. Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
Management analyzes the Company's exposure to credit losses for both on-balance sheet and off-balance sheet activity using a consistent methodology for the quantitative framework as well as the qualitative framework. For purposes of estimating the allowance for credit losses for off-balance sheet credit exposures, the exposure that may default includes an estimated drawdown of unused credit based on historical credit utilization factors and current loss factors.
For the three and six months ended June 30,March 31, 2024, the Company recorded a $506,000 provision benefit for credit losses on off-balance sheet credit exposures. For the three months ended March 31, 2023, the Company recorded a $647,000 negative$739,000 provision and a $92,000 provisioncharge for credit losses for off-balance sheet credit exposures, respectively. For the three and six months ended June 30, 2022, the Company recorded a $973,000 and a $3.4exposures. The $1.2 million negative provision for credit losses for off-balance sheet credit exposures, respectively. The $326,000 increasedecrease in the provision for the three months ended June 30, 2023,March 31, 2024, compared to the same period in 2022,2023, was primarily the result of the period-over-period relative changedue to a decrease in line of credit utilization. The $3.5 million increase in the provision for the six months ended June 30, 2023, compared to the six months ended June 30, 2022, was primarily the result of the period-over-period relative change in line of credit utilizationloans approved and an increase in projected loss factors as a result of a worsened economic forecast.awaiting closing.
The allowance for credit losses for off-balance sheet credit exposures was $3.2$2.9 million at June 30,as of March 31, 2024 and $3.4 million as of December 31, 2023, and December 31, 2022, and areis included in other liabilities on the Consolidated Statements of Financial Condition.
Note 10.11. Fair Value Measurements
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The determination of fair values of financial instruments often requires the use of estimates. Where quoted market values in an active market are not readily available, management utilizes various valuation techniques to estimate fair value.
Fair value is an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However, in many instances fair value estimates may not be substantiated by comparison to independent markets and may not be realized in an immediate sale of the financial instrument.
26


GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1:Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2:Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability; and
Level 3:Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).
A financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.
24


The valuation techniques are based upon the unpaid principal balance only, and exclude any accrued interest or dividends at the measurement date. Interest income and expense and dividend income are recorded within the consolidated statements of income depending on the nature of the instrument using the effective interest method based on acquired discount or premium.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The valuation techniques described below were used to measure fair value of financial instruments in the table below on a recurring basis as of June 30, 2023March 31, 2024 and December 31, 2022.2023.
Available for Sale Debt Securities, at Fair Value
For available for sale debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third-party data service providers or dealer market participants with whom the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark to comparable securities. The Company evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As management is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, management compares the prices received from the pricing service to a secondary pricing source. Additionally, management compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has generally not resulted in an adjustment in the prices obtained from the pricing service. The Company also holds debt instruments issued by the U.S. government that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.
Equity Securities at Fair Value
The Company holds equity securities that are traded in active markets with readily accessible quoted market prices that are considered Level 1 inputs.
Derivatives
The Company records all derivatives on the statements of financial condition at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. The Company has interest rate derivatives resulting from a service provided to certain qualified borrowers in a loan related transaction which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. As such, all changes in fair value of the Company’sthese derivatives are recognized directly in earnings.
The Company also uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges, and which satisfy hedge accounting requirements, involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. These derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits. The change in the fair value of these derivatives is recorded in accumulated other
27


comprehensive income (loss), and is subsequently reclassified into earnings in the period that the forecasted transactions affect earnings.
The fair value of the Company's derivatives is determined using discounted cash flow analysis using observable market-based inputs, which are considered Level 2 inputs.
Assets Measured at Fair Value on a Non-Recurring Basis
The valuation techniques described below were used to estimate fair value of financial instruments measured on a non-recurring basis as of June 30, 2023March 31, 2024 and December 31, 2022.2023.

Collateral-Dependent Impaired Loans
25


For loans measured for impairment based on the fair value of the underlying collateral, fair value was estimated using a market approach. The Company measures the fair value of collateral underlying impaired loans primarily through obtaining independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case-by-case basis, to comparable assets based on the appraisers’ market knowledge and experience, as well as adjustments for estimated costs to sell between 5% and 10%. Management classifies these loans as Level 3 within the fair value hierarchy.
Foreclosed Assets
Assets acquired through foreclosure or deed in lieu of foreclosure are carried at fair value, less estimated selling costs, which range between 5% and 10%. Fair value is generally based on independent appraisals that rely upon quoted market prices for similar assets in active markets. These appraisals include adjustments, on an individual case basis, to comparable assets based on the appraisers’ market knowledge and experience, and are classified as Level 3. When an asset is acquired, the excess of the loan balance over fair value less estimated selling costs is charged to the allowance for credit losses. A reserve for foreclosed assets may be established to provide for possible write-downs and selling costs that occur subsequent to foreclosure. Foreclosed assets are carried net of the related reserve. Operating results from real estate owned, including rental income, operating expenses, and gains and losses realized from the sales of real estate owned, are recorded as incurred.
There were no changes to the valuation techniques for fair value measurements as of June 30, 2023March 31, 2024 or December 31, 2022.2023.
2826


The following tables present the assets and liabilities reported on the consolidated statements of financial condition at their fair values as of June 30, 2023March 31, 2024 and December 31, 2022,2023, by level within the fair value hierarchy (in thousands):
Fair Value Measurements at Reporting Date Using:
June 30, 2023Quoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable  Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Fair Value Measurements at Reporting Date Using:Fair Value Measurements at Reporting Date Using:
March 31, 2024March 31, 2024Quoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:Measured on a recurring basis:
Available for sale debt securities:Available for sale debt securities:
Available for sale debt securities:
Available for sale debt securities:
U.S. Treasury obligationsU.S. Treasury obligations$247,067 247,067 — — 
Agency obligations31,753 31,753 — — 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,346,724 — 1,346,724 — 
Asset-backed securitiesAsset-backed securities34,506 — 34,506 — 
State and municipal obligationsState and municipal obligations55,725 — 55,725 — 
Corporate obligationsCorporate obligations34,114 — 34,114 — 
Total available for sale debt securitiesTotal available for sale debt securities1,749,889 278,820 1,471,069 — 
Equity securitiesEquity securities1,238 1,238 — — 
Derivative assetsDerivative assets131,191 — 131,191 — 
$
$1,882,318 280,058 1,602,260 — 
Derivative liabilities
Derivative liabilities
Derivative liabilitiesDerivative liabilities$108,067 — 108,067 — 
Measured on a non-recurring basis:Measured on a non-recurring basis:
Measured on a non-recurring basis:
Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral
Loans measured for impairment based on the fair value of the underlying collateral
Loans measured for impairment based on the fair value of the underlying collateralLoans measured for impairment based on the fair value of the underlying collateral$14,582 — — 14,582 
Foreclosed assetsForeclosed assets13,697 — — 13,697 
$28,279 — — 28,279 
$
Fair Value Measurements at Reporting Date Using:
December 31, 2022Quoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable  Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Fair Value Measurements at Reporting Date Using:Fair Value Measurements at Reporting Date Using:
December 31, 2023December 31, 2023Quoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Measured on a recurring basis:Measured on a recurring basis:
Available for sale debt securities:Available for sale debt securities:
Available for sale debt securities:
Available for sale debt securities:
U.S. Treasury obligationsU.S. Treasury obligations$245,816 245,816 — — 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,427,139 — 1,427,139 — 
Asset-backed securitiesAsset-backed securities37,621 — 37,621 — 
State and municipal obligationsState and municipal obligations56,864 — 56,864 — 
Corporate obligationsCorporate obligations36,108 — 36,108 — 
Total available for sale debt securitiesTotal available for sale debt securities1,803,548 245,816 1,557,732 — 
Equity SecuritiesEquity Securities1,147 1,147 — — 
Derivative assetsDerivative assets148,151 — 148,151 — 
$
$1,952,846 246,963 1,705,883 — 
Derivative liabilities
Derivative liabilities
Derivative liabilitiesDerivative liabilities$120,896 — 120,896 — 
Measured on a non-recurring basis:Measured on a non-recurring basis:
Measured on a non-recurring basis:
Measured on a non-recurring basis:
Loans measured for impairment based on the fair value of the underlying collateral
Loans measured for impairment based on the fair value of the underlying collateral
Loans measured for impairment based on the fair value of the underlying collateralLoans measured for impairment based on the fair value of the underlying collateral$23,988 — — 23,988 
Foreclosed assetsForeclosed assets2,124 — — 2,124 
$26,112 — — 26,112 
$
27


There were no transfers between Level 1, Level 2 andinto or out of Level 3 during the three and six months ended June 30, 2023.
29


March 31, 2024.
Other Fair Value Disclosures
The Company is required to disclose estimated fair value of financial instruments, both assets and liabilities on- and off- the balance sheet, for which it is practicable to estimate fair value. The following is a description of valuation methodologies used for those assets and liabilities.
Cash and Cash Equivalents
For cash and due from banks, federal funds sold and short-term investments, the carrying amount approximates fair value. At June 30, 2023As of March 31, 2024 and December 31, 2022,2023, $70,000 was included in cash and cash equivalents, representing cash collateral pledged to secure loan level swaps and risk participation agreements and reserves required by banking regulations.agreements.
Held to Maturity Debt Securities
For held to maturity debt securities, fair value was estimated using a market approach. The majority of the Company’s securities are fixed income instruments that are not quoted on an exchange, but are traded in active markets. Prices for these instruments are obtained through third party data service providers or dealer market participants with whom the Company has historically transacted both purchases and sales of securities. Prices obtained from these sources include market quotations and matrix pricing. Matrix pricing, a Level 2 input, is a mathematical technique used principally to value certain securities to benchmark to comparable securities. Management evaluates the quality of Level 2 matrix pricing through comparison to similar assets with greater liquidity and evaluation of projected cash flows. As management is responsible for the determination of fair value, it performs quarterly analyses on the prices received from the pricing service to determine whether the prices are reasonable estimates of fair value. Specifically, management compares the prices received from the pricing service to a secondary pricing source. Additionally, management compares changes in the reported market values and returns to relevant market indices to test the reasonableness of the reported prices. The Company’s internal price verification procedures and review of fair value methodology documentation provided by independent pricing services has generally not resulted in adjustment in the prices obtained from the pricing service. The Company also holds debt instruments issued by the U.S. government and U.S. governmentgovernment-sponsored agencies that are traded in active markets with readily accessible quoted market prices that are considered Level 1 within the fair value hierarchy.
Federal Home Loan Bank of New York ("FHLBNY") Stock
The carrying value of FHLBNY stock is its cost. The fair value of FHLBNY stock is based on redemption at par value. The Company classifies the estimated fair value as Level 1 within the fair value hierarchy.
Loans
Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as commercial mortgage, residential mortgage, commercial, construction and consumer. Each loan category is further segmented into fixed and adjustable-rate interest terms and into performing and non-performing categories. The fair value of performing loans was estimated using a combination of techniques, including a discounted cash flow model that utilizes a discount rate that reflects the Company’s current pricing for loans with similar characteristics and remaining maturity, adjusted by an amount for estimated credit losses inherent in the portfolio at the balance sheet date (i.e. exit pricing). The rates take into account the expected yield curve, as well as an adjustment for prepayment risk, when applicable. The Company classifies the estimated fair value of its loan portfolio as Level 3.
The fair value for significant non-performing loans was based on recent external appraisals of collateral securing such loans, adjusted for the timing of anticipated cash flows. The Company classifies the estimated fair value of its non-performing loan portfolio as Level 3.
Deposits
The fair value of deposits with no stated maturity, such as non-interest bearing demand deposits and savings deposits, was equal to the amount payable on demand and classified as Level 1. The estimated fair value of certificates of deposit was based on the discounted value of contractual cash flows. The discount rate was estimated using the Company’s current rates offered for deposits with similar remaining maturities. The Company classifies the estimated fair value of its certificates of deposit portfolio as Level 2.
3028


Borrowed Funds
The fair value of borrowed funds was estimated by discounting future cash flows using rates available for debt with similar terms and maturities and is classified by the Company as Level 2 within the fair value hierarchy.
Commitments to Extend Credit and Letters of Credit
The fair value of commitments to extend credit and letters of credit was estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The Company classifies these commitments as Level 3 within the fair value hierarchy.
Limitations
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.
Significant assets and liabilities that are not considered financial assets or liabilities include goodwill and other intangibles, deferred tax assets and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
The following tables present the Company’s financial instruments at their carrying and fair values as of June 30, 2023March 31, 2024 and December 31, 2022.2023. Fair values are presented by level within the fair value hierarchy.
3129


Fair Value Measurements at June 30, 2023 Using:
Fair Value Measurements as of March 31, 2024 Using:Fair Value Measurements as of March 31, 2024 Using:
(Dollars in thousands)(Dollars in thousands)Carrying valueFair valueQuoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable  Inputs (Level 2)Significant Unobservable Inputs (Level 3)(Dollars in thousands)Carrying valueFair valueQuoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Financial assets:Financial assets:
Cash and cash equivalentsCash and cash equivalents$208,872 208,872 208,872 — — 
Cash and cash equivalents
Cash and cash equivalents
Available for sale debt securities:Available for sale debt securities:
U.S. Treasury obligationsU.S. Treasury obligations247,067 247,067 247,067 — — 
Agency obligations31,753 31,753 31,753 — — 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,346,724 1,346,724 — 1,346,724 — 
Asset-backed securitiesAsset-backed securities34,506 34,506 — 34,506 — 
State and municipal obligationsState and municipal obligations55,725 55,725 — 55,725 — 
Corporate obligationsCorporate obligations34,114 34,114 — 34,114 — 
Total available for sale debt securitiesTotal available for sale debt securities$1,749,889 1,749,889 278,820 1,471,069 — 
Held to maturity debt securities, net of allowance for credit losses:Held to maturity debt securities, net of allowance for credit losses:
Agency obligations12,096 11,167 11,167 — — 
U.S. Treasury obligations
U.S. Treasury obligations
U.S. Treasury obligations
Agency-sponsored obligations
State and municipal obligations
State and municipal obligations
State and municipal obligationsState and municipal obligations356,987 344,661 — 344,661 — 
Corporate obligationsCorporate obligations9,811 9,201 — 9,201 — 
Total held to maturity debt securities, net of allowance for credit lossesTotal held to maturity debt securities, net of allowance for credit losses$378,894 365,029 11,167 353,862 — 
FHLBNY stockFHLBNY stock93,330 93,330 93,330 — — 
Equity SecuritiesEquity Securities1,238 1,238 1,238 — — 
Loans, net of allowance for credit lossesLoans, net of allowance for credit losses10,428,458 9,969,672 — — 9,969,672 
Derivative assetsDerivative assets131,191 131,191 — 131,191 — 
Financial liabilities:Financial liabilities:
Financial liabilities:
Financial liabilities:
Deposits other than certificates of deposits
Deposits other than certificates of deposits
Deposits other than certificates of depositsDeposits other than certificates of deposits$9,240,791 9,240,791 9,240,791 — — 
Certificates of depositCertificates of deposit1,020,329 1,015,211 — 1,015,211 — 
Total depositsTotal deposits$10,261,120 10,256,002 9,240,791 1,015,211 — 
BorrowingsBorrowings1,849,714 1,832,814 — 1,832,814 — 
Subordinated debenturesSubordinated debentures10,596 9,118 — 9,118 — 
Derivative liabilitiesDerivative liabilities108,067 108,067 — 108,067 — 
3230


Fair Value Measurements at December 31, 2022 Using:
Fair Value Measurements as of December 31, 2023 Using:Fair Value Measurements as of December 31, 2023 Using:
(Dollars in thousands)(Dollars in thousands)Carrying valueFair valueQuoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable  Inputs (Level 2)Significant Unobservable Inputs (Level 3)(Dollars in thousands)Carrying valueFair valueQuoted Prices in Active  Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Financial assets:Financial assets:
Cash and cash equivalentsCash and cash equivalents$186,508 186,508 186,508 — — 
Cash and cash equivalents
Cash and cash equivalents
Available for sale debt securities:Available for sale debt securities:
U.S. Treasury obligationsU.S. Treasury obligations245,816 245,816 245,816 — — 
U.S. Treasury obligations
U.S. Treasury obligations
Agency-guaranteed obligations
Mortgage-backed securitiesMortgage-backed securities1,427,139 1,427,139 — 1,427,139 — 
Asset-backed securitiesAsset-backed securities37,621 37,621 — 37,621 — 
State and municipal obligationsState and municipal obligations56,864 56,864 — 56,864 — 
Corporate obligationsCorporate obligations36,108 36,108 — 36,108 — 
Total available for sale debt securitiesTotal available for sale debt securities$1,803,548 1,803,548 245,816 1,557,732 — 
Held to maturity debt securities:Held to maturity debt securities:
Agency obligations$9,997 8,964 8,964 — — 
U.S. Treasury obligations
U.S. Treasury obligations
U.S. Treasury obligations
Agency-sponsored obligations
State and municipal obligations
State and municipal obligations
State and municipal obligationsState and municipal obligations366,146 353,417 — 353,417 — 
Corporate obligationsCorporate obligations11,780 11,087 — 11,087 — 
Total held to maturity debt securitiesTotal held to maturity debt securities$387,923 373,468 8,964 364,504 — 
FHLBNY stockFHLBNY stock68,554 68,554 68,554 — — 
Equity SecuritiesEquity Securities1,147 1,147 1,147 — — 
Loans, net of allowance for credit lossesLoans, net of allowance for credit losses10,160,860 9,768,460 — — 9,768,460 
Derivative assetsDerivative assets148,151 148,151 — 148,151 — 
Financial liabilities:Financial liabilities:
Financial liabilities:
Financial liabilities:
Deposits other than certificates of deposits
Deposits other than certificates of deposits
Deposits other than certificates of depositsDeposits other than certificates of deposits$9,811,588 9,811,588 9,811,588 — — 
Certificates of depositCertificates of deposit751,436 745,155 — 745,155 — 
Total depositsTotal deposits$10,563,024 10,556,743 9,811,588 745,155 — 
BorrowingsBorrowings1,337,370 1,324,578 — 1,324,578 — 
Subordinated debenturesSubordinated debentures10,493 9,422 — 9,422 — 
Derivative liabilitiesDerivative liabilities120,896 120,896 — 120,896 — 

3331


Note 11.12. Other Comprehensive (Loss) Income
The following table presents the components of other comprehensive (loss) income,, both gross and net of tax, for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (in thousands):
Three months ended June 30,
20232022
Before
Tax
Tax
Effect
After
Tax
Before
Tax
Tax
Effect
After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on available for sale debt securities:
Net unrealized (losses) gains arising during the period$(20,178)5,452 (14,726)(62,477)16,744 (45,733)
Reclassification adjustment for gains included in net income— — — (58)16 (42)
Total(20,178)5,452 (14,726)(62,535)16,760 (45,775)
Unrealized gains and losses on derivatives (cash flow hedges):
Net unrealized gains (losses) arising during the period5,002 (1,352)3,6503,110 (834)2,276 
Reclassification adjustment for gains included in net income(4,124)1,114 (3,010)(162)44 (118)
Total878 (238)640 2,948 (790)2,158 
Amortization related to post-retirement obligations(358)97 (261)(322)86 (236)
Total other comprehensive (loss) income$(19,658)5,311 (14,347)(59,909)16,056 (43,853)
Six months ended June 30,
20232022
Before
Tax
Tax
Effect
After
Tax
Before
Tax
Tax
Effect
After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on available for sale debt securities:
Net unrealized gains (losses) arising during the period$7,641 (1,503)6,138 (178,558)47,854 (130,704)
Reclassification adjustment for gains included in net income— — — (58)16 (42)
Total7,641 (1,503)6,138 (178,616)47,870 (130,746)
Unrealized gains and losses on derivatives (cash flow hedges):
Net unrealized gains (losses) arising during the period4,219 (1,186)3,033 16,703 (4,476)12,227 
Reclassification adjustment for (gains) losses included in net income(8,343)2,254 (6,089)504 (135)369 
Total(4,124)1,068 (3,056)17,207 (4,611)12,596 
Amortization related to post-retirement obligations(727)197 (530)(700)188 (512)
Total other comprehensive income (loss)$2,790 (238)2,552 (162,109)43,447 (118,662)
34


Three months ended March 31,
20242023
Before
Tax
Tax
Effect
After
Tax
Before
Tax
Tax
Effect
After
Tax
Components of Other Comprehensive Income:
Unrealized gains and losses on available for sale debt securities:
Net unrealized (losses) gains arising during the period$(13,547)3,590 (9,957)28,588 (7,724)20,864 
Reclassification adjustment for gains included in net income— — — — — — 
Total(13,547)3,590 (9,957)28,588 (7,724)20,864 
Unrealized gains and losses on derivatives (cash flow hedges):
Net unrealized gains (losses) arising during the period4,605 (1,220)3,385(845)229 (616)
Reclassification adjustment for (gains) included in net income(4,175)1,106 (3,069)(4,220)1,140 (3,080)
Total430 (114)316 (5,065)1,369 (3,696)
Amortization related to post-retirement obligations(1,128)299 (829)(369)100 (269)
Total other comprehensive (loss)$(14,245)3,775 (10,470)23,154 (6,255)16,899 
The following tables present the changes in the components of accumulated other comprehensive (loss), net of tax, for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (in thousands):
Changes in Accumulated Other Comprehensive (Loss) by Component, net of tax
for the three months ended June 30,
20232022
Unrealized
Losses on
Available for Sale Debt Securities
Post- Retirement
Obligations
Unrealized Gains on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive
Loss
Unrealized Gains on
 Available for Sale Debt Securities
Post-  Retirement
Obligations
Unrealized Losses on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive Loss
Balance at
March 31,
$(165,750)1,303 16,301 (148,146)(85,182)2,705 14,531 (67,946)
Current - period other comprehensive (loss)(14,726)(261)640 (14,347)(45,775)(236)2,158 (43,853)
Balance at June 30,$(180,476)1,042 16,941 (162,493)(130,957)2,469 16,689 (111,799)
Changes in Accumulated Other Comprehensive (Loss) by Component, net of tax
for the three months ended March 31,
20242023
Unrealized
Losses on
Available for Sale Debt Securities
Post- Retirement
Obligations
Unrealized Gains on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive
(Loss)
Unrealized Losses on
 Available for Sale Debt Securities
Post-  Retirement
Obligations
Unrealized Gains on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive (Loss)
Balance as of
December 31,
$(154,489)3,937 9,437 (141,115)(186,614)1,572 19,997 (165,045)
Current - period other comprehensive (loss) income(9,957)(829)316 (10,470)20,864 (269)(3,696)16,899 
Balance as of March 31,$(164,446)3,108 9,753 (151,585)(165,750)1,303 16,301 (148,146)
Changes in Accumulated Other Comprehensive (Loss) by Component, net of tax
for the six months ended June 30,
20232022
Unrealized
Losses on
Available for Sale Debt Securities
Post-  Retirement
Obligations
Unrealized Gains on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive
Income (Loss)
Unrealized Gains (Losses) on
 Available for Sale Debt Securities
Post- Retirement
Obligations
Unrealized Gains (Losses) on Derivatives (cash flow hedges)Accumulated
Other
Comprehensive Income (Loss)
Balance at December 31,$(186,614)1,572 19,997 (165,045)(211)2,981 4,093 6,863 
Current - period other comprehensive income (loss)6,138 (530)(3,056)2,552 (130,746)(512)12,596 (118,662)
Balance at June 30,$(180,476)1,042 16,941 (162,493)(130,957)2,469 16,689 (111,799)

3532


The following tables summarize the reclassifications from accumulated other comprehensive (loss) to the consolidated statements of income for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (in thousands):
Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the three months ended June 30,Affected line item in the Consolidated
Statement of Income
20232022
Details of AOCI:
Available for sale debt securities:
Realized net gains on the sale of securities available for sale$— (58)Net gain on securities transactions
— 16 Income tax expense
$— (42)Net of tax
Cash flow hedges:
Realized net gains on derivatives$(4,124)(162)Interest expense
1,114 44 Income tax expense
$(3,010)(118)
Post-retirement obligations:
Amortization of actuarial gains$(356)(326)
Compensation and employee benefits (1)
96 84 Income tax expense
Total reclassification$(260)(242)Net of tax
Total reclassifications$(3,270)(402)Net of tax
Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the six months ended June 30,Affected line item in the Consolidated
Statement of Income
20232022
Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Reclassifications From Accumulated Other Comprehensive
Income ("AOCI")
Amount reclassified from AOCI for the three months ended March 31,Amount reclassified from AOCI for the three months ended March 31,Affected line item in the Consolidated
Statement of Income
2024
Details of AOCI:
Details of AOCI:
Details of AOCI:Details of AOCI:
Available for sale debt securities:Available for sale debt securities:
Available for sale debt securities:
Available for sale debt securities:
Realized net gains on the sale of securities available for saleRealized net gains on the sale of securities available for sale$— (58)Net gain on securities transactions
— 16 Income tax expense
$— (42)Net of tax
Realized net gains on the sale of securities available for sale
Realized net gains on the sale of securities available for sale$— — Net gain on securities transactions
— Income tax expense
$$— — Net of tax
Cash flow hedges:Cash flow hedges:
Realized net (gains) losses on derivatives$(8,343)504 Interest expense
Cash flow hedges:
Cash flow hedges:
Realized net gains on derivatives
Realized net gains on derivatives
Realized net gains on derivatives$(4,175)(4,220)Interest expense
1,106 1,106 1,140 Income tax expense
$
2,254 (136)Income tax expense
Post-retirement obligations:
$(6,089)368 
Post-retirement obligations:
Post-retirement obligations:Post-retirement obligations:
Amortization of actuarial gainsAmortization of actuarial gains$(712)(652)
Compensation and employee benefits (1)
192 171 Income tax expense
Amortization of actuarial gains
Amortization of actuarial gains$(516)(356)
Compensation and employee benefits (1)
137 137 96 Income tax expense
Total reclassificationTotal reclassification$(520)(481)Net of taxTotal reclassification$(379)(260)(260)Net of taxNet of tax
Total reclassificationsTotal reclassifications$(6,609)(155)Net of tax
Total reclassifications
Total reclassifications$(3,448)(3,340)Net of tax
(1) This item is included in the computation of net periodic benefit cost. See Note 7. Components of Net Periodic Benefit Cost.

3633


Note 12.13. Derivative and Hedging Activities
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through the management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk, primarily by managing the amount, sources, and duration of its assets and liabilities.
Non-designated Hedges. Derivatives not designated in qualifying hedging relationships are not speculative and result from a service the Company provides to certain qualified commercial borrowers in loan related transactions which, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company may execute interest rate swaps with qualified commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting interest rate swaps that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. The interest rate swap agreement which the Company executes with the commercial borrower is collateralized by the borrower's commercial real estate financed by the Company. As the Company has not elected to apply hedge accounting and these interest rate swaps do not meet the hedge accounting requirements, changes in the fair value of both the customer swaps and the offsetting swaps are recognized directly in earnings. At June 30, 2023As of March 31, 2024 and December 31, 2022,2023, the Company had 152 and 154 loan related interest rate swaps with aggregate notional amounts of $2.23 billion and $2.40$2.30 billion, respectively.
The Company periodically enters into risk participation agreements ("RPAs"), with the Company functioning as either the lead institution, or as a participant when another company is the lead institution on a commercial loan. These RPAs are entered into to manage the credit exposure on interest rate contracts associated with these loan participation agreements. Under the RPAs, the Company will either receive or make a payment in the event the borrower defaults on the related interest rate contract. The Company has minimum collateral posting thresholds with certain of its risk participation counterparties, and has posted collateral of $70,000 against the potential risk of default by the borrower under these agreements. For June 30, 2023March 31, 2024 and December 31, 2022,2023, the Company had 12 and 14 credit derivatives, respectively, with aggregate notional amounts of $143.5$188.4 million and $157.9$142.8 million, respectively, from participations in interest rate swaps as part of these loan participation arrangements. At June 30, 2023,As of March 31, 2024, the asset and liability positions of these fair value credit derivatives totaled $47,000$9,000 and $11,000,$5,000, respectively, compared to $26,000$17,000 and $12,000,$8,000, respectively, atas of December 31, 2022.2023.
Cash Flow Hedges of Interest Rate Risk. The Company’s objective in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable payment amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. 
Changes in the fair value of derivatives designated and that qualify as cash flow hedges of interest rate risk are recorded in accumulated other comprehensive (loss) income and are subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the three and six months ended June 30,March 31, 2024 and 2023, and 2022, such derivatives were used to hedge the variable cash outflows associated with FHLBNY borrowings and brokered demand deposits.borrowings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s borrowings or demand deposits. During the next twelve months, the Company estimates that $15.7$11.1 million will be reclassified as a reduction to interest expense. At June 30, 2023,As of March 31, 2024, the Company had nine7 outstanding interest rate derivatives with an aggregate notional amount of $405.0$375.0 million that were each designated as a cash flow hedge of interest rate risk.risk, compared to 9 outstanding interest rate derivatives with an aggregate notional amount of $455.0 million, as of December 31, 2023.
Assets and liabilities relating to certain financial instruments, including derivatives, may be eligible for offset in the Consolidated Statements of Financial Condition and/or subject to enforceable master netting arrangements or similar agreements. The Company does not offset asset and liabilities under such arrangements in the Consolidated Statements of Financial Condition.
The tables below present a gross presentation, the effects of offsetting, and a net presentation of the Company’s financial instruments that are eligible for offset in the Consolidated Statements of Condition at June 30, 2023as of March 31, 2024 and December 31, 20222023 (in thousands).
3734


Fair Values of Derivative Instruments as of June 30, 2023
Asset DerivativesLiability Derivatives
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Fair Values of Derivative Instruments as of March 31, 2024Fair Values of Derivative Instruments as of March 31, 2024
Asset DerivativesAsset DerivativesLiability Derivatives
Notional AmountNotional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Derivatives not designated as a hedging instrument:Derivatives not designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate products$1,114,765 Other assets$109,589 1,114,765 Other liabilities109,871 
Credit contractsCredit contracts46,768 Other assets47 96,764 Other liabilities11 
Total derivatives not designated as a hedging instrumentTotal derivatives not designated as a hedging instrument109,636 109,882 
Derivatives designated as a hedging instrument:Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate products405,000 Other assets24,769 — Other liabilities— 
Total gross derivative amounts recognized on the balance sheetTotal gross derivative amounts recognized on the balance sheet134,405 109,882 
Total gross derivative amounts recognized on the balance sheet
Total gross derivative amounts recognized on the balance sheet
Gross amounts offset on the balance sheet
Gross amounts offset on the balance sheet
Gross amounts offset on the balance sheetGross amounts offset on the balance sheet— — 
Net derivative amounts presented on the balance sheetNet derivative amounts presented on the balance sheet$134,405 109,882 
Gross amounts not offset on the balance sheet:Gross amounts not offset on the balance sheet:
Gross amounts not offset on the balance sheet:
Gross amounts not offset on the balance sheet:
Financial instruments - institutional counterparties
Financial instruments - institutional counterparties
Financial instruments - institutional counterpartiesFinancial instruments - institutional counterparties$— — 
Cash collateral - institutional counterparties (1)
Cash collateral - institutional counterparties (1)
129,021 — 
Net derivatives not offsetNet derivatives not offset$5,384 109,882 
3835


Fair Values of Derivative Instruments as of December 31, 2022
Asset DerivativesLiability Derivatives
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Fair Values of Derivative Instruments as of December 31, 2023Fair Values of Derivative Instruments as of December 31, 2023
Asset DerivativesAsset DerivativesLiability Derivatives
Notional AmountNotional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Notional AmountConsolidated Statements of Financial Condition
Fair
 value (2)
Derivatives not designated as a hedging instrument:Derivatives not designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate products$1,198,191 Other assets$122,047 $1,198,191 Other liabilities122,378 
Credit contractsCredit contracts47,143 Other assets26 110,714 Other liabilities12 
Total derivatives not designated as a hedging instrumentTotal derivatives not designated as a hedging instrument122,073 122,390 
Derivatives designated as a hedging instrument:Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate products460,000 Other assets29,119 — Other liabilities— 
Total gross derivative amounts recognized on the balance sheetTotal gross derivative amounts recognized on the balance sheet151,192 122,390 
Total gross derivative amounts recognized on the balance sheet
Total gross derivative amounts recognized on the balance sheet
Gross amounts offset on the balance sheet
Gross amounts offset on the balance sheet
Gross amounts offset on the balance sheetGross amounts offset on the balance sheet— — 
Net derivative amounts presented on the balance sheetNet derivative amounts presented on the balance sheet$151,192 122,390 
Gross amounts not offset on the balance sheet:Gross amounts not offset on the balance sheet:
Gross amounts not offset on the balance sheet:
Gross amounts not offset on the balance sheet:
Financial instruments - institutional counterparties
Financial instruments - institutional counterparties
Financial instruments - institutional counterpartiesFinancial instruments - institutional counterparties$— — 
Cash collateral - institutional counterparties (1)
Cash collateral - institutional counterparties (1)
149,800 — 
Net derivatives not offsetNet derivatives not offset$1,392 122,390 
(1) Cash collateral represents the amount that cannot be used to offset our derivative assets and liabilities from a gross basis to a net basis in accordance with the applicable accounting guidance. The application of the cash collateral cannot reduce the net derivative position below zero. Therefore, excess cash collateral, if any, is not reflected above.
(2) The fair values related to interest rate products in the above net derivative tables show the total value of assets and liabilities, which include accrued interest receivable and accrued interest payable for the periods ended June 30, 2023March 31, 2024 and December 31, 2022.2023.
The tables below present the effect of the Company’s derivative financial instruments on the Consolidated Statements of Income during the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (in thousands).
Gain (loss) recognized in income on derivatives for the three months ended
Consolidated Statements of IncomeJune 30, 2023June 30, 2022
Gain (loss) recognized in income on derivatives for the three months endedGain (loss) recognized in income on derivatives for the three months ended
Consolidated Statements of IncomeConsolidated Statements of IncomeMarch 31, 2024March 31, 2023
Derivatives not designated as a hedging instrument:Derivatives not designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate productsOther income$126 77 
Credit contractsCredit contractsOther income(8)(18)
TotalTotal$118 59 
Derivatives designated as a hedging instrument:Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Derivatives designated as a hedging instrument:
Interest rate products
Interest rate products
Interest rate productsInterest rate productsInterest (income) expense$(4,124)(162)
TotalTotal$(4,124)(162)
3936


Gain (loss) recognized in income on derivatives for the six months ended
Consolidated Statements of IncomeJune 30, 2023June 30, 2022
Derivatives not designated as a hedging instrument:
Interest rate productsOther income$52 443 
Credit contractsOther income(4)(35)
Total$48 408 
Derivatives designated as a hedging instrument:
Interest rate productsInterest (income) expense$(8,343)504 
Total$(8,343)504 

The Company has agreements with certain of its dealer counterparties which contain a provision that if the Company defaults on any of its indebtedness, including a default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be deemed in default on its derivative obligations. In addition, the Company has agreements with certain of its dealer counterparties which contain a provision that if the Company fails to maintain its status as a well or adequately capitalized institution, then the counterparty could terminate the derivative positions and the Company would be required to settle its obligations under the agreements.
At June 30, 2023,As of March 31, 2024, the Company had four dealer counterparties. Thecounterparties and the Company hadwas in a net asset position with respect to all of its counterparties.
4037


Note 13.14. Revenue Recognition
The Company generates revenue from several business channels. The guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) does not apply to revenue associated with financial instruments, including interest income on loans and investments, which comprise the majority of the Company's revenue. For both the three and six months ended June 30, 2023,March 31, 2024, the out-of-scope revenue related to financial instruments was 88.5% and 87.6%88.7% of the Company's total revenue, compared to 83.5%86.6% for the three and six months ended June 30, 2022,March 31, 2023, respectively. Revenue-generating activities that are within the scope of Topic 606, are components of non-interest income. These revenue streams are generally classified into three categories: wealth management revenue, insurance agency income and banking service charges and other fees.
The following table presents non-interest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 (in thousands):
Three months ended June 30,Six months ended June 30,
2023202220232022
Three months ended March 31,
Three months ended March 31,
Three months ended March 31,
2024
2024
2024
Non-interest income
Non-interest income
Non-interest incomeNon-interest income
In-scope of Topic 606:In-scope of Topic 606:
In-scope of Topic 606:
In-scope of Topic 606:
Wealth management fees
Wealth management fees
Wealth management feesWealth management fees$6,919 7,024 13,834 14,489 
Insurance agency incomeInsurance agency income3,847 2,850 7,950 6,270 
Insurance agency income
Insurance agency income
Banking service charges and other fees:
Banking service charges and other fees:
Banking service charges and other fees:Banking service charges and other fees:
Service charges on deposit accountsService charges on deposit accounts3,050 3,068 6,413 6,031 
Service charges on deposit accounts
Service charges on deposit accounts
Debit card and ATM fees
Debit card and ATM fees
Debit card and ATM feesDebit card and ATM fees761 846 1,466 1,616 
Total banking service charges and other feesTotal banking service charges and other fees3,811 3,914 7,879 7,647 
Total banking service charges and other fees
Total banking service charges and other fees
Total in-scope non-interest income
Total in-scope non-interest income
Total in-scope non-interest incomeTotal in-scope non-interest income14,577 13,788 29,663 28,406 
Total out-of-scope non-interest incomeTotal out-of-scope non-interest income4,810 7,144 11,877 12,672 
Total out-of-scope non-interest income
Total out-of-scope non-interest income
Total non-interest income
Total non-interest income
Total non-interest incomeTotal non-interest income$19,387 20,932 41,540 41,078 
Wealth management fee income represents fees earned from customers as consideration for asset management, investment advisory and trust services. The Company’s performance obligation is generally satisfied monthly and the resulting fees are recognized monthly. The fee is generally based upon the average market value of the assets under management ("AUM") for the month and the applicable fee rate. The monthly accrual of wealth management fees is recorded in other assets on the Company's Consolidated Statements of Financial Condition. Fees are received from the customer on a monthly basis. The Company does not earn performance-based incentives. To a lesser extent, optional services such as tax return preparation and estate settlement are also available to existing customers. The Company’s performance obligation for these transaction-based services areis generally satisfied, and related revenue recognized, at either a point in time when the service is completed, or in the case of estate settlement, over a relatively short period of time, as each service component is completed.
Insurance agency income, consisting of commissions and fees, is generally recognized as of the effective date of the insurance policy. Commission revenues related to installment billings are recognized on the invoice date. Subsequent commission adjustments are recognized upon the receipt of notification from insurance companies concerning matters necessitating such adjustments. Profit-sharing contingent commissions are recognized when determinable, which is generally when such commissions are received from insurance companies, or when the Company receives formal notification of the amount of such payments.
Service charges on deposit accounts include overdraft service fees, account analysis fees and other deposit relateddeposit-related fees. These fees are generally transaction-based, or time-based services. The Company's performance obligation for these services areis generally satisfied, and revenue recognized, at the time the transaction is completed, or the service rendered. Fees for these services are generally received from the customer either at the time of transaction, or monthly. Debit card and ATM fees are generally transaction-based. Debit card revenue is primarily comprised of interchange fees earned when a customer's Company card is processed through a card payment network. ATM fees are largely generated when a Company cardholder uses a non-Company ATM, or a non-Company cardholder uses a Company ATM. The Company's performance obligation for these services is satisfied when the service is rendered. Payment is generally received at the time of transaction or monthly.
Out-of-scope non-interest income primarily consists of Bank-owned life insurance and net fees on loan level interest rate swaps, along with gains and losses on the sale of loans and foreclosed real estate, loan prepayment fees and loan servicing fees. None of these revenue streams are subject to the requirements of Topic 606.
4138


Note 14.15. Leases
The following table represents the consolidated statements of financial condition classification of the Company’s right-of use-assets and lease liabilities at June 30, 2023as of March 31, 2024 and December 31, 20212023 (in thousands):
ClassificationJune 30, 2023December 31, 2022
ClassificationClassificationMarch 31, 2024December 31, 2023
Lease Right-of-Use Assets:Lease Right-of-Use Assets:
Operating lease right-of-use assets
Operating lease right-of-use assets
Operating lease right-of-use assetsOperating lease right-of-use assetsOther assets$60,749 60,577 
Lease Liabilities:Lease Liabilities:
Operating lease liabilitiesOperating lease liabilitiesOther liabilities$63,916 63,372 
Operating lease liabilities
Operating lease liabilities
The calculated amount of the right-of-use assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the right-of-use asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception based upon the term of the lease. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019 was applied.
All of the leases in which the Company is the lessee are classified as operating leases and are primarily comprised of real estate properties for branches and administrative offices with terms extending through 2040.
At June 30, 2023,As of March 31, 2024, the weighted-average remaining lease term and the weighted-average discount rate for the Company's operating leases were 8.37.7 years and 2.71%, respectively.
The following tables represent lease costs and other lease information for the Company's operating leases. The variable lease cost primarily represents variable payments such as common area maintenance and utilities (in thousands):
Three months ended June 30, 2023Three months ended June 30, 2022
Three months ended March 31, 2024Three months ended March 31, 2024Three months ended March 31, 2023
Lease CostsLease Costs
Operating lease cost
Operating lease cost
Operating lease costOperating lease cost$2,629 2,586 
Variable lease costVariable lease cost842 718 
Variable lease cost
Variable lease cost
Total lease costTotal lease cost$3,471 3,304 
Total lease cost
Total lease cost

Six months ended June 30, 2023Six months ended June 30, 2022
Lease Costs
Operating lease cost$5,257 5,393 
Variable lease cost1,722 1,436 
Total lease cost$6,979 6,829 

Cash paid for amounts included in the measurement of lease liabilities:Cash paid for amounts included in the measurement of lease liabilities:Six months ended June 30, 2023Six months ended June 30, 2022Cash paid for amounts included in the measurement of lease liabilities:Three months ended March 31, 2024Three months ended March 31, 2023
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from operating leasesOperating cash flows from operating leases$4,776 4,060 

4239


Future minimum payments for operating leases with initial or remaining terms of one year or more as of June 30, 2023,March 31, 2024, were as follows (in thousands):
Operating leases
Operating leasesOperating leases
Twelve months ended:Twelve months ended:
Remainder of 2022$5,094 
20239,971 
20249,488 
Remainder of 2024
Remainder of 2024
Remainder of 2024
202520258,518 
202620267,667 
2027
2028
ThereafterThereafter30,707 
Total future minimum lease paymentsTotal future minimum lease payments71,445 
Amounts representing interestAmounts representing interest7,529 
Present value of net future minimum lease paymentsPresent value of net future minimum lease payments$63,916 

Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Forward-Looking Statements
Certain statements contained herein are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “estimate,” "project," "intend," “anticipate,” “continue,” or similar terms or variations on those terms, or the negative of those terms. Forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, those set forth in Item 1A of the Company's Annual Report on Form 10-K, as supplemented by its Quarterly Reports on Form 10-Q, and those related to the economic environment, particularly in the market areas in which the Company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, the effects of the recent turmoil in the banking industry, (including the closing of three financial institutions), changes in accounting policies and practices that may be adopted by the regulatory agencies and the accounting standards setters, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, potential goodwill impairment, acquisitions and the integration of acquired businesses, credit risk management, asset-liability management, the financial and securities markets, the availability of and costs associated with sources of liquidity, the ability to complete, or any delays in completing, the pending merger between the Company and Lakeland;Lakeland, any failure to realize the anticipated benefits of the pending merger transaction when expected or at all;all, certain restrictions during the pendency of the transaction that may impact the Company’s ability to pursue certain business opportunities or strategic transactions; the possibility that the pending merger transaction may be more expensive to complete than anticipated, including as a result of conditions imposed by regulators, unexpected conditions, factors or events, diversion of management’s attention from ongoing business operations and opportunities; and potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger and integration of the companies.companies; and the impact of a potential shutdown of the federal government.
The Company cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date they are made. The Company advises readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not assume any duty, and does not undertake, to update any forward-looking statements to reflect events or circumstances after the date of this statement.
Lakeland Bancorp, Inc. Merger Agreement
On September 26, 2022, theThe Company entered into a definitive merger agreement pursuant to which it will merge (the “merger”) withreceived all regulatory approvals for its previously announced acquisition of Lakeland Bancorp, Inc. ("Lakeland"), subject to certain conditions and commitments (referred to as the “Regulatory Conditions”). The Regulatory Conditions include, but are not limited to: prior to consummation of the merger, the Company must complete the issuance of $200 million of Tier 2 qualifying subordinated debt; for three years following consummation of the merger, Provident 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 Provident 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 Provident Bank submitted to the FDIC. In connection with
40


the acquisition, Lakeland Bank, a wholly owned subsidiary of Lakeland, will mergebe merged with and into Provident Bank, a wholly owned subsidiary of the Company. The merger agreement has been unanimously approved by the boardsAs of both companiesMarch 31, 2024, Lakeland had, on a consolidated basis, $11.00 billion in total assets, which included $8.30 billion in total loans and shareholder approval has also been received by both companies. The actual value of the Company’s common stock to be recorded as consideration$8.50 billion in the merger will be based on the closing price of Company’s common stock at the time of the merger completion date.total deposits, and operated 67 full-service banking offices in New Jersey. Under the merger agreement, each share of Lakeland common stock will be exchanged for 0.8319 shares, or approximately 55 million shares, of the Company's common stock plus cash in lieu of fractional shares. Provident stockholders will own approximately 58% and Lakeland shareholders will own approximately 42% of the combined company. The combined company is expected to have approximately $25 billion in total assets, $19.2 billion in total loans and $18.6 billion in total deposits.
43


Merger-related expenses, which is a separate line in non-interest expense on the Consolidated Statements of Income, totaled $2.2 million for the three months ended March 31, 2024.
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. These policies require management to make complex judgments on matters which by their nature have elements of uncertainty. The sensitivity of the Company’s consolidated financial statements to these critical accounting policies, and the assumptions and estimates applied, could have a significant impact on its financial condition and results of operations. 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.
The allowance for credit losses is a valuation account that reflects management’s evaluation of the current expected credit losses in the loan portfolio. The Company maintains the allowance for credit losses through provisions for credit losses that are charged to income. Charge-offs against the allowance for credit losses are taken on loans where management determines that the collection of loan principal and interest is unlikely. Recoveries made on loans that have been charged-off are credited to the allowance for credit losses.
The calculation of the allowance for credit losses is a critical accounting policy of the Company. Management estimates the allowance balance using relevant available information, from internal and external sources, related 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 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. 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.
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. 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 Asset-LiabilityACL 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. The respective quantitative allowance for each loan segment is measured using an econometric, discounted PDR/LGD modeling methodology in which distinct, segment-specific multi-variate regression models are applied to an external economic forecast. Under the discounted cash flows methodology, expected credit losses are estimated over the effective life of the loans by measuring the difference between the net present value of modeled cash flows and amortized cost basis. Contractual cash flows over the contractual life of the loans are the basis for modeled cash flows, adjusted for modeled defaults and expected prepayments and discounted at the loan-level effective interest rate. 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. 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. Qualitative factors are based on portfolio concentration levels, model imprecision,
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changes in industry conditions, changes in the Company’s loan review process, changes in the Company’s loan policies and procedures, and economic forecast uncertainty.
One of the most significant judgments involved in estimating the Company’s allowance for credit losses on loans relates to the macroeconomic forecasts used to estimate expected credit losses over the forecast period. As of June 30, 2023,March 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. For example, the commercial property price index used in the model has a higher proportion of office exposure relative to that of the Bank. This baseline outlook reflected a worseningworsened economic forecast and related deterioration in the projected commercial property price index overused in our CECL model. The Company made qualitative adjustments to the expected life ofprojected commercial real estate property price index, considering the loandifferences in portfolio andcollateral composition versus the commercial property price index used in our CECL models. The allowance estimation process resulted in recorded provisionsa total provision of $10.4 million and $16.4 million$200,000 for the three and six months ended June 30, 2023,March 31, 2024, and aan overall coverage ratio of 9798 basis points. 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. If the Company had used a more pessimisticthe unadjusted baseline outlooks for the commercial
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real estate property price index over the expected lifelives of theCommercial Real Estate Non-Owner Occupied and Owner-Occupied loan portfolio,portfolios, the provision would have increased $6.5risen by approximately $6.2 million, with aleading to an overall coverage ratio of 103approximately 104 basis points.
Portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. Management developed segments for estimating loss based on type of borrower and collateral which is generally based upon federal call report segmentation. The segments have been combined or sub-segmented as needed to ensure loans of similar risk profiles are appropriately pooled. As of June 30, 2023,March 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 OccupiedOwner-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 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 at leastgreater than $1.0 million.
For all classes of loans deemed collateral-dependent, the Company estimates expected credit losses based on the fair value of the collateral less any selling costs. If the loan is not collateral dependent, the allowance for credit losses related to individually assessed loans is based on discounted expected cash flows using the loan’s initial effective interest rate.
For loans acquired that have experienced more-than-insignificant deterioration in credit quality since their origination are considered PCD loans. 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. At the acquisition date, an estimate of expected credit losses is made for groups of PCD loans with similar risk characteristics and individual PCD loans without similar risk characteristics. Subsequent to the acquisition date, the initial allowance for credit losses on PCD loans will increase or decrease based on future evaluations, with changes recognized in the provision for credit losses.
Management believes the primary risks inherent in the portfolio are a general decline in the economy, a decline in real estate market values, rising unemployment or a protracted period of elevated unemployment, increasing vacancy rates in commercial investment properties and possible increases in interest rates in the absence of economic improvement. Any one or a combination of these events may adversely affect borrowers’ ability to repay the loans, resulting in increased delinquencies, credit losses and higher levels of provisions. Management considers it important to maintain the ratio of the allowance for credit losses to total loans at an acceptable level given current and forecasted economic conditions, interest rates and the composition of the portfolio.
The CECL approach to calculate the allowance for credit losses on loans is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized. Although management believes that the Company has established and maintained the allowance for credit losses at appropriate levels, additions may be necessary if future economic and other conditions differ substantially from the current operating
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environment and economic forecast. Management evaluates its estimates and assumptions on an ongoing basis giving consideration to forecasted economic factors, historical loss experience and other factors. The model includes both quantitative and qualitative components. Such estimates and assumptions are adjusted when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods, and to the extent actual losses are higher than management estimates, additional provision for credit losses on loans could be required and could adversely affect our earnings or financial position in future periods. In addition, various regulatory agencies periodically review the adequacy of the Company’s allowance for credit losses as an integral part of their examination process. Such agencies may require the Company to recognize additions to the allowance or additional write-downs based on their judgments about information available to them at the time of their examination. 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 change.
The CECL approach to calculate the allowance for credit losses on loans is significantly influenced by the composition, characteristics and quality of the Company’s loan portfolio, as well as the prevailing economic conditions and forecast utilized.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. For the three and six months ended June 30, 2023,March 31, 2024, the provision for credit losses on loans totaled $10.4 million and $16.4 million, compared to a $3.0 million provision for credit losses and a $3.4 million negative provision for credit losses for the three and six months ended June 30, 2022. The increasesincrease in provision for
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both periods was primarily attributable to a worsenedan increase in specific reserves on impaired credits, partially offset by an improved economic forecast and related deterioration infor the projected commercial property price indices over the expected life of the loan portfoliocurrent quarter within our CECL model, combined with an increase in total loans outstanding.model.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2023AS OF MARCH 31, 2024 AND DECEMBER 31, 20222023
Total assets at June 30, 2023as of March 31, 2024 were $14.03$14.13 billion, a $246.2$79.9 million increasedecrease from December 31, 2022.2023. The increasedecrease in total assets was primarily due to a $281.6 million increase in total loans, partially offset by a $37.8$33.6 million decrease in total investments.investments and a $31.0 million decrease in total loans.
The Company’s loan portfolio increased $281.6decreased $31.0 million to $10.53$10.84 billion at June 30, 2023,as of March 31, 2024, from $10.25$10.87 billion atas of December 31, 2022. For2023. The loan portfolio consists of the sixfollowing:
March 31, 2024December 31, 2023
Mortgage loans:
Commercial$4,353,799 4,512,411 
Multi-family1,825,888 1,812,500 
Construction711,417 653,246 
Residential1,152,185 1,164,956 
Total mortgage loans8,043,289 8,143,113 
Commercial loans (1)
2,514,550 2,442,406 
Consumer loans295,125 299,164 
Total gross loans10,852,964 10,884,683 
Premiums on purchased loans1,439 1,474 
Net deferred fees(11,696)(12,456)
Total loans$10,842,707 10,873,701 
(1) Commercial loans consist of owner-occupied real estate and commercial & industrial loans.
During the three months ended June 30, 2023, loan funding, including advances on lines of credit, totaled $1.79 billion, compared with $2.15 billion for the same period in 2022. During the six months ended June 30, 2023,March 31, 2024, the loan portfolio had net increasesdecreases of $57.3$158.6 million in commercial mortgage loans, $132.0$12.8 million in multi-familyresidential mortgage loans and $114.8$4.0 million in commercialconsumer loans, partially offset by net decreasesincreases of $72.1 million in residential mortgage,commercial loans, $58.2 million in construction loans and consumer loans of $11.5$13.4 million $8.3 million and $3.5 million, respectively.in multi-family loans. Commercial loans, consisting of commercial real estate, multi-family, commercial and construction loans represented 86.1%86.7% of the loan portfolio at June 30, 2023,as of March 31, 2024, compared to 85.6% at86.5% as of December 31, 2022.2023.
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. This geographic concentration subjects the Company’s loan portfolio to the general economic conditions within these states. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for credit losses.
We consider our commercial real estate loans to be higher risk categories in our loan portfolio. These loans are particularly sensitive to economic conditions. As of March 31, 2024, our portfolio of commercial real estate loans, including multi-family and construction loans, totaled $6.89 billion, or 63.50% of total gross loans.
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The Company believes the CRE loans it originates are appropriately collateralized under its credit standards. Collateral properties include multi-family apartment buildings, warehouse/distribution buildings, shopping centers, office buildings, mixed-use buildings, hotels/motels, senior living, residential and commercial tract developments, and raw land or lots to be developed into single-family homes. 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 primary source of the repayment on the construction portfolio is dependent on the successful completion of the project and the related sale, permanent financing or lease of the real property collateral. 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.
The table below summarizes the concentrations of CRE loans on a gross basis, not including any purchase accounting adjustments, based on the collateral securing the loans, as of March 31, 2024 (in thousands):

AmountPercentage of Total
Multi-family (1)
$2,289,230 33.2 %
Retail1,714,689 24.9 %
Industrial1,400,915 20.3 %
Office511,826 7.4 %
Mixed432,853 6.3 %
Special use property217,862 3.2 %
Hotel156,853 2.3 %
Residential140,030 2.0 %
Land33,144 0.5 %
Total CRE, multi-family and construction loans$6,897,402 100.0 %
(1) As of March 31, 2024, Multi-family CRE loans on New York City properties totaled $192.4 million. This portfolio constitutes only 1.8% of total loans and has an average loan size of $2.8 million. Approximately $118.0 million of these loans are collateralized by rent stabilized apartments and all are performing.
The determination of collateral value is critically important when financing real estate. As a result, obtaining current and objectively prepared appraisals is a major part of the underwriting process. The Company engages a variety of professional firms to supply appraisals, market studies and feasibility reports, environmental assessments and project site inspections to complement its internal resources to underwrite and monitor these credit exposures.
However, in periods of economic uncertainty where real estate market conditions may change rapidly, more current appraisals are obtained when warranted by conditions such as a borrower’s deteriorating financial condition, their possible inability to perform on the loan or other indicators of increasing risk of reliance on collateral value as the sole source of repayment of the loan. 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. The third-party reviewer will challenge whether or not the data used is appropriate and relevant, form an opinion as to the appropriateness of the appraisal methods and techniques used, and determine if overall the analysis and conclusions of the appraiser can be relied upon. Additionally, the third-party reviewer provides a detailed report of that analysis. Further review may be conducted by credit or lending teams, including the Bank’s commercial workout team as conditions warrant. These additional steps of review are undertaken to confirm that the underlying appraisal and the third-party analysis can be relied upon. If differences arise, management addresses those with the reviewer and determines an appropriate resolution in accordance with its lending policy. Both the appraisal process and the appraisal review process can be less reliable in establishing accurate collateral values during and following periods of economic weakness due to the lack of comparable sales and the limited availability of financing to support an active market of potential purchasers.
The table below summarizes the Company’s commercial real estate portfolio, including multi-family and construction loans as of March 31, 2024, as segregated by the geographic region in which the property is located (dollars in thousands):
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AmountPercentage of Total
New Jersey$3,714,820 53.9 %
Pennsylvania1,288,613 18.7 %
New York989,620 14.3 %
Other states904,350 13.1 %
Total commercial real estate loans$6,897,402 100.0 %
The Company participates in loans originated by other banks, including participations designated as Shared National Credits (“SNCs”). The Company’s gross commitments and outstanding balances as a participant in SNCs were $186.0$135.4 million and $87.0$53.8 million, respectively, at June 30, 2023,as of March 31, 2024, compared to $203.9$140.5 million and $87.3$54.9 million, respectively, atas of December 31, 2022.2023. One SNC relationship, with an outstanding balance of $7.3 million (which represents approximately a 6% share of the total facility commitment) was 90 days or more delinquent at June 30, 2023.as of March 31, 2024.
The Company had outstanding junior lien mortgages totaling $135.2$142.1 million at June 30, 2023.as of March 31, 2024. Of this total, threefour loans totaling $237,900$507,000 were 90 days or more delinquent with an allowance for credit losses of $4,675.delinquent.
The following table sets forth information regarding the Company’s non-performing assets as of June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):
June 30, 2023December 31, 2022
March 31, 2024March 31, 2024December 31, 2023
Mortgage loans:Mortgage loans:
Residential$1,698 1,928 
Commercial
Commercial
CommercialCommercial7,279 28,212 
Multi-familyMulti-family2,314 1,565 
ConstructionConstruction1,874 1,878 
Residential
Total mortgage loansTotal mortgage loans13,165 33,583 
Commercial loansCommercial loans31,885 24,188 
Consumer loansConsumer loans878 738 
Total non-performing loansTotal non-performing loans45,928 58,509 
Total non-performing loans
Total non-performing loans
Foreclosed assetsForeclosed assets13,697 2,124 
Total non-performing assetsTotal non-performing assets$59,625 60,633 
The following table sets forth information regarding the Company’s 60-89 day delinquent loans as of June 30, 2023March 31, 2024 and December 31, 20222023 (in thousands):
March 31, 2024March 31, 2024December 31, 2023
Mortgage loans:
Commercial
Commercial
Commercial
Multi-family
June 30, 2023December 31, 2022
Mortgage loans:
ResidentialResidential$1,171 1,114 
Commercial1,137 412 
Residential
Residential
Total mortgage loansTotal mortgage loans2,308 2,623 
Commercial loansCommercial loans90 1,014 
Consumer loansConsumer loans147 147 
Total 60-89 day delinquent loansTotal 60-89 day delinquent loans$2,545 3,784 
At June 30, 2023,As of March 31, 2024, the Company’s allowance for credit losses related to the loan portfolio was 0.97%0.98% of total loans, compared to 0.79% at0.99%as of December 31, 20222023 and June 30, 2022,0.91% as of March 31, 2023, respectively. The Company recorded a provision for credit losses on loans of $200,000 for the three months ended March 31, 2024, compared with a provision of $6.0 million for the three months ended March 31, 2023, respectively. For the three months ended March 31, 2024, the Company had net charge-offs of $971,000 compared to net charge-offs of $671,000 for the same period in 2023. The allowance for credit losses decreased $771,000 to $106.4 million as of March 31, 2024 from $107.2 million as of December 31, 2023. The decrease in the provision for credit losses for the quarter was primarily attributable to an improved economic forecast for the current quarter within our CECL model, partially offset by an increase in specific reserves on impaired credits.
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$10.4 million and $16.4 million for the three and six months ended June 30, 2023, compared with a provision of $3.0 million and a negative provision of $3.4 million for the three and six months ended June 30, 2022, respectively. For the three and six months ended June 30, 2023, the Company had net charge-offs of $1.1 million and $1.8 million, respectively, compared to net charge-offs of $259,000 and net recoveries of $1.7 million, respectively, for the same periods in 2022. The allowance for credit losses increased $14.1 million to $102.1 million at June 30, 2023 from $88.0 million at December 31, 2022. The increases in provision for both periods was primarily attributable to a worsened economic forecast and related deterioration in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model, combined with an increase in total loans outstanding.
Total non-performing loans were $45.9$47.6 million, or 0.44% of total loans at June 30, 2023,as of March 31, 2024, compared to $58.5$49.6 million, or 0.57%0.46% of total loans atas of December 31, 2022.2023. The $12.6$2.0 million decrease in non-performing loans as of March 31, 2024, compared to the trailing quarter, consisted of a $20.9$4.6 million decrease in non-performing commercial loans and a $771,000 decrease in non-performing construction loans, partially offset by a $1.6 million increase in non-performing multi-family loans, a $794,000 increase in non-performing residential mortgage loans, a $787,000 increase in non-performing commercial mortgage loans and a $230,000 decrease in non-performing residential mortgage loans, partially offset by a $7.7 million increase in non-performing commercial loans and a $140,000$127,000 increase in non-performing consumer loans.
At June 30, 2023As of March 31, 2024 and December 31, 2022,2023, the Company held foreclosed assets of $13.7$11.3 million and $2.1$11.7 million, respectively. During the sixthree months ended June 30, 2023,March 31, 2024, there were three additions to foreclosed assets with an aggregate carrying value of $12.3 million and threetwo properties sold with an aggregate carrying value of $768,000.$327,000. Foreclosed assets at June 30, 2023as of March 31, 2024 consisted primarily of commercial real estate. Total non-performing assets at June 30, 2023as of March 31, 2024, decreased $1.0$2.4 million to $59.6$58.9 million, or 0.42% of total assets, from $60.6$61.3 million, or 0.44%0.43% of total assets atas of December 31, 2022.2023.
Total investment securities were $2.22$2.10 billion at June 30, 2023,as of March 31, 2024, a $37.8$33.6 million decrease from December 31, 2022.2023. This decrease was primarily due to repayments of mortgage-backed securities, an increase in unrealized losses on available for sale debt securities and maturities and calls of certain municipal and agency bonds, partially offset by purchases of mortgage-backed and municipal securities and an improvement in unrealized losses on available for sale debt securities.
Total deposits decreased $301.9$193.6 million during the sixthree months ended June 30, 2023,March 31, 2024, to $10.26$10.10 billion. The decrease in total deposits was primarily due to a decrease in brokered deposits of $90.0 million and a decrease in municipal deposits of $57.0 million. Total savings and demand deposit accounts decreased $570.8$129.7 million to $9.24$9.07 billion at June 30, 2023,as of March 31, 2024, while total time deposits increased $268.9decreased $64.0 million to $1.02$1.03 billion at June 30, 2023.as of March 31, 2024. The decrease in savings and demand deposits was largely attributable toconsisted of a $285.5$149.1 million decrease in non-interest bearingnon-interest-bearing demand deposits, a $269.5 million decrease in money market deposits and a $163.3$14.7 million decrease in savings deposits, partially offset by a $147.6$28.6 million increase in interest bearing demand deposits and a $5.5 million increase in money market deposits. During the six months ended June 30, 2023, deposit balances from traditional non-interest and interest bearing demand deposits transitioned into our insured cash sweep ("ICS") product, as a method to increase the level of customers' deposit insurance in light of recent deposit turmoil in the banking industry. The Bank's ICS deposits increased $324.0 million to $382.9 million at June 30, 2023, from $58.9 million at December 31, 2022. The increasedecrease in time deposits consisted of a $258.3$90.0 million decrease in brokered time deposits, partially offset by a $26.0 million increase in retail time deposits.
Within total deposits, brokered deposits totaled $75.7 million as of March 31, 2024. Our estimated uninsured and a $10.6uncollateralized deposits as of March 31, 2024 totaled $2.49 billion, or 24.7% of deposits. Our total estimated uninsured deposits, including collateralized deposits as of March 31, 2024 was $5.25 billion. Within time deposits, approximately $96.7 million, increase in brokered time deposits.or 9.4% was uninsured as of March 31, 2024.
Borrowed funds increased $512.3$88.1 million during the sixthree months ended June 30, 2023,March 31, 2024, to $1.85$2.06 billion. The increase in borrowings was largely due to asset funding requirements, partially to replace the outflow of deposits.requirements. Borrowed funds represented 13.2%14.6% of total assets at June 30, 2023,as of March 31, 2024, an increase from 9.7% at13.9% as of December 31, 2022.2023.
Stockholders’ equity increased $44.8$4.6 million during the sixthree months ended June 30, 2023,March 31, 2024, to $1.64$1.70 billion, primarily due to net income earned for the period, andpartially offset by an improvementincrease in unrealized losses on available for sale debt securities partially offset byand cash dividends paid to stockholders. For the sixthree months ended June 30, 2023,March 31, 2024, common stock repurchases totaled 71,35786,325 shares at an average cost of $23.32$14.84 per share, all of which were made in connection with withholding to cover income taxes on the vesting of stock-based compensation. At June 30, 2023,As of March 31, 2024, approximately 1.11.0 million shares remained eligible for repurchase under the current stock repurchase authorization.
Liquidity and Capital Resources. Liquidity refers to the Company’s ability to generate adequate amounts of cash to meet financial obligations to its depositors, to fund loans and securities purchases and operating expenses. Sources of funds include scheduled amortization of loans, loan prepayments, scheduled maturities of unpledged investments, cash flows from securities and the ability to borrow funds from the FHLBNY and approved broker-dealers.
Cash flows from loan payments and maturing investment securities are fairly predictable sources of funds. Changes in interest rates, local economic conditions and the competitive marketplace can influence loan prepayments, prepayments on mortgage-backed securities and deposit flows. For sixthe three months ended June 30,March 31, 2024 and 2023, and 2022, loan repayments totaled $1.50 billion$648.8 million and $1.70 billion,$826.7 million, respectively.

As deposits have declined, the Company has continued to monitor and focus on depositdepositor behavior and borrowing capacity with the FHLBNY and FRBNY, with current borrowing capacity of $1.31$1.72 billion and $1.69$1.33 billion, respectively at June 30, 2023.as of March 31, 2024. Our estimated uninsured and uncollateralized deposits as of March 31, 2024 totaled $2.49 billion, or 24.7% of deposits. Our total estimated uninsured deposits, including collateralized deposits as of March 31, 2024, was $5.25 billion.
In March 2023, the Bank established a facility under the BTFP with the FRBNY. As of March 31, 2024, the Company had $550.0 million of advances under the Program. We elected to participate in the BTFP program due to significant cost savings compared to other wholesale funding sources. The funding was used to pay off existing wholesale borrowings. The ability to prepay at June 30, 2023 totaled $2.72 billion. At June 30, 2023, Provident Bankany time without penalty also enhances our ability to manage our interest rate risk position.
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hadTotal deposits decreased $193.6 million for the three months ended March 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. Certificate of deposit accounts that are scheduled to mature within one year totaled $881.1 million as of March 31, 2024. Based on balance sheet liquidityits current pricing strategy and borrowing capacity totaling $3.82 billion, representing 140%customer retention experience, the Bank expects to retain a significant share of estimated uninsured and uncollateralized deposits. All borrowing capacity is immediately available.
these accounts. The Bank established the Bank Term Funding Program with the Federal Reserve Bankmanages liquidity on a daily basis and expects to have sufficient cash to meet all of New York in March and pledged approximately $521 million in unencumbered security collateral to the facility improving its access to immediate funding. Advances under the Program can be requested until March 11, 2024. As of June 30, 2023, the Company had not taken any advances under the Program, but has this option available as a short term liquidity source.
During the six months ended June 30, 2023, deposit balances from traditional non-interest and interest bearing demand deposits transitioned into our ICS product, as a method to increase the level of customers' deposit insurance in light of recent banking turmoil. As of June 30, 2023, our ICS deposits totaled $382.9 million, compared to $58.9 million at December 31, 2022.funding requirements.
The Federal Deposit Insurance Corporation ("FDIC") and the other federal bank regulatory agencies issued a final rule that revised the leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act, that were effective January 1, 2015. Among other things, the rule established a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), adopted a uniform minimum leverage capital ratio at 4%, increased the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets) and assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on non-accrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The rule also required unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital unless a one-time opt-out was exercised. The Company exercised the option to exclude unrealized gains and losses from the calculation of regulatory capital. Additional constraints were also imposed on the inclusion in regulatory capital of mortgage-servicing assets, deferred tax assets and minority interests. 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.
In the first quarter of 2020, U.S. federal regulatory authorities issued an interim final rule providing banking institutions that adopted CECL during 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 connection with its adoption of CECL on January 1, 2020, the Company elected to utilize the five-year CECL transition.
At June 30, 2023,As of March 31, 2024, the Bank and the Company exceeded all current minimum regulatory capital requirements as follows:
June 30, 2023
RequiredRequired with Capital Conservation BufferActual
AmountRatioAmountRatioAmountRatio
(Dollars in thousands)
Bank:(1)
March 31, 2024March 31, 2024
RequiredRequiredRequired with Capital Conservation BufferActual
AmountAmountRatioAmountRatioAmountRatio
(Dollars in thousands)(Dollars in thousands)
Bank:(1) (2)
Tier 1 leverage capital
Tier 1 leverage capital
Tier 1 leverage capitalTier 1 leverage capital$535,118 4.00 %535,118 4.00 %1,316,418 9.84 %$552,072 4.00 4.00 %552,072 4.00 4.00 %1,367,361 9.91 9.91 %
Common equity Tier 1 risk-based capitalCommon equity Tier 1 risk-based capital528,994 4.50 822,880 7.00 1,316,418 11.20 
Tier 1 risk-based capitalTier 1 risk-based capital705,325 6.00 999,211 8.50 1,316,418 11.20 
Total risk-based capitalTotal risk-based capital940,434 8.00 1,234,320 10.50 1,411,146 12.00 
Company:Company:
Company:
Company:
Tier 1 leverage capital
Tier 1 leverage capital
Tier 1 leverage capitalTier 1 leverage capital$535,343 4.00 %535,343 4.00 %1,368,362 10.22 %$552,304 4.00 4.00 %552,304 4.00 4.00 %1,410,155 10.21 10.21 %
Common equity Tier 1 risk-based capitalCommon equity Tier 1 risk-based capital529,252 4.50 823,280 7.00 1,355,475 11.53 
Tier 1 risk-based capitalTier 1 risk-based capital705,669 6.00 999,698 8.50 1,368,362 11.63 
Total risk-based capitalTotal risk-based capital940,892 8.00 1,234,921 10.50 1,463,090 12.44 
(1) Under the FDIC's prompt corrective action provisions, the Bank is considered well capitalized if it has: a leverage (Tier 1) capital ratio of at least 5.00%; a common equity Tier 1 risk-based capital ratio of 6.50%; a Tier 1 risk-based capital ratio of at least 8.00%; and a total risk-based capital ratio of at least 10.00%.
(2) For a period of three years following completion of the merger, Provident Bank will be required to maintain a Tier 1 capital to total assets leverage ratio of at least 8.5% and a total capital to risk-based assets ratio of at least 11.25%.

COMPARISON OF OPERATING RESULTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30,MARCH 31, 2024 AND 2023 AND 2022
4847


General. The Company reported net income of $32.0$32.1 million, or $0.43 per basic and diluted share for the three months ended June 30, 2023,March 31, 2024, compared to net income of $39.2$40.5 million, or $0.53$0.54 per basic and diluted share, for the three months ended June 30, 2022. For the six months ended June 30, 2023, the Company reported net income of $72.5 million, or $0.97 per basic share and diluted share, compared to net income of $83.2 million, or $1.11 per basic and diluted share, for the six months ended June 30, 2022.March 31, 2023.
Net income for the three and six months ended June 30, 2023, was negatively impacted by an increase in funding costs and an increase in the provision for credit losses due to a worsened economic forecast. In addition, transactionTransaction costs related to our pending merger with Lakeland Bancorp, Inc. (“Lakeland”) totaled $2.0 million and $3.1$2.2 million for the three and six months ended June 30,March 31, 2024, compared with $1.1 million for the respective 2023 respectively.period. In addition, prior year earnings for the three months ended March 31, 2023, included a $2.0 million gain recognized from the sale of a foreclosed commercial property.
The following tables sets forth certain information for the three and six months ended June 30,March 31, 2024 and 2023. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities is expressed both in dollars and rates. No tax equivalent adjustments were made. Average balances are daily averages.
4948


For the three months ended
June 30, 2023June 30, 2022
Average BalanceInterestAverage
Yield/Cost
Average BalanceInterestAverage
Yield/Cost
(Dollars in Thousands) (Unaudited)
For the three months endedFor the three months ended
March 31, 2024March 31, 2024March 31, 2023
Average BalanceAverage BalanceInterestAverage
Yield/Cost
Average BalanceInterestAverage
Yield/Cost
(Dollars in Thousands) (Unaudited)(Dollars in Thousands) (Unaudited)
Interest Earning Assets:Interest Earning Assets:
Deposits
Deposits
DepositsDeposits$73,470 $947 5.17 %77,761 191 0.98 %$87,848 $$1,182 5.41 5.41 %72,022 845 845 4.76 4.76 %
Federal funds sold and other short-term investmentsFederal funds sold and other short-term investments88��6.75 %99,825 371 1.49 %
Available for sale debt securitiesAvailable for sale debt securities1,801,050 10,2902.29 %2,023,199 53528,0931.60 %
Held to maturity debt securities, net (1)
Held to maturity debt securities, net (1)
379,958 2,3572.48 %412,229 2,4892.41 %
Equity securities, at fair valueEquity securities, at fair value1,006 — — %1,019 — — %
Federal Home Loan Bank stockFederal Home Loan Bank stock82,171 1,1425.56 %31,682 3614.55 %
Net loans: (2)
Net loans: (2)
Total mortgage loansTotal mortgage loans7,701,072 99,3025.11 %7,252,665 69,0733.78 %
Total mortgage loans
Total mortgage loans
Total commercial loansTotal commercial loans2,234,043 31,4265.59 %2,107,681 22,3634.22 %
Total consumer loansTotal consumer loans303,109 4,4315.86 %322,681 3,3444.16 %
Total net loansTotal net loans10,238,224 135,1595.24 %9,683,027 94,7803.89 %
Total interest earning assetsTotal interest earning assets$12,575,967 $149,896 4.73 %12,328,742 106,285 3.43 %
Non-Interest Earning Assets:Non-Interest Earning Assets:
Cash and due from banksCash and due from banks129,979 129,953 
Cash and due from banks
Cash and due from banks
Other assets
Other assets
Other assetsOther assets1,127,109 1,082,514 
Total assetsTotal assets$13,833,055 13,541,209 
Total assets
Total assets
Interest Bearing Liabilities:Interest Bearing Liabilities:
Interest Bearing Liabilities:
Interest Bearing Liabilities:
Demand deposits
Demand deposits
Demand depositsDemand deposits$5,620,268 $28,613 2.04 %6,189,722 4,458 0.29 %$5,894,062 $$41,566 2.84 2.84 %5,771,582 21,920 21,920 1.54 1.54 %
Savings depositsSavings deposits1,307,830 5370.16 %1,496,064 2850.08 %
Time depositsTime deposits968,344 7,2973.02 %695,015 8330.48 %
Total depositsTotal deposits7,896,442 36,4471.85 %8,380,801 5,5760.27 %
Borrowed fundsBorrowed funds1,658,809 14,0883.41 %527,630 1,1040.84 %
Subordinated debenturesSubordinated debentures10,563 255 9.66 %10,355 130 5.05 %
Total interest bearing liabilitiesTotal interest bearing liabilities$9,565,814 50,7902.13 %8,918,786 6,8100.31 %
Non-Interest Bearing Liabilities:Non-Interest Bearing Liabilities:
Non-interest bearing depositsNon-interest bearing deposits$2,368,960 2,776,507 
Non-interest bearing deposits
Non-interest bearing deposits
Other non-interest bearing liabilities
Other non-interest bearing liabilities
Other non-interest bearing liabilitiesOther non-interest bearing liabilities244,604 244,671 
Total non-interest bearing liabilitiesTotal non-interest bearing liabilities2,613,564 3,021,178 
Total non-interest bearing liabilities
Total non-interest bearing liabilities
Total liabilities
Total liabilities
Total liabilitiesTotal liabilities12,179,378 11,939,964 
Stockholders' equityStockholders' equity1,653,677 1,601,245 
Stockholders' equity
Stockholders' equity
Total liabilities and stockholders' equity
Total liabilities and stockholders' equity
Total liabilities and stockholders' equityTotal liabilities and stockholders' equity$13,833,055 13,541,209 
Net interest incomeNet interest income$99,106 99,475 
Net interest income
Net interest income
Net interest rate spread
Net interest rate spread
Net interest rate spreadNet interest rate spread2.60 %3.12 %2.26 %3.09 %
Net interest-earning assetsNet interest-earning assets$3,010,153 3,409,956 
Net interest margin (3)
Net interest margin (3)
3.11 %3.21 %
Net interest margin (3)
Net interest margin (3)
2.87 %3.48 %
Ratio of interest-earning assets to total interest-bearing liabilitiesRatio of interest-earning assets to total interest-bearing liabilities1.31x1.38x
(1)Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2)Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3)Annualized net interest income divided by average interest-earning assets.

50



For the six months ended
June 30, 2023June 30, 2022
Average BalanceInterestAverage
Yield/Cost
Average BalanceInterestAverage
Yield/Cost
(Dollars in Thousands) (Unaudited)
Interest Earning Assets:
Deposits$72,750 $1,791 4.97 %175,341 298 0.34 %
Federal funds sold and other short-term investments59 6.00 %147,447 911 1.25 %
Available for sale debt securities1,804,814 20,6922.29 %2,069,270 15,6711.51 %
Held to maturity debt securities, net (1)
381,921 4,7252.47 %420,133 5,0852.42 %
Equity securities, at fair value999 — — %1,055 — — %
Federal Home Loan Bank stock70,702 2,1706.14 %31,296 7354.70 %
Net loans: (2)
Total mortgage loans7,671,493 195,2905.07 %7,156,189 132,9083.70 %
Total commercial loans2,191,222 60,1095.49 %2,105,001 45,1844.30 %
Total consumer loans303,724 8,6735.76 %321,796 6,4834.06 %
Total net loans10,166,439 264,0725.18 %9,582,986 184,5753.84 %
Total interest earning assets$12,497,684 $293,452 4.68 %12,427,528 207,275 3.33 %
Non-Interest Earning Assets:
Cash and due from banks136,431 126,423 
Other assets1,149,044 1,062,948 
Total assets$13,783,159 13,616,899 
Interest Bearing Liabilities:
Demand deposits$5,695,507 $50,533 1.79 %6,238,860 8,653 0.28 %
Savings deposits1,352,874 9900.15 %1,486,407 5760.08 %
Time deposits914,358 12,4342.74 %687,956 1,5340.45 %
Total deposits7,962,739 63,9571.62 %8,413,223 10,7630.26 %
Borrowed funds1,442,744 21,5643.01 %538,593 2,2720.85 %
Subordinated debentures10,537 501 9.58 %10,328 239 4.66 %
Total interest bearing liabilities$9,416,020 86,0221.84 %8,962,144 13,2740.30 %
Non-Interest Bearing Liabilities:
Non-interest bearing deposits$2,459,375 2,781,248 
Other non-interest bearing liabilities267,666 229,958 
Total non-interest bearing liabilities2,727,041 3,011,206 
Total liabilities12,143,061 11,973,350 
Stockholders' equity1,640,099 1,643,549 
Total liabilities and stockholders' equity$13,783,160 13,616,899 
Net interest income$207,430 194,001 
Net interest rate spread2.84 %3.03 %
Net interest-earning assets$3,081,664 3,465,384 
Net interest margin (3)
3.29 %3.11 %
Ratio of interest-earning assets to total interest-bearing liabilities1.33x1.39x
(1)Average outstanding balance amounts shown are amortized cost, net of allowance for credit losses.
(2)Average outstanding balances are net of the allowance for loan losses, deferred loan fees and expenses, loan premiums and discounts and include non-accrual loans.
(3)Annualized net interest income divided by average interest-earning assets.
51



Net Interest Income. Net interest income decreased $369,000$14.7 million to $99.1$93.7 million for the three months ended June 30, 2023,March 31, 2024, from $99.5$108.3 million for same period in 2022. For the six months ended June 30, 2023, total net interest income increased $13.4 million to $207.4 million, from $194.0 million for the same period in 2022.2023. The decrease in net interest income for the three months ended June 30, 2023, was primarily due to a decrease in lower-costinglower-
49


costing deposits and an increase in borrowings, combined with unfavorable repricing of both deposits and borrowings, partially offset by originations of new loans and the favorable repricing of adjustable-rate loans. The increase in net interest income for the six months ended June 30, 2023, was primarily driven by an increase in the net interest margin resulting from the favorable repricing of adjustable-rate loans, higher market rates on new loan originations and the originations of higher-yielding loans, partially offset by the unfavorable repricing of both deposits and borrowings, a decrease in lower-costing deposits and an increase in borrowings. Additionally, fees related to the forgiveness of PPP loans, which are recognized in interest income, were approximately $4,000 for the six months ended June 30, 2023, compared to $1.3 million for the six months ended June 30, 2022.
The net interest margin decreased 1061 basis points to 3.11%2.87% for the quarter ended June 30, 2023,March 31, 2024, compared to 3.21%3.48% for the quarter ended June 30, 2022.March 31, 2023. The weighted average yield on interest-earning assets increased 13043 basis points to 4.73%5.06% for the quarter ended June 30, 2023,March 31, 2024, compared to 3.43%4.63% for the quarter ended June 30, 2022,March 31, 2023, while the weighted average cost of interest-bearing liabilities increased 182126 basis points for the quarter ended June 30, 2023,March 31, 2024, to 2.13%2.80%, compared to 1.54% for the quarter ended June 30, 2022.March 31, 2023. The average cost of interest-bearing deposits for the quarter ended June 30, 2023,March 31, 2024, was 1.85%2.60%, compared to 0.27%1.39% for the same period last year. Average non-interest bearingnon-interest-bearing demand deposits totaled $2.37$2.07 billion for the quarter ended June 30, 2023,March 31, 2024, compared to $2.78$2.55 billion for the quarter ended June 30, 2022.March 31, 2023. The average cost of total deposits, including non-interest bearingnon-interest-bearing deposits, was 1.42%2.07% for the quarter ended June 30, 2023,March 31, 2024, compared with 0.20%1.05% for the quarter ended June 30, 2022.March 31, 2023. The average cost of borrowed funds for the quarter ended June 30, 2023,March 31, 2024, was 3.41%3.60%, compared to 0.84%2.48% for the same period last year.
For the six months ended June 30, 2023, the net interest margin increased 18 basis points to 3.29%, compared to 3.11% for the six months ended June 30, 2022. The weighted average yield on interest-earning assets increased 135 basis points to 4.68% for the six months ended June 30, 2023, compared to 3.33% for the six months ended June 30, 2022, while the weighted average cost of interest-bearing liabilities increased 154 basis points to 1.84% for the six months ended June 30, 2023, compared to 0.30% for the same period last year. The average cost of interest-bearing deposits increased 136 basis points to 1.62% for the six months ended June 30, 2023, compared to 0.26% for the same period last year. Average non-interest bearing demand deposits totaled $2.46 billion for the six months ended June 30, 2023, compared with $2.78 billion for the six months ended June 30, 2022. The average cost of total deposits, including non-interest bearing deposits, was 1.24% for the six months ended June 30, 2023, compared with 0.19% for the six months ended June 30, 2022. The average cost of borrowings for the six months ended June 30, 2023, was 3.01%, compared to 0.85% for the same period last year.
Interest income on loans secured by real estate increased $30.2$11.5 million to $99.3$107.5 million for the three months ended June 30, 2023,March 31, 2024, from $69.1$96.0 million for the three months ended June 30, 2022.March 31, 2023. Commercial loan interest income increased $9.1$7.4 million to $31.4$36.1 million for the three months ended June 30, 2023,March 31, 2024, from $22.4$28.7 million for the three months ended June 30, 2022.March 31, 2023. Consumer loan interest income increased $1.1$0.3 million to $4.4$4.5 million for the three months ended June 30, 2023,March 31, 2024, from $3.3$4.2 million for the three months ended June 30, 2022.March 31, 2023. For the three months ended June 30, 2023,March 31, 2024, the average balance of total loans increased $555.2$575.1 million to $10.24$10.67 billion, compared to the same period in 2022.2023. The average yield on total loans for the three months ended June 30, 2023,March 31, 2024, increased 13539 basis points to 5.24%5.51%, from 3.89%5.12% for the same period in 2022.
Interest income on loans secured by real estate increased $62.4 million to $195.3 million for the six months ended June 30, 2023, from $132.9 million for the six months ended June 30, 2022. Commercial loan interest income increased $14.9 million to $60.1 million for the six months ended June 30, 2023, from $45.2 million for the six months ended June 30, 2022. Consumer loan interest income increased $2.2 million to $8.7 million for the six months ended June 30, 2023, from $6.5 million for the six months ended June 30, 2022. For the six months ended June 30, 2023, the average balance of total loans was $10.17 billion, compared with $9.58 billion for the same period in 2022. The average yield on total loans for the six months ended June 30, 2023, increased 134 basis points to 5.18%, from 3.84% for the same period in 2022.2023.
Interest income on held to maturity debt securities decreased $132,000$100,000 to $2.4$2.3 million for the three months ended June 30, 2023,March 31, 2024, compared to the same period last year. Average held to maturity debt securities decreased $32.3$26.7 million to $380.0$357.2 million for the three months ended June 30, 2023,March 31, 2024, from $412.2$383.9 million for the same period last year. Interest income on held to maturity debt securities decreased $360,000 to $4.7 million for the six months ended June 30, 2023, compared to the same period in 2022. Average held to maturity debt securities decreased $38.2 million to $381.9 million for the six months ended June 30, 2023, from $420.1 million for the same period last year.
52


2023.
Interest income on available for sale debt securities and FHLBNY stock increased $3.0 milliondecreased $380,000 to $11.4$10.0 million for the three months ended June 30, 2023,March 31, 2024, from $8.5$10.4 million for the three months ended June 30, 2022.March 31, 2023. The average balance of available for sale debt securities and FHLBNY stock decreased $171.7$134.7 million to $1.88$1.67 billion for the three months ended June 30, 2023,March 31, 2024, compared to the same period in 2022. Interest2023.
Dividend income on available for sale debt securities and FHLBNY stock increased $6.5$1.3 million to $22.9$2.3 million for the sixthree months ended June 30, 2023,March 31, 2024, from $16.4$1.0 million for the same period last year.three months ended March 31, 2023. The average balance of available for sale debt securities and FHLBNY stock decreased $225.1increased $14.6 million to $1.88 billion$73.8 million for the sixthree months ended June 30,March 31, 2024, compared to the same period in 2023.
The average yield on total securities increased to 2.53%2.87% for the three months ended June 30, 2023,March 31, 2024, compared with 1.74%2.52% for the same period in 2022. For the six months ended June 30, 2023, the average yield on total securities increased to 2.52%, compared with 1.59% for the same period in 2022.2023.
Interest expense on deposit accounts increased $30.9$25.0 million to $36.4$52.5 million for the three months ended June 30, 2023,March 31, 2024, compared with $5.6$27.5 million for the three months ended June 30, 2022. For the six months ended June 30, 2023, interest expense on deposit accounts increased $53.2 million to $64.0 million, from $10.8 million for the same period last year.March 31, 2023. The average cost of interest-bearing deposits increased to 1.85% and 1.62%2.60% for the three and six months ended June 30, 2023, respectively,March 31, 2024, from 0.27% and 0.26%1.39% for the three and six months ended June 30, 2022, respectively.March 31, 2023. The average balance of interest-bearing core deposits, which consist of total savings and demand deposits, for the three months ended June 30, 2023,March 31, 2024, decreased $757.7$112.8 million to $6.93$7.06 billion. For the six months ended June 30, 2023, average interest-bearing core deposits decreased $676.9 million, to $7.05 billion, from $7.73 billion for the same period in 2022. Average time deposit account balances increased $273.3$205.4 million to $968.3$1.07 billion for the three months ended March 31, 2024, from $859.8 million for the three months ended June 30, 2023, from $695.0 million for the three months ended June 30, 2022. For the six months ended June 30, 2023, average time deposit account balances increased $226.4 million to $914.4 million, from $688.0 million for the same period in 2022.March 31, 2023.
Interest expense on borrowed funds increased $13.0$9.9 million to $14.1$17.4 million for the three months ended June 30, 2023,March 31, 2024, from $1.1$7.5 million for the three months ended June 30, 2022. For the six months ended June 30, 2023, interest expense on borrowed funds increased $19.3 million to $21.6 million, from $2.3 million for the six months ended June 30, 2022.March 31, 2023. The average cost of borrowings increased to 3.41%3.60% for the three months ended June 30, 2023,March 31, 2024, from 0.84%2.48% for the three months ended June 30, 2022. The average cost of borrowings increased to 3.01% for the six months ended June 30, 2023, from 0.85% for the same period last year.March 31, 2023. Average borrowings increased $1.13 billion$716.7 million to $1.66$1.94 billion for the three months ended June 30, 2023,March 31, 2024, from $527.6 million$1.22 billion for the three months ended June 30, 2022. For the six months ended June 30, 2023, average borrowings increased $904.2 million to $1.44 billion, compared to $538.6 million for the six months ended June 30, 2022.March 31, 2023.
Provision for Credit Losses. 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 reasonable and supportable economic forecasts. 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.
50


The Company recorded a $10.4 million and $16.4 million$200,000 provision for credit losses on loans, for the three and six months ended June 30, 2023, respectively, compared with a $6.0 million provision of $3.0 million and a negative provision of $3.4 millionfor credit losses for the three and six monthsquarter ended June 30, 2022, respectively.March 31, 2023. The increasedecrease in the provision for credit losses for the three and six months ended June 30, 2023 was largely a function of a worsened economic forecast and related deteriorationthe period-over-period improvement in the projected commercial property price indices over the expected life of the loan portfolio within our CECL model, combined with an increase in total loans outstanding.economic forecast.
Non-Interest Income. Non-interest income totaled $19.4$20.8 million for the quarter ended June 30, 2023,March 31, 2024, a decrease of $1.5$1.3 million, compared to the same period in 2022.2023. Other income decreased $2.5 million to $798,000 for the three months ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily due to a $2.0 million gain from the sale of a foreclosed commercial property which was recorded in the prior year, combined with a decrease in gains on sales of SBA loans. Fee income decreased $1.6 million$475,000 to $5.8$5.9 million for the three months ended June 30, 2023,March 31, 2024, compared to the trailingprior year quarter, primarily due to decreases in commercial loan prepayment fees and deposit fee income. Other income decreased $647,000 to $1.3 million for the three months ended June 30, 2023, compared to the quarter ended June 30, 2022, primarily due to a decrease in net gains on sales of SBA loans. Partially offsetting these decreases in non-interest income, insurance agency income increased $997,000$691,000 to $3.8$4.8 million for the three months ended June 30, 2023,March 31, 2024, compared to the quarter ended June 30, 2022,March 31, 2023, largely due to strong retention revenue and newan increase in business activity.
For Wealth management income increased $573,000 to $7.5 million for the sixthree months ended June 30, 2023, non-interest income totaled $41.5 million, an increase of $462,000,March 31, 2024, compared to the same period in 2022. Insurance agency income increased $1.7 million to $8.0 million for the six monthsquarter ended June 30,March 31, 2023, compared to $6.3 million for the same period in 2022, largely due to increases in contingent commissions, retention revenue
53


and new business activity. Other income increased $1.4 million to $4.6 million for the six months ended June 30, 2023, compared to $3.1 million for the same period in 2022, mainly due to a $2.0 million gain related toan increase in the resolutionaverage market value of certain post-closing conditions followingassets under management during the September 2022 sale of a foreclosed commercial property,period, combined with an increase in the gains on sales of SBA loans, partially offset by a decrease in net fees on loan-level interest rate swap transactions.mutual fund fees. Additionally, BOLI income increased $277,000$333,000 to $3.0$1.8 million for the sixthree months ended June 30, 2023,March 31, 2024, compared to the same period in 2022,prior year quarter, primarily due to greater equity valuations, partially offset by a decrease in benefit claims recognized. Partially offsetting these increases to non-interest income, fee income decreased $2.2 million to $12.2 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to a decrease in commercial loan prepayment fees, while wealth management income decreased $655,000 to $13.8 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to a decreaseclaim recognized in the market value of assets under management.current quarter, combined with an increase in equity valuations.
Non-Interest Expense. For the three months ended June 30, 2023,March 31, 2024, non-interest expense totaled $64.5$71.3 million, an increase of $617,000,$1.8 million, compared to the three months ended June 30, 2022.March 31, 2023. Compensation and benefits expense increased $1.3 million to $40.0 million for three months ended March 31, 2024, compared to $38.7 million for the same period in 2023. The increase was primarily due to an increase in salary expense associated with Company-wide annual merit increases, combined with increases in the accrual for incentive compensation, payroll taxes and employee insurance, partially offset by a decrease in stock-based compensation. Data processing expense increased $1.3 million to $6.8 million for three months ended March 31, 2024, compared to $5.5 million for the same period in 2023. The increase in data processing expense was primarily due to increases in software service, telecommunication and electronic business banking expenses. Merger-related expenses totaled $2.0related to our pending combination with Lakeland increased $1.1 million to $2.2 million for the three months ended June 30, 2023, as a result of transaction costs relatedMarch 31, 2024, compared to our pending combination with Lakeland.the same period in 2023. Additionally, FDIC insurance expense increased $775,000$335,000 to $2.1$2.3 million for the three months ended June 30, 2023,March 31, 2024, compared to the same period in 2022,2023, primarily due to an increase in thea current quarter FDIC special assessment rate. The Company recorded a $647,000 negative provision for credit losses for off-balance sheet credit exposures, compared to a $973,000 negative provision for the same period in 2022. The $326,000 reduction in the provision benefit was primarily the result of the period-over-period relative changes in line of credit utilization. Partially offsetting these increases in non-interest expense, compensation and benefits expense decreased $2.2 million to $35.3 million for three months ended June 30, 2023, compared to $37.4 million for the same period in 2022. The decrease was principally due to decreases in the accrual for incentive compensation and stock-based compensation, partially offset by an increase in salary expense. Net occupancy expenses decreased $530,000 to $7.9 million for the three months ended June 30, 2023, compared to the same period in 2022, largely due to decreases in depreciation and maintenance expenses.
Non-interest expense totaled $134.0 million for the six months ended June 30, 2023, an increase of $8.2 million, compared to $125.7 million for the six months ended June 30, 2022. The Company recorded a $92,000 provision for credit losses for off-balance sheet credit exposures for the six months ended June 30, 2023, compared to a $3.4 million negative provision for the same period in 2022. The $3.5 million increase in the provision for credit losses for off-balance sheet credit exposures was primarily the result of the period-over-period relative change in line of credit utilization and an increase in projected loss factors as a result of a worsened economic forecast. Merger-related expenses totaled $3.1 million for the six months ended June 30, 2023, as a result of transaction costs related to our pending combination$195,000, combined with Lakeland. Other operating expense increased $1.8 million to $21.0 million for the six months ended June 30, 2023, compared to $19.2 million for the six months ended June 30, 2022, primarily due to an increase in consulting fees and additional expenses related to foreclosed commercial real estate owned properties. FDIC insurance expense increased $1.5 million to $4.1 million for the six months ended June 30, 2023, compared to the same period in 2022, primarily due to an increase in the assessment rate. Partially offsetting these increases net occupancyin non-interest expense, other operating expense decreased $1.5 million$729,000 to $16.4$10.3 million for the sixthree months ended June 30,March 31, 2024, compared to $11.1 million for the three months ended March 31, 2023, largely due to a decrease in professional fees, partially offset by additional expenses related to foreclosed commercial real estate properties. For the three months ended March 31, 2024, the Company recorded a $506,000 provision benefit for credit losses on off-balance sheet credit exposures, compared to a $739,000 provision charge for the same period in 2022, mainly due to decreases2023. The $1.2 million decrease in maintenance and depreciation expenses. Additionally, compensation and benefits expense decreased $482,000 to $74.0 millionthe provision for credit losses on off-balance sheet credit exposures for the six months ended June 30, 2023, compared to $74.5 million for the six months ended June 30, 2022,current quarter was primarily due to decreasesa decrease in the accrual for incentiveloans approved and stock-based compensation, partially offset by an increase in salary expense.awaiting closing.
Income Tax Expense. For the three months ended June 30, 2023,March 31, 2024, the Company's income tax expense was $11.6$10.9 million with an effective tax rate of 26.7%25.3%, compared with $14.3$14.5 million with an effective tax rate of 26.8%26.3% for the three months ended June 30, 2022.March 31, 2023. The decrease in tax expense for the three months ended June 30, 2023,March 31, 2024, compared with the same period last year was largely the result of a decrease in taxable income and the 2024 sunset of the 2.5% NJ Corporate Business Tax surcharge, while the decrease in the effective tax rate for the three months ended June 30, 2023,March 31, 2024, compared with the three months ended June 30, 2022,March 31, 2023, was largely due to the 2024 sunset of the 2.5% NJ Corporate Business Tax surcharge and a decrease in the proportion of income derived from taxable sources.
For the six months ended June 30, 2023, the Company's income tax expense was $26.1 million with an effective tax rate of 26.4%, compared with $29.6 million with an effective tax rate of 26.2% for the six months ended June 30, 2022. The decrease in tax expense for the six months ended June 30, 2023, compared with the same period last year was largely the result of a decrease in taxable income, while the increase in the effective tax rate for the six months ended June 30, 2023, compared with the prior year period was largely due to non-deductible merger related transaction costs recognized in the current year, partially offset by a decrease in the proportion of income derived from taxable sources.
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Qualitative Analysis. Interest rate risk is the exposure of a bank’s current and future earnings and capital arising from adverse movements in interest rates. The guidelines of the Company’s interest rate risk policy seek to limit the exposure to changes in
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interest rates that affect the underlying economic value of assets and liabilities, earnings and capital. To minimize interest rate risk, the Company generally sells all 20- and 30-year fixed-rate residential mortgage loans at origination. The Company retains residential fixed rate mortgages with terms of 15 years or less and biweekly payment residential mortgages with a term of 30 years or less. Commercial real estate loans generally have interest rates that reset in five years, and other commercial loans such as construction loans and commercial lines of credit reset with changes in the Prime rate,Rate, the Federal Funds rate, LIBORRate or SOFR. Investment securities purchases generally have maturities of five years or less, and mortgage-backed securities have weighted average lives between three and five years.
The Asset/Liability Committee meets at least monthly, or as needed, to review the impact of interest rate changes on net interest income, net interest margin, net income and the economic value of equity. The Asset/Liability Committee reviews a variety of
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strategies that project changes in asset or liability mix and the impact of those changes on projected net interest income and net income.
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. The Company’s ability to retain maturing time deposit accounts is the result of its strategy to remain competitively priced within its marketplace. The Company’s pricing strategy may vary depending upon current funding needs and the ability of the Company to fund operations through alternative sources, primarily by accessing short-term lines of credit with the FHLBNY during periods of pricing dislocation.
Quantitative Analysis. Current and future sensitivity to changes in interest rates are measured through the use of balance sheet and income simulation models. The analysis captures changes in net interest income using flat rates as a base, a most likely rate forecast and rising and declining interest rate forecasts. Changes in net interest income and net income for the forecast period, generally twelve to twenty-four months, are measured and compared to policy limits for acceptable change. The Company periodically reviews historical deposit re-pricing activity and makes modifications to certain assumptions used in its income simulation model regarding the interest rate sensitivity of deposits without maturity dates. These modifications are made to more closely reflect the most likely results under the various interest rate change scenarios. Since it is inherently difficult to predict the sensitivity of interest-bearing deposits to changes in interest rates, the changes in net interest income due to changes in interest rates cannot be precisely predicted. There are a variety of reasons that may cause actual results to vary considerably from the predictions presented below which include, but are not limited to, the timing, magnitude, and frequency of changes in interest rates, interest rate spreads, prepayments, and actions taken in response to such changes.
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, subject to certain interest rate floors; and
Higher-balance demand deposit tiers and promotional demand accounts move at 50% to 75% of the rate ramp in either direction, subject to certain interest rate floors.
The following table sets forth the results of a twelve-month net interest income projection model as of June 30, 2023March 31, 2024 (dollars in thousands):
Change in interest rates (basis points) - Rate RampChange in interest rates (basis points) - Rate RampNet Interest IncomeChange in interest rates (basis points) - Rate RampNet Interest Income
Dollar AmountDollar ChangePercent ChangeDollar AmountDollar ChangePercent Change
-300-300$374,256 $(10,683)(2.8)%
-200-200$401,744 $(3,242)(0.8)%
-100-100403,524 (1,462)(0.4)
StaticStatic404,986 — — 
+100+100406,166 1,180 0.3 
+200406,954 1,968 0.5 
The interest rate risk position of the Company remains fairly neutral.slightly asset-sensitive. As a result, the preceding table indicates that, as of June 30, 2023,March 31, 2024, in the event of a 200100 basis point increase in interest rates, whereby rates ramp up evenly over a twelve-month period, net interest income would increase 0.5%0.1%, or $2.0 million.$512,000. In the event of a 200300 basis point decrease in interest rates, whereby rates ramp downward evenly over a twelve-month period, net interest income would decrease 0.8%2.8%, or $3.2$10.7 million over the same period. In this downward rate scenario, rates on deposits have a repricing floor of zero.

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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 result of the economic value of equity model as of June 30, 2023March 31,
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2024 (dollars in thousands):
Present Value of EquityPresent Value of Equity as Percent of Present Value of Assets Present Value of EquityPresent Value of Equity as Percent of Present Value of Assets
Change in interest rates (basis points)Change in interest rates (basis points)Dollar AmountDollar ChangePercent
Change
Present Value
 Ratio
Percent
Change
Change in interest rates (basis points)Dollar AmountDollar ChangePercent
Change
Present Value
 Ratio
Percent
Change
-300-300$1,422,618 $(305,270)(17.7)%9.8%(22.5)%
-200-200$1,752,473 $(59,795)(3.3)%12.3 %(8.0)%
-100-1001,794,579 (17,689)(1.0)12.9 (3.4)
FlatFlat1,812,268 — — 13.4 — 
+100+1001,821,117 8,849 0.5 13.8 3.0 
+2001,826,912 14,644 0.8 14.1 5.8 
The preceding table indicates that as of June 30, 2023,March 31, 2024, in the event of an immediate and sustained 200100 basis point increase in interest rates, the present value of equity is projected to increase 0.8%1.2%, or $14.6$20.5 million. If rates were to decrease 200300 basis points, the present value of equity would decrease 3.3%17.7%, or $59.8$305.3 million.
Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurements. Modeling changes in net interest income requires the use of certain assumptions regarding prepayment and deposit decay rates, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While management believes such assumptions are reasonable, there can be no assurance that assumed prepayment rates and decay rates will approximate actual future loan prepayment and deposit withdrawal activity. Moreover, the net interest income table presented assumes that the composition of interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. 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.
 

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Item 4.CONTROLS AND PROCEDURES.
Under the supervision and with the participation of management, including the Principal Executive Officer and the Principal Financial Officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934) were evaluated at the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and the Principal Financial Officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures are effective.

PART II—OTHER INFORMATION
 
Item 1.Legal Proceedings
The CompanyInformation regarding legal proceedings is involvedincorporated by reference from “Contingencies” in various legal actions and claims arisingNote 9 to our Consolidated Financial Statements (unaudited) set forth in the normal coursePart I of business. In the opinion of management, these legal actions and claims are not expected to have a material adverse impact on the Company’s financial condition.this report.
Item 1A.Risk Factors
The risk factors that were previously disclosed in the Company’s Annual Report on Form 10K10-K for the fiscal year ended December 31, 2022, were2023, have been supplemented by the Company in its Form 10-Q for the quarter ended March 31, 2023.2024, as follows:
Risk Factors Related to the Pending Merger with Lakeland
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.
The Company and Provident Bank have received approvals from the bank regulatory authorities to consummate the merger with Lakeland, subject to certain Regulatory Conditions. The Regulatory Conditions include, but are not limited to: prior to consummation of the merger, the Company must complete the issuance of $200 million of Tier 2 qualifying subordinated debt; for three years following consummation of the merger, Provident 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 Provident 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
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projections that Provident Bank submitted to the FDIC. The failure to comply with the Regulatory Conditions following the consummation of the merger could result in supervisory and enforcement actions against the Company and Provident 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.
Failure to complete the merger could negatively impact us.
If the merger is not completed for any reason, including failure to comply with the applicable Regulatory Conditions, there may be various adverse consequences for us. If the merger is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also could be subject to litigation or enforcement actions related to any failure to consummate the merger. If the merger is not completed, we will have to pay certain expenses related to the merger and this offering without realizing the expected benefits of the merger. Consequently, the failure to complete the merger could have a material adverse impact on us.
Item 2.Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities.
ISSUER PURCHASES OF EQUITY SECURITIES
Period(a) Total Number of Shares
Purchased
(b) Average
Price Paid per Share
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
(d) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
April 1, 2023 through April 30, 202338 $18.42 38 1,062,832 
May 1, 2023 through May 31, 2023208 15.15 208 1,062,624 
June 1, 2023 through June 30, 2023— — — 1,062,624 
Total246 15.66 246 
Period(a) Total Number of Shares
Purchased
(b) Average
Price Paid per Share
(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
(d) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
January 1, 2024 through January 31, 2024220 $18.13 220 1,061,980 
February 1, 2024 through February 29, 2024— — — 1,061,980 
March 1, 2024 through March 31, 202486,105 14.83 86,105 975,875 
Total86,325 14.84 86,325 
(1) On December 28, 2021, 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. The repurchase program has no expiration date.
Item 3.Defaults Upon Senior Securities.
Not Applicable 
Item 4.Mine Safety Disclosures
Not Applicable
Item 5.Other Information.
(a) During the three months ended June 30, 2023,March 31, 2024, none of the Company’s directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement," as that term is used in SEC regulations.
(b) The information below is reported in lieu of information that would be reported pursuant to a Current Report on Form 8-K filed with the Commission during the period under Item 5.02.
On August 2, 2023, Provident Financial Services, Inc. (the “Company”), Provident Bank (the “Bank”) and John Kuntz, Senior Executive Vice President, General Counsel and Corporate Secretary of the Company (the “Executive”), entered into a Transition Agreement with General Release of Claims (the “Transition Agreement”) in connection with the transaction
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contemplated under the Agreement and Plan of Merger dated September 26, 2022 by and among the Company, NL 239 Corp. and Lakeland Bancorp, Inc. (the “Merger”) and related restructuring of the Company’s management team.
The Transition Agreement provides that the Executive’s employment with the Company and Bank will terminate as part of the management restructuring on the later of January 31, 2024 or 90 days after the closing date of the Merger (the “Separation Date”), unless (i) the Executive resigns his employment or dies prior to the Separation Date, or (ii) the Company or Bank terminates the Executive’s employment due to Disability (as defined in the Transition Agreement) or for Cause (as defined in the Transition Agreement) prior to the Separation Date (the Separation Date, or if applicable, Executive’s earlier termination date, is referred to as his “Termination Date”).
Pursuant to the Transition Agreement, as of the closing date of the merger (the “Transition Date”) and ending on the Termination Date, the Executive will serve as Special Advisor to the Company’s Chief Executive Offer in exchange for an annualized base salary of $550,000. In addition, unless the Executive dies, has his employment terminated due to Disability, resigns his employment or is terminated for Cause prior to the Separation Date, and in exchange for a release of claims, post-employment restrictions in favor of the Company and other valuable consideration, the Executive will receive a lump sum bonus payment of $875,000, less required withholding (the “Bonus”), in consideration of his contributions toward the successful integration of the pending Merger. If the Executive’s employment terminates for any reason prior to the closing date of the Merger, Executive shall not be entitled to the Bonus. If Executive dies or has his employment terminated due to Disability prior to the Separation Date, the Executive or his estate, as applicable, will receive a prorated amount of the Bonus.
Pursuant to the Transition Agreement, unless the Executive dies, has his employment terminated due to Disability, resigns his employment or is terminated for Cause prior to the Separation Date, and in exchange for a release of claims, post-employment restrictions in favor of the Company and other valuable consideration, the Executive will (i) receive a lump sum severance cash payment of $1,650,000, less required withholding (the “Severance”), and (ii) in accordance with the terms of the Company’s equity plan, the Executive’s continued service as a non-employee director of Beacon Trust Company shall entitle the Executive to continued vesting of all unvested and outstanding equity awards as of the Termination Date. If the Executive’s employment terminates for any reason prior to the closing date of the Merger, Executive shall not be entitled to the Severance.
This summary of the Agreement does not purport to be complete and is subject to and qualified in its entirety by reference to the text of the Agreement, included as Exhibit 10.1 to this filing.


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Item 6.Exhibits.
The following exhibits are filed herewith:
2.1
2.2
2.3
3.1
3.2
4.1
10.1
31.1
31.2
32
101The following financial statements from the Company’s Quarterly Report to Stockholders on Form 10-Q for the quarter ended June 30, 2023,March 31, 2024, formatted in iXBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Financial Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Stockholder’s Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Labels Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
104The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023,March 31, 2024, has been formatted in iXBRL.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
PROVIDENT FINANCIAL SERVICES, INC.
Date:August 8, 2023April 26, 2024By:/s/ Anthony J. Labozzetta
Anthony J. Labozzetta
President and Chief Executive Officer (Principal Executive Officer)
Date:August 8, 2023April 26, 2024By:/s/ Thomas M. Lyons
Thomas M. Lyons
Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer)
Date:August 8, 2023April 26, 2024By:/s/ Adriano M. Duarte
Adriano M. Duarte
Executive Vice President and Chief Accounting Officer

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