10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter Ended September 30, 2022

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 No. 001-16197

PEAPACK-GLADSTONE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

New Jersey	22-3537895
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

500 Hills Drive, Suite 300

Bedminster, New Jersey 07921-0700

(Address of principal executive offices, including zip code)

(908) 234-0700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	PGC	The NASDAQ Stock Market, LLC

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 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ 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:

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller 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 ☒

Number of shares of Common Stock outstanding as of October 31, 2022: 17,920,771

PEAPACK-GLADSTONE FINANCIAL CORPORATION

PART I FINANCIAL INFORMATION

Item 1	Financial Statements (Unaudited)	3
	Consolidated Statements of Condition at September 30, 2022 and December 31, 2021	3
	Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income/(Loss) for the three and nine months ended September 30, 2022 and 2021	5
	Consolidated Statement of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2022 and 2021	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021	9
	Notes to Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3	Quantitative and Qualitative Disclosures About Market Risk	70
Item 4	Controls and Procedures	73

PART II OTHER INFORMATION

Item 1	Legal Proceedings	73
Item 1A	Risk Factors	73
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3	Defaults Upon Senior Securities	74
Item 4	Mine Safety Disclosures	74
Item 5	Other Information	74
Item 6	Exhibits	75

2

Item 1. Financial Statements

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands, except per share data)

	(unaudited)			(audited)
	September 30,			December 31,
	2022			2021
ASSETS
Cash and due from banks	$	5,066		$	5,929
Federal funds sold		—			—
Interest-earning deposits		103,214			140,875
Total cash and cash equivalents		108,280			146,804
Securities available for sale		497,880			796,753
Securities held to maturity (fair value $87,857 at September 30, 2022 and $108,460 at December 31, 2021)		103,551			108,680
Equity security, at fair value		12,957			14,685
FHLB and FRB stock, at cost		14,986			12,950
Loans held for sale, at fair value		1,333			3,040
Loans held for sale, at lower of cost or fair value		10,102			34,051
Loans		5,177,194			4,806,721
Less: Allowance for credit losses (1)		59,683			61,697
Net loans		5,117,511			4,745,024
Premises and equipment		23,781			23,044
Other real estate owned		116			—
Accrued interest receivable		17,816			21,589
Bank owned life insurance		47,072			46,663
Goodwill		36,212			36,212
Other intangible assets		11,486			12,690
Finance lease right-of-use assets		3,021			3,582
Operating lease right-of-use assets		13,404			9,775
Other assets		67,753			62,451
TOTAL ASSETS	$	6,087,261		$	6,077,993
LIABILITIES
Deposits:
Noninterest-bearing demand deposits	$	1,317,954		$	956,482
Interest-bearing deposits:
Checking		2,149,629			2,287,894
Savings		166,821			154,914
Money market accounts		1,178,112			1,307,051
Certificates of deposit - retail		345,047			409,608
Certificates of deposit - listing service		30,647			31,382
Subtotal deposits		5,188,210			5,147,331
Interest-bearing demand - brokered		85,000			85,000
Certificates of deposit - brokered		25,974			33,818
Total deposits		5,299,184			5,266,149
Short-term borrowings		32,369			—
Finance lease liabilities		5,003			5,820
Operating lease liabilities		14,101			10,111
Subordinated debt, net		132,916			132,701
Deferred tax liabilities, net		14,490			39,322
Accrued expenses and other liabilities		73,684			77,502
TOTAL LIABILITIES		5,571,747			5,531,605
SHAREHOLDERS’ EQUITY
Preferred stock (no par value; authorized 500,000 shares; liquidation preference of $1,000 per share)		—			—
Common stock (no par value; stated value $0.83 per share; authorized 42,000,000 shares; issued    shares, 20,973,770 at September 30, 2022 and 20,656,810 at December 31, 2021; outstanding    shares, 17,920,571 at September 30, 2022 and 18,393,888 at December 31, 2021)		17,484			17,220
Surplus		336,534			332,358
Treasury stock at cost, 3,053,199 shares at September 30, 2022 and 2,262,922 shares    at December 31, 2021		(92,637	)		(65,104	)
Retained earnings		329,116			274,288
Accumulated other comprehensive loss, net of income tax		(74,983	)		(12,374	)
TOTAL SHAREHOLDERS’ EQUITY		515,514			546,388
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	6,087,261		$	6,077,993

(1)Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss ("CECL") methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

See accompanying notes to consolidated financial statements

3

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
INTEREST INCOME
Interest and fees on loans	$	50,978		$	37,040		$	136,091		$	108,921
Interest on investments:
Taxable		2,853			2,824			9,995			8,473
Tax-exempt		13			28			52			107
Interest on loans held for sale		7			33			30			124
Interest on interest-earning deposits		1,162			142			1,505			367
Total interest income		55,013			40,067			147,673			117,992
INTEREST EXPENSE
Interest on savings and interest-bearing deposit accounts		6,689			1,880			11,385			5,358
Interest on certificates of deposit		791			836			2,048			3,333
Interest on borrowed funds		29			57			103			448
Interest on finance lease liability		61			74			193			229
Interest on subordinated debt		1,363			1,358			4,090			5,650
Subtotal - interest expense		8,933			4,205			17,819			15,018
Interest on interest-bearing demand - brokered		345			385			1,082			1,334
Interest on certificates of deposits - brokered		210			266			732			791
Total interest expense		9,488			4,856			19,633			17,143
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES		45,525			35,211			128,040			100,849
Provision for credit losses (1)		599			1,600			4,423			2,725
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		44,926			33,611			123,617			98,124
OTHER INCOME
Wealth management fee income		12,943			13,860			41,668			39,025
Service charges and fees		1,060			959			3,075			2,701
Bank owned life insurance		299			311			922			1,388
Gain on loans held for sale at fair value (mortgage banking)		60			408			458			1,842
Gain on loans held for sale at lower of cost or fair value		—			—			—			1,407
Fee income related to loan level, back-to-back swaps		—			—			—			—
Gain on sale of SBA loans		622			1,569			6,141			3,950
Corporate advisory fee income		102			84			1,696			1,303
Loss on swap termination		—			—			—			(842	)
Other income		1,868			660			3,982			2,798
Loss on securities sale, net		—			—			(6,609	)		—
Fair value adjustment for CRA equity security		(571	)		(70	)		(1,728	)		(293	)
Total other income		16,383			17,781			49,605			53,279
OPERATING EXPENSES
Compensation and employee benefits		22,656			19,859			66,987			61,759
Premises and equipment		4,534			4,459			13,821			12,646
FDIC insurance expense		510			555			1,484			1,669
Swap valuation allowance		—			1,350			673			1,350
Other operating expense		5,860			5,962			17,423			17,039
Total operating expenses		33,560			32,185			100,388			94,463
INCOME BEFORE INCOME TAX EXPENSE		27,749			19,207			72,834			56,940
Income tax expense		7,623			5,036			19,167			15,173
NET INCOME	$	20,126		$	14,171		$	53,667		$	41,767
EARNINGS PER SHARE
Basic	$	1.11		$	0.76		$	2.94		$	2.21
Diluted	$	1.09		$	0.74		$	2.88		$	2.15
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		18,072,385			18,763,316			18,244,691			18,891,601
Diluted		18,420,661			19,273,831			18,652,042			19,390,522

(1)Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

See accompanying notes to consolidated financial statements

4

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

(Dollars in thousands)

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net income	$	20,126		$	14,171		$	53,667		$	41,767
Comprehensive income/(loss):
Unrealized gains/(losses) on available for sale securities:
Unrealized holding gains/(losses) arising during the period		(30,983	)		(5,635	)		(102,257	)		(14,148	)
Reclassification adjustment for amounts included in net    income		—			—			6,609			—
		(30,983	)		(5,635	)		(95,648	)		(14,148	)
Tax effect		7,420			1,342			22,892			3,378
Net of tax		(23,563	)		(4,293	)		(72,756	)		(10,770	)
Unrealized gains/(losses) on cash flow hedges:
Unrealized holding gains/(losses) arising during the period		10,048			936			13,999			3,507
Reclassification adjustment for amounts included in net    income		(58	)		—			(58	)		842
		9,990			936			13,941			4,349
Tax effect		(2,683	)		(263	)		(3,794	)		(1,222	)
Net of tax		7,307			673			10,147			3,127
Total other comprehensive income/(loss)		(16,256	)		(3,620	)		(62,609	)		(7,643	)
Total comprehensive income/(loss)	$	3,870		$	10,551		$	(8,942	)	$	34,124

See accompanying notes to consolidated financial statements

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended September 30, 2022 and September 30, 2021

														Accumulated
														Other			Total
(In thousands, except share and	Preferred		Common					Treasury			Retained			Comprehensive			Shareholders'
per share data)	Stock		Stock		Surplus			Stock			Earnings			Loss			Equity
Balance at July 1, 2022 18,190,009    common shares outstanding	$	—	$	17,466	$	334,411		$	(82,725	)	$	309,899		$	(58,727	)	$	520,324
Net income		—		—		—			—			20,126			—			20,126
Comprehensive loss		—		—		—			—			—			(16,256	)		(16,256	)
Amortization of restricted stock units		—		—		1,909			—			—			—			1,909
Cash dividends declared on common stock    ($0.05 per share)		—		—		—			—			(909	)		—			(909	)
Share repurchase, (290,399) shares		—		—		—			(9,912	)		—			—			(9,912	)
Common stock options exercised, 300 shares		—		—		4			—			—			—			4
Issuance of shares for Employee Stock    Purchase Plan, 6,441 shares		—		6		222			—			—			—			228
Issuance of common stock for acquisition,    14,220 shares		—		12		(12	)		—			—			—			—

5

Balance at September 30, 2022 17,920,571    common shares outstanding	$	—	$	17,484	$	336,534		$	(92,637	)	$	329,116		$	(74,983	)	$	515,514
														Accumulated
														Other			Total
(In thousands, except share and	Preferred		Common					Treasury			Retained			Comprehensive			Shareholders'
per share data)	Stock		Stock		Surplus			Stock			Earnings			Loss			Equity
Balance at July 1, 2021 18,829,877     common shares outstanding	$	—	$	17,164	$	328,035		$	(48,461	)	$	247,136		$	(5,415	)	$	538,459
Net income		—		—		—			—			14,171			—			14,171
Comprehensive loss		—		—		—			—			—			(3,620	)		(3,620	)
Amortization of restricted stock units		—		—		1,807			—			—			—			1,807
Cash dividends declared on common stock    ($0.05 per share)		—		—		—			—			(942	)		—			(942	)
Share repurchase, (227,060) shares		—		—		—			(7,432	)		—			—			(7,432	)
Common stock options exercised, 400 shares		—		1		5			—			—			—			6
Exercise of warrants, 10,000 net of 6,416    shares used to exercise, 3,584 shares		—		2		(2	)		—			—			—			—
Issuance of shares for Employee Stock    Purchase Plan, 6,889 shares		—		6		226			—			—			—			232
Issuance of common stock for acquisition    14,220 shares		—		12		321			—			—			—			333
Balance at September 30, 2021 18,627,910    common shares outstanding	$	—	$	17,185	$	330,392		$	(55,893	)	$	260,365		$	(9,035	)	$	543,014

6

Nine Months Ended September 30, 2022 and September 30, 2021

															Accumulated
															Other
(In thousands, except share and	Preferred		Common						Treasury			Retained			Comprehensive
per share data)	Stock		Stock			Surplus			Stock			Earnings			Loss			Total
Balance at January 1, 2022 18,393,888     common shares outstanding	$	—	$	17,220		$	332,358		$	(65,104	)	$	274,288		$	(12,374	)	$	546,388
Cumulative effect adjustment for adoption of    ASU 2016-13		—		—			—			—			3,909			—			3,909
Balance at January 1, 2022, adjusted	$	—	$	17,220		$	332,358		$	(65,104	)	$	278,197		$	(12,374	)	$	550,297
Net income		—		—			—			—			53,667			—			53,667
Comprehensive loss		—		—			—			—			—			(62,609	)		(62,609	)
Restricted stock units issued, 325,607 shares		—		270			(270	)		—			—			—			—
Restricted stock units repurchased on    vesting to pay taxes, (74,445) shares		—		(62	)		(2,639	)		—			—			—			(2,701	)
Amortization of restricted stock units		—		—			6,300			—			—			—			6,300
Cash dividends declared on common stock    ($0.15 per share)		—		—			—			—			(2,748	)		—			(2,748	)
Share repurchase, (790,277) shares		—		—			—			(27,533	)		—			—			(27,533	)
Common stock options exercised, 9,660 shares		—		8			118			—			—			—			126
Exercise of warrants, 49,860 net of 28,311    shares used to exercise, 21,549 shares		—		18			(18	)		—			—			—			—
Issuance of shares for Employee Stock    Purchase Plan, 20,369 shares		—		18			697			—			—			—			715
Issuance of common stock for acquisition,    14,220 shares		—		12			(12	)		—			—			—			—
Balance at September 30, 2022 17,920,571    common shares outstanding	$	—	$	17,484		$	336,534		$	(92,637	)	$	329,116		$	(74,983	)	$	515,514
															Accumulated
															Other
(In thousands, except share and	Preferred		Common						Treasury			Retained			Comprehensive
per share data)	Stock		Stock			Surplus			Stock			Earnings			Loss			Total
Balance at January 1, 2021 18,974,703     common shares outstanding	$	—	$	16,958		$	326,592		$	(36,477	)	$	221,441		$	(1,392	)	$	527,122
Net income		—		—			—			—			41,767			—			41,767
Comprehensive loss		—		—			—			—			—			(7,643	)		(7,643	)
Restricted stock units issued, 288,348 shares		—		240			(240	)		—			—			—			—
Restricted stock units repurchased on    vesting to pay taxes, (71,749) shares		—		(60	)		(2,171	)		—			—			—			(2,231	)
Amortization of restricted stock units		—		—			5,229			—			—			—			5,229
Cash dividends declared on common stock    ($0.15 per share)		—		—			—			—			(2,843	)		—			(2,843	)
Share repurchase, (619,815) shares		—		—			—			(19,416	)		—			—			(19,416	)
Common stock options exercised, 3,220 net of    62 shares used to exercise, 3,158 shares		—		3			37			—			—			—			40
Exercise of warrants 50,000 net of 32,616    shares used to exercise, 17,384 shares		—		14			(14	)		—			—			—			—
Issuance of shares for Employee Stock    Purchase Plan, 21,661 shares		—		18			638			—			—			—			656
Issuance of common stock for acquisition,    14,220 shares		—		12			321			—			—			—			333
Balance at September 30, 2021 18,627,910    common shares outstanding	$	—	$	17,185		$	330,392		$	(55,893	)	$	260,365		$	(9,035	)	$	543,014

7

See accompanying notes to consolidated financial statements

8

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Nine Months Ended September 30,
	2022			2021
OPERATING ACTIVITIES:
Net income	$	53,667		$	41,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,554			2,367
Amortization of premium and accretion of discount on securities, net		2,331			4,502
Amortization of restricted stock		6,300			5,229
Amortization of intangible assets		1,204			1,167
Amortization of subordinated debt costs		215			931
Provision for credit losses (1)		4,423			2,725
Swap valuation allowance		673			—
Deferred tax benefit		(5,907	)		(3,247	)
Stock-based compensation and employee stock purchase plan expense		114			93
Fair value adjustment for equity security		1,728			293
Loss on securities available for sale		6,609			—
Loans originated for sale (2)		(58,409	)		(131,427	)
Proceeds from sales of loans held for sale (2)		85,663			142,141
Gain on loans held for sale (2)		(6,599	)		(5,792	)
Gain on loans held for sale at lower of cost or fair value		—			(1,407	)
Gain on OREO sold		—			(51	)
Gain on life insurance death benefit		—			(455	)
Increase in cash surrender value of life insurance, net		(409	)		(465	)
Decrease/(increase) in accrued interest receivable		3,773			(295	)
Decrease in other assets		3,952			2,998
Increase in accrued expenses and other liabilities		3,709			7,390
NET CASH PROVIDED BY OPERATING ACTIVITIES		105,591			68,464
INVESTING ACTIVITIES:
Principal repayments, maturities and calls of securities available for sale		305,337			338,596
Principal repayments, maturities and calls of securities held to maturity		5,046			807
Redemptions of FHLB and FRB stock		26,567			—
Proceeds from sales of securities available for sale		118,972			—
Purchase of securities available for sale		(229,941	)		(578,336	)
Purchase of FHLB and FRB stock		(28,603	)		(48	)
Proceeds from sales of loans held for sale at lower of cost or fair value		—			54,123
Net increase in loans, net of participations sold		(372,026	)		(253,638	)
Proceeds from sales of other real estate		—			101
Purchase of premises and equipment		(2,730	)		(3,371	)
Purchase of wealth management company		—			(5,500	)
Proceeds from life insurance death benefit		—			1,219
NET CASH USED IN INVESTING ACTIVITIES		(177,378	)		(446,047	)
FINANCING ACTIVITIES:
Net increase in deposits		33,035			557,857
Net increase in short-term borrowings		32,369			—
Repayments of Paycheck Protection Program Liquidity Facility		—			(128,590	)
Repayments of FHLB advances		—			(15,000	)
Dividends paid on common stock		(2,748	)		(2,843	)
Exercise of stock options, net of stock swaps		126			40
Restricted stock repurchased on vesting to pay taxes		(2,701	)		(2,231	)
Repayments of subordinated debt		—			(50,000	)
Issuance of shares for employee stock purchase plan		715			656
Shares repurchased		(27,533	)		(19,416	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		33,263			340,473
Net decrease in cash and cash equivalents		(38,524	)		(37,110	)
Cash and cash equivalents at beginning of period		146,804			653,322
Cash and cash equivalents at end of period	$	108,280		$	616,212
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	17,155		$	16,128
Income tax, net		16,311			13,448
Transfer of loans to loans held for sale		—			45,776
Transfer of loans to other real estate owned		116			—

(1)Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(2)Includes mortgage loans originated with the intent to sell which are carried at fair value. In addition, this includes the guaranteed portion of Small Business Administration (“SBA”) loans which are carried at the lower of cost or fair value.

See accompanying notes to consolidated financial statements

9

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Certain information and footnote disclosures normally included in the audited consolidated 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. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2021 for Peapack-Gladstone Financial Corporation (the “Corporation” or the “Company”). In the opinion of the management of the Corporation, the accompanying unaudited consolidated interim financial statements contain all adjustments (consisting solely of normal and recurring accruals) necessary to present fairly the financial position as of September 30, 2022, and the results of operations, comprehensive income/(loss), and changes in shareholders’ equity for the three and nine months ended September 30, 2022 and 2021 and cash flow statements for the nine months ended September 30, 2022 and 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year or for any future period.

Principles of Consolidation and Organization: The consolidated financial statements of the Company are prepared on the accrual basis and include the accounts of the Company and its wholly-owned subsidiary, Peapack-Gladstone Bank (the “Bank”). The consolidated financial statements also include the Bank’s wholly-owned subsidiaries:

•PGB Trust & Investments of Delaware

•Peapack Capital Corporation (“PCC”)

•Peapack-Gladstone Mortgage Group, Inc., which owns 99 percent of Peapack Ventures, LLC and 79 percent of Peapack-Gladstone Realty, Inc., a New Jersey real estate investment company

•PGB Trust & Investments of Delaware, which owns one percent of Peapack Ventures, LLC

•Peapack Ventures, LLC, which owns the remaining 21 percent of Peapack-Gladstone Realty, Inc.

•PGB Securities, Inc.

While the following footnotes include the consolidated results of the Company, the Bank and their subsidiaries, these footnotes primarily reflect the Bank’s and its subsidiaries’ activities. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements.

Basis of Financial Statement Presentation: The consolidated financial statements have been prepared in accordance with GAAP. In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the statement of condition and revenues and expenses for the periods presented. Actual results could differ from those estimates.

Adoption of New Accounting Standards: On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan and lease receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, Accounting Standards Codification (“ASC”) 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities Management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet commitments. Results for reporting periods beginning after January 1, 2022, are presented under ASC 326 while prior period amounts continue to be reported in accordance with the incurred loss model previously applicable under GAAP. The Company recorded a net increase to retained earnings of $3.9 million as of January 1, 2022, for the cumulative effect of adopting ASC 326. The transition adjustment includes a $5.5 million reduction to our allowance for credit losses. The lower allowance was in part attributed to historically low charge-offs combined with the shorter duration of the loan portfolio employed in our CECL

10

analysis. Further, the incurred loss method required significant qualitative factors, including factors related to COVID-19, and the use of a multiplier for potential losses on criticized and classified loans, neither of which are included within the CECL methodology. The CECL methodology utilizes significantly less qualitative factors as it uses economic factors and historical losses over a full economic cycle and calculates losses based on discounted cash flow on an individual loan basis. Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology.

The following table illustrates the impact to our financial statements as of January 1, 2022 upon adoption of ASC 326:

	January 1, 2022
(In thousands)	Impact to Consolidated Statement of Condition from ASC-326 Adoption			Tax Effect			Impact to Retained Earnings from ASC-326 Adoption
Allowance for credit losses on loans	$	(5,536	)	$	1,490		$	4,046
Allowance for credit losses on off-balance sheet commitments		188			(51	)		(137	)
Total impact from ASC 326 adoption	$	(5,348	)	$	1,439		$	3,909

Segment Information: The Company’s business is conducted through two business segments: (1) its banking segment (“Banking”), which involves the delivery of loan and deposit products to customers, and (2) the Peapack Private Wealth Management Division (“Peapack Private”), which includes asset management services to individuals and institutions. Management uses certain methodologies to allocate income and expense to the business segments.

The Banking segment includes: commercial (includes commercial and industrial (“C&I”) and equipment financing), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support services.

Peapack Private includes: investment management services for individuals and institutions; personal trust services, including services as executor, trustee, administrator and custodian; and other financial planning and advisory services. This segment also includes the activity from the Delaware subsidiary, PGB Trust & Investments of Delaware. Wealth management fees are primarily earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management and/or administration (“AUM”) at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).

Cash and Cash Equivalents: For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-earning deposits and federal funds sold. Generally, federal funds are sold for one-day periods. Cash equivalents are of original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions and short-term borrowings with original maturities of 90 days or less.

Interest-Earning Deposits in Other Financial Institutions: Interest-earning deposits in other financial institutions mature within one year and are carried at cost.

11

Securities: Prior to January 1, 2022, Management evaluated securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warranted. For securities in an unrealized loss position, Management considered the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer. Management also assessed whether it intended to sell, or it is more likely than not that it was required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that did not meet the aforementioned criteria, the amount of impairment was split into two components as follows: (1) other-than-temporary impairment related to credit loss, which would be recognized through the income statement and (2) other-than-temporary impairment related to other factors, which would be recognized in other comprehensive income.

Effective January 1, 2022, upon the adoption of ASU 2016-13, debt securities available-for-sale are measured at fair value and subject to impairment testing. When an available-for-sale debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, (1) recognize an allowance for credit losses ("ACL") by a charge to earnings for the credit-related component (if any) of the decline in fair value, and (2) recognize in other comprehensive income (loss) any non-credit related components of the fair value change. If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.

Debt securities are classified as held to maturity and carried at amortized cost when Management has the positive intent and ability to hold them to maturity. Under ASU 2016-13, held-to-maturity securities in a loss position are evaluated to determine if the decline in fair value has resulted from a credit-related loss or other factors and then, recognize an ACL through a charge to earnings for the decline in fair value. Other debt securities are classified as available for sale and are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax. The Company also has an investment in a Community Reinvestment Act (“CRA”) investment fund, which is classified as an equity security.

Interest income includes amortization of purchase premiums and discounts. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated, and premiums on callable debt securities, which are amortized to the earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock, based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

The Bank is also a member of the Federal Reserve Bank of New York and required to own a certain amount of FRB stock. FRB stock is carried at cost and classified as a restricted security. Dividends are reported as income.

Loans Held for Sale: Mortgage loans originated with the intent to sell in the secondary market are carried at fair value, as determined by outstanding commitments from investors.

Mortgage loans held for sale are generally sold with servicing rights released; therefore, no servicing rights are recorded. Gains and losses on sales of mortgage loans, shown as gain on sale of loans on the Statement of Income, are based on the difference between the selling price and the carrying value of the related loan sold.

SBA loans originated with the intent to sell in the secondary market are carried at the lower of cost or fair value. SBA loans are generally sold with the servicing rights retained. Gains and losses on the sale of SBA loans are based on the difference between the selling price and the carrying value of the related loan sold. Total SBA loans serviced totaled $145.6 million and $97.5 million as of September 30, 2022 and December 31, 2021, respectively. SBA loans held for sale totaled $10.1 million and $32.5 million at September 30, 2022 and December 31, 2021, respectively.

Loans originated with the intent to hold and subsequently transferred to loans held for sale are carried at the lower of cost or fair value. These are loans that the Company no longer has the intent to hold for the foreseeable future.

Loans: Loans that Management has the intent and ability to hold for the foreseeable future or until maturity are stated at the principal amount outstanding. Interest on loans is recognized based upon the principal amount outstanding. Loans are stated at face value, less purchased premium and discounts and net deferred fees. Loan origination fees and certain direct loan origination costs are deferred and recognized on a level-yield method over the life of the loan as an adjustment to the loan’s yield. The definition of recorded investment in loans includes accrued interest receivable and deferred fees/costs, however, for the Company’s loan disclosures, accrued interest and deferred fees/costs were excluded as the impact was not material.

12

Loans are considered past due when they are not paid within 30 days in accordance with contractual terms. The accrual of income on loans, including individually evaluated loans, is discontinued if, in the opinion of Management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement, or when principal or interest is past due 90 days unless the asset is both well secured and in the process of collection. All interest accrued but not received for loans placed on nonaccrual are reversed against interest income. Payments received on nonaccrual loans are recorded as principal payments. A nonaccrual loan is returned to accrual status only when interest and principal payments are brought current and future payments are reasonably assured, generally when the Bank receives contractual payments for a minimum of six consecutive months. Commercial loans are generally charged off, in whole or in part, after an analysis is completed which indicates that collectability of the full principal balance is in doubt. Consumer closed-end loans are generally charged off after they become 120 days past due and open-end loans after 180 days. Subsequent payments are credited to income only if collection of principal is not in doubt. If principal and interest payments are brought contractually current and future collectability is reasonably assured, loans may be returned to accrual status. Nonaccrual mortgage loans are generally charged off to the extent that the value of the underlying collateral does not cover the outstanding principal balance. The majority of the Company’s loans are secured by real estate in New Jersey, New York and Pennsylvania.

Allowance for Credit Losses: On January 1, 2022, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances.

The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Statements of Condition. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.

Allowance for Loan Losses under incurred methodology prior to CECL Adoption on January 1, 2022

The allowance for loan and lease losses was a valuation allowance for credit losses that was Management’s estimate of probable incurred losses in the loan portfolio. Under this accounting method, the process to determine reserves utilized analytical tools and Management judgment and was reviewed on a quarterly basis. When Management was reasonably certain that a loan balance was not fully collectable, an impairment analysis was completed whereby a specific reserve could be established or a full or partial charge off was recorded against the allowance. Subsequent recoveries, if any, were credited to the allowance. Management estimated the allowance balance required using past loan loss experience, the size and composition of the portfolio, information about specific borrower situations, estimated collateral values, asset quality information, economic conditions and other factors. Allocations of the allowance could be made for specific loans via a specific reserve, but the entire allowance was available for any loan that, in Management’s judgment, should be charged off.

The allowance consisted of specific and general components. The specific component of the allowance related to loans that were individually classified as impaired.

A loan was impaired when, based on current information and events, it was probable that the Bank would be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by Management in determining impairment included payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired. Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Loans were individually evaluated for impairment when they were classified as substandard by Management. If a loan was considered impaired, a portion of the allowance could be allocated so that the loan was reported, net, at the present value of estimated future cash flows using the loan’s existing rate or if repayment was expected solely from the underlying collateral, the loan principal balance was compared to the fair value of collateral less estimated disposition costs to determine the need, if any, for a charge off.

The general component of the allowance covered non-impaired loans and was based primarily on the Company’s historical loss experience adjusted for current factors. The historical loss experience was determined by portfolio segment and was based on the

13

actual loss history experienced by the Company on a weighted average basis over the previous three years. This actual loss experience was adjusted by other qualitative factors based on the risks present for each portfolio segment. These qualitative factors included consideration of the following: levels of and trends in delinquencies, charge-offs and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. For loans that were graded as non-impaired, the Company allocated a higher general reserve percentage than pass-rated loans using a multiple that was calculated annually through a migration analysis. At both December 31, 2021 and 2020, respectively, the multiple was 2.25 times for non-impaired special mention loans and 3.25 times for non-impaired substandard loans.

ACL in accordance with CECL methodology

With respect to pools of similar loans that are collectively evaluated, an appropriate level of general allowance is determined by portfolio segment using a non-linear discounted cash flow (“DCF”) model. The DCF model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to unemployment rates, national consumer price and confidence indices. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following: levels of and trends in delinquencies and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the ACL results in two forms of allocations, specific and general. These two components represent the total ACL deemed adequate to cover current expected credit losses in the loan portfolio.

When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses.

In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified:

Primary Residential Mortgages. The Bank originates one to four family residential mortgage loans in the Tri-State area (New York, New Jersey and Connecticut), Pennsylvania and Florida. Loans are secured by first liens on the primary residence or investment property. Primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Junior Lien Loan on Residence (which include home equity lines of credit). The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit against one to four family properties in the Tri-State area. These

14

loans are subordinate to a first mortgage, which may be from another lending institution. Primary risk characteristics associated with JLLs and home equity lines of credit typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. In addition, home equity lines of credit typically are made with variable or floating interest rates, which could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Multifamily. The Bank provides mortgage loans for multifamily properties (i.e., buildings which have five or more residential units) and other commercial real estate that is either owner occupied or managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Multifamily loans are expected to be repaid from the cash flows of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and its ability to repay the loan.

Owner-Occupied Commercial Real Estate Loans. The Bank provides mortgage loans for owner-occupied commercial real estate properties in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are mixed use. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Non-owner-occupied properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Commercial and Industrial Loans. The Bank provides lines of credit and term loans to operating companies for business purposes. The loans are generally secured by business assets such as accounts receivable, inventory, business vehicles and equipment as well as the stock of a company, if privately held. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business’ profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. To mitigate the risk characteristics of commercial and industrial loans, these loans often include commercial real estate as collateral and the Bank will often require more frequent reporting requirements from the borrower in order to better monitor its business performance. However, the ability of the Bank to foreclose and realize sufficient value from the assets is often highly uncertain.

Leasing Finance. PCC offers a range of finance solutions nationally. PCC provides term loans and leases secured by assets financed for U.S. based mid-size and large companies. Facilities tend to be fully drawn under fixed rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.

Asset risk in PCC’s portfolio is generally recognized through changes to loan income, or through changes to lease related income streams due to fluctuations in lease rates. Changes to lease income can occur when the existing lease contract expires, the asset comes off lease or the business seeks to enter a new lease agreement. Asset risk may also change through depreciation, resulting from changes in the residual value of the operating lease asset or through impairment of the asset carrying value, which can occur at any time during the life of the asset.

15

Credit risk in PCC’s portfolio generally results from the potential default of borrowers or lessees, which may be driven by customer specific or broader industry related conditions. Credit losses can impact multiple parts of the income statement including loss of interest/lease/rental income and/or higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets.

Construction. The Bank provides commercial construction loans for properties located in the Tri-state area. Risks common to commercial construction loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.

Consumer and Other. These are loans to individuals for household, family and other personal expenditures as well as obligations of states and political subdivisions in the U.S. This also represents all other loans that cannot be categorized in any of the previous mentioned loan segments. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral.

A troubled debt restructuring (“TDR”) is a modified loan with concessions made by the lender to a borrower who is experiencing financial difficulty. TDRs are impaired and are generally measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral, less estimated disposition costs. For TDRs that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for credit losses.

The Coronavirus Aid, Relief, and Economic Security ("CARES”) Act, which provided entities with optional temporary relief from certain accounting and financial reporting requirements under U.S. GAAP, allowed financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria were met. This relief could be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that deferred or delayed the payment of principal or interest or changed the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40. The Company approved total loan modifications under the CARES Act of $947.0 million of which none remain outstanding.

Another key program under the CARES Act is the Paycheck Protection Program (“PPP”) administered by the SBA which provided funding to qualifying businesses and organizations. Under this program, the Company provided funding of approximately $650 million. In the third quarter of 2020 and second quarter of 2021, the Company sold approximately $355.0 million and $56.5 million, respectively, of such loans, servicing rights released to a third party. The Company also referred approximately $124 million of PPP loans to a third party during the first six months of 2021. The Company has approximately $1.9 million of PPP loans remaining in its portfolio as of September 30, 2022 and believes that substantially all of these loans will be forgiven by the SBA. These loans are fully guaranteed by the SBA and provide for full forgiveness of the loans during a specified forgiveness period that meet specific guidelines provided by the SBA. Loans that do not meet the forgiveness criteria will enter a repayment period of 2 or 5 years.

Leases: At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding right-of-use (“ROU”) asset and operating lease liability are recorded as separate line items on the statement of condition. An ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made.

If the rate implicit in the lease is not readily determinable, the incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s statement of condition, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. The Company maintains certain property

16

and equipment under direct financing and operating leases. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space and are classified as operating leases.

The ROU asset is measured at the amount of the lease liability adjusted for lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the ROU asset. Operating lease expense consists of a single lease cost allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the ROU asset.

There are no terms or conditions related to residual value guarantees and no restrictions or covenants that would impact the Company’s ability to pay dividends or to incur additional financial obligations.

Derivatives: At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”); or (3) an instrument with no hedging designation. For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For cash flow hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the statement of condition, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the statement of condition or to specific firm commitments or forecasted transactions. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

The Company also offers facility specific / loan level swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a financial institution / swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions. The Company is exposed to losses if a customer counterparty fails to make its payments under a contract in which the Company is in a net receiving position. At this time, the Company anticipates that its counterparties will be able to fully satisfy their obligations under the agreements. All of the contracts to which the Company is a party settle monthly. Further, the Company has netting agreements with the dealers with which it does business.

Stock-Based Compensation: The Company’s 2006 Long-Term Stock Incentive Plan, 2012 Long-Term Stock Incentive Plan and 2021 Long-Term Stock Incentive Plan allow the granting of shares of the Company’s common stock as incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to directors, officers and employees of the Company and its subsidiaries. There are no shares remaining for issuance with respect to the stock option plan approved in 2002, however options granted under this plan are still included in the amounts below. Options granted under these plans are, in general, exercisable not earlier than one year after the date of grant, at a price equal to the fair value of common stock

17

on the date of grant and expire not more than ten years after the date of grant. Stock options may vest during a period of up to five years after the date of grant. Some options granted to officers at or above the senior vice president level were immediately exercisable at the date of grant. The Company has a policy of using authorized but unissued shares to satisfy option exercises.

Upon adoption of ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

For the Company’s stock option plans, changes in options outstanding during the nine months ended September 30, 2022 were as follows:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
	Number of			Exercise		Contractual	Value
	Options			Price		Term	(In thousands)
Balance, January 1, 2022		31,340		$	14.59
Exercised during 2022		(9,660	)		13.14
Expired during 2022		—			—
Forfeited during 2022		(900	)		13.11
Balance, September 30, 2022		20,780		$	15.33	0.44 years	$	381
Vested and expected to vest		20,780		$	15.33	0.44 years	$	381
Exercisable at September 30, 2022		20,780		$	15.33	0.44 years	$	381

The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the third quarter of 2022 and the exercise price, multiplied by the number of in-the-money options. The Company’s closing stock price on September 30, 2022 was $33.65.

There were no stock options granted during the three or nine months ended September 30, 2022.

The Company issued performance-based and service-based restricted stock units in 2022 and 2021. Service-based units vest ratably over a three- or five-year period. There were no service-based restricted stock units granted during the third quarter of 2022.

The performance-based awards are dependent upon the Company meeting certain performance criteria and, to the extent the performance criteria are met, will cliff vest at the end of the performance period, which is generally three years. There were no performance-based restricted stock units granted in the third quarter of 2022.

Changes in non-vested shares dependent on performance criteria for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		225,435		$	20.29
Granted during 2022		71,482			35.93
Vested during 2022		(58,077	)		25.77
Forfeited during 2022		(5,284	)		17.92
Balance, September 30, 2022		233,556		$	23.77

Changes in service-based restricted stock awards/units for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		701,145		$	21.93
Granted during 2022		235,534			36.86
Vested during 2022		(267,530	)		21.48
Forfeited during 2022		(22,868	)		23.46
Balance, September 30, 2022		646,281		$	27.50

18

As of September 30, 2022, there was $17.0 million of total unrecognized compensation cost related to service-based and performance-based units. That cost is expected to be recognized over a weighted average period of 1.39 years. Stock compensation expense recorded for the third quarters of 2022 and 2021 totaled $2.1 million and $1.8 million, respectively. Stock compensation expense recorded for the nine months ended September 30, 2022 and 2021 totaled $5.7 million and $5.3 million, respectively.

Employee Stock Purchase Plan (“ESPP”): The ESPP provides for the granting of rights to purchase up to 150,000 shares of Peapack-Gladstone Financial Corporation common stock. In May 2020, shareholders approved an increase of 200,000 shares of Peapack-Gladstone Financial Corporation common stock to be issued under the ESPP.

The ESPP allows for the purchase of shares during four three-month Offering Periods of each calendar year. The Offering Periods end on February 16, May 16, August 16 and November 16 of each calendar year.

Each participant in the Offering Period is granted an option to purchase a number of shares and may contribute between one percent and 15 percent of their compensation. At the end of each Offering Period, the number of shares to be purchased by the employee is determined by dividing the employee’s contributions accumulated during the Offering Period by the applicable purchase price. The purchase price is an amount equal to 85 percent of the closing market price of a share of common stock on the purchase date. Participation in the ESPP is entirely voluntary and employees can cancel their purchases at any time during the period without penalty. The fair value of each share purchase right is determined using the Black-Scholes option pricing model.

The Company recorded $37,000 of expense in salaries and employee benefits expense for both the three months ended September 30, 2022 and 2021 related to the ESPP. Total shares issued under the ESPP during the third quarter of 2022 and 2021 were 6,441 and 6,889, respectively.

The Company recorded $114,000 and $93,000 of expense in salaries and employee benefits expense for the nine months ended September 30, 2022 and 2021, respectively, related to the ESPP. Total shares issued under the ESPP during the nine months ended September 30, 2022 and 2021 were 20,369 and 21,661, respectively.

Earnings per share – Basic and Diluted: The following is a reconciliation of the calculation of basic and diluted earnings per share. Basic net income per share is calculated by dividing net income available to shareholders by the weighted average shares outstanding during the reporting period. Diluted net income per share is computed similarly to that of basic net income per share, except that the denominator is increased to include the number of additional shares that would have been outstanding utilizing the Treasury Stock Method if all shares underlying potentially dilutive stock options were issued and all shares of restricted stock, stock warrants or restricted stock units were to vest during the reporting period.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share data)	2022		2021		2022		2021
Net income available to common shareholders	$	20,126	$	14,171	$	53,667	$	41,767
Basic weighted average shares outstanding		18,072,385		18,763,316		18,244,691		18,891,601
Plus: common stock equivalents		348,276		510,515		407,351		498,921
Diluted weighted average shares outstanding		18,420,661		19,273,831		18,652,042		19,390,522
Net income per share
Basic	$	1.11	$	0.76	$	2.94	$	2.21
Diluted		1.09		0.74		2.88		2.15

For the three months ended September 30, 2022, restricted stock units totaling 112,241 were not included in the computation of diluted earnings per share because they were anti-dilutive. For the three months ended September 30, 2021, all restricted stock units were included in the computation of diluted earnings per share because they were all dilutive. For the nine months ended September 30, 2022 and 2021, restricted stock units totaling 296,687 and 261,610 were not included in the computation of diluted earnings per share because they were anti-dilutive. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.

Income Taxes: The Company files a consolidated Federal income tax return. Separate state income tax returns are filed for each subsidiary based on current laws and regulations.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on the enacted tax rates. Such tax assets and liabilities are adjusted for the effect of a change in tax rates in the period of enactment.

19

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company is no longer subject to examination by the U.S. Federal tax authorities for years prior to 2018 or by New Jersey tax authorities for years prior to 2016.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Restrictions on Cash: A large portion of cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. Prior to March 2020, reserves were in the form of cash and balances with the FRB and included in interest-earning deposits in our statement of condition. The FRB suspended cash reserve requirements effective March 26, 2020.

Comprehensive Income/(Loss): Comprehensive income/(loss) consists of net income and the change during the period in the Company’s net unrealized gains or losses on securities available for sale and unrealized gains and losses on cash flow hedge, net of tax, less adjustments for realized gains and losses.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Risks and Uncertainties: It is possible that estimates made in the Company’s consolidated financial statements could be materially and adversely impacted as a result of the conditions created by COVID-19, including estimates regarding expected provision for credit losses and impairment of goodwill.

Goodwill and Other Intangible Assets: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree (if any), over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Goodwill was primarily attributable to the Bank’s wealth acquisitions. Management monitors the impact of changes in the financial markets and includes these assessments in our impairment process. Management has concluded that there was no goodwill impairment as of September 30, 2022.

The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill, which includes assembled workforce has an indefinite life on our statement of financial condition. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill and assembled workforce are the intangible assets with an indefinite life on our balance sheet.

Other intangible assets, which primarily consist of customer relationship intangible assets arising from acquisitions, are amortized on an accelerated basis over their estimated useful lives, which range from 5 to 15 years.

20

2. INVESTMENT SECURITIES

A summary of amortized cost and approximate fair value of investment securities available for sale and held to maturity included in the Consolidated Statements of Condition as of September 30, 2022 and December 31, 2021 follows:

	September 30, 2022
			Gross		Gross			Allowance
	Amortized		Unrealized		Unrealized			for		Fair
(In thousands)	Cost		Gains		Losses			Credit Losses		Value
Securities Available for Sale:
U.S government-sponsored agencies	$	244,770	$	—	$	(55,360	)	$	—	$	189,410
Mortgage-backed securities–residential		315,541		40		(48,034	)		—		267,547
SBA pool securities		33,538		2		(4,419	)		—		29,121
State and political subdivisions		2,613		—		(29	)		—		2,584
Corporate bond		10,000		—		(782	)		—		9,218
Total securities available for sale	$	606,462	$	42	$	(108,624	)	$	—	$	497,880
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	—	$	(4,869	)	$	—	$	35,131
Mortgage-backed securities–residential		63,551		—		(10,825	)		—		52,726
Total securities held to maturity	$	103,551	$	—	$	(15,694	)	$	—	$	87,857

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Securities Available for Sale:
U.S government-sponsored agencies	$	280,045	$	—	$	(7,824	)	$	272,221
Mortgage-backed securities–residential		481,062		3,849		(7,937	)		476,974
SBA pool securities		40,649		12		(1,100	)		39,561
State and political subdivisions		5,431		45		—			5,476
Corporate bond		2,500		21		—			2,521
Total securities available for sale	$	809,687	$	3,927	$	(16,861	)	$	796,753
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	7	$	(25	)	$	39,982
Mortgage-backed securities–residential		68,680		67		(269	)		68,478
Total securities held to maturity	$	108,680	$	74	$	(294	)	$	108,460

The following table presents a summary of the gross gains, gross losses and net tax benefit related to proceeds on sales of securities available for sale for the nine months ended September 30, 2022:

(In thousands)	September 30, 2022
Proceeds from sales	$	118,972
Gross gains		3
Gross losses		(6,612	)
Net tax benefit		1,581

There were no sales of securities for the quarter ended September 30, 2022.

21

The following tables present the Company’s available for sale and held to maturity securities with continuous unrealized losses and the approximate fair value of these investments as of September 30, 2022 and December 31, 2021.

	September 30, 2022
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	—	$	—		$	189,410	$	(55,360	)	$	189,410	$	(55,360	)
Mortgage-backed securities residential		70,005		(5,425	)		166,924		(42,609	)		236,929		(48,034	)
SBA pool securities		3,788		(282	)		24,313		(4,137	)		28,101		(4,419	)
State and political subdivisions		2,584		(29	)		—		—			2,584		(29	)
Corporate bond		9,218		(782	)		—		—			9,218		(782	)
Total securities available for sale	$	85,595	$	(6,518	)	$	380,647	$	(102,106	)	$	466,242	$	(108,624	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	35,131	$	(4,869	)	$	—	$	—		$	35,131	$	(4,869	)
Mortgage-backed securities residential		52,726		(10,825	)		—		—			52,726		(10,825	)
Total securities held to maturity	$	87,857	$	(15,694	)	$	—	$	—		$	87,857	$	(15,694	)
Total securities	$	173,452	$	(22,212	)	$	380,647	$	(102,106	)	$	554,099	$	(124,318	)

	December 31, 2021
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	243,187	$	(6,858	)	$	29,034	$	(966	)	$	272,221	$	(7,824	)
Mortgage-backed securities residential		265,403		(7,053	)		33,455		(884	)		298,858		(7,937	)
SBA pool securities		22,057		(567	)		10,562		(533	)		32,619		(1,100	)
Total securities available for sale	$	530,647	$	(14,478	)	$	73,051	$	(2,383	)	$	603,698	$	(16,861	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	24,975	$	(25	)	$	—	$	—		$	24,975	$	(25	)
Mortgage-backed securities residential		48,307		(269	)		—		—			48,307		(269	)
Total securities held to maturity	$	73,282	$	(294	)	$	—	$	—		$	73,282	$	(294	)
Total securities	$	603,929	$	(14,772	)	$	73,051	$	(2,383	)	$	676,980	$	(17,155	)

Available for sale and held to maturity securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the Consolidated Statements of Income when management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of securities currently in a continuous loss position continue to make timely principal and interest payments and none of these securities were past due or were placed in nonaccrual status at September 30, 2022. Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely given the lack of historical credit losses and governmental backing. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. Therefore, no allowance for credit losses was recorded at September 30, 2022.

The Company has an investment in a CRA investment fund with a fair value of $13.0 million at September 30, 2022. This investment is classified as an equity security in our Consolidated Statements of Condition. This security had a loss of $571,000 and $1.7 million for the three months and nine months ended September 30, 2022, respectively. This amount is included in the fair value adjustment for CRA equity security on the Consolidated Statements of Income.

22

3. LOANS AND LEASES

Loans outstanding, excluding those held for sale, by general ledger classification, as of September 30, 2022 and December 31, 2021, consisted of the following:

			% of					% of
	September 30,		Totals			December 31,		Total
(Dollars in thousands)	2022		Loans			2021		Loans
Residential mortgage	$	517,755		10.00	%	$	498,300		10.37	%
Multifamily mortgage		1,856,675		35.87			1,595,866		33.20
Commercial mortgage		638,903		12.34			662,626		13.78
Commercial loans (including equipment financing) (1)		2,084,998		40.27			1,955,157		40.67
Commercial construction		4,817		0.09			20,044		0.42
Home equity lines of credit		36,375		0.70			40,803		0.85
Consumer loans, including fixed rate home equity loans		37,412		0.72			33,687		0.70
Other loans		259		0.01			238		0.01
Total loans	$	5,177,194		100.00	%	$	4,806,721		100.00	%

(1)Includes PPP loans of $1.9 million at September 30, 2022 and $13.8 million at December 31, 2021.

In determining an appropriate amount for the allowance, the Bank segments and aggregated the loan portfolio based on common characteristics. The following pool segments identified as of September 30, 2022 are based on the CECL methodology:

			% of
	September 30,		Totals
(Dollars in thousands)	2022		Loans
Primary residential mortgage	$	520,276		10.06	%
Junior lien loan on residence		40,216		0.78
Multifamily property		1,856,675		35.89
Owner-occupied commercial real estate		256,891		4.96
Investment commercial real estate		1,035,254		20.01
Commercial and industrial (1)		1,106,927		21.40
Lease financing		304,256		5.88
Construction		10,384		0.20
Consumer and other		42,506		0.82
Total loans		5,173,385		100.00	%
Net deferred costs		3,809
Total loans including net deferred costs	$	5,177,194

(1) Includes PPP loans of $1.9 million at September 30, 2022.

The portfolio classes identified as of December 31, 2021 are based on the incurred loss methodology and are segmented by federal Call Report codes:

			% of
	December 31,		Total
(Dollars in thousands)	2021		Loans
Primary residential mortgage	$	500,243		10.42	%
Home equity lines of credit		40,803		0.85
Junior lien loan on residence		3,191		0.07
Multifamily property		1,595,866		33.23
Owner-occupied commercial real estate		252,603		5.26
Investment commercial real estate		1,003,979		20.90
Commercial and industrial (1)		992,332		20.66
Lease financing		345,868		7.20
Farmland/agricultural production		6,871		0.14
Commercial construction loans		20,174		0.42
Consumer and other loans		40,828		0.85
Total loans		4,802,758		100.00	%
Net deferred costs		3,963
Total loans including net deferred costs	$	4,806,721

23

(1)Includes PPP loans of $13.8 million at December 31, 2021.

The following tables present the recorded investment in nonaccrual and loans past due 90 days or over still on accrual by class of loans as of September 30, 2022 and December 31, 2021:

	September 30, 2022
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	2,527	$	—
Owner-occupied commercial real estate		263		—
Investment commercial real estate		12,429		—
Commercial and industrial		505		—
Total	$	15,724	$	—

	December 31, 2021
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	1,851	$	—
Junior lien loan on residence		18		—
Owner-occupied commercial real estate		458		—
Investment commercial real estate		12,750		—
Commercial and industrial		496		—
Total	$	15,573	$	—

The following tables present the aging of the recorded investment in past due loans as of September 30, 2022 and December 31, 2021 by class of loans, excluding nonaccrual loans:

	September 30, 2022
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	323	$	—	$	—	$	323
Commercial and industrial		6,925		—		—		6,925
Total	$	7,248	$	—	$	—	$	7,248

	December 31, 2021
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	639	$	—	$	—	$	639
Commercial and industrial		7,825		142		—		7,967
Total	$	8,464	$	142	$	—	$	8,606

Credit Quality Indicators:

The Company places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten and then annually based on set criteria in the loan policy.

In addition, the Bank has engaged an independent loan review firm to validate risk ratings and to ensure compliance with our policies and procedures. This review of the following types of loans is performed quarterly:

•A large sample of relationships or new lending to existing relationships greater than $1,000,000 booked since the prior review;

•All criticized and classified rated borrowers with relationship exposure of more than $500,000;

24

•A large sample of Pass-rated (including Pass Watch) borrowers with total relationships in excess of $1,000,000 and a small sample of Pass related relationships less than $1,000,000;

•All leveraged loans of $1,000,000 or greater;

•At least two borrowing relationships managed by each commercial banker;

•Any new Regulation “O” loan commitments over $1,000,000; and

•Any other credits requested by Bank senior management or a member of the Board of Directors and any borrower for which the reviewer determines a review is warranted based upon knowledge of the portfolio, local events, industry stresses, etc.

The review excludes borrowers with commitments of less than $500,000.

The Company uses the following regulatory definitions for criticized and classified risk ratings:

Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

With the adoption of CECL, loans that are in the process of or expected to be in foreclosure are deemed to be collateral dependent with respect to measuring potential loss and allowance adequacy and are individually evaluated by Management. Loans that do not share common risk characteristics are also evaluated on an individual basis. All other loans are evaluated using a non-linear discounted cashflow methodology for measuring potential loss and allowance adequacy.

25

The following is a summary of the credit risk profile of loans by internally assigned grade as of September 30, 2022 based on originations for the periods indicated; the years represent the year of origination for non-revolving loans:

	Grade as of September 30, 2022 for Loans Originated During
											2017				Revolving-
(In thousands)	2022		2021		2020		2019		2018		and Prior		Revolving		Term		Total
Primary residential mortgage:
Pass	$	91,142	$	94,871	$	63,091	$	38,422	$	28,052	$	201,286	$	—	$	694	$	517,558
Special mention		—		—		—		—		—		98		—		—		98
Substandard		—		—		554		1,062		282		722		—		—		2,620
Doubtful		—		—		—		—		—		—		—		—		—
Total primary residential mortgages		91,142		94,871		63,645		39,484		28,334		202,106		—		694		520,276
Junior lien loan on residence:
Pass		1,545		185		46		664		354		1,047		35,867		—		39,708
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		508		—		508
Doubtful		—		—		—		—		—		—		—		—		—
Total junior lien loan on residence		1,545		185		46		664		354		1,047		36,375		—		40,216
Multifamily property:
Pass		449,363		683,097		118,815		229,869		43,062		317,365		981		1,830		1,844,382
Special mention		—		—		—		2,860		—		3,518		—		—		6,378
Substandard		—		—		—		—		—		5,915		—		—		5,915
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily property		449,363		683,097		118,815		232,729		43,062		326,798		981		1,830		1,856,675
Owner-occupied commercial real estate:
Pass		12,216		44,107		20,990		12,335		22,587		134,701		764		8,739		256,439
Special mention		—		—		—		—		—		189		—		—		189
Substandard		—		—		—		—		—		263		—		—		263
Doubtful		—		—		—		—		—		—		—		—		—
Total owner-occupied commercial real estate		12,216		44,107		20,990		12,335		22,587		135,153		764		8,739		256,891
Investment commercial real estate:
Pass		149,630		155,537		64,245		168,225		93,927		317,770		7,128		21,831		978,293
Special mention		—		—		—		13,069		—		13,379		—		14,588		41,036
Substandard		12,429		—		—		3,496		—		—		—		—		15,925
Doubtful		—		—		—		—		—		—		—		—		—
Total investment commercial real estate		162,059		155,537		64,245		184,790		93,927		331,149		7,128		36,419		1,035,254
Commercial and industrial:
Pass		277,681		250,700		87,541		89,923		30,915		6,107		298,246		33,082		1,074,195
Special mention		16,333		1,788		2,322		4,265		194		—		7,325		—		32,227
Substandard		—		—		—		—		283		186		36		—		505
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial		294,014		252,488		89,863		94,188		31,392		6,293		305,607		33,082		1,106,927
Lease financing:
Pass		51,120		76,975		61,758		56,022		34,009		20,422		—		—		300,306
Special mention		2,179		—		—		—		—		—		—		—		2,179
Substandard		—		—		—		1,771		—		—		—		—		1,771
Doubtful		—		—		—		—		—		—		—		—		—
Total lease financing		53,299		76,975		61,758		57,793		34,009		20,422		—		—		304,256
Construction loans:

26

Pass		—		—		—		1,444		—		—		4,848		4,092		10,384
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial construction loans		—		—		—		1,444		—		—		4,848		4,092		10,384
Consumer and other loans:
Pass		—		396		200		13		—		5,980		32,661		3,256		42,506
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer and other loans		—		396		200		13		—		5,980		32,661		3,256		42,506
Total:
Pass		1,032,697		1,305,868		416,686		596,917		252,906		1,004,678		380,495		73,524		5,063,771
Special mention		18,512		1,788		2,322		20,194		194		17,184		7,325		14,588		82,107
Substandard		12,429		—		554		6,329		565		7,086		544		—		27,507
Doubtful		—		—		—		—		—		—		—		—		—
Total Loans	$	1,063,638	$	1,307,656	$	419,562	$	623,440	$	253,665	$	1,028,948	$	388,364	$	88,112	$	5,173,385

27

As of December 31, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans was as follows:

			Special
(In thousands)	Pass		Mention		Substandard		Doubtful
Primary residential mortgage	$	494,444	$	557	$	5,242	$	—
Home equity lines of credit		40,274		—		529		—
Junior lien loan on residence		3,173		—		18		—
Multifamily property		1,579,776		7,720		8,370		—
Owner-occupied commercial real estate		251,229		663		711		—
Investment commercial real estate		901,877		87,297		14,805		—
Commercial and industrial		951,127		20,178		21,027		—
Lease financing		345,868		—		—		—
Farmland/agricultural production		6,871		—		—		—
Commercial construction loans		20,099		75		—		—
Consumer and other loans		40,828		—		—		—
Total	$	4,635,566	$	116,490	$	50,702	$	—

At September 30, 2022, $13.0 million of substandard loans were also considered individually evaluated, compared to $15.7 million at December 31, 2021.

Loan Modifications:

The CARES Act allowed financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria were met. This relief could be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that deferred or delayed the payment of principal or interest or changed the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40.

As of September 30, 2022, the Bank had modified 542 loans under the CARES Act with a balance of $947.0 million resulting in the deferral of principal and/or interest. There are no outstanding deferrals as of September 30, 2022.

Troubled Debt Restructurings:

The Company has allocated $2.4 million of specific reserves on TDRs as of September 30, 2022. The Company did not allocate specific reserves to customers whose loan terms had been modified TDRs as of December 31, 2021. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs.

There were no loans modified as TDRs during the three-month period ended September 30, 2022.

The following table presents loans by class modified as TDRs during the three-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		2	$	455	$	455
Total		2	$	455	$	455

28

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2022:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		1	$	12,429	$	12,429
Total		1	$	12,429	$	12,429

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Primary residential mortgage		3	$	1,277	$	1,277
Commercial and industrial		1		2,194		2,194
Total		4	$	3,471	$	3,471

29

The identification of the TDRs did not have a material impact on the allowance for credit losses.

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2022:

	Number of		Recorded
(Dollars in thousands)	Loans		Investment
Primary residential mortgage		1	$	145
Total		1	$	145

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Primary residential mortgage		1	$	221	$	221
Total		1	$	221	$	221

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The modification of the terms of such loans may include one or more of the following: (1) a reduction of the stated interest rate of the loan to a rate that is lower than the current market rate for new debt with similar risk; (2) an extension of an interest only period for a predetermined period of time; (3) an extension of the maturity date; or (4) an extension of the amortization period over which future payments will be computed. At the time a loan is restructured, the Bank performs a full underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, and an updated independent appraisal of the property. A loan will continue to accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the TDR. At a minimum, six consecutive months of contractual payments would need to be made on a restructured loan before returning it to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status if it meets the requirements of ASC 310-40-50-2.

4. ALLOWANCE FOR CREDIT LOSSES

30

On January 1, 2022, the Company adopted ASU 2016-13, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. See Note 1, Summary of Significant Accounting Policies for additional information on Topic 326.

The Company does not estimate expected credit losses on accrued interest receivable (“AIR”) on loans, as AIR is reversed or written off when the full collection of the AIR related to a loan becomes doubtful. AIR on loans totaled $16.1 million at September 30, 2022 and $19.1 million at December 31, 2021.

The following table presents the loan balances by segment, and the corresponding balances in the allowance as of September 30, 2022. For the period ended September 30, 2022, the allowance was based on the CECL methodology.

	September 30, 2022
			Ending ACL				Ending ACL
	Total		Attributable		Total		Attributable
	Individually		To Individually		Loans		To Loans				Total
	Evaluated		Evaluated		Collectively		Collectively		Total		Ending
(In thousands)	Loans		Loans		Evaluated		Evaluated		Loans		ACL
Primary residential mortgage	$	133	$	—	$	520,143	$	2,279	$	520,276	$	2,279
Junior lien loan on residence		—		—		40,216		154		40,216		154
Multifamily property		—		—		1,856,675		15,317		1,856,675		15,317
Owner-occupied commercial real estate		263		—		256,628		4,907		256,891		4,907
Investment commercial real estate		12,429		2,429		1,022,825		8,897		1,035,254		11,326
Commercial and industrial		222		—		1,106,705		21,838		1,106,927		21,838
Lease financing		—		—		304,256		3,238		304,256		3,238
Construction loans		—		—		10,384		128		10,384		128
Consumer and other loans		—		—		42,506		496		42,506		496
Total ACL	$	13,047	$	2,429	$	5,160,338	$	57,254	$	5,173,385	$	59,683

The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2021. For the year ended December 31, 2021, the allowance was calculated based on the incurred loss methodology:

	December 31, 2021
	Total		Ending ALLL		Total		Ending ALLL
	Loans		Attributable		Loans		Attributable
	Individually		To Loans		Collectively		To Loans
	Evaluated		Individually		Evaluated		Collectively				Total
	For		Evaluated for		For		Evaluated for		Total		Ending
(In thousands)	Impairment		Impairment		Impairment		Impairment		Loans		ALLL
Primary residential mortgage	$	2,242	$	—	$	498,001	$	1,432	$	500,243	$	1,432
Home equity lines of credit		—		—		40,803		83		40,803		83
Junior lien loan on residence		18		—		3,173		5		3,191		5
Multifamily property		—		—		1,595,866		9,806		1,595,866		9,806
Owner-occupied commercial real estate		458		—		252,145		1,998		252,603		1,998
Investment commercial real estate		12,750		4,234		991,229		22,849		1,003,979		27,083
Commercial and industrial		2,584		—		989,748		17,509		992,332		17,509
Lease financing		—		—		345,868		3,440		345,868		3,440
Farmland/agricultural production		—		—		6,871		84		6,871		84
Commercial construction loans		—		—		20,174		42		20,174		42
Consumer and other loans		—		—		40,828		215		40,828		215
Total ALLL	$	18,052	$	4,234	$	4,784,706	$	57,463	$	4,802,758	$	61,697

Individually evaluated loans include nonaccrual loans of $13.0 million at September 30, 2022 and $15.6 million at December 31, 2021. This includes a $12.4 million commercial real estate loan that was placed on nonaccrual status in the third quarter of 2021, which resulted in the Company recording a charge-off of $7.4 million during the fourth quarter of 2021. Individually evaluated loans did not include any performing TDR loans at September 30, 2022 but included $2.5 million of performing TDR loans at December 31, 2021. The allowance allocated to TDR loans totaled $2.4 million at September 30, 2022, of which all was allocated to one nonaccrual loan. At December 31, 2021, there was no allowance allocated to TDR loans. All accruing TDR loans were paying in accordance with restructured terms as of September 30, 2022. The Company has not committed to lend additional amounts as of September 30, 2022 to customers with outstanding loans that are classified as TDR loans.

31

The allowance for credit losses was $59.7 million as of September 30, 2022, compared to $61.7 million at December 31, 2021. The decline in the allowance for credit losses (“ACL”) was primarily due to the Day 1 reduction of $5.5 million incurred in connection with the implementation of CECL on January 1, 2022 partially offset by the 2022 provision for credit losses of $4.4 million. The allowance for credit losses as a percentage of loans was 1.15 percent and 1.28 percent at September 30, 2022 and December 31, 2021, respectively. The allowance for credit loss ratio declined due to the Day 1 reduction and a 2022 provision for credit losses based on 2022 loan growth in lower risk segments that carry lower ACL coverage.

Under Topic 326, the Company's methodology for determining the ACL on loans is based upon key assumptions, including historic net charge-off factors, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.

The following tables present collateral dependent loans individually evaluated by segment as of September 30, 2022:

	September 30, 2022
	Unpaid						Average
	Principal		Recorded		Related		Individually Evaluated
(In thousands)	Balance		Investment		Allowance		Loans
With no related allowance recorded:
Primary residential mortgage	$	136	$	133	$	—	$	249
Owner-occupied commercial real estate		301		263		—		307
Commercial and industrial		241		222		—		254
Total loans with no related allowance	$	678	$	618	$	—	$	810
With related allowance recorded:
Investment commercial real estate	$	12,500	$	12,429	$	2,429	$	12,531
Total loans with related allowance	$	12,500	$	12,429	$	2,429	$	12,531
Total loans individually evaluated	$	13,178	$	13,047	$	2,429	$	13,341

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2021 (the average impaired loans on the following tables represent year to date impaired loans):

	December 31, 2021
	Unpaid						Average
	Principal		Recorded		Specific		Impaired
(In thousands)	Balance		Investment		Reserves		Loans
With no related allowance recorded:
Primary residential mortgage	$	2,453	$	2,242	$	—	$	1,818
Owner-occupied commercial real estate		492		458		—		540
Junior lien loan on residence		18		18		—		3
Commercial and industrial		4,549		2,584		—		3,153
Total loans with no related allowance	$	7,512	$	5,302	$	—	$	5,514
With related allowance recorded:
Investment commercial real estate	$	19,887	$	12,750	$	4,234	$	6,034
Total loans with related allowance	$	19,887	$	12,750	$	4,234	$	6,034
Total loans individually evaluated for impairment	$	27,399	$	18,052	$	4,234	$	11,548

Interest income recognized on individually evaluated loans for the three and nine months ended September 30, 2022 and 2021 was not material. The Company did not recognize any income on non-accruing impaired loans for the three and nine months ended September 30, 2022 and 2021.

The activity in the allowance for credit losses for the three months ended September 30, 2022 is summarized below:

32

	July 1,										September 30,
	2022										2022
	Beginning							Provision			Ending
(In thousands)	ACL		Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	2,154	$	—		$	15	$	110		$	2,279
Junior lien loan on residence		151		—			—		3			154
Multifamily property		15,790		—			—		(473	)		15,317
Owner-occupied commercial real estate		4,660		—			—		247			4,907
Investment commercial real estate		10,969		—			—		357			11,326
Commercial and industrial		20,998		—			—		840			21,838
Lease financing		3,352		—			—		(114	)		3,238
Construction loans		359		—			—		(231	)		128
Consumer and other loans		589		(19	)		—		(74	)		496
Total ACL	$	59,022	$	(19	)	$	15	$	665		$	59,683

(1) Provision to roll forward the ACL excludes a credit of $66,000 for off-balance sheet commitments.

The activity in the allowance for credit losses for the nine months ended September 30, 2022 is summarized below:

	December 31,													September 30,
	2021													2022
	Prior to adoption		Impact of								Provision			Ending
(In thousands)	of Topic 326		adopting Topic 326			Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	1,510	$	717		$	—		$	15	$	37		$	2,279
Junior lien loan on residence		88		83			(3	)		—		(14	)		154
Multifamily property		9,806		4,072			—			—		1,439			15,317
Owner-occupied commercial real estate		1,998		2,902			—			—		7			4,907
Investment commercial real estate		27,083		(13,589	)		(250	)		—		(1,918	)		11,326
Commercial and industrial		17,509		(657	)		—			4		4,982			21,838
Lease financing		3,440		156			—			—		(358	)		3,238
Construction loans		48		361			—			—		(281	)		128
Consumer and other loans		215		419			(46	)		2		(94	)		496
Total ACL	$	61,697	$	(5,536	)	$	(299	)	$	21	$	3,800		$	59,683

(1) Provision to roll forward the ACL excludes a provision of $623,000 for off-balance sheet commitments.

For the accounting policy on the allowance for loan losses that was in effect prior to the adoption of Topic 326, refer to Note 1, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year-ended December 31, 2021. The

33

activity in the allowance for loan and lease losses for the three months and nine months ended September 30, 2021 is summarized below:

	July 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,167	$	—		$	—	$	(92	)	$	2,075
Home equity lines of credit		123		—			—		(4	)		119
Junior lien loan on residence		8		—			—		(1	)		7
Multifamily property		10,615		—			—		(47	)		10,568
Owner-occupied commercial real estate		2,447		—			—		(154	)		2,293
Investment commercial real estate		27,886		—			—		2,098			29,984
Commercial and industrial		16,565		(19	)		50		(330	)		16,266
Lease financing		3,275		—			—		94			3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		159		—			—		6			165
Consumer and other loans		217		(4	)		1		15			229
Total ALLL	$	63,505	$	(23	)	$	51	$	1,600		$	65,133

	January 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,905	$	(12	)	$	—	$	(818	)	$	2,075
Home equity lines of credit		218		—			85		(184	)		119
Junior lien loan on residence		15		—			—		(8	)		7
Multifamily property		9,945		—			—		623			10,568
Owner-occupied commercial real estate		3,050		—			—		(757	)		2,293
Investment commercial real estate		27,713		—			—		2,271			29,984
Commercial and industrial		19,047		(5,019	)		60		2,178			16,266
Lease financing		3,936		—			—		(567	)		3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		158		—			—		7			165
Consumer and other loans		279		(24	)		9		(35	)		229
Total ALLL	$	67,309	$	(5,055	)	$	154	$	2,725		$	65,133

Allowance for Credit Losses on Off Balance Sheet Commitments

The following table presets the activity in the ACL for off balance sheet commitments for the nine months ended September 30, 2022:

	December 31,
	2021						September 30,
	Prior to adoption		Impact of		Provision		2022
(In thousands)	of Topic 326		adopting Topic 326		(Credit)		Ending ACL
Off balance sheet commitments	$	—	$	302	$	623	$	925
Total ACL	$	—	$	302	$	623	$	925

34

5. DEPOSITS

Certificates of deposit that met or exceeded $250,000 totaled $107.8 million and $140.4 million at September 30, 2022 and December 31, 2021, respectively. These totals excluded brokered certificates of deposit.

The following table sets forth the details of total deposits as of September 30, 2022 and December 31, 2021:

	September 30,				December 31,
	2022				2021
(Dollars in thousands)
Noninterest-bearing demand deposits	$	1,317,954	24.87	%	$	956,482	18.16	%
Interest-bearing checking (1)		2,149,629	40.57			2,287,894	43.45
Savings		166,821	3.15			154,914	2.94
Money market		1,178,112	22.23			1,307,051	24.82
Certificates of deposit - retail		345,047	6.51			409,608	7.78
Certificates of deposit - listing service		30,647	0.58			31,382	0.60
Subtotal deposits		5,188,210	97.91			5,147,331	97.75
Interest-bearing demand - Brokered		85,000	1.60			85,000	1.61
Certificates of deposit - Brokered		25,974	0.49			33,818	0.64
Total deposits	$	5,299,184	100.00	%	$	5,266,149	100.00	%

(1)Interest-bearing checking includes $567.3 million at September 30, 2022 and $647.8 million at December 31, 2021 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace program.

The scheduled maturities of certificates of deposit, including brokered certificates of deposit, as of September 30, 2022, are as follows:

(In thousands)
2022	$	84,432
2023		183,096
2024		76,793
2025		46,231
2026		10,314
2027 and later		802
Total	$	401,668

6. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

At September 30, 2022, the Company had $32.4 million of overnight borrowings at the FHLB at a rate of 3.29 percent compared to no overnight borrowings as of December 31, 2021. At September 30, 2022, unused short-term overnight borrowing commitments totaled $1.8 billion from the FHLB, $22.0 million from correspondent banks and $1.7 billion at the Federal Reserve Bank of New York.

7. BUSINESS SEGMENTS

The Company assesses its results among two operating segments, Banking and Peapack Private. Management uses certain methodologies to allocate income and expense to the business segments. A funds transfer pricing methodology is used to assign interest income and interest expense. Certain indirect expenses are allocated to segments. These include support unit expenses such as technology and operations and other support functions. Taxes are allocated to each segment based on the effective rate for the period shown.

Banking

The Banking segment includes: commercial (includes C&I and equipment finance), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support and sales.

35

Peapack Private

Peapack Private which includes the operations of PGB Trust & Investments of Delaware, consists of: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services.

The following tables present the statements of income and total assets for the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	43,327	$	2,198	$	45,525
Noninterest income		2,955		13,428		16,383
Total income		46,282		15,626		61,908
Provision for credit losses		599		—		599
Compensation and benefits		15,343		7,313		22,656
Premises and equipment expense		3,908		626		4,534
FDIC expense		510		—		510
Other operating expense		3,235		2,625		5,860
Total operating expense		23,595		10,564		34,159
Income before income tax expense		22,687		5,062		27,749
Income tax expense		6,193		1,430		7,623
Net income	$	16,494	$	3,632	$	20,126

	Three Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	33,780	$	1,431	$	35,211
Noninterest income		3,476		14,305		17,781
Total income		37,256		15,736		52,992
Provision for loan and lease losses		1,600		—		1,600
Compensation and employee benefits		13,079		6,780		19,859
Premises and equipment expense		3,861		598		4,459
FDIC insurance expense		555		—		555
Other operating expense		4,657		2,655		7,312
Total operating expense		23,752		10,033		33,785
Income before income tax expense		13,504		5,703		19,207
Income tax expense		3,556		1,480		5,036
Net income	$	9,948	$	4,223	$	14,171

36

	Nine Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	122,404	$	5,636	$	128,040
Noninterest income		6,645		42,960		49,605
Total income		129,049		48,596		177,645
Provision for credit losses		4,423		—		4,423
Compensation and employee benefits		47,222		19,765		66,987
Premises and equipment expense		11,674		2,147		13,821
FDIC insurance expense		1,484		—		1,484
Other operating expense		10,613		7,483		18,096
Total operating expense		75,416		29,395		104,811
Income before income tax expense		53,633		19,201		72,834
Income tax expense		14,117		5,050		19,167
Net income	$	39,516	$	14,151	$	53,667
Total assets at period end	$	5,999,393	$	87,868	$	6,087,261

	Nine Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	96,405	$	4,444	$	100,849
Noninterest income		12,810		40,469		53,279
Total income		109,215		44,913		154,128
Provision for loan and lease losses		2,725		—		2,725
Compensation and employee benefits		43,876		17,883		61,759
Premises and equipment expense		10,950		1,696		12,646
FDIC insurance expense		1,669		—		1,669
Other operating expense		10,865		7,524		18,389
Total operating expense		70,085		27,103		97,188
Income before income tax expense		39,130		17,810		56,940
Income tax expense		10,436		4,737		15,173
Net income	$	28,694	$	13,073	$	41,767
Total assets at period end	$	6,144,190	$	96,095	$	6,240,285

8. FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

37

The Company used the following methods and significant assumptions to estimate the fair value:

Investment Securities: The fair values for investment securities are determined by quoted market prices (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Loans Held for Sale, at Fair Value: The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2).

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Individually Evaluated Loans: The fair value of collateral dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Individually evaluated loans may, in some cases, also be measured by the discounted cash flow methodology where payments are anticipated. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO") are measured at fair value, less estimated costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Management. Once received, a third party conducts a review of the appraisal for compliance with the Uniform Standards of Professional Appraisal Practice and appropriate analysis methods for the type of property. Subsequently, a member of the Credit Department reviews the assumptions and approaches utilized in the appraisal, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals on collateral dependent impaired loans and other real estate owned (consistent for all loan types) are obtained on an annual basis, unless a significant change in the market or other factors warrants a more frequent appraisal. On an annual basis, Management compares the actual selling price of any collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value for other properties. The most recent analysis performed indicated that a discount up to 15 percent should be applied to appraisals on properties. The discount is determined based on the nature of the underlying properties, aging of appraisals and other factors. For each collateral-dependent impaired loan, we consider other factors, such as certain indices or other market information, as well as property specific circumstances to determine if an adjustment to the appraised value is needed. In situations where there is evidence of change in value, the Bank will determine if there is a need for an adjustment to the specific reserve on the collateral dependent impaired loans. When the Bank applies an interim adjustment, it generally shows the adjustment as an incremental specific reserve against the loan until it has received the full updated appraisal. All collateral-dependent impaired loans and other real estate owned valuations were supported by an appraisal less than 12 months old or in the process of obtaining an appraisal as of September 30, 2022.

38

The following tables summarize, at the dates indicated, assets measured at fair value on a recurring basis, including financial assets for which the Corporation has elected the fair value option:

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale:
U.S. government-sponsored agencies	$	189,410	$	—	$	189,410	$	—
Mortgage-backed securities-residential		267,547		—		267,547		—
SBA pool securities		29,121		—		29,121		—
State and political subdivisions		2,584		—		2,584		—
Corporate bond		9,218		—		9,218		—
CRA investment fund		12,957		12,957		—		—
Loans held for sale, at fair value		1,333		—		1,333		—
Derivatives:
Cash flow hedges		10,462		—		10,462		—
Loan level swaps		41,018		—		41,018		—
Total	$	563,650	$	12,957	$	550,693	$	—
Liabilities:
Derivatives:
Loan level swaps	$	41,018	$	—	$	41,018	$	—
Total	$	41,018	$	—	$	41,018	$	—

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies	$	272,221	$	—	$	272,221	$	—
Mortgage-backed securities-residential		476,974		—		476,974		—
SBA pool securities		39,561		—		39,561		—
State and political subdivisions		5,476		—		5,476		—
Corporate bond		2,521		—		2,521		—
CRA investment fund		14,685		14,685		—		—
Loans held for sale, at fair value		3,040		—		3,040		—
Derivatives:
Loan level swaps		32,326		—		32,326		—
Total	$	846,804	$	14,685	$	832,119	$	—
Liabilities:
Derivatives:
Cash flow hedges	$	3,479	$	—	$	3,479	$	—
Loan level swaps		34,569		—		34,569		—
Total	$	38,048	$	—	$	38,048	$	—

The Company has elected the fair value option for certain loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 days or more past due nor on nonaccrual as of September 30, 2022 and December 31, 2021.

39

The following tables present residential loans held for sale, at fair value at the dates indicated:

(In thousands)	September 30, 2022		December 31, 2021
Residential loans contractual balance	$	1,326	$	2,992
Fair value adjustment		7		48
Total fair value of residential loans held for sale	$	1,333	$	3,040

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2022.

The following tables summarize, at the dates indicated, assets measured at fair value on a non-recurring basis:

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Individually evaluated loans:
Investment commercial real estate	$	10,000	$	—	$	—	$	10,000

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Investment commercial real estate	$	8,516	$	—	$	—	$	8,516

The carrying amounts and estimated fair values of financial instruments at September 30, 2022 are as follows:

			Fair Value Measurements at September 30, 2022 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	108,280	$	108,280	$	—	$	—	$	108,280
Securities available for sale		497,880		—		497,880		—		497,880
Securities held to maturity		103,551		—		87,857		—		87,857
CRA investment fund		12,957		12,957		—		—		12,957
FHLB and FRB stock		14,986		—		—		—	N/A
Loans held for sale, at fair value		1,333		—		1,333		—		1,333
Loans held for sale, at lower of cost or fair value		10,102		—		11,152		—		11,152
Loans, net of allowance for credit losses		5,117,511		—		—		4,842,877		4,842,877
Accrued interest receivable		17,816		—		1,756		16,060		17,816
Accrued interest receivable loan level swaps (1)		2,048		—		2,048		—		2,048
Cash flow hedges		10,462		—		10,462		—		10,462
Loan level swaps		41,018		—		41,018		—		41,018
Financial liabilities
Deposits	$	5,299,184	$	4,897,516	$	387,933	$	—	$	5,285,449
Short-term borrowings		32,369		—		32,369		—		32,369
Subordinated debt		132,916		—		—		127,062		127,062
Accrued interest payable		2,910		1,187		357		1,366		2,910
Accrued interest payable loan level swaps (2)		2,048		—		2,048		—		2,048
Loan level swap		41,018		—		41,018		—		41,018

40

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

The carrying amounts and estimated fair values of financial instruments at December 31, 2021 are as follows:

			Fair Value Measurements at December 31, 2021 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	146,804	$	146,804	$	—	$	—	$	146,804
Securities available for sale		796,753		—		796,753		—		796,753
Securities held to maturity		108,680		—		108,460		—		108,460
CRA investment fund		14,685		14,685		—		—		14,685
FHLB and FRB stock		12,950		—		—		—	N/A
Loans held for sale, at fair value		3,040		—		3,040		—		3,040
Loans held for sale, at lower of cost or fair value		34,051		—		37,538		—		37,538
Loans, net of allowance for loan and lease losses		4,745,024		—		—		4,767,293		4,767,293
Accrued interest receivable		21,589		—		2,443		19,146		21,589
Accrued interest receivable loan level swaps (1)		4,842		—		4,842		—		4,842
Loan level swaps		32,326		—		32,326		—		32,326
Financial liabilities
Deposits	$	5,266,149	$	4,791,341	$	476,659	$	—	$	5,268,000
Subordinated debt		132,701		—		—		140,556		140,556
Accrued interest payable		651		130		446		75		651
Accrued interest payable loan level swaps (2)		4,842		—		4,842		—		4,842
Cash flow hedges		3,479		—		3,479		—		3,479
Loan level swaps		34,569		—		34,569		—		34,569

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

9. REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income.

The following tables present the sources of noninterest income for the periods indicated:

	For the Three Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	129	$	117
Interchange income		356		374
Other		575		468
Wealth management fees (1)		12,943		13,860
Corporate advisory fee income		102		84
Other (2)		2,278		2,878
Total noninterest other income	$	16,383	$	17,781

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	360	$	297
Interchange income		1,077		1,061
Other		1,638		1,343
Wealth management fees (1)		41,668		39,025
Corporate advisory fee income		1,696		1,303
Gains/(losses) on sales of OREO		—		51
Other (2)		3,166		10,199
Total noninterest other income	$	49,605	$	53,279

(1)Includes investment brokerage fees.

41

(2)All of the other category is outside the scope of ASC 606.

The following table presents the sources of noninterest income by operating segment for the periods indicated:

	For the Three Months Ended  September 30,						For the Three Months Ended  September 30,
	2022						2021
(In thousands)			Wealth						Wealth
Revenue by Operating Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	129	$	—	$	129	$	117	$	—	$	117
Interchange income		356		—		356		374		—		374
Other		575		—		575		468		—		468
Wealth management fees (1)		—		12,943		12,943		—		13,860		13,860
Corporate advisory fee income		102		—		102		84		—		84
Other (2)		1,793		485		2,278		2,433		445		2,878
Total noninterest income	$	2,955	$	13,428	$	16,383	$	3,476	$	14,305	$	17,781

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
(In thousands)	2022						2021
Revenue by Operating			Wealth						Wealth
Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	360	$	—	$	360	$	297	$	—	$	297
Interchange income		1,077		—		1,077		1,061		—		1,061
Other		1,638		—		1,638		1,343		—		1,343
Wealth management fees (1)		—		41,668		41,668		—		39,025		39,025
Corporate advisory fee income		1,696		—		1,696		1,303		—		1,303
Gains/(losses) on sales of OREO		—		—		—		51		—		51
Other (2)		1,874		1,292		3,166		8,755		1,444		10,199
Total noninterest income	$	6,645	$	42,960	$	49,605	$	12,810	$	40,469	$	53,279

(1)Includes investment brokerage fees.

(2)All of the other category is outside the scope of ASC 606.

A description of the Company’s revenue streams accounted for under ASC 606 follows:

Service charges on deposit accounts: The Company earns fees from its deposit customers for certain transaction account maintenance, and overdraft fees. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented gross of cardholder rewards. Cardholder rewards are included in other expenses in the statement of income. Cardholder rewards reduced interchange income for the third quarter of 2022 by $36,000 compared to $34,000 for the same quarter in 2021. Cardholder rewards reduced interchange income by $100,000 and $95,000 for the nine months ended September 30, 2022 and 2021, respectively.

Wealth management fees (gross): The Company earns wealth management fees from its contracts with wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company charges its clients on a monthly or quarterly basis in accordance with its investment advisory agreements. Fees are generally assessed based on a tiered scale of the market value of AUM at month end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).

Investment brokerage fees (net): The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider twice a month based upon

42

customer activity for the month. The fees are recognized monthly, and a receivable is recorded until commissions are generally paid by the 15th of the following month. Because the Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers, investment brokerage fees are presented net of related costs.

Corporate advisory fee income: The Company provides our clients with financial advisory and underwriting services. Investment banking revenues, which includes mergers and acquisition advisory fees and private placement fees, are recorded when the performance obligation for the transaction is satisfied under the terms of each engagement. Reimbursed expenses are reported in other revenue on the statement of operations. Expenses related to investment banking are recognized as non-compensation expenses on the statement of operations. Amounts received and unearned are included on the statement of financial condition. Expenses related to investment banking deals not completed are recognized in non-compensation expenses on the statement of operations.

The Company’s mergers and acquisition advisory fees generally consist of a nonrefundable up-front fee and success fee. The nonrefundable fee is recorded as deferred revenue upon receipt and recognized at a point in time when the performance obligation is satisfied, or when the transaction is deemed by management to be terminated. Management’s judgement is required in determining when a transaction is considered to be terminated.

Gains/(losses) on sales of OREO: The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform its obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain/(loss) on sale if a significant financing component is present. The company recorded a gain on the sale of OREO of $51,000 for the nine months ended September 30, 2021.

Other: All of the other income items are outside the scope of ASC 606.

10. OTHER OPERATING EXPENSES

The following table presents the major components of other operating expenses for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Professional and legal fees	$	1,180	$	1,565	$	3,630	$	4,007
Telephone		403		342		1,085		988
Advertising		574		386		1,545		1,004
Amortization of intangible assets		384		431		1,204		1,167
Branch restructure		—		—		372		228
Write-off of subordinated debt costs		—		—		—		648
Other operating expenses		3,319		3,238		9,587		8,997
Total other operating expenses	$	5,860	$	5,962	$	17,423	$	17,039

11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the three months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Three Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	July 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(59,066	)	$	(23,563	)	$	—		$	(23,563	)	$	(82,629	)
Gain/(loss) on cash flow hedges		339			7,349			(42	)		7,307			7,646
Accumulated other comprehensive gain/(loss),    net of tax	$	(58,727	)	$	(16,214	)	$	(42	)	$	(16,256	)	$	(74,983	)

43

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Three Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	July 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(956	)	$	(4,293	)	$	—	$	(4,293	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(4,459	)		673			—		673			(3,786	)
Accumulated other comprehensive gain/(loss),    net of tax	$	(5,415	)	$	(3,620	)	$	—	$	(3,620	)	$	(9,035	)

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the three months ended September 30, 2022 and 2021:

	Three Months Ended
	September 30,
(In thousands)	2022			2021		Affected Line Item in Income Statement
Unrealized gains/(losses) on securities    available for sale:
Reclassification adjustment for gains on termination    of swaps included in net income	$	(58	)	$	—	Other income
Tax effect		16			—	Income tax expense
Total reclassifications, net of tax	$	(42	)	$	—

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the nine months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Nine Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	January 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(9,873	)	$	(77,783	)	$	5,027		$	(72,756	)	$	(82,629	)
Gain/(loss) on cash flow hedges		(2,501	)		10,189			(42	)		10,147			7,646
Accumulated other comprehensive    gain/(loss), net of tax	$	(12,374	)	$	(67,594	)	$	4,985		$	(62,609	)	$	(74,983	)

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Nine Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	January 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	5,521		$	(10,770	)	$	—	$	(10,770	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(6,913	)		2,521			606		3,127			(3,786	)
Accumulated other comprehensive    gain/(loss), net of tax	$	(1,392	)	$	(8,249	)	$	606	$	(7,643	)	$	(9,035	)

44

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended
	September 30,
(In thousands)	2022			2021			Affected Line Item in Income
Unrealized gains/(losses) on cash flow hedge    derivatives:
Reclassification adjustment for amounts    included in net income	$	6,609		$	—		Securities losses, net
Reclassification adjustment for (gains)/losses on   termination of swaps included in net income		(58	)		842		Other income
Tax effect		(1,566	)		(236	)	Income tax expense
Total reclassifications, net of tax	$	4,985		$	606

12. DERIVATIVES

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest Rate Swaps Designated as Cash Flow Hedges: Interest rate swaps with a notional amount of $290.0 million as of September 30, 2022 and $230.0 million as of December 31, 2021 were designated as cash flow hedges of certain interest-bearing deposits. On a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty’s risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. As of September 30, 2022, there were no events or market conditions that would result in hedge ineffectiveness. The aggregate fair value of the swaps is recorded in other assets/liabilities with changes in fair value recorded in other comprehensive income. The amount included in accumulated other comprehensive income would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swaps.

In March 2022, the Company entered into four forward starting interest rate swaps with a total notional amount of $100.0 million. These swaps will effectively extend the interest rate protection of existing swaps that are maturing in 2023 for an additional five years. As such, they are designated as cash flow hedges of certain interest-bearing deposits. The Company will receive variable amounts and pay fixed amounts. The weighted-average fixed pay rate on these forward swaps was 2.25% as of September 30, 2022. As of September 30, 2022, an unrealized gain of $6.4 million was recorded in accumulated other comprehensive income related to these forward starting swaps. The tables below do not include the impact of these forward swaps.

The following table presents information about the interest rate swaps designated as cash flow hedges as of September 30, 2022 and December 31, 2021:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	290,000		$	230,000
Weighted average pay rate		1.78	%		1.99	%
Weighted average receive rate		1.53	%		0.20	%
Weighted average maturity	2.26 years			1.04 years
Unrealized gain/(loss), net	$	4,083		$	(3,479	)
Number of contracts		12			13

	September 30, 2022
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	290,000	$	4,083
Total included in other assets		290,000		4,083
Total included in other liabilities		—		—

45

	December 31, 2021
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	230,000	$	(3,479	)
Total included in other assets		—		—
Total included in other liabilities		230,000		(3,479	)

Cash Flow Hedges

The following table presents the net gain/(loss) recorded in accumulated other comprehensive income/(loss) and the consolidated financial statements relating to the cash flow derivative instruments for the three and nine months ended September 30, 2022 and 2021:

	For the Three Months Ended  September 30,				For the Nine Months Ended September 30,
(In thousands)	2022		2021		2022		2021
Interest rate contracts
Gain/(loss) recognized in other comprehensive income (effective portion)	$	10,048	$	936	$	13,999	$	3,507
Gain/(loss) reclassified from other comprehensive income to interest expense		—		—		—		—
Gain/(loss) recognized in other noninterest income		58		—		58		(842	)

During the third quarter of 2022, the Company recognized an unrealized after-tax gain of $167,000 in accumulated other comprehensive income/(loss) related to the termination of two interest rate swaps designated as cash flow hedges that were deemed ineffective. The gain is being amortized into earnings over the remaining life of the terminated swaps.

Net interest income/(expense) recorded on these swap transactions totaled $(11,000) and $(1.7) million for the three and nine months ended September 30, 2022, respectively. Net interest expense recorded on these swap transactions totaled $1.0 million and $3.3 million for the three and nine months ended September 30, 2021, respectively.

Derivatives Not Designated as Accounting Hedges

The Company offers facility specific/loan level swaps to its customers and offsets its exposure from such contracts by entering mirror image swaps with a financial institution/swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions.

The accrued interest receivable and payable related to these swaps of $2.0 million and $4.8 million at September 30, 2022 and December 31, 2021, respectively, is recorded in other assets and other liabilities. At December 31, 2021, the Company recorded a total swap valuation provision of $2.1 million related to a commercial real estate loan placed on nonaccrual status during the third quarter of 2021. This swap was terminated during the first quarter of 2022.

Information about these swaps is as follows:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	627,502		$	702,210
Fair value	$	(38,969	)	$	32,326
Weighted average pay rates		3.96	%		4.00	%
Weighted average receive rates		4.88	%		1.83	%
Weighted average maturity	4.83 years			5.5 years
Number of contracts		80			86

46

13. SUBORDINATED DEBT

In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors. The 2017 Notes are non-callable for five years, have a stated maturity of December 15, 2027, and bear interest at a fixed rate of 4.75 percent until December 15, 2022. From December 16, 2022 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month London Interbank Offered Rate (“LIBOR”) rate plus 254 basis points, payable quarterly in arrears. Debt issuance costs incurred totaled $875,000 and are being amortized to maturity.

In December 2020, the Company issued $100.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of December 22, 2030, and bear interest at a fixed rate of 3.50 percent until December 22, 2025. From December 23, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 326 basis points, payable quarterly in arrears. Debt issuance costs incurred totaled $1.9 million and are being amortized to maturity.

The Company may use the proceeds from the issuance of the 2020 Notes to refinance then-outstanding debt, for stock repurchases, acquisitions of wealth management firms, as well as other general corporate purposes.

Subordinated debt is presented net of issuance costs on the Consolidated Statements of Condition. The subordinated debt issuances are included in the Company’s regulatory total capital amount and ratio.

In connection with the issuance of the 2020 Notes, the Company obtained ratings from Kroll Bond Rating Agency (“KBRA”) and Moody’s Investors Services (“Moody’s). KBRA assigned an investment grade rating of BBB- and Moody’s assigned an investment grade rating of Baa3 for the 2020 Notes at the time of issuance.

14. LEASES

The Company maintains certain property and equipment under direct financing and operating leases. As of September 30, 2022, the Company's operating lease ROU asset and operating lease liability totaled $13.4 million and $14.1 million, respectively. As of December 31, 2021, the Company's operating lease ROU asset and operating lease liability totaled $9.8 million and $10.1 million, respectively. A weighted average discount rate of 2.65 percent and 2.78 percent was used in the measurement of the ROU asset and lease liability as of September 30, 2022 and December 31, 2021, respectively.

The Company's leases have remaining lease terms between two months to 14 years, with a weighted average lease term of 7.53 years at September 30, 2022. The Company's leases had remaining lease terms between four months to 15 years, with a weighted average lease term of 6.09 years at December 31, 2021. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal.

Total operating lease costs were $868,000 and $697,000 for the three months ended September 30, 2022 and 2021, respectively. The variable lease costs were $76,000 and $75,000 for the three months ended September 30, 2022 and 2021, respectively.

Total operating lease costs were $2.6 million and $2.1 million for the nine months ended September 30, 2022 and 2021, respectively. The variable lease costs were $229,000 and $242,000 for the nine months ended September 30, 2022 and 2021, respectively.

The following is a schedule of the Company's operating lease liabilities by contractual maturity as of September 30, 2022:

(In thousands)
2022	$	711
2023		2,976
2024		2,299
2025		2,048
2026		1,487
Thereafter		6,194
Total lease payments		15,715
Less: imputed interest		1,614
Total present value of lease payments	$	14,101

47

The following table shows the supplemental cash flow information related to the Company’s direct finance and operating leases for the periods indicated:

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Right-of-use asset obtained in exchange for lease obligation	$	5,696	$	2,772
Operating cash flows from operating leases		2,008		1,844
Operating cash flows from direct finance leases		193		229
Financing cash flows from direct finance leases		561		561

15. ACCOUNTING PRONOUNCEMENTS

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in this ASU can be adopted immediately and are effective through December 31, 2022. The Company is evaluating alternative reference rates including SOFR in preparation for a rate index replacement and the adoption of ASU 2020-04.

In March 2022, FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815) (“ASU 2022-01”) which clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios and financial assets. Among other things, the amended guidance established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible and renamed that method the “portfolio layer” method. ASU 2022-01 is effective January 1, 2023 and is not expected to have a material impact on our consolidated financial statements.

In March 2022, FASB issued ASU 2022-02, Financial Instruments–Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. ASU 2022-02 also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The amendments in this update will be effective for fiscal years beginning after December 15, 2022 for entities that have adopted the amendments in ASU 2016-13, Financial Instruments–Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The Company is evaluating the additional disclosure requirements and does not expect them to have a material effect on the consolidated financial statements.

48

Item 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS: This Quarterly Report on Form 10-Q may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about Management’s confidence and strategies and Management’s expectations about operations, growth, financial results, new and existing programs and products, investments, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from those contemplated by such forward-looking statements include, among others, those risk factors identified in the Company’s Form 10-K for the year ended December 31, 2021, in addition to/which include the following:

•inflation and changes in interest rates and potential effects from a recession, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;

•our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;

•the disruption to local, regional, national and global economic activity caused by infectious disease outbreaks, including the COVID-19 pandemic and variants thereof, and the significant and continuing impact that such pandemics may have on our growth, operations, earnings and asset quality;

•the impact of potentially higher operating expenses;

•our ability to successfully integrate wealth management firm acquisitions;

•our ability to manage our growth;

•our ability to successfully integrate our expanded employee base;

•an unexpected decline in the economy, in particular in our New Jersey and New York market areas;

•declines in our net interest margin and/or our ability to originate loans caused by the interest rate environment and/or our highly competitive market;

•declines in the value in our investment portfolio;

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

•higher than expected increases in our allowance for credit losses;

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

•decline in real estate values within our market areas;

•legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;

•successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;

•higher than expected FDIC insurance premiums;

•adverse weather conditions;

•the current or anticipated impact of military conflict, terrorism or other geopolitical events;

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

•a reduction in our lower-cost funding sources;

•our inability to adapt to technological changes;

•claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

•our inability to retain key employees;

•demands for loans and deposits in our market areas;

•adverse changes in securities markets;

•changes in accounting policies and practices; and

•other unexpected material adverse changes in our operations or earnings.

Moreover, our operations depend on the management skills of our executive officers and directors, many of whom have held officer and director positions with us for many years. The unanticipated loss or unavailability of key employees due to the pandemic could hinder our ability to operate our business or execute our business strategy.

Except as may be required by applicable law or regulation, the Company undertakes no duty to update any forward-looking statements to conform the statement to actual results or change in the Company’s expectations. Although we believe that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements.

49

CRITICAL ACCOUNTING POLICIES AND ESTIMATES: Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the Company’s Audited Consolidated Financial Statements for the year ended December 31, 2021 contains a summary of the Company’s significant accounting policies.

Management believes that the Company’s policy with respect to the methodology for the determination of the allowance for credit losses involves a higher degree of complexity and requires Management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. This critical policy and its application are periodically reviewed with the Audit Committee and the Board of Directors.

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

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

The Company accounts for its debt securities in accordance with ASC 320, “Investments - Debt Securities” and its equity security in accordance with ASC 321, “Investments – Equity Securities”. All securities are classified as available for sale and are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income/(loss), net of tax, with the exception of the Company’s investment in a CRA investment fund which is classified as an equity security. In accordance with ASU 2016-01, “Financial Instruments” unrealized holding gains and losses are marked to market through the income statement.

EXECUTIVE SUMMARY: The following table presents certain key aspects of our performance for the three months ended September 30, 2022 and 2021.

50

	For the Three Months Ended September 30,						Change
(Dollars in thousands, except per share data)	2022			2021			2022 vs 2021
Results of Operations:
Net interest income	$	45,525		$	35,211		$	10,314
Provision for credit losses (1)		599			1,600			(1,001	)
Net interest income after provision for credit losses		44,926			33,611			11,315
Wealth management fee income		12,943			13,860			(917	)
Other income (2)		3,440			3,921			(481	)
Operating expense (3)		33,560			32,185			1,375
Income before income tax expense		27,749			19,207			8,542
Income tax expense		7,623			5,036			2,587
Net income	$	20,126		$	14,171		$	5,955
Total revenue (4)	$	61,908		$	52,992		$	8,916
Diluted average shares outstanding		18,420,661			19,273,831			(853,170	)
Diluted earnings per share	$	1.09		$	0.74		$	0.35
Return on average assets annualized ("ROAA")		1.30	%		0.95	%		0.35	%
Return on average equity annualized ("ROAE")		15.21			10.40			4.81

(1)Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(2)The quarter ended September 30, 2022 and 2021 included a fair value adjustment on a CRA equity security of $571,000 and $70,000, respectively.

(3)The quarter ended September 2021 included $1.4 million of expense related to a swap valuation allowance.

(4)Total revenue equals net interest income plus wealth management fee income and other income.

The following table presents certain key aspects of our performance for the nine months ended September 30, 2022 and 2021.

	For the Nine Months Ended September 30,						Change
(Dollars in thousands, except per share data)	2022			2021			2022 vs 2021
Results of Operations:
Net interest income	$	128,040		$	100,849		$	27,191
Provision for loan and lease losses (1)		4,423			2,725			1,698
Net interest income after provision for loan and lease losses		123,617			98,124			25,493
Wealth management fee income (2)		41,668			39,025			2,643
Other income (3)		7,937			14,254			(6,317	)
Operating expense (2) (4)		100,388			94,463			5,925
Income before income tax expense		72,834			56,940			15,894
Income tax expense		19,167			15,173			3,994
Net income	$	53,667		$	41,767		$	11,900
Total revenue (5)	$	177,645		$	154,128		$	23,517
Diluted average shares outstanding		18,652,042			19,390,522			(738,480	)
Diluted earnings per share	$	2.88		$	2.15		$	0.73
Return on average assets annualized (ROAA)		1.16	%		0.94	%		0.22	%
Return on average equity annualized (ROAE)		13.46			10.43			3.03

(1)Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

51

(2)The nine months ended September 30, 2022 included nine months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group (“PPSG”) while the nine months ended September 30, 2021 included three months.

(3)The nine months ended September 30, 2022 included a $6.6 million loss on sale of securities associated with a balance sheet reposition executed in the first quarter of 2022, and a $1.7 million fair value adjustment on a CRA equity security. The nine months ended September 30, 2021 included a cost of $842,000 related to the termination of certain interest rate swaps; a $1.4 million gain on sale of loans held at lower of cost or fair value; $722,000 of income related to referral of PPP loans to a third party; $455,000 of additional bank-owned life insurance ("BOLI") income related to the receipt of life insurance proceeds; and a $293,000 fair value adjustment on a CRA equity security.

(4)Each of the nine months ended September 30, 2022 and 2021 included $1.5 million of severance expense related to certain staff reorganizations with several areas of the bank. The nine months ended September 30, 2021 included $648,000 of expense related to the redemption of subordinated debt and $1.4 million related to a swap valuation allowance.

(5)Total revenue equals net interest income plus wealth management fee income and other income.

	September 30,			December 31,			Change
	2022			2021			2022 vs 2021
Selected Balance Sheet Ratios:
Total capital (Tier I + II) to risk-weighted assets		14.74	%		14.64	%		0.10	%
Tier I leverage ratio		8.70			8.29			0.41
Loans to deposits		97.70			91.28			6.42
Allowance for credit losses to total loans		1.15			1.28			(0.13	)
Allowance for credit losses to nonperforming loans		379.57			396.18			(16.61	)
Nonperforming loans to total loans		0.30			0.32			(0.02	)

For the three months ended September 30, 2022, the Company recorded total revenue of $61.91million, pretax income of $27.75 million, net income of $20.13 million and diluted earnings per share of $1.09, compared to revenue of $52.99 million, pretax income of $19.21 million, net income of $14.17 million and diluted earnings per share of $0.74 for the same period last year. The third quarter of 2022 included increased net interest income driven by net interest margin expansion, partially offset by a decline in wealth management income and income from capital markets activities (which includes mortgage banking income, back-to-back swap income, SBA loan income, and corporate advisory fee income), and increased operating expenses. Other income included a fair value adjustment on an equity security held for CRA investment purposes of $571,000 and $70,000 for the quarter ended September 30, 2022 and 2021, respectively. Operating expense for the third quarter of 2021 included $1.4 million of expense related to a swap valuation allowance.

For the nine months ended September 30, 2022, the Company recorded total revenue of $177.65 million, pretax income of $72.83 million, net income of $53.67 million and diluted earnings per share of $2.88, compared to revenue of $154.13 million, pretax income of $56.94 million, net income of $41.77 million and diluted earnings per share of $2.15 for the same period last year. The nine months ended September 30, 2022 included increased net interest income, wealth management income and income from capital markets activities (which includes mortgage banking income, back-to-back swap income, SBA loan income, and corporate advisory fee income), partially offset by increased operating expenses. Fee income generated by capital markets activities totaled $8.30 million for the nine months ended September 30, 2022, an increase of $1.20 million from $7.10 million for the same period in 2021, of which $6.14 million was attributable to gains on sales of SBA loans compared to $3.95 million for the same period in 2021. The nine months ended September 30, 2022, benefitted from the addition of an SBA team hired by the Company in the fourth quarter of 2021. Income from these programs are not consistent each quarter. Other income included a fair value adjustment on an equity security held for CRA investment purposes of $1.7 million and $293,000 for the nine months ended September 30, 2022 and 2021, respectively. The nine months ended September 30, 2022 included a $6.6 million loss on sale of securities in other income and $1.5 million of severance expense in other expense related to certain staff reorganizations. Other income for the nine months ended September 30, 2021 included: a cost of $842,000 related to the termination of certain interest rate swaps; a $1.41 million gain on sale of loans held at lower of cost or fair value; $722,000 of income related to referral of PPP loans to a third party; and $455,000 of additional BOLI income related to the receipt of life insurance proceeds. Other expense for the nine months ended September 30, 2021 included $1.5 million of severance expense related to certain staff reorganizations; $648,000 of expense related to the redemption of subordinated debt; and $1.4 million of expense related to a swap valuation allowance.

OFF-BALANCE SHEET ARRANGEMENTS: For a discussion of our off-balance sheet arrangements, see the information set forth in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2021 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Aggregate Contractual Obligations.”

52

EARNINGS ANALYSIS

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

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

The following table summarize the Company’s net interest income and margin for the periods indicated:

	Three Months Ended					Three Months Ended
	September 30, 2022					September 30, 2021
(Dollars in thousands)	NII		NIM			NII			NIM
NII/NIM excluding the below	$	44,728		2.99	%	$	34,635			2.56	%
Prepayment premiums received on loan paydowns		305		0.02	%		325			0.02	%
Effect of maintaining excess interest earning cash		492		-0.03	%		(46	)		-0.14	%
Effect of PPP loans		—		0.00	%		297			-0.02	%
NII/NIM as reported	$	45,525		2.98	%	$	35,211			2.42	%

	Nine Months Ended					Nine Months Ended
	September 30, 2022					September 30, 2021
	NII		NIM			NII			NIM
NII/NIM excluding the below	$	126,643		2.84	%	$	97,655			2.53	%
Prepayment premiums received on loan paydowns		912		0.02	%		1,530			0.03	%
Effect of maintaining excess interest earning cash		485		-0.03	%		(365	)		-0.17	%
Effect of PPP loans		—		0.00	%		2,029			-0.04	%
NII/NIM as reported	$	128,040		2.83	%	$	100,849			2.35	%

NII, on a fully tax-equivalent basis, increased $10.5 million for the third quarter of 2022 to $45.9 million as compared to $35.4 million for the same quarter in 2021. The net interest margin for the third quarter of 2022 was 2.98 percent, which increased 56 basis points from 2.42 percent for the same 2021 period. The Company recorded net interest income, on a fully tax-equivalent basis, of $129.1 million for the nine months ended September 30, 2022, an increase of $27.5 million from $101.5 million for the same 2021 period. The net interest margin increased 48 basis points to 2.83 percent for the nine months ended September 30, 2022 from 2.35 percent for the same 2021 period. The increase in NIM for the three and nine months ended September 30, 2022, when compared to the same period in 2021 was primarily due the increase in yield on the average balance of interest-earning assets due to the current interest rate environment. Additionally, NII benefitted from the increase in average earning assets of $314.3 million and $319.2 million for the three and nine months ended September 30, 2022, respectively.

NIM also improved, as the Company executed a balance sheet reposition in the first quarter of 2022, whereby the Company added $250.0 million of multifamily loans, funded by the sale of $125.0 million of lower-yielding, like duration securities, and deposit growth. To manage a neutral overall duration effect on the balance sheet, thereby protecting the balance sheet against the impact of rising rates, we executed $100.0 million of forward starting five-year pay fixed swaps. The repositioning resulted in an attractive earn-back period on the loss on sale of securities, with future net interest margin improving by four basis points, with no impact to tangible capital or tangible book value per share.

53

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

	For the Three Months Ended
	September 30,		September 30,
(In thousands)	2022		2021
Residential mortgage loans originated for portfolio	$	17,885	$	36,845
Residential mortgage loans originated for sale		4,898		24,041
Total residential mortgage loans		22,783		60,886
Commercial real estate loans		7,320		14,944
Multifamily		4,000		120,716
C&I loans (A) (B)		251,249		143,121
Small business administration		5,682		11,570
Wealth lines of credit (A)		4,450		10,020
Total commercial loans		272,701		300,371
Installment loans		1,253		178
Home equity lines of credit (A)		5,614		2,535
Total loans closed	$	302,351	$	363,970

	For the Nine Months Ended
	September 30,		September 30,
(In thousands)	2022		2021
Residential mortgage loans originated for portfolio	$	94,604	$	89,742
Residential mortgage loans originated for sale		30,453		95,346
Total residential mortgage loans		125,057		185,088
Commercial real estate loans		46,855		65,550
Multifamily		344,214		461,545
C&I loans (A) (B)		727,079		413,547
Small business administration (C)		42,309		86,276
Wealth lines of credit (A)		26,425		15,695
Total commercial loans		1,186,882		1,042,613
Installment loans		1,484		266
Home equity lines of credit (A)		10,852		8,574
Total loans closed	$	1,324,275	$	1,236,541

(a)Includes loans and lines of credit that closed in the period but were not necessarily funded.

(b)Includes equipment finance leases and loans.

(c)Includes PPP loans of $57 million for the nine months ended September 30, 2021.

At September 30, 2022, December 31, 2021 and September 30, 2021, the Bank had a concentration in commercial real estate (“CRE”) loans as defined by applicable regulatory guidance as follows:

	September 30,			December 31,			September 30,
	2022			2021			2021
Multifamily real estate loans as a percent of    total regulatory capital of the Bank		254	%		237	%		230	%
Non-owner occupied commercial real estate    loans as a percent of total regulatory capital    of the Bank		142			149			154
Total CRE concentration		396	%		386	%		384	%

The Bank believes it addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.

54

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

Average Balance Sheet

Unaudited

Three Months Ended

	September 30, 2022									September 30, 2021
	Average			Income/			Annualized			Average			Income/			Annualized
(Dollars in thousands)	Balance			Expense			Yield			Balance			Expense			Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)	$	754,180		$	2,853			1.51	%	$	820,574		$	2,824			1.38	%
Tax-exempt (1) (2)		3,226			30			3.72			6,035			64			4.24
Loans (2) (3):
Residential mortgages		513,864			3,861			3.01			503,621			3,779			3.00
Commercial mortgages		2,510,616			23,121			3.68			2,133,259			16,114			3.02
Commercial		2,016,590			23,362			4.63			1,826,368			16,553			3.63
Commercial construction		12,073			143			4.74			24,596			198			3.22
Installment		38,338			399			4.16			32,219			245			3.04
Home equity		36,706			451			4.91			43,182			357			3.31
Other		263			7			10.65			252			5			7.94
Total loans		5,128,450			51,344			4.00			4,563,497			37,251			3.27
Federal funds sold		—			—			—			—			—			—
Interest-earning deposits		232,158			1,162			2.00			413,623			142			0.14
Total interest-earning assets		6,118,014			55,389			3.62	%		5,803,729			40,281			2.78	%
Noninterest-earning assets:
Cash and due from banks		8,296									8,592
Allowance for credit losses		(59,464	)								(64,100	)
Premises and equipment		23,580									23,311
Other assets		97,583									201,287
Total noninterest-earning assets		69,995									169,090
Total assets	$	6,188,009								$	5,972,819
LIABILITIES:
Interest-bearing deposits:
Checking	$	2,408,206		$	5,127			0.85	%	$	2,098,827		$	1,177			0.22	%
Money markets		1,237,975			1,557			0.50			1,257,760			683			0.22
Savings		168,281			5			0.01			152,759			20			0.05
Certificates of deposit - retail		391,340			791			0.81			461,917			836			0.72
Subtotal interest-bearing deposits		4,205,802			7,480			0.71			3,971,263			2,716			0.27
Interest-bearing demand - brokered		85,000			345			1.62			85,000			385			1.81
Certificates of deposit - brokered		25,968			210			3.23			33,796			266			3.15
Total interest-bearing deposits		4,316,770			8,035			0.74			4,090,059			3,367			0.33
FHLB advances and borrowings		3,810			29			3.04			64,332			57			0.35
Finance lease liabilities		5,106			61			4.78			6,147			74			4.82
Subordinated debt		132,874			1,363			4.10			132,588			1,358			4.10
Total interest-bearing liabilities		4,458,560			9,488			0.85	%		4,293,126			4,856			0.45	%
Noninterest-bearing liabilities:
Demand deposits		1,116,843									997,450
Accrued expenses and other liabilities		83,446									137,387
Total noninterest-bearing liabilities		1,200,289									1,134,837
Shareholders’ equity		529,160									544,856
Total liabilities and shareholders’ equity	$	6,188,009								$	5,972,819
Net interest income (tax-equivalent basis)				$	45,901								$	35,425
Net interest spread								2.77	%								2.33	%
Net interest margin (4)								2.98	%								2.42	%
Tax equivalent adjustment				$	(376	)							$	(214	)
Net interest income				$	45,525								$	35,211

(1)Average balances for available for sale securities are based on amortized cost.

(2)Interest income is presented on a tax-equivalent basis using a 21 percent federal tax rate.

(3)Loans are stated net of unearned income and include nonaccrual loans.

(4)Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

55

Average Balance Sheet

Unaudited

Nine Months Ended

	September 30, 2022									September 30, 2021
	Average			Income/			Annualized			Average			Income/			Annualized
(Dollars in thousands)	Balance			Expense			Yield			Balance			Expense			Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (1)	$	818,411		$	9,995			1.63	%	$	822,262		$	8,473			1.37	%
Tax-exempt (1) (2)		4,035			117			3.87			6,961			243			4.65
Loans (2) (3):
Residential mortgages		511,999			11,148			2.90			501,276			11,559			3.07
Commercial mortgages		2,472,503			62,481			3.37			1,972,723			45,590			3.08
Commercial		2,016,533			60,911			4.03			1,900,231			49,992			3.51
Commercial construction		15,427			465			4.02			20,418			516			3.37
Installment		36,697			951			3.46			34,724			777			2.98
Home equity		38,324			1,106			3.85			45,672			1,133			3.31
Other		268			18			8.96			239			15			8.37
Total loans		5,091,751			137,080			3.59			4,475,283			109,582			3.26
Federal funds sold		—			—			—			64			—			0.13
Interest-earning deposits		174,833			1,505			1.15			465,287			367			0.11
Total interest-earning assets		6,089,030			148,697			3.26	%		5,769,857			118,665			2.74	%
Noninterest-earning assets:
Cash and due from banks		8,491									10,018
Allowance for loan and lease losses		(60,026	)								(67,592	)
Premises and equipment		23,187									23,087
Other assets		119,908									203,344
Total noninterest-earning assets		91,560									168,857
Total assets	$	6,180,590								$	5,938,714
LIABILITIES:
Interest-bearing deposits:
Checking	$	2,411,023		$	8,695			0.48	%	$	1,996,663		$	3,099			0.21	%
Money markets		1,255,341			2,675			0.28			1,250,933			2,204			0.23
Savings		162,675			15			0.01			144,066			55			0.05
Certificates of deposit - retail		409,442			2,048			0.67			494,255			3,333			0.90
Subtotal interest-bearing deposits		4,238,481			13,433			0.42			3,885,917			8,691			0.30
Interest-bearing demand - brokered		85,000			1,082			1.70			100,110			1,334			1.78
Certificates of deposit - brokered		31,058			732			3.14			33,783			791			3.12
Total interest-bearing deposits		4,354,539			15,247			0.47			4,019,810			10,816			0.36
FHLB advances and borrowings		20,876			103			0.66			138,448			448			0.43
Finance lease liabilities		5,389			193			4.78			6,376			229			4.79
Subordinated debt		132,803			4,090			4.11			165,053			5,650			4.56
Total interest-bearing liabilities		4,513,607			19,633			0.58	%		4,329,687			17,143			0.53	%
Noninterest-bearing liabilities:
Demand deposits		1,042,064									932,088
Accrued expenses and other liabilities		93,462									143,045
Total noninterest-bearing liabilities		1,135,526									1,075,133
Shareholders’ equity		531,457									533,894
Total liabilities and shareholders’ equity	$	6,180,590								$	5,938,714
Net interest income (tax-equivalent basis)				$	129,064								$	101,522
Net interest spread								2.68	%								2.21	%
Net interest margin (4)								2.83	%								2.35	%
Tax equivalent adjustment				$	(1,024	)							$	(673	)
Net interest income				$	128,040								$	100,849

(1)Average balances for available for sale securities are based on amortized cost.

(2)Interest income is presented on a tax-equivalent basis using a 21 percent federal tax rate.

(3)Loans are stated net of unearned income and include nonaccrual loans.

(4)Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

56

The effect of volume and rate changes on net interest income (on a tax-equivalent basis) for the periods indicated are shown below:

	For the Three Months Ended September 30, 2022
	Difference due to						Change In
	Change In:						Income/
(In Thousands):	Volume			Rate			Expense
ASSETS:
Investments	$	(176	)	$	171		$	(5	)
Loans		4,854			9,239			14,093
Interest-earning deposits		(91	)		1,111			1,020
Total interest income	$	4,587		$	10,521		$	15,108
LIABILITIES:
Interest-bearing checking	$	271		$	3,679		$	3,950
Money market		86			788			874
Savings		—			(15	)		(15	)
Certificates of deposit - retail		(130	)		85			(45	)
Certificates of deposit - brokered		(63	)		7			(56	)
Interest bearing demand brokered		(2	)		(38	)		(40	)
Borrowed funds		(465	)		437			(28	)
Capital lease obligation		(13	)		—			(13	)
Subordinated debt		5			—			5
Total interest expense	$	(311	)	$	4,943		$	4,632
Net interest income	$	4,898		$	5,578		$	10,476

	For the Nine Months Ended September 30, 2022
	Difference due to						Change In
	Change In:						Income/
(In Thousands):	Volume			Rate			Expense
ASSETS:
Investments	$	8		$	1,388		$	1,396
Loans		15,472			12,026			27,498
Interest-earning deposits		(380	)		1,518			1,138
Total interest income	$	15,100		$	14,932		$	30,032
LIABILITIES:
Interest-bearing checking	$	1,056		$	4,540		$	5,596
Money market		93			378			471
Savings		3			(43	)		(40	)
Certificates of deposit - retail		(516	)		(769	)		(1,285	)
Certificates of deposit - brokered		(64	)		5			(59	)
Interest bearing demand brokered		(194	)		(58	)		(252	)
Borrowed funds		(647	)		302			(345	)
Capital lease obligation		(36	)		—			(36	)
Subordinated debt		(1,003	)		(557	)		(1,560	)
Total interest expense	$	(1,308	)	$	3,798		$	2,490
Net interest income	$	16,408		$	11,134		$	27,542

Interest income on interest-earning assets, on a fully tax-equivalent basis, totaled $55.4 million for the third quarter of 2022 compared to $40.3 million for the same period of 2021, reflecting an increase of $15.1 million, or 38 percent. Interest income on interest-earning assets, on a fully tax-equivalent basis, totaled $148.7 million for the nine months ended September 30, 2022 compared to $118.7 million for the same period of 2021, reflecting an increase of $30.0 million, or 25 percent. The increase for both the three and nine months compared to the prior periods reflected increases in the average balance and yield of interest-earning assets.

The average balance of interest-earning assets totaled $6.12 billion for the third quarter of 2022, an increase of $314.3 million, or 5 percent, from the same period of 2021. The average balance of interest-earning assets totaled $6.09 billion for the nine months ended September 30, 2022, an increase of $319.2 million, or 6 percent, from the same period of 2021.

The increase in interest-earning assets for the three months ended September 30, 2022 reflected growth in the average balance of loans of $565.0 million or 12 percent to $5.13 billion for the quarter ended September 30, 2022, from $4.56 billion for the same 2021 period. This increase was offset by a decline in the average balance of investments for the quarter ended September 30, 2022

57

of $69.2 million, or 8 percent, to $757.4 million as compared to $826.6 million for the same 2021 quarter. The increase in interest-earning assets for the nine months ended September 30, 2022 reflected growth in the average balance of loans of $616.5 million or 14 percent to $5.09 billion for the nine months ended September 30, 2022, from $4.48 billion for the same 2021 period. The increase in average interest-earnings assets for the three and nine months ended September 30, 2022 were partially offset by declines in the average balance of interest-earning deposits of $181.5 million to $232.2 million for the three months ended September 30, 2022 and $290.5 million to $174.8 million for the nine months ended September 30, 2022.

The growth in loans for both the three months and nine months ended September 30, 2022 was driven by growth in commercial mortgages as part of the Company’s balance sheet repositioning executed in the first quarter of 2022. Commercial mortgages grew by $377.4 million, or 18 percent, to $2.51 billion from $2.13 billion and commercial loans increased by $190.2 million or 10 percent, to $2.02 billion from $1.83 billion for the three months ended September 30, 2022. Commercial mortgages increased by $499.8 million, or 25 percent, to $2.47 billion for the nine months ended September 30, 2022 from $1.97 billion for the same period in 2021 coupled with growth in commercial loans of $116.3 million, or 6 percent to $2.02 billion.

The average balance of investments decreased $69.2 million or 8 percent for the quarter ended September 30, 2022, to $757.4 million from $826.6 million for the same three-month period in 2021. During the first quarter of 2022, the Company executed a balance sheet repositioning which included the sale of $125 million of investments at lower yields to partially fund like duration, higher yielding multifamily loans. The average balance of investments decreased slightly for the nine months ended September 30, 2022 to $822.4 million from $829.2 million for the same 2021 period, due partially to the investment sale and normal amortization of the portfolio.

For the third quarters of 2022 and 2021, the average yields earned on interest-earning assets were 3.62 percent and 2.78 percent, respectively, an increase of 84 basis points. The increase in yields on interest-earning assets was due to the increase in target Federal Funds of 150 basis points during the third quarter (300 basis points year-to-date), which resulted in an increase of 73 basis points on loans to 4.00 percent for the quarter ended September 30, 2022, compared to 3.27 percent for the same period of 2021. The yield on interest-earning deposits increased 186 basis points to 200 basis points for the quarter ended September 30, 2022 when compared to the same period in 2021. However, the balance of interest-bearing deposits significantly decreased, which helped to improve the average yield on interest-earning assets as the Bank utilized excess liquidity to originate loans and for security purchases during the latter half of 2021. With the transformation to a commercial bank balance sheet and business model, the Company is asset sensitive as of September 30, 2022, and therefore net interest income would improve in a rising rate environment but decline in a falling rate environment.

For the nine months ended September 30, 2022 and 2021, the average yields earned on interest-earning assets were 3.26 percent and 2.74 percent, respectively, an increase of 52 basis points. This was due to an increase of 33 basis points in loans to 3.59 percent for the nine months ended September 30, 2022, compared to 3.26 percent for the same period of 2021. The yield on interest-earning deposits increased 104 basis points to 115 basis points for the nine months ended September 30, 2022 when compared to the same period in 2021. However, the average balance of interest-bearing deposits significantly decreased, which helped to improve the average yield on interest-earning assets as the Bank utilized excess liquidity to originate loans and for security purchases during the latter half of 2021.

The average yield on total loans increased 73 basis points to 4.00 percent for the quarter ended September 30, 2022 when compared to 3.27 percent for the prior period was driven by an increase in yield on commercial loans of 100 basis points to 4.63 percent when compared to 3.63 percent for the same quarter of 2021, due to the increase in target Federal Funds of 150 basis points during the third quarter of 2022 (300 basis points year-to-date) given these loans are typically floating rates with short repricing periods. The increase in yield was also driven by an increase in yield on commercial mortgages which increased by 66 basis points to 3.68 percent for the quarter ended September 30, 2022 compared to 3.02 percent for the same 2021 quarter. The increase was due to the originations of loans with higher yields during the first nine months of 2022. In addition, 23 percent of our loan portfolio reprices within one month; 36 percent within three months and 46 percent within one year. The increases in the average balances of commercial loans and commercial mortgages were partially funded by the balance sheet repositioning completed in the first quarter of 2022 and the use of the Company’s liquidity, as seen by the decline in interest-earning deposits of $181.5 million during the third quarter of 2022.

The average yield earned on total loans increased by 33 basis points to 3.59 percent when compared to the same nine month period of 2021. This increase was primarily due to higher yields on commercial loans which were 4.03 percent for the nine months ended when compared to 3.51 percent for the same 2021 period due to the increase in target Fed Funds throughout 2022 given these loans are typically floating rates with short repricing periods. The increase was also driven by an increase in yield on commercial mortgages which increased by 29 basis points to 3.37 percent for the nine months ended September 30, 2022 when compared to 3.08 percent for the same period of 2021. The increase in the average yields was due to the originations of loans with higher yields. The increases in the average balances of commercial loans and commercial mortgages were partially funded by the balance sheet

58

repositioning completed in the first quarter and the use of the Company’s liquidity, as seen by the decline in interest-earning deposits of $290.5 million during the nine months ended September 30, 2022.

During the quarter ended September 30, 2022 and 2021, the Company recorded a yield on investments of 1.52 percent and 1.40 percent, respectively.

For the nine months ended September 30, 2022 and 2021, the Company recorded a yield on investments of 1.64 percent and 1.40 percent, respectively. The increase in yield for the three and nine months ended September 30, 2022 was due to the Company strategically purchasing higher yielding investments during 2021 to maintain the size of the portfolio in anticipation of maturities and to utilize excess liquidity.

The average balance of interest-bearing liabilities totaled $4.46 billion for the third quarter of 2022, an increase of $165.4 million, or 4 percent, from the same period of 2021. The increase in interest-bearing liabilities reflected growth of interest-bearing deposits of $226.7 million, or 6 percent to $4.32 billion for the quarter ended September 30, 2022 from $4.09 billion for the same period of 2021, offset by decreases in the average balance of borrowings of $60.5 million, or 94 percent, to $3.8 million for the three months ended September 30, 2022 from $64.3 million for the same period of 2021.

The average balance of interest-bearing liabilities totaled $4.51 billion for the nine months ended September 30, 2022, an increase of $183.9 million, or 4 percent, from the same period of 2021. The increase of interest-bearing liabilities reflected growth of interest-bearing deposits of $334.7 million, or 8 percent, to $4.35 billion for the nine months ended September 30, 2022 from $4.02 billion for the same period of 2021, offset by decreases in the average balance of borrowings of $117.6 million or 85 percent to $20.9 million for the nine months ended September 30, 2022 from $138.4 million for the same period of 2021, and a decrease in the average balance of subordinated debt of $32.3 million or 20 percent to $132.8 million at September 30, 2022 from $165.1 million for the same 2021 period.

The increase in the average balance of interest-bearing deposits was due to the growth in customer deposits (excluding brokered CDs and brokered interest-bearing demand deposits, but including reciprocal funds discussed below) of $234.5 million to $4.21 billion for the quarter ended September 30, 2022 when compared to $3.97 billion for the same period of 2021. The increase was due to: an increase in retail deposits from our branch network; an increase in interest-bearing checking deposits as maturing CDs shifted into these accounts; a focus on providing high-touch client service; new deposit relationships related to PPP; and a full array of treasury management products that support core deposit growth. This growth was partially offset by a decline of $7.8 million in the average balance of brokered deposits and $70.6 million in the average balance of retail CDs for the three months ended September 30, 2022, when compared to the same 2021 period.

The increase in the average balance of interest-bearing deposits was due to the growth in customer deposits (excluding brokered CDs and brokered interest-bearing demand deposits, but including reciprocal funds discussed below) of $352.6 million to $4.24 billion for the nine months ended September 30, 2022 when compared to $3.89 billion for the same period of 2021. The increase was due to: an increase in retail deposits from our branch network; an increase in interest-bearing checking deposits as maturing CDs shifted into these accounts; a focus on providing high-touch client service; new deposit relationships related to PPP; and a full array of treasury management products that support core deposit growth. This growth was partially offset by a decline of $17.8 million in the average balance of brokered deposits and $84.8 million in the average balance of retail CDs for the nine months ended September 30, 2022, when compared to the same 2021 period.

The Company is a participant in the Reich & Tang Demand Deposit Marketplace (“DDM”) program and the Promontory Program. The Company uses these deposit sweep services to place customer funds into interest-bearing demand (checking) accounts issued by other participating banks. Customer funds are placed at one or more participating banks to ensure that each deposit customer is eligible for the full amount of FDIC insurance. As a program participant, the Company receives reciprocal amounts of deposits from other participating banks. Such reciprocal deposit balances are included in the Company’s interest-bearing checking balances. The average balance of reciprocal deposits was $630.1 million and $711.6 million for the three months ended September 30, 2022 and 2021, respectively. The average balance of reciprocal deposits was $667.7 million and $725.4 million for the nine months ended September 30, 2022 and 2021, respectively.

The decrease in borrowings for the three and nine months ended September 30, 2022 when compared to the 2021 periods was principally due to the Company’s participation in the Paycheck Protection Program Loan Facility in 2021 to fund PPP loan originations, which decreased due to PPP loan forgiveness that occurred during the latter part of 2021, offset by a slight increase in overnight borrowings.

In June 2021, the Company redeemed $50.0 million of subordinated debt bearing interest at an annual rate of 6.0 percent issued in June 2016 that was set to re-price to approximately 5.0 percent. In December 2020, the Company issued $100.0 million of subordinated debt ($98.2 million net of issuance costs) bearing interest at an annual rate of 3.50 percent for the first five years, and

59

thereafter at an adjustable rate until maturity in December 2025 or earlier redemption. In December 2017, the Company issued $35.0 million of subordinated debt ($34.1 million net of issuance costs) bearing interest at an annual rate of 4.75 percent for the first five years, and thereafter at an adjustable rate until maturity in December 2027 or earlier redemption.

For the quarters ended September 30, 2022 and 2021, the cost of interest-bearing liabilities was 85 basis points and 45 basis points, respectively, an increase of 40 basis points. The increase was driven by an increase in the average cost of interest-bearing deposits of 41 basis points coupled with the balance increasing $226.7 million. Although the Federal Reserve raised the target Federal Funds rate 300 basis points, the Company has been able to maintain lower deposit rates as our high touch client service has provided a competitive advantage in the pricing of our deposit accounts. The cost of borrowings increased by 269 basis points to 3.04 percent for the quarter ended September 30, 2022 from 0.35 percent for the quarter ended September 30, 2021 due to the current interest rate environment.

For the nine months ended September 30, 2022 and 2021, the cost of interest-bearing liabilities was 58 basis points and 53 basis points, respectively, reflecting an increase of 5 basis points. The increase was driven by an increase in the average cost of interest-bearing deposits of 11 basis points for the nine months ended September 30, 2022. Although the Federal Reserve raised the target Federal Funds rate 300 basis points, the Company has been able to maintain lower deposit rates as our high touch client service has provided a competitive advantage in the pricing of our deposit accounts. The cost of borrowings increased by 23 basis points to 66 basis points for the nine months ended September 30, 2022 due to the current rate environment. The average cost of interest-bearing liabilities was also effected by a decline in the cost of subordinated debt of 45 basis points to 4.11 percent.

INVESTMENT SECURITIES: Investment securities available for sale are purchased, sold and/or maintained as a part of the Company’s overall balance sheet, liquidity and interest rate risk management strategies, and in response to changes in interest rates, liquidity needs, prepayment speeds and/or other factors. These securities are carried at estimated fair value, and unrealized changes in fair value are recognized as a separate component of shareholders’ equity, net of income taxes. Realized gains and losses are recognized in income at the time the securities are sold. Investment securities held to maturity are those securities that the Company has both the ability and intent to hold to maturity. These securities are carried at amortized cost. Equity securities are carried at fair value with unrealized gains and losses recorded in non-interest income.

At September 30, 2022, the Company had investment securities available for sale with a fair value of $497.9 million compared with $796.8 million at December 31, 2021. The decrease was due to the sale of residential mortgage-backed securities and U.S. government-sponsored agencies of $121.2 million associated with a balance sheet repositioning executed in first quarter of 2022. The decrease was also due to an increase in the unrealized loss due to the rising interest rate environment experienced during the first nine months of 2022. A net unrealized loss (net of income tax) of $82.6 million and of $9.9 million were included in shareholders’ equity at September 30, 2022 and December 31, 2021, respectively.

At September 30, 2022, the Company had investment securities held to maturity with a carrying cost of $103.6 million and an estimated fair value of $87.9 million compared with a carrying cost of $108.7 million and an estimated fair value of $108.5 million at December 31, 2021.

The Company has one equity security (a CRA investment security) with a fair value of $13.0 million at September 30, 2022 compared with a fair value of $14.7 million at December 31, 2021, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded a $571,000 and $1.7 million unrealized loss on the Consolidated Statements of Income for the three and nine months ended September 30, 2022, respectively, as compared to an unrealized loss of $70,000 and $293,000 for the three and nine months ended September 30, 2021, respectively.

60

The carrying value of investment securities available for sale as of September 30, 2022 and December 31, 2021 are shown below:

	September 30, 2022				December 31, 2021
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value
Investment securities - available for sale:
U.S. government-sponsored agencies	$	244,770	$	189,410	$	280,045	$	272,221
Mortgage-backed securities-residential (principally       U.S. government-sponsored entities)		315,541		267,547		481,062		476,974
SBA pool securities		33,538		29,121		40,649		39,561
State and political subdivisions		2,613		2,584		5,431		5,476
Corporate bond		10,000		9,218		2,500		2,521
Total investment securities - available for sale	$	606,462	$	497,880	$	809,687	$	796,753
Investment securities - held to maturity:
U.S. government-sponsored agencies		40,000		35,131		40,000		39,982
Mortgage-backed securities-residential (principally       U.S. government-sponsored entities)		63,551		52,726		68,680		68,478
Total investment securities - held to maturity	$	103,551	$	87,857	$	108,680	$	108,460
Total	$	710,013	$	585,737	$	918,367	$	905,213

The following table presents the contractual maturities and yields of debt securities available for sale and held to maturity as of September 30, 2022. The weighted average yield is a computation of income within each maturity range based on the amortized cost of securities:

				After 1			After 5
				But			But			After
	Within			Within			Within			10
(Dollars in thousands)	1 Year			5 Years			10 Years			Years			Total
Investment securities - available for sale:
U.S. government-sponsored agencies	$	—		$	—		$	111,935		$	77,475		$	189,410
		—			—			1.39	%		1.79	%		1.56	%
Mortgage-backed securities-residential (1)		24,986			8,937			15,126			218,498			267,547
		3.37	%		2.85	%		1.90	%		1.99	%		2.12	%
SBA pool securities		—			—			11,686			17,435			29,121
		—			—			1.75	%		1.32	%		1.49	%
State and political subdivisions (2)		1,945			639			—			—			2,584
		2.17	%		1.90	%		—			—			2.10	%
Corporate bond		—			—			9,218			—			9,218
		—			—			4.81	%		—			4.81	%
Total investments - available for sale	$	26,931		$	9,576		$	147,965		$	313,408		$	497,880
		3.28	%		2.79	%		1.65	%		1.90	%		1.90	%
Investment securities - held to maturity:
U.S. government-sponsored agencies		—			15,000			25,000			—			40,000
		—			1.35	%		1.64	%		—			1.53	%
Mortgage-backed securities-residential (1)		—			—			—			63,551			63,551
		—			—			—			1.77	%		1.77	%
Total investments - held to maturity	$	—		$	15,000		$	25,000		$	63,551			103,551
		—			1.35	%		1.64	%		1.77	%		1.68	%
Total	$	26,931		$	24,576		$	172,965		$	376,959		$	601,431
		3.28	%		1.91	%		1.65	%		1.88	%		1.86	%

(1)Shown using stated final maturity.

(2)Yields presented on a fully tax-equivalent basis.

Federal funds sold and interest-earning deposits are an additional part of the Company’s liquidity and interest rate risk management strategies. The combined average balance of these investments during the three months ended September 30, 2022 was $232.2 million compared to $413.6 million for the quarter ended September 30, 2021. The decrease reflected the use of excess liquidity to fund asset growth.

61

OTHER INCOME: The following table presents other income, excluding income from wealth management, which is summarized and discussed subsequently:

	For the Three Months Ended September 30,						Change
(In thousands)	2022			2021			2022 vs 2021
Service charges and fees	$	1,060		$	959		$	101
Bank owned life insurance		299			311			(12	)
Gain on sale of loans (mortgage banking)		60			408			(348	)
Gain on loans held for sale at lower of cost or fair value		—			—			—
Fee income related to loan level, back-to-back swaps		—			—			—
Gain on sale of SBA loans		622			1,569			(947	)
Corporate advisory fee income		102			84			18
Other income		1,868			660			1,208
Fair value adjustment for CRA equity security		(571	)		(70	)		(501	)
Total other income (excluding wealth management income)	$	3,440		$	3,921		$	(481	)

	For the Nine Months Ended September 30,						Change
(In thousands)	2022			2021			2022 vs 2021
Service charges and fees	$	3,075		$	2,701		$	374
Bank owned life insurance		922			1,388			(466	)
Gain on sale of loans (mortgage banking)		458			1,842			(1,384	)
Gain/(loss) on loans held for sale at lower of cost or fair value		—			1,407			(1,407	)
Fee income related to loan level, back-to-back swaps		—			—			—
Gain on sale of SBA loans		6,141			3,950			2,191
Corporate advisory fee income		1,696			1,303			393
Loss on swap termination		—			(842	)		842
Other income		3,982			2,798			1,184
Loss on securities sale, net		(6,609	)		—			(6,609	)
Fair value adjustment for CRA equity security		(1,728	)		(293	)		(1,435	)
Total other income (excluding wealth management income)	$	7,937		$	14,254		$	(6,317	)

The Company recorded total other income, excluding wealth management fee income, of $3.4 million for the third quarter of 2022 compared to $3.9 million for the same quarter of 2021. The Company recorded total other income, excluding wealth management fee income, of $7.9 million for the nine months ended September 30, 2022 compared to $14.3 million for the same 2021 period.

The Company provides loans that are partially guaranteed by the SBA, to provide working capital and/or financing the purchase of equipment, inventory or commercial real estate that could be used for start-up businesses. All SBA loans are underwritten and documented as prescribed by the SBA. The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. The third quarter of 2022 included $622,000 of gains on sales of SBA loans, which represents a decrease of $947,000, or 60 percent compared to $1.6 million for the same quarter in 2021. Gains on sales of SBA loans for the nine months ended September 30, 2022 increased $2.2 million, or 55 percent, to $6.1 million from $4.0 million for the same 2021 period. 2022 activity has benefitted from the addition of an SBA team hired by the Company in the fourth quarter of 2021 offset slightly by market volatility, which has resulted in lower sale premiums.

The Company recorded corporate advisory fee income for the third quarter of 2022 of $102,000 compared to $84,000 for the same three-month period ended September 30, 2021. The nine months ended September 30, 2022 included $1.7 million of corporate advisory fee income compared to $1.3 million for the same 2021 period.

Income from the back-to-back swap, SBA programs, and corporate advisory fee income are dependent on volume, and thus are not consistent from quarter to quarter.

For the three months ended September 30, 2022, income from the sale of newly originated residential mortgage loans was $60,000 compared to $408,000 for the same quarter in 2021. Income from the sale of newly originated residential mortgage loans decreased $1.4 million from $1.8 million for the nine months ended September 30, 2021 to $458,000 for the same 2022 period. The decrease for the three and nine months ended September 30, 2022, was the result of the decreased volume of residential mortgage loans originated for sale due to a slowdown in refinancing and home purchase activity in the higher interest rate environment.

Other income for the three and nine months ended September 30, 2022 included unused commercial line fees of $818,000 and $1.5 million, respectively, compared to $163,000 and $476,000 for the same 2021 periods. Additionally, the three and nine months ended

62

September 2022 included income recorded by the Equipment Finance Division related to equipment transfers to lessees of $547,000 and $972,000, respectively, compared to none recorded in the prior periods.

During the three and nine months ended September 30, 2022, the Company recorded a $571,000 and $1.7 million loss on the fair value adjustment for CRA equity securities, respectively, compared to a loss of $70,000 and $293,000, respectively, for the same 2021 periods.

Other income for the nine months ended September 30, 2022, included a $6.6 million loss on securities due to the Company’s balance sheet repositioning, by selling lower yielding securities and replacing them with higher yielding like duration multifamily loans, executed during the first quarter. The Company repositioning has improved the NIM with no impact to tangible capital or tangible book value per share.

The nine months ended September 30, 2021 included $455,000 of additional income related to a net life insurance death benefit under the Company’s BOLI policies.

During the nine months ended September 30, 2021, the Company recorded a gain on sale of $1.1 million for the sale of $57 million of PPP loans to a third party.

Other income included $164,000 and $886,000 of income related to the referral of PPP loans for the three and nine months ended September 30, 2021, respectively.

During the nine months ended September 30, 2021, the Company recognized a loss on the termination of $842,000 for two interest rate swaps that had a notional value of $40 million with a weighted average cost of 1.50 percent.

The nine months ended September 30, 2021 included a gain on sale of an OREO property of $51,000.

The remainder of the increase for the three and nine months ended September 30, 2022, when compared to the same 2021 periods were primarily due to an increase in commercial lending fees primarily related to loan servicing income and letter of credit fees.

OPERATING EXPENSES: The following table presents the components of operating expenses for the periods indicated:

	For the Three Months Ended September 30,				Change
(In thousands)	2022		2021		2022 vs 2021
Compensation and employee benefits	$	22,656	$	19,859	$	2,797
Premises and equipment		4,534		4,459		75
FDIC assessment		510		555		(45	)
Other Operating Expenses:
Professional and legal fees		1,180		1,565		(385	)
Telephone		403		342		61
Advertising		574		386		188
Amortization of intangible assets		384		431		(47	)
Swap valuation allowance		—		1,350		(1,350	)
Other		3,319		3,238		81
Total operating expenses	$	33,560	$	32,185	$	1,375

63

	For the Nine Months Ended September 30,				Change
(In thousands)	2022		2021		2022 vs 2021
Compensation and employee benefits	$	66,987	$	61,759	$	5,228
Premises and equipment		13,821		12,646		1,175
FDIC assessment		1,484		1,669		(185	)
Other Operating Expenses:
Professional and legal fees		3,630		4,007		(377	)
Telephone		1,085		988		97
Advertising		1,545		1,004		541
Amortization of intangible assets		1,204		1,167		37
Branch restructure		372		228		144
Write-off of subordinated debt costs		—		648		(648	)
Swap valuation allowance		673		1,350		(677	)
Other		9,587		8,997		590
Total operating expenses	$	100,388	$	94,463	$	5,925

Operating expenses totaled $33.6 million for the three months ended September 30, 2022, compared to $32.2 million for the same 2021 period, reflecting an increase of $1.4 million or 4 percent. Operating expenses for the nine months ended September 30, 2022 increased $5.9 million or 6 percent to $100.4 million compared to $94.5 million for the same 2021 period. The increased operating expenses for the three and nine months ended September 30, 2022 were principally attributable to: increased corporate and health insurance costs; hiring in line with the Company’s strategic plan; and normal salary increases, which were partially offset by decreased FDIC expense. The nine months ended September 30, 2022 included nine months of expense associated with the acquisition of PPSG completed in July 2021 compared to three months for the prior year period. The nine months ended September 30, 2022 included $372,000 of expense associated with the consolidation of private banking offices. The nine months ended September 30, 2022 included a swap valuation allowance of $673,000. Both the three and nine months ended September 30, 2021 included a swap valuation expense of $1.4 million. Both the nine months ended September 30, 2021 and 2022 included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank. The nine months ended September 30, 2021 included accelerated expense of $648,000 related to the redemption of subordinated debt.

PEAPACK PRIVATE: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services. Peapack Private provides wealth management, trust and investment services at the Bank’s headquarters in Bedminster, at private banking locations in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey and at the Bank’s subsidiaries and PGB Trust & Investments of Delaware, in Greenville, Delaware.

The market value of the assets under management and/or administration (“AUM/AUA”) of Peapack Private was $9.3 billion at September 30, 2022, reflecting a 16 percent decrease from $11.1 billion at December 31, 2021 and a decrease of 10 percent from $10.3 billion at September 30, 2021. Continued market declines in 2022 further impacted the results in the September 2022 quarter, as the S&P was down another 5 percent in Q3 2022 (and down 25 percent for the nine months ended September 30, 2022). Effective July 1, 2021, the Bank closed on the acquisition of Princeton Portfolio Strategies Group (“PPSG”), a registered investment advisor headquartered in Princeton, New Jersey, which contributed approximately $520 million of AUM/AUA at the time of acquisition.

In the September 2022 quarter, Peapack Private generated $12.9 million in fee income compared to $13.9 million for the September 2021 quarter, reflecting a 7 percent decrease. For the nine months ended September 30, 2022, Peapack Private generated $41.7 million in fee income compared to $39.0 million in fee income for the same period in 2021, reflecting a 7 percent increase. The growth in fee income for the nine months ended September 30, 2022 was due to several factors, including the acquisition noted above, new business, partially offset by normal levels of disbursements and outflows and negative market performance.

Operating expenses relative to Peapack Private reflected increases due to overall growth in the business, new hires and the PPSG acquisition when comparing the three and nine months ended September 30, 2022 to the same periods for 2021. Expenses are in line with the Company’s Strategic Plan, particularly the hiring of key management and revenue-producing personnel.

Peapack Private currently generates adequate revenue to support the salaries, benefits and other expenses of the wealth division and Management believes it will continue to do so as the Company grows organically and/or by acquisition. Management believes that the Bank generates adequate liquidity to support the expenses of Peapack Private should it be necessary.

64

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

The following table sets forth asset quality data as of the dates indicated:

	As of
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2022			2022			2022			2021			2021
Loans past due 90 days or more and still accruing	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans		15,724			15,078			15,884			15,573			25,925
Other real estate owned		116			116			—			—			—
Total nonperforming assets	$	15,840		$	15,194		$	15,884		$	15,573		$	25,925
Performing TDRs (1)(2)	$	2,761		$	2,272		$	2,375		$	2,479		$	416
Loans past due 30 through 89 days and still accruing (3)	$	7,248		$	3,126		$	606		$	8,606		$	1,193
Loans subject to special mention	$	82,107		$	98,787		$	110,252		$	116,490		$	115,935
Classified loans	$	27,507		$	27,167		$	47,386		$	50,702		$	51,937
Individually evaluated loans	$	13,047		$	13,227		$	16,147		$	18,052		$	26,341
Nonperforming loans as a % of total loans (4)		0.30	%		0.29	%		0.31	%		0.32	%		0.56	%
Nonperforming assets as a % of total assets (4)		0.26	%		0.25	%		0.25	%		0.26	%		0.42	%
Nonperforming assets as a % of total loans    plus other real estate owned (4)		0.31	%		0.29	%		0.31	%		0.32	%		0.57	%

(1)Amounts reflect TDRs that are paying according to restructured terms.

(2)Amount excludes $12.9 million at September 30, 2022, $13.5 million at June 30, 2022, $13.6 million at March 31, 2022, $1.1 million at December 31, 2021 and $4.0 million at September 30, 2021 of TDRs included in nonaccrual loans.

(3)Includes $5.1 million outstanding to a U.S. governmental unit at September 30, 2022; $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021.

(4)Nonperforming loans/assets do not include performing TDRs.

PROVISION FOR CREDIT LOSSES: The provision for credit losses was $599,000 and $1.6 million for the third quarters of 2022 and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the provision for credit losses was $4.4 million and $2.7 million, respectively. The increased provision for credit losses for the nine months ended September 30, 2022, when compared to the nine months ended September 30, 2021, was due principally to loan growth of $370.6 million and an increase in unused lines of credit which require a reserve under CECL.

The allowance for credit losses was $59.7 million as of September 30, 2022, compared to $61.7 million at December 31, 2021. The decline in the allowance for credit losses (“ACL”) was primarily due to the Day 1 reduction of $5.5 million incurred in connection with the implementation of CECL on January 1, 2022 partially offset by the 2022 provision for credit losses of $4.4 million. The allowance for credit losses as a percentage of loans was 1.15 percent and 1.28 percent at September 30, 2022 and December 31, 2021, respectively. The allowance for credit loss ratio declined due to the Day 1 reduction and a 2022 provision for credit losses based on 2022 loan growth in lower risk segments that carry lower ACL coverage. The specific reserves recorded on individually evaluated loans were $2.4 million at September 30, 2022 compared to $4.2 million as of December 31, 2021. Total individually evaluated loans were $13.0 million and $18.1 million as of September 30, 2022 and December 31, 2021, respectively. The general component of the allowance decreased from $57.5 million at December 31, 2021 to $57.3 million at September 30, 2022.

The adoption of CECL resulted in a day 1 reduction of $5.5 million. The lower allowance was in part attributed to historically low charge-offs combined with the shorter duration of the loan portfolio employed in our CECL analysis. Further, the incurred loss method required significant qualitative factors, including factors related to COVID-19, and the use of a multiplier for potential losses on criticized and classified loans, neither of which are included within the CECL methodology. The CECL methodology utilizes significantly less qualitative factors as it uses economic factors and historical losses over a full economic cycle and calculates losses based on DCF on an individual loan basis. Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology.

65

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

A summary of the allowance for credit losses for the quarterly periods indicated follows:

	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2022			2022			2022			2021			2021
Allowance for credit losses:
Beginning of period	$	59,022		$	58,386		$	61,697		$	65,133		$	63,505
Day one CECL adjustment		—			—			(5,536	)		—			—
Provision for credit losses (1)		665			646			2,489			3,750			1,600
(Charge-offs)/recoveries, net		(4	)		(10	)		(264	)		(7,186	)		28
End of period	$	59,683		$	59,022		$	58,386		$	61,697		$	65,133
Allowance for credit losses as a % of    total loans (2)		1.15	%		1.15	%		1.14	%		1.28	%		1.42	%
General allowance for credit losses as    a % of total loans (2)		1.11	%		1.10	%		1.09	%		1.20	%		1.27	%
Allowance for credit losses as a % of    non-performing loans		379.57	%		391.44	%		367.58	%		396.18	%		251.24	%

(1)Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the allowance calculation was based on the incurred loss methodology. Provision to rollforward the ACL excludes a credit of $66,000 for the three months ended September 30, 2022, a provision of $803,000 for the three months ended June 30, 2022 and a credit of $114,000 for the three months ended March 31, 2022 related to the off-balance sheet commitments.

(2)The September 30, 2021, December 31, 2021, March 31, 2022, June 30, 2022 and September 30, 2022 allowance coverage ratios include PPP loans of $48.7 million, $13.8 million, $9.6 million, $9.4 million and $1.9 million, respectively, in total loans. PPP loans are fully guaranteed by the SBA and as such do not have an associated reserve for those same periods.

INCOME TAXES: Income tax expense for the quarter ended September 30, 2022 was $7.6 million as compared to $5.0 million for the same period in 2021. During the nine months ended September 30, 2022, the Company recorded income tax expense of $19.2 million compared to $15.2 million for the same period in 2021.

The effective tax rate for the three months ended September 30, 2022 was 27.47 percent compared to 26.22 percent for the same quarter in 2021. The effective tax rate for the nine months ended September 30, 2022 was 26.32 percent compared to 26.65 percent for the same 2021 period.

The nine months ended September 30, 2022 and 2021 both benefitted from the vesting of restricted stock at prices higher than grant prices. The nine months ended September 30, 2021 quarter also benefitted from life insurance proceeds that were not taxable.

CAPITAL RESOURCES: A solid capital base provides the Company with the ability to support future growth and financial strength and is essential to executing the Company’s Strategic Plan – “Expanding Our Reach.” The Company’s capital strategy is

66

intended to provide stability to expand its business, even in stressed environments. Quarterly stress testing is integral to the Company’s capital management process.

The Company strives to maintain capital levels in excess of internal “triggers” and in excess of those considered to be well capitalized under regulatory guidelines applicable to banks. Maintaining an adequate capital position supports the Company’s goal of providing shareholders an attractive and stable long-term return on investment.

Capital was benefitted by net income of $53.7 million for the nine months ended September 30, 2022, which was offset by the purchase of shares through the Company’s stock repurchase program and an increase in the unrealized loss on securities, net of tax of $72.8 million. The Company repurchased 790,277 shares, at an average price of $34.84, for a total cost of $27.5 million during the nine months ended September 30, 2022.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test based on June 30, 2022 financial information, under severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period. With a pandemic stress overlay, the Bank still remains well capitalized over the two-year stress period.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of Total, Common Equity Tier 1 and Tier 1 capital (each as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). At September 30, 2022 and December 31, 2021, all of the Bank’s capital ratios remain above the levels required to be considered “well capitalized” and the Company’s capital ratios remain above regulatory requirements.

To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, common equity Tier I and Tier I leverage ratios as set forth in the table.

As a result of the Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies set the minimum capital for the Community Bank Leverage Ratio (“CBLR”) at 9 percent, effective January 1, 2020. Under the CARES Act, the Community Bank Leverage Ratio was temporarily lowered to 8 percent. The Bank did not opt into the CBLR and will continue to comply with the requirements under Basel III. The Bank’s leverage ratio was 10.79 percent at September 30, 2022.

67

The Bank’s regulatory capital amounts and ratios are presented in the following table:

						To Be Well										For Capital
						Capitalized Under					For Capital					Adequacy Purposes
						Prompt Corrective					Adequacy					Including Capital
	Actual					Action Provisions					Purposes					Conservation Buffer (A)
(Dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
As of September 30, 2022:
Total capital (to risk-weighted assets)	$	731,325		14.69	%	$	497,731		10.00	%	$	398,185		8.00	%	$	522,618		10.50	%
Tier I capital (to risk-weighted assets)		670,717		13.48			398,185		8.00			298,639		6.00			423,072		8.50
Common equity tier I (to risk-weighted assets)		670,693		13.48			323,525		6.50			223,979		4.50			348,412		7.00
Tier I capital (to average assets)		670,717		10.79			310,685		5.00			248,548		4.00			248,548		4.00
As of December 31, 2021:
Total capital (to risk-weighted assets)	$	672,614		14.05	%	$	478,628		10.00	%	$	382,902		8.00	%	$	502,559		10.50	%
Tier I capital (to risk-weighted assets)		612,762		12.80			382,902		8.00			287,177		6.00			406,834		8.50
Common equity tier I (to risk-weighted assets)		612,738		12.80			311,108		6.50			215,382		4.50			335,039		7.00
Tier I capital (to average assets)		612,762		9.99			306,538		5.00			245,231		4.00			245,231		4.00

(A)See footnote on following table

68

The Company’s regulatory capital amounts and ratios are presented in the following table:

						To Be Well							For Capital
						Capitalized Under		For Capital					Adequacy Purposes
						Prompt Corrective		Adequacy					Including Capital
	Actual					Action Provisions		Purposes					Conservation Buffer (A)
(Dollars in thousands)	Amount		Ratio			Amount	Ratio	Amount		Ratio			Amount		Ratio
As of September 30, 2022:
Total capital (to risk-weighted assets)	$	733,988		14.74	%	N/A	N/A	$	398,309		8.00	%	$	522,780		10.50	%
Tier I capital (to risk-weighted assets)		540,464		10.86		N/A	N/A		298,731		6.00			423,203		8.50
Common equity tier I (to risk-weighted assets)		540,440		10.86		N/A	N/A		224,049		4.50			348,520		7.00
Tier I capital (to average assets)		540,464		8.70		N/A	N/A		248,580		4.00			248,580		4.00
As of December 31, 2021:
Total capital (to risk-weighted assets)	$	700,790		14.64	%	N/A	N/A	$	382,944		8.00	%	$	502,614		10.50	%
Tier I capital (to risk-weighted assets)		508,231		10.62		N/A	N/A		287,208		6.00			406,878		8.50
Common equity tier I (to risk-weighted assets)		508,207		10.62		N/A	N/A		215,406		4.50			335,076		7.00
Tier I capital (to average assets)		508,231		8.29		N/A	N/A		245,242		4.00			245,242		4.00

(A)The Basel Rules require the Company and the Bank to maintain a 2.5% “capital conservation buffer” on top of the minimum risk-weighted asset ratios. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of (i) Common Equity Tier 1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall.

The Dividend Reinvestment Plan of Peapack-Gladstone Financial Corporation, or the “Reinvestment Plan,” allows shareholders of the Company to purchase additional shares of common stock using cash dividends without payment of any brokerage commissions or other charges. Shareholders may also make voluntary cash payments of up to $200,000 per quarter to purchase additional shares of common stock. Voluntary share purchases in the “Reinvestment Plan” can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company. All shares purchased during the quarter ended September 30, 2022 were purchased in the open market.

On October 27, 2022, the Board of Directors declared a regular cash dividend of $0.05 per share payable on November 28, 2022 to shareholders of record on November 10, 2022.

Management believes the Company’s capital position and capital ratios are adequate. Further, Management believes the Company has sufficient common equity to support its planned growth for the immediate future. The Company continually assesses other potential sources of capital to support future growth.

LIQUIDITY: Liquidity refers to an institution’s ability to meet short-term requirements including funding of loans, deposit withdrawals and maturing obligations, as well as long-term obligations, including potential capital expenditures. The Company’s liquidity risk management is intended to ensure the Company has adequate funding and liquidity to support its assets across a range of market environments and conditions, including stressed conditions. Principal sources of liquidity include cash, temporary

69

investments, securities available for sale, customer deposit inflows, loan repayments and secured borrowings. Other liquidity sources include loan sales.

Management actively monitors and manages the Company’s liquidity position and believes it is sufficient to meet future needs. Cash and cash equivalents, including interest-earning deposits, totaled $108.3 million at September 30, 2022. In addition, the Company had $497.9 million in securities designated as available for sale at September 30, 2022. These securities can be sold, or used as collateral for borrowings, in response to liquidity concerns. Available for sale and held to maturity securities with a carrying value of $461.0 million and $103.6 million as of September 30, 2022, respectively, were pledged to secure public funds and for other purposes required or permitted by law. In addition, the Company generates significant liquidity from scheduled and unscheduled principal repayments of loans and mortgage-backed securities.

As of September 30, 2022, the Company had approximately $1.8 billion of secured funding available from the Federal Home Loan Bank. Additionally, the Company had $1.7 billion of secured funding available from the Federal Reserve Discount Window, none of which was drawn.

Brokered interest-bearing demand (“overnight”) deposits were $85.0 million at September 30, 2022. The interest rate paid on these deposits allows the Bank to fund asset growth at attractive rates and engage in interest rate swaps to hedge its asset-liability interest rate risk. The Company ensures ample available collateralized liquidity as a backup to these short-term brokered deposits. As of September 30, 2022, the Company had transacted pay fixed, receive floating interest rate swaps totaling $390.0 million in notional amount, which includes $100.0 million of forward-starting swaps.

The Company has a Board-approved Contingency Funding Plan in place. This plan provides a framework for managing adverse liquidity stress and contingent sources of liquidity. The Company conducts liquidity stress testing on a regular basis to ensure sufficient liquidity in a stressed environment. The Company believes it has sufficient liquidity given the current environment created by the COVID-19 pandemic.

Management believes the Company’s liquidity position and sources are adequate.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

ASSET/LIABILITY MANAGEMENT: The Company’s Asset/Liability Committee (“ALCO”) is responsible for developing, implementing and monitoring asset/liability management strategies and advising the Board of Directors on such strategies, as well as the related level of interest rate risk. In this regard, interest rate risk simulation models are prepared on a quarterly basis. These models demonstrate balance sheet gaps and predict changes to net interest income and economic/market value of portfolio equity under various interest rate scenarios. In addition, these models, as well as ALCO processes and reporting, are subject to annual independent third-party review.

The ALCO is generally authorized to manage interest rate risk through the management of capital, cash flows and duration of assets and liabilities, including sales and purchases of assets, as well as additions of wholesale borrowings and other sources of medium/longer-term funding. The ALCO is authorized to engage in interest rate swaps as a means of extending the duration of shorter-term liabilities.

The following strategies are among those used to manage interest rate risk:

•Actively market C&I loans, which tend to have adjustable-rate features, and which generate customer relationships that can result in higher core deposit accounts;

•Actively market equipment finance leases and loans, which tend to have shorter terms and higher interest rates than real estate loans;

•Limit residential mortgage portfolio originations to adjustable-rate and/or shorter-term and/or “relationship” loans that result in core deposit and/or wealth management relationships;

•Actively market core deposit relationships, which are generally longer duration liabilities;

•Utilize medium to longer term certificates of deposit and/or wholesale borrowings to extend liability duration;

•Utilize interest rate swaps to extend liability duration;

•Utilize a loan level / back-to-back interest rate swap program, which converts a borrower’s fixed rate loan to adjustable rate for the Company;

70

•Closely monitor and actively manage the investment portfolio, including management of duration, prepayment and interest rate risk;

•Maintain adequate levels of capital; and

•Utilize loan sales.

The interest rate swap program is administered by the ALCO and follows procedures and documentation in accordance with regulatory guidance and standards as set forth in ASC 815 for cash flow hedges. The program incorporates pre-purchase analysis, liability designation, sensitivity analysis, correlation analysis, daily mark-to-market analysis and collateral posting as required. The Board is advised of all swap activity. The Company is receiving floating and paying fixed interest rates with total notional value of $390.0 million as of September 30, 2022. The Company’s interest rate swaps include $100.0 million of forward starting swaps that extend swaps set to mature in 2023 for an additional five years.

In addition, the Company initiated a loan level / back-to-back swap program in support of its commercial lending business. Pursuant to this program, the Company extends a floating rate loan and executes a floating to fixed swap with the borrower. At the same time, the Company executes a third-party swap, the terms of which fully offset the fixed exposure and, result in a final floating rate exposure for the Company. As of September 30, 2022, $627.5 million of notional value in swaps were executed and outstanding with borrowers under this program.

As noted above, the ALCO uses simulation modeling to analyze the Company’s net interest income sensitivity, as well as the Company’s economic value of portfolio equity under various interest rate scenarios. The models are based on the actual maturity and repricing characteristics of rate sensitive assets and liabilities. The models incorporate certain prepayment and interest rate assumptions, which management believes to be reasonable as of September 30, 2022. The models assume changes in interest rates without any proactive change in the balance sheet by management. In the models, the forecasted shape of the yield curve remained static as of September 30, 2022.

In an immediate and sustained 100 basis point increase in market rates at September 30, 2022, net interest income would increase approximately 1.3 percent for year 1 and 3.8 percent for year 2, compared to a flat interest rate scenario. The Company’s interest rate sensitivity models indicate the Company is asset sensitive as of September 30, 2022 and that net interest income would improve in a rising rate environment but decline in a falling rate environment.

In an immediate and sustained 200 basis point increase in market rates at September 30, 2022, net interest income for year 1 would increase approximately 3.2 percent, when compared to a flat interest rate scenario. In year 2 net interest income would increase 7.8 percent, when compared to a flat interest rate scenario.

The table below shows the estimated changes in the Company’s economic value of portfolio equity (“EVPE”) that would result from an immediate parallel change in the market interest rates at September 30, 2022.

	Estimated Increase/								EVPE as a Percentage of
(Dollars in thousands)	Decrease in EVPE								Present Value of Assets (2)
Change In
Interest
Rates	Estimated								EVPE			Increase/(Decrease)
(Basis Points)	EVPE (1)		Amount			Percent			Ratio (3)			(basis points)
+200	$	779,622	$	(37,658	)		(4.61	)%		13.98	%		1
+100		797,519		(19,761	)		(2.42	)		13.97			—
Flat interest rates		817,280		—			—			13.97			—
-100		872,091		54,811			6.71			14.46			49

(1)EVPE is the discounted present value of expected cash flows from assets and liabilities.

(2)Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.

(3)EVPE ratio represents EVPE divided by the present value of assets.

Certain shortcomings are inherent in the methodologies used in determining interest rate risk. Simulation modeling requires making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the modeling assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the information provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results.

71

72

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to provide reasonable assurance that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the forms and rules of the Securities and Exchange Commission and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Corporation’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

In connection with the preparation of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, our management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2022 because of a material weakness in our internal control over financial reporting relating to the design of the controls over accounting for credit losses in accordance with the CECL accounting standard, ASC 2016-13, Financial Instruments – Credit Losses including the timing of the operation of these controls.

We have taken certain measures to remediate the material weakness related to the design of the controls related to application of the CECL accounting standard, including designing and implementing formal procedures and controls related to the timing of the operation of such controls. While we believe that the efforts taken to date and those planned for remediation will improve the effectiveness of our internal control over financial reporting, these remediation efforts are ongoing and will require time to operate for management to be able to conclude that the design is effective to remediate the material weakness identified.

Changes in Internal Control Over Financial Reporting

During the most recent fiscal quarter, there has been no change in our internal controls over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, that have materially affected or are reasonably likely to materially affect the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings

In the normal course of its business, lawsuits and claims may be brought against the Company and its subsidiaries. There is no currently pending or threatened litigation or proceedings against the Company or its subsidiaries, which if adversely decided, we believe would have a material adverse effect on the Company.

ITEM 1A. Risk Factors

Other than described below, there have been no material changes in risk factors applicable to the Company from those disclosed in “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

Inflation and increase in market interest rates and potential effects from a recession can have an adverse impact on our business and on our customers.

Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. Recently, there has been a pronounced rise in inflation and the Federal Reserve Board has raised certain benchmark interest rates to combat inflation. As inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease further. In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses. Furthermore, our customers are also affected by inflation, rising interest rates, and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us. Further, the

73

increase in market interest rates is likely to reduce our loan origination volume, particularly refinance volume, and/or reduce our interest rate spread, which could have an adverse effect on our profitability and results of operations.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

	Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs		Total Number of Shares Withheld (1)		Average Price Paid Per Share		Maximum Number of Shares That May Yet Be Purchased Under the Plans Or Programs (2)
July 1, 2022 -
July 31, 2022		—		—	$	—		749,042
August 1, 2022 -
August 31, 2022		222,673		—		34.18		526,369
September 1, 2022 -
September 30, 2022		67,726		—		33.96		458,643
Total		290,399		—	$	34.13

(1)Represents shares withheld to satisfy tax withholding obligations upon the exercise of stock options and/or the vesting of restricted stock awards/units.

(2)On January 27, 2022, the Company’s Board of Directors approved a plan to repurchase up to 920,000 shares, which was approximately 5 percent of the outstanding shares as of that date, through March 31, 2023. The timing and amount of shares repurchased will depend on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity and capital requirements and alternative uses of capital.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

74

ITEM 6. Exhibits

3	Articles of Incorporation and By-Laws:
	A. Certificate of Incorporation of the Registrant, as amended, incorporated herein by reference to Exhibit 3 of the Registrant’s Quarterly Report on Form 10-Q filed on November 9, 2009 (File No. 001-16197).
	B. By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed on December 20, 2017 (File No. 001-16197).
31.1	Certification of Douglas L. Kennedy, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
31.2	Certification of Jeffrey J. Carfora, Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Douglas L. Kennedy, Chief Executive Officer of the Corporation and Jeffrey J. Carfora, Chief Financial Officer of the Corporation.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

75

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.

	PEAPACK-GLADSTONE FINANCIAL CORPORATION
	(Registrant)
DATE: November 9, 2022	By:	/s/ Douglas L. Kennedy
		Douglas L. Kennedy
		President and Chief Executive Officer
		(Principal Executive Officer)
DATE: November 9, 2022	By:	/s/ Jeffrey J. Carfora
		Jeffrey J. Carfora
		Senior Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)
DATE: November 9, 2022	By:	/s/ Francesco S. Rossi
		Francesco S. Rossi
		Chief Accounting Officer
		(Principal Accounting Officer)

76

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Douglas L. Kennedy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Peapack-Gladstone Financial Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2022	By: /s/ Douglas L. Kennedy
	Name: Douglas L. Kennedy
	Title: President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jeffrey J. Carfora, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Peapack-Gladstone Financial Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves Management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2022	By: /s/ Jeffrey J. Carfora
	Name: Jeffrey J. Carfora
	Title: Senior Executive Vice President,             Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATIONS PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Peapack-Gladstone Financial Corporation (the “Corporation”), for the quarterly period ended September 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Douglas L. Kennedy, as Chief Executive Officer of the Corporation, and Jeffrey J. Carfora, as Chief Financial Officer of the Corporation, each hereby certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

/s/ Douglas L. Kennedy
Name:	Douglas L. Kennedy
Title:	President and Chief Executive Officer
Date:	November 9, 2022

/s/ Jeffrey J. Carfora
Name:	Jeffrey J. Carfora
Title:	Senior Executive Vice President
	Chief Financial Officer
Date:	November 9, 2022

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Entity Registrant Name	PEAPACK-GLADSTONE FINANCIAL CORPORATION
Entity Central Index Key	0001050743
Document Type	10-Q
Document Period End Date	Sep. 30, 2022
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		17,920,771
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Trading Symbol	PGC
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity File Number	001-16197
Entity Tax Identification Number	22-3537895
Entity Address, Address Line One	500 Hills Drive
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Bedminster
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07921-0700
City Area Code	908
Local Phone Number	234-0700
Document Quarterly Report	true
Document Transition Report	false
Entity Incorporation, State or Country Code	NJ
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, no par value
Security Exchange Name	NASDAQ

XML

CONSOLIDATED STATEMENTS OF CONDITION - USD ($) $ in Thousands		Sep. 30, 2022	Dec. 31, 2021
ASSETS
Cash and due from banks		$ 5,066	$ 5,929
Interest-earning deposits		103,214	140,875
Total cash and cash equivalents		108,280	146,804
Securities available for sale		497,880	796,753
Securities held to maturity (fair value $87,857 at September 30, 2022 and $108,460 at December 31, 2021)		103,551	108,680
Equity security, at fair value		12,957	14,685
FHLB and FRB stock, at cost		14,986	12,950
Loans held for sale, at fair value		1,333	3,040
Loans held for sale, at lower of cost or fair value		10,102	34,051
Loans		5,177,194	4,806,721
Less: Allowance for credit losses	[1]	59,683	61,697
Net loans		5,117,511	4,745,024
Premises and equipment		23,781	23,044
Other real estate owned		116
Accrued interest receivable		17,816	21,589
Bank owned life insurance		47,072	46,663
Goodwill		36,212	36,212
Other intangible assets		11,486	12,690
Finance lease right-of-use assets		3,021	3,582
Operating lease right-of-use assets		13,404	9,775
Other assets		67,753	62,451
TOTAL ASSETS		6,087,261	6,077,993
Deposits:
Noninterest-bearing demand deposits		1,317,954	956,482
Interest-bearing deposits:
Checking	[2]	2,149,629	2,287,894
Savings		166,821	154,914
Money market accounts		1,178,112	1,307,051
Certificates of deposit - retail		345,047	409,608
Certificates of deposit - listing service		30,647	31,382
Subtotal deposits		5,188,210	5,147,331
Interest-bearing demand - brokered		85,000	85,000
Certificates of deposit - brokered		25,974	33,818
Total deposits		5,299,184	5,266,149
Short-term borrowings		32,369
Finance lease liabilities		5,003	5,820
Operating lease liabilities		14,101	10,111
Subordinated debt, net		132,916	132,701
Deferred tax liabilities, net		14,490	39,322
Accrued expenses and other liabilities		73,684	77,502
TOTAL LIABILITIES		5,571,747	5,531,605
SHAREHOLDERS’ EQUITY
Preferred stock (no par value; authorized 500,000 shares; liquidation preference of $1,000 per share)
Common stock (no par value; stated value $0.83 per share; authorized 42,000,000 shares; issued shares, 20,973,770 at September 30, 2022 and 20,656,810 at December 31, 2021; outstanding shares, 17,920,571 at September 30, 2022 and 18,393,888 at December 31, 2021)		17,484	17,220
Surplus		336,534	332,358
Treasury stock at cost, 3,053,199 shares at September 30, 2022 and 2,262,922 shares at December 31, 2021		(92,637)	(65,104)
Retained earnings		329,116	274,288
Accumulated other comprehensive loss, net of income tax		(74,983)	(12,374)
TOTAL SHAREHOLDERS’ EQUITY		515,514	546,388
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY		$ 6,087,261	$ 6,077,993

[1] Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss ("CECL") methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

[2] Interest-bearing checking includes $567.3 million at September 30, 2022 and $647.8 million at December 31, 2021 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace program.

XML

CONSOLIDATED STATEMENTS OF CONDITION (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Statement Of Financial Position [Abstract]
Securities held to maturity fair value	$ 87,857	$ 108,460
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	500,000	500,000
Preferred stock, liquidation preference per share	$ 1,000	$ 1,000
Common stock, stated value	$ 0.83	$ 0.83
Common stock, shares authorized	42,000,000	42,000,000
Common stock, shares issued	20,973,770	20,656,810
Common stock, shares outstanding	17,920,571	18,393,888
Treasury stock, shares	3,053,199	2,262,922

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
INTEREST INCOME
Interest and fees on loans		$ 50,978	$ 37,040	$ 136,091	$ 108,921
Interest on investments:
Taxable		2,853	2,824	9,995	8,473
Tax-exempt		13	28	52	107
Interest on loans held for sale		7	33	30	124
Interest on interest-earning deposits		1,162	142	1,505	367
Total interest income		55,013	40,067	147,673	117,992
INTEREST EXPENSE
Interest on savings and interest-bearing deposit accounts		6,689	1,880	11,385	5,358
Interest on certificates of deposit		791	836	2,048	3,333
Interest on borrowed funds		29	57	103	448
Interest on finance lease liability		61	74	193	229
Interest on subordinated debt		1,363	1,358	4,090	5,650
Subtotal - interest expense		8,933	4,205	17,819	15,018
Interest on interest-bearing demand - brokered		345	385	1,082	1,334
Interest on certificates of deposits - brokered		210	266	732	791
Total interest expense		9,488	4,856	19,633	17,143
NET INTEREST INCOME BEFORE PROVISION FOR CREDIT LOSSES		45,525	35,211	128,040	100,849
Provision for credit losses	[1]	599	1,600	4,423	2,725
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES		44,926	33,611	123,617	98,124
OTHER INCOME
Wealth management fee income		12,943	13,860	41,668	39,025
Service charges and fees		1,060	959	3,075	2,701
Bank owned life insurance		299	311	922	1,388
Gain on loans held for sale at fair value (mortgage banking)		60	408	458	1,842
Gain on loans held for sale at lower of cost or fair value					1,407
Gain on sale of SBA loans		622	1,569	6,141	3,950
Corporate advisory fee income		102	84	1,696	1,303
Loss on swap termination					(842)
Other income		1,868	660	3,982	2,798
Loss on securities sale, net				(6,609)
Fair value adjustment for CRA equity security		(571)	(70)	(1,728)	(293)
Total noninterest other income		16,383	17,781	49,605	53,279
OPERATING EXPENSES
Compensation and employee benefits		22,656	19,859	66,987	61,759
Premises and equipment		4,534	4,459	13,821	12,646
FDIC insurance expense		510	555	1,484	1,669
Swap valuation allowance			1,350	673	1,350
Other operating expense		5,860	5,962	17,423	17,039
Total operating expenses		33,560	32,185	100,388	94,463
INCOME BEFORE INCOME TAX EXPENSE		27,749	19,207	72,834	56,940
Income tax expense		7,623	5,036	19,167	15,173
NET INCOME		$ 20,126	$ 14,171	$ 53,667	$ 41,767
EARNINGS PER SHARE
Basic		$ 1.11	$ 0.76	$ 2.94	$ 2.21
Diluted		$ 1.09	$ 0.74	$ 2.88	$ 2.15
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic		18,072,385	18,763,316	18,244,691	18,891,601
Diluted		18,420,661	19,273,831	18,652,042	19,390,522

[1] Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 20,126	$ 14,171	$ 53,667	$ 41,767
Unrealized gains/(losses) on available for sale securities:
Unrealized holding gains/(losses) arising during the period	(30,983)	(5,635)	(102,257)	(14,148)
Reclassification adjustment for amounts included in net income			6,609
Before tax	(30,983)	(5,635)	(95,648)	(14,148)
Tax effect	7,420	1,342	22,892	3,378
Net of tax	(23,563)	(4,293)	(72,756)	(10,770)
Unrealized gains/(losses) on cash flow hedges:
Unrealized holding gains/(losses) arising during the period	10,048	936	13,999	3,507
Reclassification adjustment for amounts included in net income	(58)		(58)	842
Before tax	9,990	936	13,941	4,349
Tax effect	(2,683)	(263)	(3,794)	(1,222)
Net of tax	7,307	673	10,147	3,127
Total other comprehensive income/(loss)	(16,256)	(3,620)	(62,609)	(7,643)
Total comprehensive income/(loss)	$ 3,870	$ 10,551	$ (8,942)	$ 34,124

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment [Member]	Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Common Stock [Member]	Common Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Surplus [Member]	Surplus [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Treasury Stock [Member]	Treasury Stock [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Retained Earnings [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjustment [Member]	Retained Earnings [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Other Comprehensive Loss [Member] Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance at Dec. 31, 2020	$ 527,122			$ 16,958		$ 326,592		$ (36,477)		$ 221,441			$ (1,392)
Net income	41,767									41,767
Comprehensive loss	(7,643)												(7,643)
Restricted stock units issued shares				240		(240)
Restricted stock units repurchased on vesting to pay taxes	(2,231)			(60)		(2,171)
Amortization of restricted stock units	5,229					5,229
Cash dividends declared on common stock ($0.05 per share)	(2,843)									(2,843)
Share repurchase	(19,416)							(19,416)
Common stock options exercised shares	40			3		37
Exercise of warrants				14		(14)
Issuance of shares for Employee Stock Purchase Plan	656			18		638
Issuance of common stock for acquisition	333			12		321
Balance at Sep. 30, 2021	543,014			17,185		330,392		(55,893)		260,365			(9,035)
Balance at Jun. 30, 2021	538,459			17,164		328,035		(48,461)		247,136			(5,415)
Net income	14,171									14,171
Comprehensive loss	(3,620)												(3,620)
Amortization of restricted stock units	1,807					1,807
Cash dividends declared on common stock ($0.05 per share)	(942)									(942)
Share repurchase	(7,432)							(7,432)
Common stock options exercised shares	6			1		5
Exercise of warrants				2		(2)
Issuance of shares for Employee Stock Purchase Plan	232			6		226
Issuance of common stock for acquisition	333			12		321
Balance at Sep. 30, 2021	543,014			17,185		330,392		(55,893)		260,365			(9,035)
Balance at Dec. 31, 2021	546,388		$ 550,297	17,220	$ 17,220	332,358	$ 332,358	(65,104)	$ (65,104)	274,288		$ 278,197	(12,374)	$ (12,374)
Balance (ASU 2016-13 [Member]) at Dec. 31, 2021		$ 3,909									$ 3,909
Net income	53,667									53,667
Comprehensive loss	(62,609)												(62,609)
Restricted stock units issued shares				270		(270)
Restricted stock units repurchased on vesting to pay taxes	(2,701)			(62)		(2,639)
Amortization of restricted stock units	6,300					6,300
Cash dividends declared on common stock ($0.05 per share)	(2,748)									(2,748)
Share repurchase	(27,533)							(27,533)
Common stock options exercised shares	126			8		118
Exercise of warrants	0			18		(18)
Issuance of shares for Employee Stock Purchase Plan	715			18		697
Issuance of common stock for acquisition				12		(12)
Balance at Sep. 30, 2022	515,514			17,484		336,534		(92,637)		329,116			(74,983)
Balance at Jun. 30, 2022	520,324			17,466		334,411		(82,725)		309,899			(58,727)
Net income	20,126									20,126
Comprehensive loss	(16,256)												(16,256)
Amortization of restricted stock units	1,909					1,909
Cash dividends declared on common stock ($0.05 per share)	(909)									(909)
Share repurchase	(9,912)							(9,912)
Common stock options exercised shares	4					4
Issuance of shares for Employee Stock Purchase Plan	228			6		222
Issuance of common stock for acquisition				12		(12)
Balance at Sep. 30, 2022	$ 515,514			$ 17,484		$ 336,534		$ (92,637)		$ 329,116			$ (74,983)

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Shares outstanding			18,393,888
Common stock options exercised, shares			9,660
Issuance of shares for Employee Stock Purchase Plan, shares	6,441	6,889	20,369	21,661
Shares outstanding	17,920,571		17,920,571
Common Stock [Member]
Shares outstanding	18,190,009	18,829,877	18,393,888	18,974,703
Restricted stock units issued, shares			325,607	288,348
Restricted stock units/awards repurchased on vesting to pay taxes, shares			(74,445)	(71,749)
Cash dividends declared on common stock, per share	$ 0.05	$ 0.05	$ 0.15	$ 0.15
Share repurchase, share	(290,399)	(227,060)	(790,277)	(619,815)
Common stock options exercised, shares	300	400	9,660	3,220
Common stock options exercised, used to exercise, shares				62
Common stock options exercised, net of shares used to exercise, shares				3,158
Exercise of warrants, shares		10,000	49,860	50,000
Exercise of warrants, used to exercise, shares		6,416	28,311	32,616
Exercise of warrants, net of shares used to exercise, shares		3,584	21,549	17,384
Issuance of shares for Employee Stock Purchase Plan, shares	6,441	6,889	20,369	21,661
Issuance of common stock for acquisition, shares	14,220	14,220	14,220	14,220
Shares outstanding	17,920,571	18,627,910	17,920,571	18,627,910

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021
OPERATING ACTIVITIES:
Net income		$ 53,667	$ 41,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,554	2,367
Amortization of premium and accretion of discount on securities, net		2,331	4,502
Amortization of restricted stock		6,300	5,229
Amortization of intangible assets		1,204	1,167
Amortization of subordinated debt costs		215	931
Provision for credit losses	[1]	4,423	2,725
Swap valuation allowance		673	1,350
Deferred tax benefit		(5,907)	(3,247)
Stock-based compensation and employee stock purchase plan expense		114	93
Fair value adjustment for equity security		1,728	293
Loss on securities available for sale		6,609
Loans originated for sale	[2]	(58,409)	(131,427)
Proceeds from sales of loans held for sale	[2]	85,663	142,141
Gain on loans held for sale	[2]	(6,599)	(5,792)
Gain on loans held for sale at lower of cost or fair value			(1,407)
Gain on OREO sold			(51)
Gain on life insurance death benefit			(455)
Increase in cash surrender value of life insurance, net		(409)	(465)
Decrease/(Increase) in accrued interest receivable		3,773	(295)
Decrease in other assets		3,952	2,998
Increase in accrued expenses and other liabilities		3,709	7,390
NET CASH PROVIDED BY OPERATING ACTIVITIES		105,591	68,464
INVESTING ACTIVITIES:
Principal repayments, maturities and calls of securities available for sale		305,337	338,596
Principal repayments, maturities and calls of securities held to maturity		5,046	807
Redemptions of FHLB and FRB stock		26,567
Proceeds from sales of securities available for sale		118,972
Purchase of securities available for sale		(229,941)	(578,336)
Purchase of FHLB and FRB stock		(28,603)	(48)
Proceeds from sales of loans held for sale at lower of cost or fair value			54,123
Net increase in loans, net of participations sold		(372,026)	(253,638)
Proceeds from sales of other real estate			101
Purchase of premises and equipment		(2,730)	(3,371)
Purchase of wealth management company			(5,500)
Proceeds from life insurance death benefit			1,219
NET CASH USED IN INVESTING ACTIVITIES		(177,378)	(446,047)
FINANCING ACTIVITIES:
Net increase in deposits		33,035	557,857
Net increase in short-term borrowings		32,369
Repayments of Paycheck Protection Program Liquidity Facility			(128,590)
Repayments of FHLB advances			(15,000)
Dividends paid on common stock		(2,748)	(2,843)
Exercise of stock options, net of stock swaps		126	40
Restricted stock repurchased on vesting to pay taxes		(2,701)	(2,231)
Repayments of subordinated debt			(50,000)
Issuance of shares for employee stock purchase plan		715	656
Shares repurchased		(27,533)	(19,416)
NET CASH PROVIDED BY FINANCING ACTIVITIES		33,263	340,473
Net decrease in cash and cash equivalents		(38,524)	(37,110)
Cash and cash equivalents at beginning of period		146,804	653,322
Cash and cash equivalents at end of period		108,280	616,212
Cash paid during the period for:
Interest		17,155	16,128
Income tax, net		16,311	13,448
Transfer of loans to loans held for sale			$ 45,776
Transfer of loans to other real estate owned		$ 116

[1] Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

[2] Includes mortgage loans originated with the intent to sell which are carried at fair value. In addition, this includes the guaranteed portion of Small Business Administration (“SBA”) loans which are carried at the lower of cost or fair value.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Certain information and footnote disclosures normally included in the audited consolidated 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. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2021 for Peapack-Gladstone Financial Corporation (the “Corporation” or the “Company”). In the opinion of the management of the Corporation, the accompanying unaudited consolidated interim financial statements contain all adjustments (consisting solely of normal and recurring accruals) necessary to present fairly the financial position as of September 30, 2022, and the results of operations, comprehensive income/(loss), and changes in shareholders’ equity for the three and nine months ended September 30, 2022 and 2021 and cash flow statements for the nine months ended September 30, 2022 and 2021. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the full year or for any future period.

Principles of Consolidation and Organization: The consolidated financial statements of the Company are prepared on the accrual basis and include the accounts of the Company and its wholly-owned subsidiary, Peapack-Gladstone Bank (the “Bank”). The consolidated financial statements also include the Bank’s wholly-owned subsidiaries:

•PGB Trust & Investments of Delaware

•Peapack Capital Corporation (“PCC”)

•Peapack-Gladstone Mortgage Group, Inc., which owns 99 percent of Peapack Ventures, LLC and 79 percent of Peapack-Gladstone Realty, Inc., a New Jersey real estate investment company

•PGB Trust & Investments of Delaware, which owns one percent of Peapack Ventures, LLC

•Peapack Ventures, LLC, which owns the remaining 21 percent of Peapack-Gladstone Realty, Inc.

•PGB Securities, Inc.

While the following footnotes include the consolidated results of the Company, the Bank and their subsidiaries, these footnotes primarily reflect the Bank’s and its subsidiaries’ activities. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements.

Basis of Financial Statement Presentation: The consolidated financial statements have been prepared in accordance with GAAP. In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the statement of condition and revenues and expenses for the periods presented. Actual results could differ from those estimates.

Adoption of New Accounting Standards: On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan and lease receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, Accounting Standards Codification (“ASC”) 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities Management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet commitments. Results for reporting periods beginning after January 1, 2022, are presented under ASC 326 while prior period amounts continue to be reported in accordance with the incurred loss model previously applicable under GAAP. The Company recorded a net increase to retained earnings of $3.9 million as of January 1, 2022, for the cumulative effect of adopting ASC 326. The transition adjustment includes a $5.5 million reduction to our allowance for credit losses. The lower allowance was in part attributed to historically low charge-offs combined with the shorter duration of the loan portfolio employed in our CECL

analysis. Further, the incurred loss method required significant qualitative factors, including factors related to COVID-19, and the use of a multiplier for potential losses on criticized and classified loans, neither of which are included within the CECL methodology. The CECL methodology utilizes significantly less qualitative factors as it uses economic factors and historical losses over a full economic cycle and calculates losses based on discounted cash flow on an individual loan basis. Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology.

The following table illustrates the impact to our financial statements as of January 1, 2022 upon adoption of ASC 326:

	January 1, 2022
(In thousands)	Impact to Consolidated Statement of Condition from ASC-326 Adoption			Tax Effect			Impact to Retained Earnings from ASC-326 Adoption
Allowance for credit losses on loans	$	(5,536	)	$	1,490		$	4,046
Allowance for credit losses on off-balance sheet commitments		188			(51	)		(137	)
Total impact from ASC 326 adoption	$	(5,348	)	$	1,439		$	3,909

Segment Information: The Company’s business is conducted through two business segments: (1) its banking segment (“Banking”), which involves the delivery of loan and deposit products to customers, and (2) the Peapack Private Wealth Management Division (“Peapack Private”), which includes asset management services to individuals and institutions. Management uses certain methodologies to allocate income and expense to the business segments.

The Banking segment includes: commercial (includes commercial and industrial (“C&I”) and equipment financing), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support services.

Peapack Private includes: investment management services for individuals and institutions; personal trust services, including services as executor, trustee, administrator and custodian; and other financial planning and advisory services. This segment also includes the activity from the Delaware subsidiary, PGB Trust & Investments of Delaware. Wealth management fees are primarily earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management and/or administration (“AUM”) at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).

Cash and Cash Equivalents: For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-earning deposits and federal funds sold. Generally, federal funds are sold for one-day periods. Cash equivalents are of original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions and short-term borrowings with original maturities of 90 days or less.

Interest-Earning Deposits in Other Financial Institutions: Interest-earning deposits in other financial institutions mature within one year and are carried at cost.

Securities: Prior to January 1, 2022, Management evaluated securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warranted. For securities in an unrealized loss position, Management considered the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer. Management also assessed whether it intended to sell, or it is more likely than not that it was required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that did not meet the aforementioned criteria, the amount of impairment was split into two components as follows: (1) other-than-temporary impairment related to credit loss, which would be recognized through the income statement and (2) other-than-temporary impairment related to other factors, which would be recognized in other comprehensive income.

Effective January 1, 2022, upon the adoption of ASU 2016-13, debt securities available-for-sale are measured at fair value and subject to impairment testing. When an available-for-sale debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, (1) recognize an allowance for credit losses ("ACL") by a charge to earnings for the credit-related component (if any) of the decline in fair value, and (2) recognize in other comprehensive income (loss) any non-credit related components of the fair value change. If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.

Debt securities are classified as held to maturity and carried at amortized cost when Management has the positive intent and ability to hold them to maturity. Under ASU 2016-13, held-to-maturity securities in a loss position are evaluated to determine if the decline in fair value has resulted from a credit-related loss or other factors and then, recognize an ACL through a charge to earnings for the decline in fair value. Other debt securities are classified as available for sale and are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax. The Company also has an investment in a Community Reinvestment Act (“CRA”) investment fund, which is classified as an equity security.

Interest income includes amortization of purchase premiums and discounts. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated, and premiums on callable debt securities, which are amortized to the earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock, based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

The Bank is also a member of the Federal Reserve Bank of New York and required to own a certain amount of FRB stock. FRB stock is carried at cost and classified as a restricted security. Dividends are reported as income.

Loans Held for Sale: Mortgage loans originated with the intent to sell in the secondary market are carried at fair value, as determined by outstanding commitments from investors.

Mortgage loans held for sale are generally sold with servicing rights released; therefore, no servicing rights are recorded. Gains and losses on sales of mortgage loans, shown as gain on sale of loans on the Statement of Income, are based on the difference between the selling price and the carrying value of the related loan sold.

SBA loans originated with the intent to sell in the secondary market are carried at the lower of cost or fair value. SBA loans are generally sold with the servicing rights retained. Gains and losses on the sale of SBA loans are based on the difference between the selling price and the carrying value of the related loan sold. Total SBA loans serviced totaled $145.6 million and $97.5 million as of September 30, 2022 and December 31, 2021, respectively. SBA loans held for sale totaled $10.1 million and $32.5 million at September 30, 2022 and December 31, 2021, respectively.

Loans originated with the intent to hold and subsequently transferred to loans held for sale are carried at the lower of cost or fair value. These are loans that the Company no longer has the intent to hold for the foreseeable future.

Loans: Loans that Management has the intent and ability to hold for the foreseeable future or until maturity are stated at the principal amount outstanding. Interest on loans is recognized based upon the principal amount outstanding. Loans are stated at face value, less purchased premium and discounts and net deferred fees. Loan origination fees and certain direct loan origination costs are deferred and recognized on a level-yield method over the life of the loan as an adjustment to the loan’s yield. The definition of recorded investment in loans includes accrued interest receivable and deferred fees/costs, however, for the Company’s loan disclosures, accrued interest and deferred fees/costs were excluded as the impact was not material.

Loans are considered past due when they are not paid within 30 days in accordance with contractual terms. The accrual of income on loans, including individually evaluated loans, is discontinued if, in the opinion of Management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement, or when principal or interest is past due 90 days unless the asset is both well secured and in the process of collection. All interest accrued but not received for loans placed on nonaccrual are reversed against interest income. Payments received on nonaccrual loans are recorded as principal payments. A nonaccrual loan is returned to accrual status only when interest and principal payments are brought current and future payments are reasonably assured, generally when the Bank receives contractual payments for a minimum of six consecutive months. Commercial loans are generally charged off, in whole or in part, after an analysis is completed which indicates that collectability of the full principal balance is in doubt. Consumer closed-end loans are generally charged off after they become 120 days past due and open-end loans after 180 days. Subsequent payments are credited to income only if collection of principal is not in doubt. If principal and interest payments are brought contractually current and future collectability is reasonably assured, loans may be returned to accrual status. Nonaccrual mortgage loans are generally charged off to the extent that the value of the underlying collateral does not cover the outstanding principal balance. The majority of the Company’s loans are secured by real estate in New Jersey, New York and Pennsylvania.

Allowance for Credit Losses: On January 1, 2022, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances.

The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Statements of Condition. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.

Allowance for Loan Losses under incurred methodology prior to CECL Adoption on January 1, 2022

The allowance for loan and lease losses was a valuation allowance for credit losses that was Management’s estimate of probable incurred losses in the loan portfolio. Under this accounting method, the process to determine reserves utilized analytical tools and Management judgment and was reviewed on a quarterly basis. When Management was reasonably certain that a loan balance was not fully collectable, an impairment analysis was completed whereby a specific reserve could be established or a full or partial charge off was recorded against the allowance. Subsequent recoveries, if any, were credited to the allowance. Management estimated the allowance balance required using past loan loss experience, the size and composition of the portfolio, information about specific borrower situations, estimated collateral values, asset quality information, economic conditions and other factors. Allocations of the allowance could be made for specific loans via a specific reserve, but the entire allowance was available for any loan that, in Management’s judgment, should be charged off.

The allowance consisted of specific and general components. The specific component of the allowance related to loans that were individually classified as impaired.

A loan was impaired when, based on current information and events, it was probable that the Bank would be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by Management in determining impairment included payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired. Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Loans were individually evaluated for impairment when they were classified as substandard by Management. If a loan was considered impaired, a portion of the allowance could be allocated so that the loan was reported, net, at the present value of estimated future cash flows using the loan’s existing rate or if repayment was expected solely from the underlying collateral, the loan principal balance was compared to the fair value of collateral less estimated disposition costs to determine the need, if any, for a charge off.

The general component of the allowance covered non-impaired loans and was based primarily on the Company’s historical loss experience adjusted for current factors. The historical loss experience was determined by portfolio segment and was based on the

actual loss history experienced by the Company on a weighted average basis over the previous three years. This actual loss experience was adjusted by other qualitative factors based on the risks present for each portfolio segment. These qualitative factors included consideration of the following: levels of and trends in delinquencies, charge-offs and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. For loans that were graded as non-impaired, the Company allocated a higher general reserve percentage than pass-rated loans using a multiple that was calculated annually through a migration analysis. At both December 31, 2021 and 2020, respectively, the multiple was 2.25 times for non-impaired special mention loans and 3.25 times for non-impaired substandard loans.

ACL in accordance with CECL methodology

With respect to pools of similar loans that are collectively evaluated, an appropriate level of general allowance is determined by portfolio segment using a non-linear discounted cash flow (“DCF”) model. The DCF model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to unemployment rates, national consumer price and confidence indices. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following: levels of and trends in delinquencies and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the ACL results in two forms of allocations, specific and general. These two components represent the total ACL deemed adequate to cover current expected credit losses in the loan portfolio.

When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses.

In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified:

Primary Residential Mortgages. The Bank originates one to four family residential mortgage loans in the Tri-State area (New York, New Jersey and Connecticut), Pennsylvania and Florida. Loans are secured by first liens on the primary residence or investment property. Primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Junior Lien Loan on Residence (which include home equity lines of credit). The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit against one to four family properties in the Tri-State area. These

loans are subordinate to a first mortgage, which may be from another lending institution. Primary risk characteristics associated with JLLs and home equity lines of credit typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. In addition, home equity lines of credit typically are made with variable or floating interest rates, which could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Multifamily. The Bank provides mortgage loans for multifamily properties (i.e., buildings which have five or more residential units) and other commercial real estate that is either owner occupied or managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Multifamily loans are expected to be repaid from the cash flows of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and its ability to repay the loan.

Owner-Occupied Commercial Real Estate Loans. The Bank provides mortgage loans for owner-occupied commercial real estate properties in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are mixed use. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Non-owner-occupied properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Commercial and Industrial Loans. The Bank provides lines of credit and term loans to operating companies for business purposes. The loans are generally secured by business assets such as accounts receivable, inventory, business vehicles and equipment as well as the stock of a company, if privately held. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business’ profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. To mitigate the risk characteristics of commercial and industrial loans, these loans often include commercial real estate as collateral and the Bank will often require more frequent reporting requirements from the borrower in order to better monitor its business performance. However, the ability of the Bank to foreclose and realize sufficient value from the assets is often highly uncertain.

Leasing Finance. PCC offers a range of finance solutions nationally. PCC provides term loans and leases secured by assets financed for U.S. based mid-size and large companies. Facilities tend to be fully drawn under fixed rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.

Asset risk in PCC’s portfolio is generally recognized through changes to loan income, or through changes to lease related income streams due to fluctuations in lease rates. Changes to lease income can occur when the existing lease contract expires, the asset comes off lease or the business seeks to enter a new lease agreement. Asset risk may also change through depreciation, resulting from changes in the residual value of the operating lease asset or through impairment of the asset carrying value, which can occur at any time during the life of the asset.

Credit risk in PCC’s portfolio generally results from the potential default of borrowers or lessees, which may be driven by customer specific or broader industry related conditions. Credit losses can impact multiple parts of the income statement including loss of interest/lease/rental income and/or higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets.

Construction. The Bank provides commercial construction loans for properties located in the Tri-state area. Risks common to commercial construction loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.

Consumer and Other. These are loans to individuals for household, family and other personal expenditures as well as obligations of states and political subdivisions in the U.S. This also represents all other loans that cannot be categorized in any of the previous mentioned loan segments. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral.

A troubled debt restructuring (“TDR”) is a modified loan with concessions made by the lender to a borrower who is experiencing financial difficulty. TDRs are impaired and are generally measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral, less estimated disposition costs. For TDRs that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for credit losses.

The Coronavirus Aid, Relief, and Economic Security ("CARES”) Act, which provided entities with optional temporary relief from certain accounting and financial reporting requirements under U.S. GAAP, allowed financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria were met. This relief could be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that deferred or delayed the payment of principal or interest or changed the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40. The Company approved total loan modifications under the CARES Act of $947.0 million of which none remain outstanding.

Another key program under the CARES Act is the Paycheck Protection Program (“PPP”) administered by the SBA which provided funding to qualifying businesses and organizations. Under this program, the Company provided funding of approximately $650 million. In the third quarter of 2020 and second quarter of 2021, the Company sold approximately $355.0 million and $56.5 million, respectively, of such loans, servicing rights released to a third party. The Company also referred approximately $124 million of PPP loans to a third party during the first six months of 2021. The Company has approximately $1.9 million of PPP loans remaining in its portfolio as of September 30, 2022 and believes that substantially all of these loans will be forgiven by the SBA. These loans are fully guaranteed by the SBA and provide for full forgiveness of the loans during a specified forgiveness period that meet specific guidelines provided by the SBA. Loans that do not meet the forgiveness criteria will enter a repayment period of 2 or 5 years.

Leases: At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding right-of-use (“ROU”) asset and operating lease liability are recorded as separate line items on the statement of condition. An ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made.

If the rate implicit in the lease is not readily determinable, the incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s statement of condition, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. The Company maintains certain property

and equipment under direct financing and operating leases. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space and are classified as operating leases.

The ROU asset is measured at the amount of the lease liability adjusted for lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the ROU asset. Operating lease expense consists of a single lease cost allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the ROU asset.

There are no terms or conditions related to residual value guarantees and no restrictions or covenants that would impact the Company’s ability to pay dividends or to incur additional financial obligations.

Derivatives: At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”); or (3) an instrument with no hedging designation. For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For cash flow hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the statement of condition, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the statement of condition or to specific firm commitments or forecasted transactions. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

The Company also offers facility specific / loan level swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a financial institution / swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions. The Company is exposed to losses if a customer counterparty fails to make its payments under a contract in which the Company is in a net receiving position. At this time, the Company anticipates that its counterparties will be able to fully satisfy their obligations under the agreements. All of the contracts to which the Company is a party settle monthly. Further, the Company has netting agreements with the dealers with which it does business.

Stock-Based Compensation: The Company’s 2006 Long-Term Stock Incentive Plan, 2012 Long-Term Stock Incentive Plan and 2021 Long-Term Stock Incentive Plan allow the granting of shares of the Company’s common stock as incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to directors, officers and employees of the Company and its subsidiaries. There are no shares remaining for issuance with respect to the stock option plan approved in 2002, however options granted under this plan are still included in the amounts below. Options granted under these plans are, in general, exercisable not earlier than one year after the date of grant, at a price equal to the fair value of common stock

on the date of grant and expire not more than ten years after the date of grant. Stock options may vest during a period of up to five years after the date of grant. Some options granted to officers at or above the senior vice president level were immediately exercisable at the date of grant. The Company has a policy of using authorized but unissued shares to satisfy option exercises.

Upon adoption of ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

For the Company’s stock option plans, changes in options outstanding during the nine months ended September 30, 2022 were as follows:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
	Number of			Exercise		Contractual	Value
	Options			Price		Term	(In thousands)
Balance, January 1, 2022		31,340		$	14.59
Exercised during 2022		(9,660	)		13.14
Expired during 2022		—			—
Forfeited during 2022		(900	)		13.11
Balance, September 30, 2022		20,780		$	15.33	0.44 years	$	381
Vested and expected to vest		20,780		$	15.33	0.44 years	$	381
Exercisable at September 30, 2022		20,780		$	15.33	0.44 years	$	381

The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the third quarter of 2022 and the exercise price, multiplied by the number of in-the-money options. The Company’s closing stock price on September 30, 2022 was $33.65.

There were no stock options granted during the three or nine months ended September 30, 2022.

The Company issued performance-based and service-based restricted stock units in 2022 and 2021. Service-based units vest ratably over a three- or five-year period. There were no service-based restricted stock units granted during the third quarter of 2022.

The performance-based awards are dependent upon the Company meeting certain performance criteria and, to the extent the performance criteria are met, will cliff vest at the end of the performance period, which is generally three years. There were no performance-based restricted stock units granted in the third quarter of 2022.

Changes in non-vested shares dependent on performance criteria for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		225,435		$	20.29
Granted during 2022		71,482			35.93
Vested during 2022		(58,077	)		25.77
Forfeited during 2022		(5,284	)		17.92
Balance, September 30, 2022		233,556		$	23.77

Changes in service-based restricted stock awards/units for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		701,145		$	21.93
Granted during 2022		235,534			36.86
Vested during 2022		(267,530	)		21.48
Forfeited during 2022		(22,868	)		23.46
Balance, September 30, 2022		646,281		$	27.50

As of September 30, 2022, there was $17.0 million of total unrecognized compensation cost related to service-based and performance-based units. That cost is expected to be recognized over a weighted average period of 1.39 years. Stock compensation expense recorded for the third quarters of 2022 and 2021 totaled $2.1 million and $1.8 million, respectively. Stock compensation expense recorded for the nine months ended September 30, 2022 and 2021 totaled $5.7 million and $5.3 million, respectively.

Employee Stock Purchase Plan (“ESPP”): The ESPP provides for the granting of rights to purchase up to 150,000 shares of Peapack-Gladstone Financial Corporation common stock. In May 2020, shareholders approved an increase of 200,000 shares of Peapack-Gladstone Financial Corporation common stock to be issued under the ESPP.

The ESPP allows for the purchase of shares during four three-month Offering Periods of each calendar year. The Offering Periods end on February 16, May 16, August 16 and November 16 of each calendar year.

Each participant in the Offering Period is granted an option to purchase a number of shares and may contribute between one percent and 15 percent of their compensation. At the end of each Offering Period, the number of shares to be purchased by the employee is determined by dividing the employee’s contributions accumulated during the Offering Period by the applicable purchase price. The purchase price is an amount equal to 85 percent of the closing market price of a share of common stock on the purchase date. Participation in the ESPP is entirely voluntary and employees can cancel their purchases at any time during the period without penalty. The fair value of each share purchase right is determined using the Black-Scholes option pricing model.

The Company recorded $37,000 of expense in salaries and employee benefits expense for both the three months ended September 30, 2022 and 2021 related to the ESPP. Total shares issued under the ESPP during the third quarter of 2022 and 2021 were 6,441 and 6,889, respectively.

The Company recorded $114,000 and $93,000 of expense in salaries and employee benefits expense for the nine months ended September 30, 2022 and 2021, respectively, related to the ESPP. Total shares issued under the ESPP during the nine months ended September 30, 2022 and 2021 were 20,369 and 21,661, respectively.

Earnings per share – Basic and Diluted: The following is a reconciliation of the calculation of basic and diluted earnings per share. Basic net income per share is calculated by dividing net income available to shareholders by the weighted average shares outstanding during the reporting period. Diluted net income per share is computed similarly to that of basic net income per share, except that the denominator is increased to include the number of additional shares that would have been outstanding utilizing the Treasury Stock Method if all shares underlying potentially dilutive stock options were issued and all shares of restricted stock, stock warrants or restricted stock units were to vest during the reporting period.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share data)	2022		2021		2022		2021
Net income available to common shareholders	$	20,126	$	14,171	$	53,667	$	41,767
Basic weighted average shares outstanding		18,072,385		18,763,316		18,244,691		18,891,601
Plus: common stock equivalents		348,276		510,515		407,351		498,921
Diluted weighted average shares outstanding		18,420,661		19,273,831		18,652,042		19,390,522
Net income per share
Basic	$	1.11	$	0.76	$	2.94	$	2.21
Diluted		1.09		0.74		2.88		2.15

For the three months ended September 30, 2022, restricted stock units totaling 112,241 were not included in the computation of diluted earnings per share because they were anti-dilutive. For the three months ended September 30, 2021, all restricted stock units were included in the computation of diluted earnings per share because they were all dilutive. For the nine months ended September 30, 2022 and 2021, restricted stock units totaling 296,687 and 261,610 were not included in the computation of diluted earnings per share because they were anti-dilutive. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.

Income Taxes: The Company files a consolidated Federal income tax return. Separate state income tax returns are filed for each subsidiary based on current laws and regulations.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on the enacted tax rates. Such tax assets and liabilities are adjusted for the effect of a change in tax rates in the period of enactment.

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company is no longer subject to examination by the U.S. Federal tax authorities for years prior to 2018 or by New Jersey tax authorities for years prior to 2016.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Restrictions on Cash: A large portion of cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. Prior to March 2020, reserves were in the form of cash and balances with the FRB and included in interest-earning deposits in our statement of condition. The FRB suspended cash reserve requirements effective March 26, 2020.

Comprehensive Income/(Loss): Comprehensive income/(loss) consists of net income and the change during the period in the Company’s net unrealized gains or losses on securities available for sale and unrealized gains and losses on cash flow hedge, net of tax, less adjustments for realized gains and losses.

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Risks and Uncertainties: It is possible that estimates made in the Company’s consolidated financial statements could be materially and adversely impacted as a result of the conditions created by COVID-19, including estimates regarding expected provision for credit losses and impairment of goodwill.

Goodwill and Other Intangible Assets: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree (if any), over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Goodwill was primarily attributable to the Bank’s wealth acquisitions. Management monitors the impact of changes in the financial markets and includes these assessments in our impairment process. Management has concluded that there was no goodwill impairment as of September 30, 2022.

The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill, which includes assembled workforce has an indefinite life on our statement of financial condition. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill and assembled workforce are the intangible assets with an indefinite life on our balance sheet.

Other intangible assets, which primarily consist of customer relationship intangible assets arising from acquisitions, are amortized on an accelerated basis over their estimated useful lives, which range from 5 to 15 years.

XML

INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2022

Investment Securities Available For Sale [Abstract]

INVESTMENT SECURITIES AVAILABLE FOR SALE

2. INVESTMENT SECURITIES

A summary of amortized cost and approximate fair value of investment securities available for sale and held to maturity included in the Consolidated Statements of Condition as of September 30, 2022 and December 31, 2021 follows:

	September 30, 2022
			Gross		Gross			Allowance
	Amortized		Unrealized		Unrealized			for		Fair
(In thousands)	Cost		Gains		Losses			Credit Losses		Value
Securities Available for Sale:
U.S government-sponsored agencies	$	244,770	$	—	$	(55,360	)	$	—	$	189,410
Mortgage-backed securities–residential		315,541		40		(48,034	)		—		267,547
SBA pool securities		33,538		2		(4,419	)		—		29,121
State and political subdivisions		2,613		—		(29	)		—		2,584
Corporate bond		10,000		—		(782	)		—		9,218
Total securities available for sale	$	606,462	$	42	$	(108,624	)	$	—	$	497,880
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	—	$	(4,869	)	$	—	$	35,131
Mortgage-backed securities–residential		63,551		—		(10,825	)		—		52,726
Total securities held to maturity	$	103,551	$	—	$	(15,694	)	$	—	$	87,857

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Securities Available for Sale:
U.S government-sponsored agencies	$	280,045	$	—	$	(7,824	)	$	272,221
Mortgage-backed securities–residential		481,062		3,849		(7,937	)		476,974
SBA pool securities		40,649		12		(1,100	)		39,561
State and political subdivisions		5,431		45		—			5,476
Corporate bond		2,500		21		—			2,521
Total securities available for sale	$	809,687	$	3,927	$	(16,861	)	$	796,753
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	7	$	(25	)	$	39,982
Mortgage-backed securities–residential		68,680		67		(269	)		68,478
Total securities held to maturity	$	108,680	$	74	$	(294	)	$	108,460

The following table presents a summary of the gross gains, gross losses and net tax benefit related to proceeds on sales of securities available for sale for the nine months ended September 30, 2022:

(In thousands)	September 30, 2022
Proceeds from sales	$	118,972
Gross gains		3
Gross losses		(6,612	)
Net tax benefit		1,581

There were no sales of securities for the quarter ended September 30, 2022.

The following tables present the Company’s available for sale and held to maturity securities with continuous unrealized losses and the approximate fair value of these investments as of September 30, 2022 and December 31, 2021.

	September 30, 2022
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	—	$	—		$	189,410	$	(55,360	)	$	189,410	$	(55,360	)
Mortgage-backed securities residential		70,005		(5,425	)		166,924		(42,609	)		236,929		(48,034	)
SBA pool securities		3,788		(282	)		24,313		(4,137	)		28,101		(4,419	)
State and political subdivisions		2,584		(29	)		—		—			2,584		(29	)
Corporate bond		9,218		(782	)		—		—			9,218		(782	)
Total securities available for sale	$	85,595	$	(6,518	)	$	380,647	$	(102,106	)	$	466,242	$	(108,624	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	35,131	$	(4,869	)	$	—	$	—		$	35,131	$	(4,869	)
Mortgage-backed securities residential		52,726		(10,825	)		—		—			52,726		(10,825	)
Total securities held to maturity	$	87,857	$	(15,694	)	$	—	$	—		$	87,857	$	(15,694	)
Total securities	$	173,452	$	(22,212	)	$	380,647	$	(102,106	)	$	554,099	$	(124,318	)

	December 31, 2021
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	243,187	$	(6,858	)	$	29,034	$	(966	)	$	272,221	$	(7,824	)
Mortgage-backed securities residential		265,403		(7,053	)		33,455		(884	)		298,858		(7,937	)
SBA pool securities		22,057		(567	)		10,562		(533	)		32,619		(1,100	)
Total securities available for sale	$	530,647	$	(14,478	)	$	73,051	$	(2,383	)	$	603,698	$	(16,861	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	24,975	$	(25	)	$	—	$	—		$	24,975	$	(25	)
Mortgage-backed securities residential		48,307		(269	)		—		—			48,307		(269	)
Total securities held to maturity	$	73,282	$	(294	)	$	—	$	—		$	73,282	$	(294	)
Total securities	$	603,929	$	(14,772	)	$	73,051	$	(2,383	)	$	676,980	$	(17,155	)

Available for sale and held to maturity securities are evaluated to determine if a decline in fair value below the amortized cost basis has resulted from a credit loss or other factors. An impairment related to credit factors would be recorded through an allowance for credit losses. The allowance is limited to the amount by which the security’s amortized cost basis exceeds the fair value. An impairment that has not been recorded through an allowance for credit losses shall be recorded through other comprehensive income, net of applicable taxes. Investment securities will be written down to fair value through the Consolidated Statements of Income when management intends to sell, or may be required to sell, the securities before they recover in value. The issuers of securities currently in a continuous loss position continue to make timely principal and interest payments and none of these securities were past due or were placed in nonaccrual status at September 30, 2022. Primarily all of the investment securities are backed by loans guaranteed by either U.S. government agencies or U.S government-sponsored entities, and management believes that default is highly unlikely given the lack of historical credit losses and governmental backing. Management believes that the unrealized losses on these securities are a function of changes in market interest rates and credit spreads, not changes in credit quality. Therefore, no allowance for credit losses was recorded at September 30, 2022.

The Company has an investment in a CRA investment fund with a fair value of $13.0 million at September 30, 2022. This investment is classified as an equity security in our Consolidated Statements of Condition. This security had a loss of $571,000 and $1.7 million for the three months and nine months ended September 30, 2022, respectively. This amount is included in the fair value adjustment for CRA equity security on the Consolidated Statements of Income.

XML

LOANS AND LEASES

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

LOANS AND LEASES

3. LOANS AND LEASES

Loans outstanding, excluding those held for sale, by general ledger classification, as of September 30, 2022 and December 31, 2021, consisted of the following:

			% of					% of
	September 30,		Totals			December 31,		Total
(Dollars in thousands)	2022		Loans			2021		Loans
Residential mortgage	$	517,755		10.00	%	$	498,300		10.37	%
Multifamily mortgage		1,856,675		35.87			1,595,866		33.20
Commercial mortgage		638,903		12.34			662,626		13.78
Commercial loans (including equipment financing) (1)		2,084,998		40.27			1,955,157		40.67
Commercial construction		4,817		0.09			20,044		0.42
Home equity lines of credit		36,375		0.70			40,803		0.85
Consumer loans, including fixed rate home equity loans		37,412		0.72			33,687		0.70
Other loans		259		0.01			238		0.01
Total loans	$	5,177,194		100.00	%	$	4,806,721		100.00	%

(1)Includes PPP loans of $1.9 million at September 30, 2022 and $13.8 million at December 31, 2021.

In determining an appropriate amount for the allowance, the Bank segments and aggregated the loan portfolio based on common characteristics. The following pool segments identified as of September 30, 2022 are based on the CECL methodology:

			% of
	September 30,		Totals
(Dollars in thousands)	2022		Loans
Primary residential mortgage	$	520,276		10.06	%
Junior lien loan on residence		40,216		0.78
Multifamily property		1,856,675		35.89
Owner-occupied commercial real estate		256,891		4.96
Investment commercial real estate		1,035,254		20.01
Commercial and industrial (1)		1,106,927		21.40
Lease financing		304,256		5.88
Construction		10,384		0.20
Consumer and other		42,506		0.82
Total loans		5,173,385		100.00	%
Net deferred costs		3,809
Total loans including net deferred costs	$	5,177,194

(1) Includes PPP loans of $1.9 million at September 30, 2022.

The portfolio classes identified as of December 31, 2021 are based on the incurred loss methodology and are segmented by federal Call Report codes:

			% of
	December 31,		Total
(Dollars in thousands)	2021		Loans
Primary residential mortgage	$	500,243		10.42	%
Home equity lines of credit		40,803		0.85
Junior lien loan on residence		3,191		0.07
Multifamily property		1,595,866		33.23
Owner-occupied commercial real estate		252,603		5.26
Investment commercial real estate		1,003,979		20.90
Commercial and industrial (1)		992,332		20.66
Lease financing		345,868		7.20
Farmland/agricultural production		6,871		0.14
Commercial construction loans		20,174		0.42
Consumer and other loans		40,828		0.85
Total loans		4,802,758		100.00	%
Net deferred costs		3,963
Total loans including net deferred costs	$	4,806,721

(1)Includes PPP loans of $13.8 million at December 31, 2021.

The following tables present the recorded investment in nonaccrual and loans past due 90 days or over still on accrual by class of loans as of September 30, 2022 and December 31, 2021:

	September 30, 2022
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	2,527	$	—
Owner-occupied commercial real estate		263		—
Investment commercial real estate		12,429		—
Commercial and industrial		505		—
Total	$	15,724	$	—

	December 31, 2021
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	1,851	$	—
Junior lien loan on residence		18		—
Owner-occupied commercial real estate		458		—
Investment commercial real estate		12,750		—
Commercial and industrial		496		—
Total	$	15,573	$	—

The following tables present the aging of the recorded investment in past due loans as of September 30, 2022 and December 31, 2021 by class of loans, excluding nonaccrual loans:

	September 30, 2022
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	323	$	—	$	—	$	323
Commercial and industrial		6,925		—		—		6,925
Total	$	7,248	$	—	$	—	$	7,248

	December 31, 2021
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	639	$	—	$	—	$	639
Commercial and industrial		7,825		142		—		7,967
Total	$	8,464	$	142	$	—	$	8,606

Credit Quality Indicators:

The Company places all commercial loans into various credit risk rating categories based on an assessment of the expected ability of the borrowers to properly service their debt. The assessment considers numerous factors including, but not limited to, current financial information on the borrower, historical payment experience, strength of any guarantor, nature of and value of any collateral, acceptability of the loan structure and documentation, relevant public information and current economic trends. This credit risk rating analysis is performed when the loan is initially underwritten and then annually based on set criteria in the loan policy.

In addition, the Bank has engaged an independent loan review firm to validate risk ratings and to ensure compliance with our policies and procedures. This review of the following types of loans is performed quarterly:

•A large sample of relationships or new lending to existing relationships greater than $1,000,000 booked since the prior review;

•All criticized and classified rated borrowers with relationship exposure of more than $500,000;

•A large sample of Pass-rated (including Pass Watch) borrowers with total relationships in excess of $1,000,000 and a small sample of Pass related relationships less than $1,000,000;

•All leveraged loans of $1,000,000 or greater;

•At least two borrowing relationships managed by each commercial banker;

•Any new Regulation “O” loan commitments over $1,000,000; and

•Any other credits requested by Bank senior management or a member of the Board of Directors and any borrower for which the reviewer determines a review is warranted based upon knowledge of the portfolio, local events, industry stresses, etc.

The review excludes borrowers with commitments of less than $500,000.

The Company uses the following regulatory definitions for criticized and classified risk ratings:

Special Mention: These loans have a potential weakness that deserves Management’s close attention. If left uncorrected, the potential weaknesses may result in deterioration of the repayment prospects for the loans or of the institution’s credit position at some future date.

Substandard: These loans are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful: These loans have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, based on currently existing facts, conditions and values.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

With the adoption of CECL, loans that are in the process of or expected to be in foreclosure are deemed to be collateral dependent with respect to measuring potential loss and allowance adequacy and are individually evaluated by Management. Loans that do not share common risk characteristics are also evaluated on an individual basis. All other loans are evaluated using a non-linear discounted cashflow methodology for measuring potential loss and allowance adequacy.

The following is a summary of the credit risk profile of loans by internally assigned grade as of September 30, 2022 based on originations for the periods indicated; the years represent the year of origination for non-revolving loans:

	Grade as of September 30, 2022 for Loans Originated During
											2017				Revolving-
(In thousands)	2022		2021		2020		2019		2018		and Prior		Revolving		Term		Total
Primary residential mortgage:
Pass	$	91,142	$	94,871	$	63,091	$	38,422	$	28,052	$	201,286	$	—	$	694	$	517,558
Special mention		—		—		—		—		—		98		—		—		98
Substandard		—		—		554		1,062		282		722		—		—		2,620
Doubtful		—		—		—		—		—		—		—		—		—
Total primary residential mortgages		91,142		94,871		63,645		39,484		28,334		202,106		—		694		520,276
Junior lien loan on residence:
Pass		1,545		185		46		664		354		1,047		35,867		—		39,708
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		508		—		508
Doubtful		—		—		—		—		—		—		—		—		—
Total junior lien loan on residence		1,545		185		46		664		354		1,047		36,375		—		40,216
Multifamily property:
Pass		449,363		683,097		118,815		229,869		43,062		317,365		981		1,830		1,844,382
Special mention		—		—		—		2,860		—		3,518		—		—		6,378
Substandard		—		—		—		—		—		5,915		—		—		5,915
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily property		449,363		683,097		118,815		232,729		43,062		326,798		981		1,830		1,856,675
Owner-occupied commercial real estate:
Pass		12,216		44,107		20,990		12,335		22,587		134,701		764		8,739		256,439
Special mention		—		—		—		—		—		189		—		—		189
Substandard		—		—		—		—		—		263		—		—		263
Doubtful		—		—		—		—		—		—		—		—		—
Total owner-occupied commercial real estate		12,216		44,107		20,990		12,335		22,587		135,153		764		8,739		256,891
Investment commercial real estate:
Pass		149,630		155,537		64,245		168,225		93,927		317,770		7,128		21,831		978,293
Special mention		—		—		—		13,069		—		13,379		—		14,588		41,036
Substandard		12,429		—		—		3,496		—		—		—		—		15,925
Doubtful		—		—		—		—		—		—		—		—		—
Total investment commercial real estate		162,059		155,537		64,245		184,790		93,927		331,149		7,128		36,419		1,035,254
Commercial and industrial:
Pass		277,681		250,700		87,541		89,923		30,915		6,107		298,246		33,082		1,074,195
Special mention		16,333		1,788		2,322		4,265		194		—		7,325		—		32,227
Substandard		—		—		—		—		283		186		36		—		505
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial		294,014		252,488		89,863		94,188		31,392		6,293		305,607		33,082		1,106,927
Lease financing:
Pass		51,120		76,975		61,758		56,022		34,009		20,422		—		—		300,306
Special mention		2,179		—		—		—		—		—		—		—		2,179
Substandard		—		—		—		1,771		—		—		—		—		1,771
Doubtful		—		—		—		—		—		—		—		—		—
Total lease financing		53,299		76,975		61,758		57,793		34,009		20,422		—		—		304,256
Construction loans:

Pass		—		—		—		1,444		—		—		4,848		4,092		10,384
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial construction loans		—		—		—		1,444		—		—		4,848		4,092		10,384
Consumer and other loans:
Pass		—		396		200		13		—		5,980		32,661		3,256		42,506
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer and other loans		—		396		200		13		—		5,980		32,661		3,256		42,506
Total:
Pass		1,032,697		1,305,868		416,686		596,917		252,906		1,004,678		380,495		73,524		5,063,771
Special mention		18,512		1,788		2,322		20,194		194		17,184		7,325		14,588		82,107
Substandard		12,429		—		554		6,329		565		7,086		544		—		27,507
Doubtful		—		—		—		—		—		—		—		—		—
Total Loans	$	1,063,638	$	1,307,656	$	419,562	$	623,440	$	253,665	$	1,028,948	$	388,364	$	88,112	$	5,173,385

As of December 31, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans was as follows:

			Special
(In thousands)	Pass		Mention		Substandard		Doubtful
Primary residential mortgage	$	494,444	$	557	$	5,242	$	—
Home equity lines of credit		40,274		—		529		—
Junior lien loan on residence		3,173		—		18		—
Multifamily property		1,579,776		7,720		8,370		—
Owner-occupied commercial real estate		251,229		663		711		—
Investment commercial real estate		901,877		87,297		14,805		—
Commercial and industrial		951,127		20,178		21,027		—
Lease financing		345,868		—		—		—
Farmland/agricultural production		6,871		—		—		—
Commercial construction loans		20,099		75		—		—
Consumer and other loans		40,828		—		—		—
Total	$	4,635,566	$	116,490	$	50,702	$	—

At September 30, 2022, $13.0 million of substandard loans were also considered individually evaluated, compared to $15.7 million at December 31, 2021.

Loan Modifications:

The CARES Act allowed financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria were met. This relief could be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that deferred or delayed the payment of principal or interest or changed the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40.

As of September 30, 2022, the Bank had modified 542 loans under the CARES Act with a balance of $947.0 million resulting in the deferral of principal and/or interest. There are no outstanding deferrals as of September 30, 2022.

Troubled Debt Restructurings:

The Company has allocated $2.4 million of specific reserves on TDRs as of September 30, 2022. The Company did not allocate specific reserves to customers whose loan terms had been modified TDRs as of December 31, 2021. There were no unfunded commitments to lend additional amounts to customers with outstanding loans that are classified as TDRs.

There were no loans modified as TDRs during the three-month period ended September 30, 2022.

The following table presents loans by class modified as TDRs during the three-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		2	$	455	$	455
Total		2	$	455	$	455

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2022:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		1	$	12,429	$	12,429
Total		1	$	12,429	$	12,429

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Primary residential mortgage		3	$	1,277	$	1,277
Commercial and industrial		1		2,194		2,194
Total		4	$	3,471	$	3,471

The identification of the TDRs did not have a material impact on the allowance for credit losses.

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2022:

	Number of		Recorded
(Dollars in thousands)	Loans		Investment
Primary residential mortgage		1	$	145
Total		1	$	145

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Primary residential mortgage		1	$	221	$	221
Total		1	$	221	$	221

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. The modification of the terms of such loans may include one or more of the following: (1) a reduction of the stated interest rate of the loan to a rate that is lower than the current market rate for new debt with similar risk; (2) an extension of an interest only period for a predetermined period of time; (3) an extension of the maturity date; or (4) an extension of the amortization period over which future payments will be computed. At the time a loan is restructured, the Bank performs a full underwriting analysis, which includes, at a minimum, obtaining current financial statements and tax returns, copies of all leases, and an updated independent appraisal of the property. A loan will continue to accrue interest if it can be reasonably determined that the borrower should be able to perform under the modified terms, that the loan has not been chronically delinquent (both to debt service and real estate taxes) or in nonaccrual status since its inception, and that there have been no charge-offs on the loan. Restructured loans with previous charge-offs would not accrue interest at the time of the TDR. At a minimum, six consecutive months of contractual payments would need to be made on a restructured loan before returning it to accrual status. Once a loan is classified as a TDR, the loan is reported as a TDR until the loan is paid in full, sold or charged-off. In rare circumstances, a loan may be removed from TDR status if it meets the requirements of ASC 310-40-50-2.

XML

ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2022

Credit Loss [Abstract]

ALLOWANCE FOR CREDIT LOSSES

4. ALLOWANCE FOR CREDIT LOSSES

On January 1, 2022, the Company adopted ASU 2016-13, which replaced the incurred loss methodology with an expected loss methodology that is referred to as the CECL methodology. See Note 1, Summary of Significant Accounting Policies for additional information on Topic 326.

The Company does not estimate expected credit losses on accrued interest receivable (“AIR”) on loans, as AIR is reversed or written off when the full collection of the AIR related to a loan becomes doubtful. AIR on loans totaled $16.1 million at September 30, 2022 and $19.1 million at December 31, 2021.

The following table presents the loan balances by segment, and the corresponding balances in the allowance as of September 30, 2022. For the period ended September 30, 2022, the allowance was based on the CECL methodology.

	September 30, 2022
			Ending ACL				Ending ACL
	Total		Attributable		Total		Attributable
	Individually		To Individually		Loans		To Loans				Total
	Evaluated		Evaluated		Collectively		Collectively		Total		Ending
(In thousands)	Loans		Loans		Evaluated		Evaluated		Loans		ACL
Primary residential mortgage	$	133	$	—	$	520,143	$	2,279	$	520,276	$	2,279
Junior lien loan on residence		—		—		40,216		154		40,216		154
Multifamily property		—		—		1,856,675		15,317		1,856,675		15,317
Owner-occupied commercial real estate		263		—		256,628		4,907		256,891		4,907
Investment commercial real estate		12,429		2,429		1,022,825		8,897		1,035,254		11,326
Commercial and industrial		222		—		1,106,705		21,838		1,106,927		21,838
Lease financing		—		—		304,256		3,238		304,256		3,238
Construction loans		—		—		10,384		128		10,384		128
Consumer and other loans		—		—		42,506		496		42,506		496
Total ACL	$	13,047	$	2,429	$	5,160,338	$	57,254	$	5,173,385	$	59,683

The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2021. For the year ended December 31, 2021, the allowance was calculated based on the incurred loss methodology:

	December 31, 2021
	Total		Ending ALLL		Total		Ending ALLL
	Loans		Attributable		Loans		Attributable
	Individually		To Loans		Collectively		To Loans
	Evaluated		Individually		Evaluated		Collectively				Total
	For		Evaluated for		For		Evaluated for		Total		Ending
(In thousands)	Impairment		Impairment		Impairment		Impairment		Loans		ALLL
Primary residential mortgage	$	2,242	$	—	$	498,001	$	1,432	$	500,243	$	1,432
Home equity lines of credit		—		—		40,803		83		40,803		83
Junior lien loan on residence		18		—		3,173		5		3,191		5
Multifamily property		—		—		1,595,866		9,806		1,595,866		9,806
Owner-occupied commercial real estate		458		—		252,145		1,998		252,603		1,998
Investment commercial real estate		12,750		4,234		991,229		22,849		1,003,979		27,083
Commercial and industrial		2,584		—		989,748		17,509		992,332		17,509
Lease financing		—		—		345,868		3,440		345,868		3,440
Farmland/agricultural production		—		—		6,871		84		6,871		84
Commercial construction loans		—		—		20,174		42		20,174		42
Consumer and other loans		—		—		40,828		215		40,828		215
Total ALLL	$	18,052	$	4,234	$	4,784,706	$	57,463	$	4,802,758	$	61,697

Individually evaluated loans include nonaccrual loans of $13.0 million at September 30, 2022 and $15.6 million at December 31, 2021. This includes a $12.4 million commercial real estate loan that was placed on nonaccrual status in the third quarter of 2021, which resulted in the Company recording a charge-off of $7.4 million during the fourth quarter of 2021. Individually evaluated loans did not include any performing TDR loans at September 30, 2022 but included $2.5 million of performing TDR loans at December 31, 2021. The allowance allocated to TDR loans totaled $2.4 million at September 30, 2022, of which all was allocated to one nonaccrual loan. At December 31, 2021, there was no allowance allocated to TDR loans. All accruing TDR loans were paying in accordance with restructured terms as of September 30, 2022. The Company has not committed to lend additional amounts as of September 30, 2022 to customers with outstanding loans that are classified as TDR loans.

The allowance for credit losses was $59.7 million as of September 30, 2022, compared to $61.7 million at December 31, 2021. The decline in the allowance for credit losses (“ACL”) was primarily due to the Day 1 reduction of $5.5 million incurred in connection with the implementation of CECL on January 1, 2022 partially offset by the 2022 provision for credit losses of $4.4 million. The allowance for credit losses as a percentage of loans was 1.15 percent and 1.28 percent at September 30, 2022 and December 31, 2021, respectively. The allowance for credit loss ratio declined due to the Day 1 reduction and a 2022 provision for credit losses based on 2022 loan growth in lower risk segments that carry lower ACL coverage.

Under Topic 326, the Company's methodology for determining the ACL on loans is based upon key assumptions, including historic net charge-off factors, economic forecasts, reversion periods, prepayments and qualitative adjustments. The allowance is measured on a collective, or pool, basis when similar risk characteristics exist. Loans that do not share common risk characteristics are evaluated on an individual basis and are excluded from the collective evaluation.

The following tables present collateral dependent loans individually evaluated by segment as of September 30, 2022:

	September 30, 2022
	Unpaid						Average
	Principal		Recorded		Related		Individually Evaluated
(In thousands)	Balance		Investment		Allowance		Loans
With no related allowance recorded:
Primary residential mortgage	$	136	$	133	$	—	$	249
Owner-occupied commercial real estate		301		263		—		307
Commercial and industrial		241		222		—		254
Total loans with no related allowance	$	678	$	618	$	—	$	810
With related allowance recorded:
Investment commercial real estate	$	12,500	$	12,429	$	2,429	$	12,531
Total loans with related allowance	$	12,500	$	12,429	$	2,429	$	12,531
Total loans individually evaluated	$	13,178	$	13,047	$	2,429	$	13,341

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2021 (the average impaired loans on the following tables represent year to date impaired loans):

	December 31, 2021
	Unpaid						Average
	Principal		Recorded		Specific		Impaired
(In thousands)	Balance		Investment		Reserves		Loans
With no related allowance recorded:
Primary residential mortgage	$	2,453	$	2,242	$	—	$	1,818
Owner-occupied commercial real estate		492		458		—		540
Junior lien loan on residence		18		18		—		3
Commercial and industrial		4,549		2,584		—		3,153
Total loans with no related allowance	$	7,512	$	5,302	$	—	$	5,514
With related allowance recorded:
Investment commercial real estate	$	19,887	$	12,750	$	4,234	$	6,034
Total loans with related allowance	$	19,887	$	12,750	$	4,234	$	6,034
Total loans individually evaluated for impairment	$	27,399	$	18,052	$	4,234	$	11,548

Interest income recognized on individually evaluated loans for the three and nine months ended September 30, 2022 and 2021 was not material. The Company did not recognize any income on non-accruing impaired loans for the three and nine months ended September 30, 2022 and 2021.

The activity in the allowance for credit losses for the three months ended September 30, 2022 is summarized below:

	July 1,										September 30,
	2022										2022
	Beginning							Provision			Ending
(In thousands)	ACL		Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	2,154	$	—		$	15	$	110		$	2,279
Junior lien loan on residence		151		—			—		3			154
Multifamily property		15,790		—			—		(473	)		15,317
Owner-occupied commercial real estate		4,660		—			—		247			4,907
Investment commercial real estate		10,969		—			—		357			11,326
Commercial and industrial		20,998		—			—		840			21,838
Lease financing		3,352		—			—		(114	)		3,238
Construction loans		359		—			—		(231	)		128
Consumer and other loans		589		(19	)		—		(74	)		496
Total ACL	$	59,022	$	(19	)	$	15	$	665		$	59,683

(1) Provision to roll forward the ACL excludes a credit of $66,000 for off-balance sheet commitments.

The activity in the allowance for credit losses for the nine months ended September 30, 2022 is summarized below:

	December 31,													September 30,
	2021													2022
	Prior to adoption		Impact of								Provision			Ending
(In thousands)	of Topic 326		adopting Topic 326			Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	1,510	$	717		$	—		$	15	$	37		$	2,279
Junior lien loan on residence		88		83			(3	)		—		(14	)		154
Multifamily property		9,806		4,072			—			—		1,439			15,317
Owner-occupied commercial real estate		1,998		2,902			—			—		7			4,907
Investment commercial real estate		27,083		(13,589	)		(250	)		—		(1,918	)		11,326
Commercial and industrial		17,509		(657	)		—			4		4,982			21,838
Lease financing		3,440		156			—			—		(358	)		3,238
Construction loans		48		361			—			—		(281	)		128
Consumer and other loans		215		419			(46	)		2		(94	)		496
Total ACL	$	61,697	$	(5,536	)	$	(299	)	$	21	$	3,800		$	59,683

(1) Provision to roll forward the ACL excludes a provision of $623,000 for off-balance sheet commitments.

For the accounting policy on the allowance for loan losses that was in effect prior to the adoption of Topic 326, refer to Note 1, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year-ended December 31, 2021. The

activity in the allowance for loan and lease losses for the three months and nine months ended September 30, 2021 is summarized below:

	July 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,167	$	—		$	—	$	(92	)	$	2,075
Home equity lines of credit		123		—			—		(4	)		119
Junior lien loan on residence		8		—			—		(1	)		7
Multifamily property		10,615		—			—		(47	)		10,568
Owner-occupied commercial real estate		2,447		—			—		(154	)		2,293
Investment commercial real estate		27,886		—			—		2,098			29,984
Commercial and industrial		16,565		(19	)		50		(330	)		16,266
Lease financing		3,275		—			—		94			3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		159		—			—		6			165
Consumer and other loans		217		(4	)		1		15			229
Total ALLL	$	63,505	$	(23	)	$	51	$	1,600		$	65,133

	January 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,905	$	(12	)	$	—	$	(818	)	$	2,075
Home equity lines of credit		218		—			85		(184	)		119
Junior lien loan on residence		15		—			—		(8	)		7
Multifamily property		9,945		—			—		623			10,568
Owner-occupied commercial real estate		3,050		—			—		(757	)		2,293
Investment commercial real estate		27,713		—			—		2,271			29,984
Commercial and industrial		19,047		(5,019	)		60		2,178			16,266
Lease financing		3,936		—			—		(567	)		3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		158		—			—		7			165
Consumer and other loans		279		(24	)		9		(35	)		229
Total ALLL	$	67,309	$	(5,055	)	$	154	$	2,725		$	65,133

Allowance for Credit Losses on Off Balance Sheet Commitments

The following table presets the activity in the ACL for off balance sheet commitments for the nine months ended September 30, 2022:

	December 31,
	2021						September 30,
	Prior to adoption		Impact of		Provision		2022
(In thousands)	of Topic 326		adopting Topic 326		(Credit)		Ending ACL
Off balance sheet commitments	$	—	$	302	$	623	$	925
Total ACL	$	—	$	302	$	623	$	925

XML

DEPOSITS

9 Months Ended

Sep. 30, 2022

Deposits [Abstract]

DEPOSITS

5. DEPOSITS

Certificates of deposit that met or exceeded $250,000 totaled $107.8 million and $140.4 million at September 30, 2022 and December 31, 2021, respectively. These totals excluded brokered certificates of deposit.

The following table sets forth the details of total deposits as of September 30, 2022 and December 31, 2021:

	September 30,				December 31,
	2022				2021
(Dollars in thousands)
Noninterest-bearing demand deposits	$	1,317,954	24.87	%	$	956,482	18.16	%
Interest-bearing checking (1)		2,149,629	40.57			2,287,894	43.45
Savings		166,821	3.15			154,914	2.94
Money market		1,178,112	22.23			1,307,051	24.82
Certificates of deposit - retail		345,047	6.51			409,608	7.78
Certificates of deposit - listing service		30,647	0.58			31,382	0.60
Subtotal deposits		5,188,210	97.91			5,147,331	97.75
Interest-bearing demand - Brokered		85,000	1.60			85,000	1.61
Certificates of deposit - Brokered		25,974	0.49			33,818	0.64
Total deposits	$	5,299,184	100.00	%	$	5,266,149	100.00	%

(1)Interest-bearing checking includes $567.3 million at September 30, 2022 and $647.8 million at December 31, 2021 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace program.

The scheduled maturities of certificates of deposit, including brokered certificates of deposit, as of September 30, 2022, are as follows:

(In thousands)
2022	$	84,432
2023		183,096
2024		76,793
2025		46,231
2026		10,314
2027 and later		802
Total	$	401,668

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

6. FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS

At September 30, 2022, the Company had $32.4 million of overnight borrowings at the FHLB at a rate of 3.29 percent compared to no overnight borrowings as of December 31, 2021. At September 30, 2022, unused short-term overnight borrowing commitments totaled $1.8 billion from the FHLB, $22.0 million from correspondent banks and $1.7 billion at the Federal Reserve Bank of New York.

XML

BUSINESS SEGMENTS

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

BUSINESS SEGMENTS

7. BUSINESS SEGMENTS

The Company assesses its results among two operating segments, Banking and Peapack Private. Management uses certain methodologies to allocate income and expense to the business segments. A funds transfer pricing methodology is used to assign interest income and interest expense. Certain indirect expenses are allocated to segments. These include support unit expenses such as technology and operations and other support functions. Taxes are allocated to each segment based on the effective rate for the period shown.

Banking

The Banking segment includes: commercial (includes C&I and equipment finance), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support and sales.

Peapack Private

Peapack Private which includes the operations of PGB Trust & Investments of Delaware, consists of: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian; and other financial planning, tax preparation and advisory services.

The following tables present the statements of income and total assets for the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	43,327	$	2,198	$	45,525
Noninterest income		2,955		13,428		16,383
Total income		46,282		15,626		61,908
Provision for credit losses		599		—		599
Compensation and benefits		15,343		7,313		22,656
Premises and equipment expense		3,908		626		4,534
FDIC expense		510		—		510
Other operating expense		3,235		2,625		5,860
Total operating expense		23,595		10,564		34,159
Income before income tax expense		22,687		5,062		27,749
Income tax expense		6,193		1,430		7,623
Net income	$	16,494	$	3,632	$	20,126

	Three Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	33,780	$	1,431	$	35,211
Noninterest income		3,476		14,305		17,781
Total income		37,256		15,736		52,992
Provision for loan and lease losses		1,600		—		1,600
Compensation and employee benefits		13,079		6,780		19,859
Premises and equipment expense		3,861		598		4,459
FDIC insurance expense		555		—		555
Other operating expense		4,657		2,655		7,312
Total operating expense		23,752		10,033		33,785
Income before income tax expense		13,504		5,703		19,207
Income tax expense		3,556		1,480		5,036
Net income	$	9,948	$	4,223	$	14,171

	Nine Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	122,404	$	5,636	$	128,040
Noninterest income		6,645		42,960		49,605
Total income		129,049		48,596		177,645
Provision for credit losses		4,423		—		4,423
Compensation and employee benefits		47,222		19,765		66,987
Premises and equipment expense		11,674		2,147		13,821
FDIC insurance expense		1,484		—		1,484
Other operating expense		10,613		7,483		18,096
Total operating expense		75,416		29,395		104,811
Income before income tax expense		53,633		19,201		72,834
Income tax expense		14,117		5,050		19,167
Net income	$	39,516	$	14,151	$	53,667
Total assets at period end	$	5,999,393	$	87,868	$	6,087,261

	Nine Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	96,405	$	4,444	$	100,849
Noninterest income		12,810		40,469		53,279
Total income		109,215		44,913		154,128
Provision for loan and lease losses		2,725		—		2,725
Compensation and employee benefits		43,876		17,883		61,759
Premises and equipment expense		10,950		1,696		12,646
FDIC insurance expense		1,669		—		1,669
Other operating expense		10,865		7,524		18,389
Total operating expense		70,085		27,103		97,188
Income before income tax expense		39,130		17,810		56,940
Income tax expense		10,436		4,737		15,173
Net income	$	28,694	$	13,073	$	41,767
Total assets at period end	$	6,144,190	$	96,095	$	6,240,285

XML

FAIR VALUE

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE

8. FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate the fair value:

Investment Securities: The fair values for investment securities are determined by quoted market prices (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3).

Loans Held for Sale, at Fair Value: The fair value of loans held for sale is determined using quoted prices for similar assets, adjusted for specific attributes of that loan or other observable market data, such as outstanding commitments from third party investors (Level 2).

Derivatives: The fair values of derivatives are based on valuation models using observable market data as of the measurement date (Level 2). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third-party pricing services.

Individually Evaluated Loans: The fair value of collateral dependent loans with specific allocations of the allowance for credit losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Individually evaluated loans may, in some cases, also be measured by the discounted cash flow methodology where payments are anticipated. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (“OREO") are measured at fair value, less estimated costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Appraisals for both collateral-dependent impaired loans and other real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by Management. Once received, a third party conducts a review of the appraisal for compliance with the Uniform Standards of Professional Appraisal Practice and appropriate analysis methods for the type of property. Subsequently, a member of the Credit Department reviews the assumptions and approaches utilized in the appraisal, as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Appraisals on collateral dependent impaired loans and other real estate owned (consistent for all loan types) are obtained on an annual basis, unless a significant change in the market or other factors warrants a more frequent appraisal. On an annual basis, Management compares the actual selling price of any collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value for other properties. The most recent analysis performed indicated that a discount up to 15 percent should be applied to appraisals on properties. The discount is determined based on the nature of the underlying properties, aging of appraisals and other factors. For each collateral-dependent impaired loan, we consider other factors, such as certain indices or other market information, as well as property specific circumstances to determine if an adjustment to the appraised value is needed. In situations where there is evidence of change in value, the Bank will determine if there is a need for an adjustment to the specific reserve on the collateral dependent impaired loans. When the Bank applies an interim adjustment, it generally shows the adjustment as an incremental specific reserve against the loan until it has received the full updated appraisal. All collateral-dependent impaired loans and other real estate owned valuations were supported by an appraisal less than 12 months old or in the process of obtaining an appraisal as of September 30, 2022.

The following tables summarize, at the dates indicated, assets measured at fair value on a recurring basis, including financial assets for which the Corporation has elected the fair value option:

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale:
U.S. government-sponsored agencies	$	189,410	$	—	$	189,410	$	—
Mortgage-backed securities-residential		267,547		—		267,547		—
SBA pool securities		29,121		—		29,121		—
State and political subdivisions		2,584		—		2,584		—
Corporate bond		9,218		—		9,218		—
CRA investment fund		12,957		12,957		—		—
Loans held for sale, at fair value		1,333		—		1,333		—
Derivatives:
Cash flow hedges		10,462		—		10,462		—
Loan level swaps		41,018		—		41,018		—
Total	$	563,650	$	12,957	$	550,693	$	—
Liabilities:
Derivatives:
Loan level swaps	$	41,018	$	—	$	41,018	$	—
Total	$	41,018	$	—	$	41,018	$	—

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies	$	272,221	$	—	$	272,221	$	—
Mortgage-backed securities-residential		476,974		—		476,974		—
SBA pool securities		39,561		—		39,561		—
State and political subdivisions		5,476		—		5,476		—
Corporate bond		2,521		—		2,521		—
CRA investment fund		14,685		14,685		—		—
Loans held for sale, at fair value		3,040		—		3,040		—
Derivatives:
Loan level swaps		32,326		—		32,326		—
Total	$	846,804	$	14,685	$	832,119	$	—
Liabilities:
Derivatives:
Cash flow hedges	$	3,479	$	—	$	3,479	$	—
Loan level swaps		34,569		—		34,569		—
Total	$	38,048	$	—	$	38,048	$	—

The Company has elected the fair value option for certain loans held for sale. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Interest income is recorded based on the contractual terms of the loan and in accordance with the Company’s policy on loans held for investment. None of these loans are 90 days or more past due nor on nonaccrual as of September 30, 2022 and December 31, 2021.

The following tables present residential loans held for sale, at fair value at the dates indicated:

(In thousands)	September 30, 2022		December 31, 2021
Residential loans contractual balance	$	1,326	$	2,992
Fair value adjustment		7		48
Total fair value of residential loans held for sale	$	1,333	$	3,040

There were no transfers between Level 1 and Level 2 during the nine months ended September 30, 2022.

The following tables summarize, at the dates indicated, assets measured at fair value on a non-recurring basis:

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Individually evaluated loans:
Investment commercial real estate	$	10,000	$	—	$	—	$	10,000

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Investment commercial real estate	$	8,516	$	—	$	—	$	8,516

The carrying amounts and estimated fair values of financial instruments at September 30, 2022 are as follows:

			Fair Value Measurements at September 30, 2022 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	108,280	$	108,280	$	—	$	—	$	108,280
Securities available for sale		497,880		—		497,880		—		497,880
Securities held to maturity		103,551		—		87,857		—		87,857
CRA investment fund		12,957		12,957		—		—		12,957
FHLB and FRB stock		14,986		—		—		—	N/A
Loans held for sale, at fair value		1,333		—		1,333		—		1,333
Loans held for sale, at lower of cost or fair value		10,102		—		11,152		—		11,152
Loans, net of allowance for credit losses		5,117,511		—		—		4,842,877		4,842,877
Accrued interest receivable		17,816		—		1,756		16,060		17,816
Accrued interest receivable loan level swaps (1)		2,048		—		2,048		—		2,048
Cash flow hedges		10,462		—		10,462		—		10,462
Loan level swaps		41,018		—		41,018		—		41,018
Financial liabilities
Deposits	$	5,299,184	$	4,897,516	$	387,933	$	—	$	5,285,449
Short-term borrowings		32,369		—		32,369		—		32,369
Subordinated debt		132,916		—		—		127,062		127,062
Accrued interest payable		2,910		1,187		357		1,366		2,910
Accrued interest payable loan level swaps (2)		2,048		—		2,048		—		2,048
Loan level swap		41,018		—		41,018		—		41,018

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

The carrying amounts and estimated fair values of financial instruments at December 31, 2021 are as follows:

			Fair Value Measurements at December 31, 2021 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	146,804	$	146,804	$	—	$	—	$	146,804
Securities available for sale		796,753		—		796,753		—		796,753
Securities held to maturity		108,680		—		108,460		—		108,460
CRA investment fund		14,685		14,685		—		—		14,685
FHLB and FRB stock		12,950		—		—		—	N/A
Loans held for sale, at fair value		3,040		—		3,040		—		3,040
Loans held for sale, at lower of cost or fair value		34,051		—		37,538		—		37,538
Loans, net of allowance for loan and lease losses		4,745,024		—		—		4,767,293		4,767,293
Accrued interest receivable		21,589		—		2,443		19,146		21,589
Accrued interest receivable loan level swaps (1)		4,842		—		4,842		—		4,842
Loan level swaps		32,326		—		32,326		—		32,326
Financial liabilities
Deposits	$	5,266,149	$	4,791,341	$	476,659	$	—	$	5,268,000
Subordinated debt		132,701		—		—		140,556		140,556
Accrued interest payable		651		130		446		75		651
Accrued interest payable loan level swaps (2)		4,842		—		4,842		—		4,842
Cash flow hedges		3,479		—		3,479		—		3,479
Loan level swaps		34,569		—		34,569		—		34,569

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS

9 Months Ended

Sep. 30, 2022

Revenue From Contract With Customer [Abstract]

REVENUE FROM CONTRACTS WITH CUSTOMERS

9. REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Company’s revenue from contracts with customers within the scope of ASC 606 is recognized within noninterest income.

The following tables present the sources of noninterest income for the periods indicated:

	For the Three Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	129	$	117
Interchange income		356		374
Other		575		468
Wealth management fees (1)		12,943		13,860
Corporate advisory fee income		102		84
Other (2)		2,278		2,878
Total noninterest other income	$	16,383	$	17,781

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	360	$	297
Interchange income		1,077		1,061
Other		1,638		1,343
Wealth management fees (1)		41,668		39,025
Corporate advisory fee income		1,696		1,303
Gains/(losses) on sales of OREO		—		51
Other (2)		3,166		10,199
Total noninterest other income	$	49,605	$	53,279

(1)Includes investment brokerage fees.

(2)All of the other category is outside the scope of ASC 606.

The following table presents the sources of noninterest income by operating segment for the periods indicated:

	For the Three Months Ended  September 30,						For the Three Months Ended  September 30,
	2022						2021
(In thousands)			Wealth						Wealth
Revenue by Operating Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	129	$	—	$	129	$	117	$	—	$	117
Interchange income		356		—		356		374		—		374
Other		575		—		575		468		—		468
Wealth management fees (1)		—		12,943		12,943		—		13,860		13,860
Corporate advisory fee income		102		—		102		84		—		84
Other (2)		1,793		485		2,278		2,433		445		2,878
Total noninterest income	$	2,955	$	13,428	$	16,383	$	3,476	$	14,305	$	17,781

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
(In thousands)	2022						2021
Revenue by Operating			Wealth						Wealth
Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	360	$	—	$	360	$	297	$	—	$	297
Interchange income		1,077		—		1,077		1,061		—		1,061
Other		1,638		—		1,638		1,343		—		1,343
Wealth management fees (1)		—		41,668		41,668		—		39,025		39,025
Corporate advisory fee income		1,696		—		1,696		1,303		—		1,303
Gains/(losses) on sales of OREO		—		—		—		51		—		51
Other (2)		1,874		1,292		3,166		8,755		1,444		10,199
Total noninterest income	$	6,645	$	42,960	$	49,605	$	12,810	$	40,469	$	53,279

(1)Includes investment brokerage fees.

(2)All of the other category is outside the scope of ASC 606.

A description of the Company’s revenue streams accounted for under ASC 606 follows:

Service charges on deposit accounts: The Company earns fees from its deposit customers for certain transaction account maintenance, and overdraft fees. Transaction-based fees, which include services such as ATM use fees, stop payment charges, statement rendering, and ACH fees, are recognized at the time the transaction is executed as that is the point in time the Company fulfills the customer’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the customer’s account balance.

Interchange income: The Company earns interchange fees from debit cardholder transactions conducted through the Visa payment network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction value and are recognized daily, concurrently with the transaction processing services provided to the cardholder. Interchange income is presented gross of cardholder rewards. Cardholder rewards are included in other expenses in the statement of income. Cardholder rewards reduced interchange income for the third quarter of 2022 by $36,000 compared to $34,000 for the same quarter in 2021. Cardholder rewards reduced interchange income by $100,000 and $95,000 for the nine months ended September 30, 2022 and 2021, respectively.

Wealth management fees (gross): The Company earns wealth management fees from its contracts with wealth management clients to manage assets for investment, and/or to transact on their accounts. These fees are primarily earned over time as the Company charges its clients on a monthly or quarterly basis in accordance with its investment advisory agreements. Fees are generally assessed based on a tiered scale of the market value of AUM at month end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).

Investment brokerage fees (net): The Company earns fees from investment brokerage services provided to its customers by a third-party service provider. The Company receives commissions from the third-party service provider twice a month based upon

customer activity for the month. The fees are recognized monthly, and a receivable is recorded until commissions are generally paid by the 15th of the following month. Because the Company (i) acts as an agent in arranging the relationship between the customer and the third-party service provider and (ii) does not control the services rendered to the customers, investment brokerage fees are presented net of related costs.

Corporate advisory fee income: The Company provides our clients with financial advisory and underwriting services. Investment banking revenues, which includes mergers and acquisition advisory fees and private placement fees, are recorded when the performance obligation for the transaction is satisfied under the terms of each engagement. Reimbursed expenses are reported in other revenue on the statement of operations. Expenses related to investment banking are recognized as non-compensation expenses on the statement of operations. Amounts received and unearned are included on the statement of financial condition. Expenses related to investment banking deals not completed are recognized in non-compensation expenses on the statement of operations.

The Company’s mergers and acquisition advisory fees generally consist of a nonrefundable up-front fee and success fee. The nonrefundable fee is recorded as deferred revenue upon receipt and recognized at a point in time when the performance obligation is satisfied, or when the transaction is deemed by management to be terminated. Management’s judgement is required in determining when a transaction is considered to be terminated.

Gains/(losses) on sales of OREO: The Company records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed. When the Company finances the sale of OREO to the buyer, the Company assesses whether the buyer is committed to perform its obligations under the contract and whether collectability of the transaction price is probable. Once these criteria are met, the OREO asset is derecognized and the gain or loss on sale is recorded upon the transfer of control of the property to the buyer. In determining the gain or loss on the sale, the Company adjusts the transaction price and related gain/(loss) on sale if a significant financing component is present. The company recorded a gain on the sale of OREO of $51,000 for the nine months ended September 30, 2021.

Other: All of the other income items are outside the scope of ASC 606.

XML

OTHER OPERATING EXPENSES

9 Months Ended

Sep. 30, 2022

Other Income And Expenses [Abstract]

OTHER OPERATING EXPENSES

10. OTHER OPERATING EXPENSES

The following table presents the major components of other operating expenses for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Professional and legal fees	$	1,180	$	1,565	$	3,630	$	4,007
Telephone		403		342		1,085		988
Advertising		574		386		1,545		1,004
Amortization of intangible assets		384		431		1,204		1,167
Branch restructure		—		—		372		228
Write-off of subordinated debt costs		—		—		—		648
Other operating expenses		3,319		3,238		9,587		8,997
Total other operating expenses	$	5,860	$	5,962	$	17,423	$	17,039

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

9 Months Ended

Sep. 30, 2022

Stockholders Equity Note [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

11. ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS)

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the three months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Three Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	July 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(59,066	)	$	(23,563	)	$	—		$	(23,563	)	$	(82,629	)
Gain/(loss) on cash flow hedges		339			7,349			(42	)		7,307			7,646
Accumulated other comprehensive gain/(loss),    net of tax	$	(58,727	)	$	(16,214	)	$	(42	)	$	(16,256	)	$	(74,983	)

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Three Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	July 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(956	)	$	(4,293	)	$	—	$	(4,293	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(4,459	)		673			—		673			(3,786	)
Accumulated other comprehensive gain/(loss),    net of tax	$	(5,415	)	$	(3,620	)	$	—	$	(3,620	)	$	(9,035	)

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the three months ended September 30, 2022 and 2021:

	Three Months Ended
	September 30,
(In thousands)	2022			2021		Affected Line Item in Income Statement
Unrealized gains/(losses) on securities    available for sale:
Reclassification adjustment for gains on termination    of swaps included in net income	$	(58	)	$	—	Other income
Tax effect		16			—	Income tax expense
Total reclassifications, net of tax	$	(42	)	$	—

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the nine months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Nine Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	January 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(9,873	)	$	(77,783	)	$	5,027		$	(72,756	)	$	(82,629	)
Gain/(loss) on cash flow hedges		(2,501	)		10,189			(42	)		10,147			7,646
Accumulated other comprehensive    gain/(loss), net of tax	$	(12,374	)	$	(67,594	)	$	4,985		$	(62,609	)	$	(74,983	)

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Nine Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	January 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	5,521		$	(10,770	)	$	—	$	(10,770	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(6,913	)		2,521			606		3,127			(3,786	)
Accumulated other comprehensive    gain/(loss), net of tax	$	(1,392	)	$	(8,249	)	$	606	$	(7,643	)	$	(9,035	)

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended
	September 30,
(In thousands)	2022			2021			Affected Line Item in Income
Unrealized gains/(losses) on cash flow hedge    derivatives:
Reclassification adjustment for amounts    included in net income	$	6,609		$	—		Securities losses, net
Reclassification adjustment for (gains)/losses on   termination of swaps included in net income		(58	)		842		Other income
Tax effect		(1,566	)		(236	)	Income tax expense
Total reclassifications, net of tax	$	4,985		$	606

XML

DERIVATIVES

9 Months Ended

Sep. 30, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

DERIVATIVES

12. DERIVATIVES

The Company utilizes interest rate swap agreements as part of its asset liability management strategy to help manage its interest rate risk position. The notional amount of the interest rate swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest Rate Swaps Designated as Cash Flow Hedges: Interest rate swaps with a notional amount of $290.0 million as of September 30, 2022 and $230.0 million as of December 31, 2021 were designated as cash flow hedges of certain interest-bearing deposits. On a quarterly basis, the Company performs a qualitative hedge effectiveness assessment. This assessment takes into consideration any adverse developments related to the counterparty’s risk of default and any negative events or circumstances that affect the factors that originally enabled the Company to assess that it could reasonably support, qualitatively, an expectation that the hedging relationship was and will continue to be highly effective. As of September 30, 2022, there were no events or market conditions that would result in hedge ineffectiveness. The aggregate fair value of the swaps is recorded in other assets/liabilities with changes in fair value recorded in other comprehensive income. The amount included in accumulated other comprehensive income would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining terms of the swaps.

In March 2022, the Company entered into four forward starting interest rate swaps with a total notional amount of $100.0 million. These swaps will effectively extend the interest rate protection of existing swaps that are maturing in 2023 for an additional five years. As such, they are designated as cash flow hedges of certain interest-bearing deposits. The Company will receive variable amounts and pay fixed amounts. The weighted-average fixed pay rate on these forward swaps was 2.25% as of September 30, 2022. As of September 30, 2022, an unrealized gain of $6.4 million was recorded in accumulated other comprehensive income related to these forward starting swaps. The tables below do not include the impact of these forward swaps.

The following table presents information about the interest rate swaps designated as cash flow hedges as of September 30, 2022 and December 31, 2021:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	290,000		$	230,000
Weighted average pay rate		1.78	%		1.99	%
Weighted average receive rate		1.53	%		0.20	%
Weighted average maturity	2.26 years			1.04 years
Unrealized gain/(loss), net	$	4,083		$	(3,479	)
Number of contracts		12			13

	September 30, 2022
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	290,000	$	4,083
Total included in other assets		290,000		4,083
Total included in other liabilities		—		—

	December 31, 2021
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	230,000	$	(3,479	)
Total included in other assets		—		—
Total included in other liabilities		230,000		(3,479	)

Cash Flow Hedges

The following table presents the net gain/(loss) recorded in accumulated other comprehensive income/(loss) and the consolidated financial statements relating to the cash flow derivative instruments for the three and nine months ended September 30, 2022 and 2021:

	For the Three Months Ended  September 30,				For the Nine Months Ended September 30,
(In thousands)	2022		2021		2022		2021
Interest rate contracts
Gain/(loss) recognized in other comprehensive income (effective portion)	$	10,048	$	936	$	13,999	$	3,507
Gain/(loss) reclassified from other comprehensive income to interest expense		—		—		—		—
Gain/(loss) recognized in other noninterest income		58		—		58		(842	)

During the third quarter of 2022, the Company recognized an unrealized after-tax gain of $167,000 in accumulated other comprehensive income/(loss) related to the termination of two interest rate swaps designated as cash flow hedges that were deemed ineffective. The gain is being amortized into earnings over the remaining life of the terminated swaps.

Net interest income/(expense) recorded on these swap transactions totaled $(11,000) and $(1.7) million for the three and nine months ended September 30, 2022, respectively. Net interest expense recorded on these swap transactions totaled $1.0 million and $3.3 million for the three and nine months ended September 30, 2021, respectively.

Derivatives Not Designated as Accounting Hedges

The Company offers facility specific/loan level swaps to its customers and offsets its exposure from such contracts by entering mirror image swaps with a financial institution/swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions.

The accrued interest receivable and payable related to these swaps of $2.0 million and $4.8 million at September 30, 2022 and December 31, 2021, respectively, is recorded in other assets and other liabilities. At December 31, 2021, the Company recorded a total swap valuation provision of $2.1 million related to a commercial real estate loan placed on nonaccrual status during the third quarter of 2021. This swap was terminated during the first quarter of 2022.

Information about these swaps is as follows:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	627,502		$	702,210
Fair value	$	(38,969	)	$	32,326
Weighted average pay rates		3.96	%		4.00	%
Weighted average receive rates		4.88	%		1.83	%
Weighted average maturity	4.83 years			5.5 years
Number of contracts		80			86

XML

SUBORDINATED DEBT

9 Months Ended

Sep. 30, 2022

Subordinated Longterm Debt Current And Noncurrent [Abstract]

SUBORDINATED DEBT

13. SUBORDINATED DEBT

In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors. The 2017 Notes are non-callable for five years, have a stated maturity of December 15, 2027, and bear interest at a fixed rate of 4.75 percent until December 15, 2022. From December 16, 2022 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month London Interbank Offered Rate (“LIBOR”) rate plus 254 basis points, payable quarterly in arrears. Debt issuance costs incurred totaled $875,000 and are being amortized to maturity.

In December 2020, the Company issued $100.0 million in aggregate principal amount of fixed to floating subordinated notes (the “2020 Notes”) to certain institutional investors. The 2020 Notes are non-callable for five years, have a stated maturity of December 22, 2030, and bear interest at a fixed rate of 3.50 percent until December 22, 2025. From December 23, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to a level equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 326 basis points, payable quarterly in arrears. Debt issuance costs incurred totaled $1.9 million and are being amortized to maturity.

The Company may use the proceeds from the issuance of the 2020 Notes to refinance then-outstanding debt, for stock repurchases, acquisitions of wealth management firms, as well as other general corporate purposes.

Subordinated debt is presented net of issuance costs on the Consolidated Statements of Condition. The subordinated debt issuances are included in the Company’s regulatory total capital amount and ratio.

In connection with the issuance of the 2020 Notes, the Company obtained ratings from Kroll Bond Rating Agency (“KBRA”) and Moody’s Investors Services (“Moody’s). KBRA assigned an investment grade rating of BBB- and Moody’s assigned an investment grade rating of Baa3 for the 2020 Notes at the time of issuance.

XML

LEASES

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

LEASES

14. LEASES

The Company maintains certain property and equipment under direct financing and operating leases. As of September 30, 2022, the Company's operating lease ROU asset and operating lease liability totaled $13.4 million and $14.1 million, respectively. As of December 31, 2021, the Company's operating lease ROU asset and operating lease liability totaled $9.8 million and $10.1 million, respectively. A weighted average discount rate of 2.65 percent and 2.78 percent was used in the measurement of the ROU asset and lease liability as of September 30, 2022 and December 31, 2021, respectively.

The Company's leases have remaining lease terms between two months to 14 years, with a weighted average lease term of 7.53 years at September 30, 2022. The Company's leases had remaining lease terms between four months to 15 years, with a weighted average lease term of 6.09 years at December 31, 2021. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal.

Total operating lease costs were $868,000 and $697,000 for the three months ended September 30, 2022 and 2021, respectively. The variable lease costs were $76,000 and $75,000 for the three months ended September 30, 2022 and 2021, respectively.

Total operating lease costs were $2.6 million and $2.1 million for the nine months ended September 30, 2022 and 2021, respectively. The variable lease costs were $229,000 and $242,000 for the nine months ended September 30, 2022 and 2021, respectively.

The following is a schedule of the Company's operating lease liabilities by contractual maturity as of September 30, 2022:

(In thousands)
2022	$	711
2023		2,976
2024		2,299
2025		2,048
2026		1,487
Thereafter		6,194
Total lease payments		15,715
Less: imputed interest		1,614
Total present value of lease payments	$	14,101

The following table shows the supplemental cash flow information related to the Company’s direct finance and operating leases for the periods indicated:

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Right-of-use asset obtained in exchange for lease obligation	$	5,696	$	2,772
Operating cash flows from operating leases		2,008		1,844
Operating cash flows from direct finance leases		193		229
Financing cash flows from direct finance leases		561		561

XML

ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2022

Accounting Changes And Error Corrections [Abstract]

ACCOUNTING PRONOUNCEMENTS

15. ACCOUNTING PRONOUNCEMENTS

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU 2020-04 apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in this ASU can be adopted immediately and are effective through December 31, 2022. The Company is evaluating alternative reference rates including SOFR in preparation for a rate index replacement and the adoption of ASU 2020-04.

In March 2022, FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815) (“ASU 2022-01”) which clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios and financial assets. Among other things, the amended guidance established the “last-of-layer” method for making the fair value hedge accounting for these portfolios more accessible and renamed that method the “portfolio layer” method. ASU 2022-01 is effective January 1, 2023 and is not expected to have a material impact on our consolidated financial statements.

In March 2022, FASB issued ASU 2022-02, Financial Instruments–Credit Losses (Topic 326); Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”). ASU 2022-02 eliminates the accounting guidance on troubled debt restructurings for creditors in ASC 310-40 and amends the guidance on “vintage disclosures” to require disclosure of current-period gross write-offs by year of origination. ASU 2022-02 also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. The amendments in this update will be effective for fiscal years beginning after December 15, 2022 for entities that have adopted the amendments in ASU 2016-13, Financial Instruments–Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The Company is evaluating the additional disclosure requirements and does not expect them to have a material effect on the consolidated financial statements.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Principles of Consolidation and Organization

Principles of Consolidation and Organization: The consolidated financial statements of the Company are prepared on the accrual basis and include the accounts of the Company and its wholly-owned subsidiary, Peapack-Gladstone Bank (the “Bank”). The consolidated financial statements also include the Bank’s wholly-owned subsidiaries:

•PGB Trust & Investments of Delaware

•Peapack Capital Corporation (“PCC”)

•Peapack-Gladstone Mortgage Group, Inc., which owns 99 percent of Peapack Ventures, LLC and 79 percent of Peapack-Gladstone Realty, Inc., a New Jersey real estate investment company

•PGB Trust & Investments of Delaware, which owns one percent of Peapack Ventures, LLC

•Peapack Ventures, LLC, which owns the remaining 21 percent of Peapack-Gladstone Realty, Inc.

•PGB Securities, Inc.

While the following footnotes include the consolidated results of the Company, the Bank and their subsidiaries, these footnotes primarily reflect the Bank’s and its subsidiaries’ activities. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements.

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation: The consolidated financial statements have been prepared in accordance with GAAP. In preparing the financial statements, Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the statement of condition and revenues and expenses for the periods presented. Actual results could differ from those estimates.

Adoption of New Accounting Standards

Adoption of New Accounting Standards: On January 1, 2022, the Company adopted Accounting Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which replaced the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan and lease receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments). In addition, Accounting Standards Codification (“ASC”) 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities Management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet commitments. Results for reporting periods beginning after January 1, 2022, are presented under ASC 326 while prior period amounts continue to be reported in accordance with the incurred loss model previously applicable under GAAP. The Company recorded a net increase to retained earnings of $3.9 million as of January 1, 2022, for the cumulative effect of adopting ASC 326. The transition adjustment includes a $5.5 million reduction to our allowance for credit losses. The lower allowance was in part attributed to historically low charge-offs combined with the shorter duration of the loan portfolio employed in our CECL

analysis. Further, the incurred loss method required significant qualitative factors, including factors related to COVID-19, and the use of a multiplier for potential losses on criticized and classified loans, neither of which are included within the CECL methodology. The CECL methodology utilizes significantly less qualitative factors as it uses economic factors and historical losses over a full economic cycle and calculates losses based on discounted cash flow on an individual loan basis. Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology.

The following table illustrates the impact to our financial statements as of January 1, 2022 upon adoption of ASC 326:

	January 1, 2022
(In thousands)	Impact to Consolidated Statement of Condition from ASC-326 Adoption			Tax Effect			Impact to Retained Earnings from ASC-326 Adoption
Allowance for credit losses on loans	$	(5,536	)	$	1,490		$	4,046
Allowance for credit losses on off-balance sheet commitments		188			(51	)		(137	)
Total impact from ASC 326 adoption	$	(5,348	)	$	1,439		$	3,909

Segment Information

Segment Information: The Company’s business is conducted through two business segments: (1) its banking segment (“Banking”), which involves the delivery of loan and deposit products to customers, and (2) the Peapack Private Wealth Management Division (“Peapack Private”), which includes asset management services to individuals and institutions. Management uses certain methodologies to allocate income and expense to the business segments.

The Banking segment includes: commercial (includes commercial and industrial (“C&I”) and equipment financing), commercial real estate, multifamily, residential and consumer lending activities; treasury management services; C&I advisory services; escrow management; deposit generation; operation of ATMs; telephone and internet banking services; merchant credit card services and customer support services.

Peapack Private includes: investment management services for individuals and institutions; personal trust services, including services as executor, trustee, administrator and custodian; and other financial planning and advisory services. This segment also includes the activity from the Delaware subsidiary, PGB Trust & Investments of Delaware. Wealth management fees are primarily earned over time as the Company provides the contracted monthly or quarterly services and are generally assessed based on a tiered scale of the market value of assets under management and/or administration (“AUM”) at month-end. Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed (i.e. trade date).

Cash and Cash Equivalents

Cash and Cash Equivalents: For purposes of the statements of cash flows, cash and cash equivalents include cash and due from banks, interest-earning deposits and federal funds sold. Generally, federal funds are sold for one-day periods. Cash equivalents are of original maturities of 90 days or less. Net cash flows are reported for customer loan and deposit transactions and short-term borrowings with original maturities of 90 days or less.

Interest-Earning Deposits in Other Financial Institutions

Interest-Earning Deposits in Other Financial Institutions: Interest-earning deposits in other financial institutions mature within one year and are carried at cost.

Securities

Securities: Prior to January 1, 2022, Management evaluated securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warranted. For securities in an unrealized loss position, Management considered the extent and duration of the unrealized loss and the financial condition and near-term prospects of the issuer. Management also assessed whether it intended to sell, or it is more likely than not that it was required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that did not meet the aforementioned criteria, the amount of impairment was split into two components as follows: (1) other-than-temporary impairment related to credit loss, which would be recognized through the income statement and (2) other-than-temporary impairment related to other factors, which would be recognized in other comprehensive income.

Effective January 1, 2022, upon the adoption of ASU 2016-13, debt securities available-for-sale are measured at fair value and subject to impairment testing. When an available-for-sale debt security is considered impaired, the Company must determine if the decline in fair value has resulted from a credit-related loss or other factors and then, (1) recognize an allowance for credit losses ("ACL") by a charge to earnings for the credit-related component (if any) of the decline in fair value, and (2) recognize in other comprehensive income (loss) any non-credit related components of the fair value change. If the amount of the amortized cost basis expected to be recovered increases in a future period, the valuation reserve would be reduced, but not more than the amount of the current existing reserve for that security.

Debt securities are classified as held to maturity and carried at amortized cost when Management has the positive intent and ability to hold them to maturity. Under ASU 2016-13, held-to-maturity securities in a loss position are evaluated to determine if the decline in fair value has resulted from a credit-related loss or other factors and then, recognize an ACL through a charge to earnings for the decline in fair value. Other debt securities are classified as available for sale and are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income (loss), net of tax. The Company also has an investment in a Community Reinvestment Act (“CRA”) investment fund, which is classified as an equity security.

Interest income includes amortization of purchase premiums and discounts. Premiums and discounts on securities are amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated, and premiums on callable debt securities, which are amortized to the earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method.

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock

Federal Home Loan Bank (FHLB) and Federal Reserve Bank (FRB) Stock: The Bank is a member of the FHLB system. Members are required to own a certain amount of FHLB stock, based on the level of borrowings and other factors. FHLB stock is carried at cost, classified as a restricted security and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income.

The Bank is also a member of the Federal Reserve Bank of New York and required to own a certain amount of FRB stock. FRB stock is carried at cost and classified as a restricted security. Dividends are reported as income.

Loans Held for Sale

Loans Held for Sale: Mortgage loans originated with the intent to sell in the secondary market are carried at fair value, as determined by outstanding commitments from investors.

Mortgage loans held for sale are generally sold with servicing rights released; therefore, no servicing rights are recorded. Gains and losses on sales of mortgage loans, shown as gain on sale of loans on the Statement of Income, are based on the difference between the selling price and the carrying value of the related loan sold.

SBA loans originated with the intent to sell in the secondary market are carried at the lower of cost or fair value. SBA loans are generally sold with the servicing rights retained. Gains and losses on the sale of SBA loans are based on the difference between the selling price and the carrying value of the related loan sold. Total SBA loans serviced totaled $145.6 million and $97.5 million as of September 30, 2022 and December 31, 2021, respectively. SBA loans held for sale totaled $10.1 million and $32.5 million at September 30, 2022 and December 31, 2021, respectively.

Loans originated with the intent to hold and subsequently transferred to loans held for sale are carried at the lower of cost or fair value. These are loans that the Company no longer has the intent to hold for the foreseeable future.

Loans

Loans: Loans that Management has the intent and ability to hold for the foreseeable future or until maturity are stated at the principal amount outstanding. Interest on loans is recognized based upon the principal amount outstanding. Loans are stated at face value, less purchased premium and discounts and net deferred fees. Loan origination fees and certain direct loan origination costs are deferred and recognized on a level-yield method over the life of the loan as an adjustment to the loan’s yield. The definition of recorded investment in loans includes accrued interest receivable and deferred fees/costs, however, for the Company’s loan disclosures, accrued interest and deferred fees/costs were excluded as the impact was not material.

Loans are considered past due when they are not paid within 30 days in accordance with contractual terms. The accrual of income on loans, including individually evaluated loans, is discontinued if, in the opinion of Management, principal or interest is not likely to be paid in accordance with the terms of the loan agreement, or when principal or interest is past due 90 days unless the asset is both well secured and in the process of collection. All interest accrued but not received for loans placed on nonaccrual are reversed against interest income. Payments received on nonaccrual loans are recorded as principal payments. A nonaccrual loan is returned to accrual status only when interest and principal payments are brought current and future payments are reasonably assured, generally when the Bank receives contractual payments for a minimum of six consecutive months. Commercial loans are generally charged off, in whole or in part, after an analysis is completed which indicates that collectability of the full principal balance is in doubt. Consumer closed-end loans are generally charged off after they become 120 days past due and open-end loans after 180 days. Subsequent payments are credited to income only if collection of principal is not in doubt. If principal and interest payments are brought contractually current and future collectability is reasonably assured, loans may be returned to accrual status. Nonaccrual mortgage loans are generally charged off to the extent that the value of the underlying collateral does not cover the outstanding principal balance. The majority of the Company’s loans are secured by real estate in New Jersey, New York and Pennsylvania.

Allowance for Credit Losses

Allowance for Credit Losses: On January 1, 2022, the Company adopted ASU 2016-13, Topic 326 which replaced the incurred loss methodology with CECL for financial instruments measured at amortized cost and other commitments to extend credit. CECL requires the immediate recognition of estimated credit losses expected to occur over the estimated remaining life of the asset. The forward-looking concept of CECL requires loss estimates to consider historical experience, current conditions and reasonable and supportable economic forecasts of future events and circumstances.

The allowance for credit losses (“ACL”) on loans held for investment is the combination of the allowance for loan losses and the reserve for unfunded loan commitments. The allowance for loan losses is reported as a reduction of the amortized cost basis of loans, while the reserve for unfunded loan commitments is included within "other liabilities" on the Consolidated Statements of Condition. The estimate of credit loss incorporates assumptions for both the likelihood and amount of funding over the estimated life of the commitments, including adjustments for current conditions and reasonable and supportable forecasts. Management periodically reviews and updates its assumptions for estimated funding rates. The amortized cost basis of loans does not include accrued interest receivable, which is included in "accrued interest receivable" on the Consolidated Statements of Condition. The "Provision for credit losses" on the Consolidated Statements of Income is a combination of the provision for credit losses and the provision for unfunded loan commitments.

Allowance for Loan Losses under incurred methodology prior to CECL Adoption on January 1, 2022

The allowance for loan and lease losses was a valuation allowance for credit losses that was Management’s estimate of probable incurred losses in the loan portfolio. Under this accounting method, the process to determine reserves utilized analytical tools and Management judgment and was reviewed on a quarterly basis. When Management was reasonably certain that a loan balance was not fully collectable, an impairment analysis was completed whereby a specific reserve could be established or a full or partial charge off was recorded against the allowance. Subsequent recoveries, if any, were credited to the allowance. Management estimated the allowance balance required using past loan loss experience, the size and composition of the portfolio, information about specific borrower situations, estimated collateral values, asset quality information, economic conditions and other factors. Allocations of the allowance could be made for specific loans via a specific reserve, but the entire allowance was available for any loan that, in Management’s judgment, should be charged off.

The allowance consisted of specific and general components. The specific component of the allowance related to loans that were individually classified as impaired.

A loan was impaired when, based on current information and events, it was probable that the Bank would be unable to collect all amounts due according to the contractual terms of the loan agreement. Factors considered by Management in determining impairment included payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experienced insignificant payment delays and payment shortfalls generally were not classified as impaired. Management determined the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

Loans were individually evaluated for impairment when they were classified as substandard by Management. If a loan was considered impaired, a portion of the allowance could be allocated so that the loan was reported, net, at the present value of estimated future cash flows using the loan’s existing rate or if repayment was expected solely from the underlying collateral, the loan principal balance was compared to the fair value of collateral less estimated disposition costs to determine the need, if any, for a charge off.

The general component of the allowance covered non-impaired loans and was based primarily on the Company’s historical loss experience adjusted for current factors. The historical loss experience was determined by portfolio segment and was based on the

actual loss history experienced by the Company on a weighted average basis over the previous three years. This actual loss experience was adjusted by other qualitative factors based on the risks present for each portfolio segment. These qualitative factors included consideration of the following: levels of and trends in delinquencies, charge-offs and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations. For loans that were graded as non-impaired, the Company allocated a higher general reserve percentage than pass-rated loans using a multiple that was calculated annually through a migration analysis. At both December 31, 2021 and 2020, respectively, the multiple was 2.25 times for non-impaired special mention loans and 3.25 times for non-impaired substandard loans.

ACL in accordance with CECL methodology

With respect to pools of similar loans that are collectively evaluated, an appropriate level of general allowance is determined by portfolio segment using a non-linear discounted cash flow (“DCF”) model. The DCF model captures losses over the historical charge-off and prepayment cycle and applies those losses at a loan level over the remaining maturity of the loan. The model then calculates a historical loss rate using the average losses over the reporting period, which is then applied to each segment utilizing a standard reversion rate. This loss rate is then supplemented with adjustments for reasonable and supportable forecasts of relevant economic indicators, including but not limited to unemployment rates, national consumer price and confidence indices. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the ACL are qualitative factors based on the risks present for each portfolio segment. These qualitative factors include the following: levels of and trends in delinquencies and impaired loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures and practices; experience, ability and depth of lending management and other relevant staffing and experience; industry conditions; and effects of changes in credit concentrations. It is also possible that these factors could include social, political, economic, and terrorist events or activities. All of these factors are susceptible to change, which may be significant. As a result of this detailed process, the ACL results in two forms of allocations, specific and general. These two components represent the total ACL deemed adequate to cover current expected credit losses in the loan portfolio.

When management identifies loans that do not share common risk characteristics (i.e., are not similar to other loans within a pool) they are evaluated on an individual basis. These loans are not included in the collective evaluation. For loans identified as having a likelihood of foreclosure or that the borrower is experiencing financial difficulty, a collateral dependent approach is used. These are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral. Under CECL, for collateral dependent loans, the Company has adopted the practical expedient method to measure the allowance for credit losses based on the fair value of collateral. The allowance for credit losses is calculated on an individual loan basis based on the shortfall between the fair value of the loan's collateral, which is adjusted for liquidation costs/discounts, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required.

The CECL methodology requires a significant amount of management judgment in determining the appropriate allowance for credit losses. Several of the steps in the methodology involve judgment and are subjective in nature including, among other things: segmenting the loan portfolio; determining the amount of loss history to consider; selecting predictive econometric regression models that use appropriate macroeconomic variables; determining the methodology to forecast prepayments; selecting the most appropriate economic forecast scenario; determining the length of the reasonable and supportable forecast and reversion periods; estimating expected utilization rates on unfunded loan commitments; and assessing relevant and appropriate qualitative factors. In addition, the CECL methodology is dependent on economic forecasts, which are inherently imprecise and will change from period to period. Although the allowance for credit losses is considered appropriate, there can be no assurance that it will be sufficient to absorb future losses.

In determining an appropriate amount for the allowance, the Bank segments and aggregates the loan portfolio based on common characteristics. The following segments have been identified:

Primary Residential Mortgages. The Bank originates one to four family residential mortgage loans in the Tri-State area (New York, New Jersey and Connecticut), Pennsylvania and Florida. Loans are secured by first liens on the primary residence or investment property. Primary risk characteristics associated with residential mortgage loans typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. In addition, residential mortgage loans that have adjustable rates could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Junior Lien Loan on Residence (which include home equity lines of credit). The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit against one to four family properties in the Tri-State area. These

loans are subordinate to a first mortgage, which may be from another lending institution. Primary risk characteristics associated with JLLs and home equity lines of credit typically involve: major living or lifestyle changes to the borrower, including unemployment or other loss of income; unexpected significant expenses, such as for major medical issues or catastrophic events; and divorce or death. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank. In addition, home equity lines of credit typically are made with variable or floating interest rates, which could expose the borrower to higher debt service requirements in a rising interest rate environment. Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential loss exposure for the Bank.

Multifamily. The Bank provides mortgage loans for multifamily properties (i.e., buildings which have five or more residential units) and other commercial real estate that is either owner occupied or managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Multifamily loans are expected to be repaid from the cash flows of the underlying property so the collective amount of rents must be sufficient to cover all operating expenses, property management and maintenance, taxes and debt service. Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and its ability to repay the loan.

Owner-Occupied Commercial Real Estate Loans. The Bank provides mortgage loans for owner-occupied commercial real estate properties in the Tri-State area and Pennsylvania. Commercial real estate properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are mixed use. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania. Non-owner-occupied properties primarily include retail buildings/shopping centers, hotels, office/medical buildings and industrial/warehouse space. Some properties are considered “mixed use” as they are a combination of building types, such as a building with retail space on the ground floor and either residential apartments or office suites on the upper floors. Commercial real estate loans are generally considered to have a higher degree of credit risk as they may be dependent on the ongoing success and operating viability of a fewer number of tenants who are occupying the property and who may have a greater degree of exposure to economic conditions.

Commercial and Industrial Loans. The Bank provides lines of credit and term loans to operating companies for business purposes. The loans are generally secured by business assets such as accounts receivable, inventory, business vehicles and equipment as well as the stock of a company, if privately held. Commercial and industrial loans are typically repaid first by the cash flows generated by the borrower’s business operations. The primary risk characteristics are specific to the underlying business and its ability to generate sustainable profitability and resulting positive cash flows. Factors that may influence a business’ profitability include, but are not limited to, demand for its products or services, quality and depth of management, degree of competition, regulatory changes, and general economic conditions. To mitigate the risk characteristics of commercial and industrial loans, these loans often include commercial real estate as collateral and the Bank will often require more frequent reporting requirements from the borrower in order to better monitor its business performance. However, the ability of the Bank to foreclose and realize sufficient value from the assets is often highly uncertain.

Leasing Finance. PCC offers a range of finance solutions nationally. PCC provides term loans and leases secured by assets financed for U.S. based mid-size and large companies. Facilities tend to be fully drawn under fixed rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.

Asset risk in PCC’s portfolio is generally recognized through changes to loan income, or through changes to lease related income streams due to fluctuations in lease rates. Changes to lease income can occur when the existing lease contract expires, the asset comes off lease or the business seeks to enter a new lease agreement. Asset risk may also change through depreciation, resulting from changes in the residual value of the operating lease asset or through impairment of the asset carrying value, which can occur at any time during the life of the asset.

Credit risk in PCC’s portfolio generally results from the potential default of borrowers or lessees, which may be driven by customer specific or broader industry related conditions. Credit losses can impact multiple parts of the income statement including loss of interest/lease/rental income and/or higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets.

Construction. The Bank provides commercial construction loans for properties located in the Tri-state area. Risks common to commercial construction loans are cost overruns, changes in market demand for property, inadequate long-term financing arrangements and declines in real estate values. Changes in market demand for property could lead to longer marketing times resulting in higher carrying costs, declining values, and higher interest rates.

Consumer and Other. These are loans to individuals for household, family and other personal expenditures as well as obligations of states and political subdivisions in the U.S. This also represents all other loans that cannot be categorized in any of the previous mentioned loan segments. Consumer loans generally have higher interest rates and shorter terms than residential loans but tend to have higher credit risk due to the type of collateral securing the loan or in some cases the absence of collateral.

A troubled debt restructuring (“TDR”) is a modified loan with concessions made by the lender to a borrower who is experiencing financial difficulty. TDRs are impaired and are generally measured at the present value of estimated future cash flows using the loan’s effective rate at inception. If a TDR is considered to be a collateral dependent loan, the loan is reported, net, at the fair value of the collateral, less estimated disposition costs. For TDRs that subsequently default, the Company determines the amount of reserve in accordance with the accounting policy for the allowance for credit losses.

The Coronavirus Aid, Relief, and Economic Security ("CARES”) Act, which provided entities with optional temporary relief from certain accounting and financial reporting requirements under U.S. GAAP, allowed financial institutions to suspend application of certain current TDR accounting guidance under ASC 310-40 for loan modifications related to the COVID-19 pandemic made between March 1, 2020 and the earlier of December 31, 2020 or 60 days after the end of the COVID-19 national emergency, provided certain criteria were met. This relief could be applied to loan modifications for borrowers that were not more than 30 days past due as of December 31, 2019 and to loan modifications that deferred or delayed the payment of principal or interest or changed the interest rate on the loan. In April 2020, federal and state banking regulators issued the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus to provide further interpretation of when a borrower is experiencing financial difficulty, specifically indicating that if the modification is either short-term (e.g., six months) or mandated by a federal or state government in response to the COVID-19 pandemic, the borrower is not experiencing financial difficulty under ASC 310-40. The Company approved total loan modifications under the CARES Act of $947.0 million of which none remain outstanding.

Another key program under the CARES Act is the Paycheck Protection Program (“PPP”) administered by the SBA which provided funding to qualifying businesses and organizations. Under this program, the Company provided funding of approximately $650 million. In the third quarter of 2020 and second quarter of 2021, the Company sold approximately $355.0 million and $56.5 million, respectively, of such loans, servicing rights released to a third party. The Company also referred approximately $124 million of PPP loans to a third party during the first six months of 2021. The Company has approximately $1.9 million of PPP loans remaining in its portfolio as of September 30, 2022 and believes that substantially all of these loans will be forgiven by the SBA. These loans are fully guaranteed by the SBA and provide for full forgiveness of the loans during a specified forgiveness period that meet specific guidelines provided by the SBA. Loans that do not meet the forgiveness criteria will enter a repayment period of 2 or 5 years.

Leases

Leases: At inception, contracts are evaluated to determine whether the contract constitutes a lease agreement. For contracts that are determined to be an operating lease, a corresponding right-of-use (“ROU”) asset and operating lease liability are recorded as separate line items on the statement of condition. An ROU asset represents the Company’s right to use an underlying asset during the lease term and a lease liability represents the Company’s commitment to make contractually obligated lease payments. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease and are based on the present value of lease payments over the lease term. The measurement of the operating lease ROU asset includes any lease payments made.

If the rate implicit in the lease is not readily determinable, the incremental collateralized borrowing rate is used to determine the present value of lease payments. This rate gives consideration to the applicable FHLB collateralized borrowing rates and is based on the information available at the commencement date. The Company has elected to apply the short-term lease measurement and recognition exemption to leases with an initial term of 12 months or less; therefore, these leases are not recorded on the Company’s statement of condition, but rather, lease expense is recognized over the lease term on a straight-line basis. The Company’s lease agreements may include options to extend or terminate the lease. The Company’s decision to exercise renewal options is based on an assessment of its current business needs and market factors at the time of the renewal. The Company maintains certain property

and equipment under direct financing and operating leases. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches and office space and are classified as operating leases.

The ROU asset is measured at the amount of the lease liability adjusted for lease incentives received, any cumulative prepaid or accrued rent if the lease payments are uneven throughout the lease term, any unamortized initial direct costs, and any impairment of the ROU asset. Operating lease expense consists of a single lease cost allocated over the remaining lease term on a straight-line basis, variable lease payments not included in the lease liability, and any impairment of the ROU asset.

There are no terms or conditions related to residual value guarantees and no restrictions or covenants that would impact the Company’s ability to pay dividends or to incur additional financial obligations.

Derivatives

Derivatives: At the inception of a derivative contract, the Company designates the derivative as one of three types based on the Company’s intentions and belief as to likely effectiveness as a hedge. These three types are (1) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value hedge”); (2) a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”); or (3) an instrument with no hedging designation. For a fair value hedge, the gain or loss on the derivative, as well as the offsetting loss or gain on the hedged item, are recognized in current earnings as fair values change. For a cash flow hedge, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. For cash flow hedges, changes in the fair value of derivatives that are not highly effective in hedging the changes in fair value or expected cash flows of the hedged item are recognized immediately in current earnings. Changes in the fair value of derivatives that do not qualify for hedge accounting are reported currently in earnings, as non-interest income. When hedge accounting is discontinued on a fair value hedge that no longer qualifies as an effective hedge, the derivative continues to be reported at fair value in the statement of condition, but the carrying amount of the hedged item is no longer adjusted for future changes in fair value. The adjustment to the carrying amount of the hedged item that existed at the date hedge accounting is discontinued is amortized over the remaining life of the hedged item into earnings.

Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Net cash settlements on derivatives that do not qualify for hedge accounting are reported in non-interest income. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk-management objective and the strategy for undertaking hedge transactions at the inception of the hedging relationship. This documentation includes linking fair value or cash flow hedges to specific assets and liabilities on the statement of condition or to specific firm commitments or forecasted transactions. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminated, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended.

When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as non-interest income. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods which the hedged transactions will affect earnings.

The Company also offers facility specific / loan level swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a financial institution / swap counterparty (loan level / back-to-back swap program). The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting (“standalone derivatives”). The notional amount of the swaps does not represent amounts exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual contracts. The fair value of the swaps is recorded as both an asset and a liability, in other assets and other liabilities, respectively, in equal amounts for these transactions. The Company is exposed to losses if a customer counterparty fails to make its payments under a contract in which the Company is in a net receiving position. At this time, the Company anticipates that its counterparties will be able to fully satisfy their obligations under the agreements. All of the contracts to which the Company is a party settle monthly. Further, the Company has netting agreements with the dealers with which it does business.

Stock-Based Compensation

Stock-Based Compensation: The Company’s 2006 Long-Term Stock Incentive Plan, 2012 Long-Term Stock Incentive Plan and 2021 Long-Term Stock Incentive Plan allow the granting of shares of the Company’s common stock as incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and stock appreciation rights to directors, officers and employees of the Company and its subsidiaries. There are no shares remaining for issuance with respect to the stock option plan approved in 2002, however options granted under this plan are still included in the amounts below. Options granted under these plans are, in general, exercisable not earlier than one year after the date of grant, at a price equal to the fair value of common stock

on the date of grant and expire not more than ten years after the date of grant. Stock options may vest during a period of up to five years after the date of grant. Some options granted to officers at or above the senior vice president level were immediately exercisable at the date of grant. The Company has a policy of using authorized but unissued shares to satisfy option exercises.

Upon adoption of ASU 2016-09, “Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting,” the Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

For the Company’s stock option plans, changes in options outstanding during the nine months ended September 30, 2022 were as follows:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
	Number of			Exercise		Contractual	Value
	Options			Price		Term	(In thousands)
Balance, January 1, 2022		31,340		$	14.59
Exercised during 2022		(9,660	)		13.14
Expired during 2022		—			—
Forfeited during 2022		(900	)		13.11
Balance, September 30, 2022		20,780		$	15.33	0.44 years	$	381
Vested and expected to vest		20,780		$	15.33	0.44 years	$	381
Exercisable at September 30, 2022		20,780		$	15.33	0.44 years	$	381

The aggregate intrinsic value represents the difference between the Company’s closing stock price on the last trading day of the third quarter of 2022 and the exercise price, multiplied by the number of in-the-money options. The Company’s closing stock price on September 30, 2022 was $33.65.

There were no stock options granted during the three or nine months ended September 30, 2022.

The Company issued performance-based and service-based restricted stock units in 2022 and 2021. Service-based units vest ratably over a three- or five-year period. There were no service-based restricted stock units granted during the third quarter of 2022.

The performance-based awards are dependent upon the Company meeting certain performance criteria and, to the extent the performance criteria are met, will cliff vest at the end of the performance period, which is generally three years. There were no performance-based restricted stock units granted in the third quarter of 2022.

Changes in non-vested shares dependent on performance criteria for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		225,435		$	20.29
Granted during 2022		71,482			35.93
Vested during 2022		(58,077	)		25.77
Forfeited during 2022		(5,284	)		17.92
Balance, September 30, 2022		233,556		$	23.77

Changes in service-based restricted stock awards/units for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		701,145		$	21.93
Granted during 2022		235,534			36.86
Vested during 2022		(267,530	)		21.48
Forfeited during 2022		(22,868	)		23.46
Balance, September 30, 2022		646,281		$	27.50

As of September 30, 2022, there was $17.0 million of total unrecognized compensation cost related to service-based and performance-based units. That cost is expected to be recognized over a weighted average period of 1.39 years. Stock compensation expense recorded for the third quarters of 2022 and 2021 totaled $2.1 million and $1.8 million, respectively. Stock compensation expense recorded for the nine months ended September 30, 2022 and 2021 totaled $5.7 million and $5.3 million, respectively.

Employee Stock Purchase Plan

Employee Stock Purchase Plan (“ESPP”): The ESPP provides for the granting of rights to purchase up to 150,000 shares of Peapack-Gladstone Financial Corporation common stock. In May 2020, shareholders approved an increase of 200,000 shares of Peapack-Gladstone Financial Corporation common stock to be issued under the ESPP.

The ESPP allows for the purchase of shares during four three-month Offering Periods of each calendar year. The Offering Periods end on February 16, May 16, August 16 and November 16 of each calendar year.

Each participant in the Offering Period is granted an option to purchase a number of shares and may contribute between one percent and 15 percent of their compensation. At the end of each Offering Period, the number of shares to be purchased by the employee is determined by dividing the employee’s contributions accumulated during the Offering Period by the applicable purchase price. The purchase price is an amount equal to 85 percent of the closing market price of a share of common stock on the purchase date. Participation in the ESPP is entirely voluntary and employees can cancel their purchases at any time during the period without penalty. The fair value of each share purchase right is determined using the Black-Scholes option pricing model.

The Company recorded $37,000 of expense in salaries and employee benefits expense for both the three months ended September 30, 2022 and 2021 related to the ESPP. Total shares issued under the ESPP during the third quarter of 2022 and 2021 were 6,441 and 6,889, respectively.

The Company recorded $114,000 and $93,000 of expense in salaries and employee benefits expense for the nine months ended September 30, 2022 and 2021, respectively, related to the ESPP. Total shares issued under the ESPP during the nine months ended September 30, 2022 and 2021 were 20,369 and 21,661, respectively.

Earnings per share - Basic and Diluted

Earnings per share – Basic and Diluted: The following is a reconciliation of the calculation of basic and diluted earnings per share. Basic net income per share is calculated by dividing net income available to shareholders by the weighted average shares outstanding during the reporting period. Diluted net income per share is computed similarly to that of basic net income per share, except that the denominator is increased to include the number of additional shares that would have been outstanding utilizing the Treasury Stock Method if all shares underlying potentially dilutive stock options were issued and all shares of restricted stock, stock warrants or restricted stock units were to vest during the reporting period.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share data)	2022		2021		2022		2021
Net income available to common shareholders	$	20,126	$	14,171	$	53,667	$	41,767
Basic weighted average shares outstanding		18,072,385		18,763,316		18,244,691		18,891,601
Plus: common stock equivalents		348,276		510,515		407,351		498,921
Diluted weighted average shares outstanding		18,420,661		19,273,831		18,652,042		19,390,522
Net income per share
Basic	$	1.11	$	0.76	$	2.94	$	2.21
Diluted		1.09		0.74		2.88		2.15

For the three months ended September 30, 2022, restricted stock units totaling 112,241 were not included in the computation of diluted earnings per share because they were anti-dilutive. For the three months ended September 30, 2021, all restricted stock units were included in the computation of diluted earnings per share because they were all dilutive. For the nine months ended September 30, 2022 and 2021, restricted stock units totaling 296,687 and 261,610 were not included in the computation of diluted earnings per share because they were anti-dilutive. Anti-dilutive shares are common stock equivalents with weighted average exercise prices in excess of the average market value for the periods presented.

Income Taxes

Income Taxes: The Company files a consolidated Federal income tax return. Separate state income tax returns are filed for each subsidiary based on current laws and regulations.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in its financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on the enacted tax rates. Such tax assets and liabilities are adjusted for the effect of a change in tax rates in the period of enactment.

The Company recognizes a tax position as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50 percent likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

The Company is no longer subject to examination by the U.S. Federal tax authorities for years prior to 2018 or by New Jersey tax authorities for years prior to 2016.

The Company recognizes interest and/or penalties related to income tax matters in income tax expense.

Loss Contingencies

Loss Contingencies: Loss contingencies, including claims and legal actions arising in the ordinary course of business, are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be reasonably estimated. Management does not believe there are any such matters that will have a material effect on the financial statements.

Restrictions on Cash

Restrictions on Cash: A large portion of cash on hand or on deposit with the Federal Reserve Bank (“FRB”) was required to meet regulatory reserve and clearing requirements. Prior to March 2020, reserves were in the form of cash and balances with the FRB and included in interest-earning deposits in our statement of condition. The FRB suspended cash reserve requirements effective March 26, 2020.

Comprehensive Income/(Loss)

Comprehensive Income/(Loss): Comprehensive income/(loss) consists of net income and the change during the period in the Company’s net unrealized gains or losses on securities available for sale and unrealized gains and losses on cash flow hedge, net of tax, less adjustments for realized gains and losses.

Transfers of Financial Assets

Transfers of Financial Assets: Transfers of financial assets are accounted for as sales, when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when the assets have been isolated from the Company, the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Risks and Uncertainties

Risks and Uncertainties: It is possible that estimates made in the Company’s consolidated financial statements could be materially and adversely impacted as a result of the conditions created by COVID-19, including estimates regarding expected provision for credit losses and impairment of goodwill.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets: Goodwill is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree (if any), over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized but tested for impairment at least annually or more frequently if events and circumstances exist that indicate that a goodwill impairment test should be performed. Goodwill was primarily attributable to the Bank’s wealth acquisitions. Management monitors the impact of changes in the financial markets and includes these assessments in our impairment process. Management has concluded that there was no goodwill impairment as of September 30, 2022.

The Company has selected December 31 as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill, which includes assembled workforce has an indefinite life on our statement of financial condition. Intangible assets with definite useful lives are amortized over their estimated useful lives to their estimated residual values. Goodwill and assembled workforce are the intangible assets with an indefinite life on our balance sheet.

Other intangible assets, which primarily consist of customer relationship intangible assets arising from acquisitions, are amortized on an accelerated basis over their estimated useful lives, which range from 5 to 15 years.

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Impact to Financial Statements Upon Adoption of ASC 326

The following table illustrates the impact to our financial statements as of January 1, 2022 upon adoption of ASC 326:

	January 1, 2022
(In thousands)	Impact to Consolidated Statement of Condition from ASC-326 Adoption			Tax Effect			Impact to Retained Earnings from ASC-326 Adoption
Allowance for credit losses on loans	$	(5,536	)	$	1,490		$	4,046
Allowance for credit losses on off-balance sheet commitments		188			(51	)		(137	)
Total impact from ASC 326 adoption	$	(5,348	)	$	1,439		$	3,909

Schedule of Changes in Options Outstanding

For the Company’s stock option plans, changes in options outstanding during the nine months ended September 30, 2022 were as follows:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
	Number of			Exercise		Contractual	Value
	Options			Price		Term	(In thousands)
Balance, January 1, 2022		31,340		$	14.59
Exercised during 2022		(9,660	)		13.14
Expired during 2022		—			—
Forfeited during 2022		(900	)		13.11
Balance, September 30, 2022		20,780		$	15.33	0.44 years	$	381
Vested and expected to vest		20,780		$	15.33	0.44 years	$	381
Exercisable at September 30, 2022		20,780		$	15.33	0.44 years	$	381

Schedule of Changes in Non-Vested Performance-Based Shares

Changes in non-vested shares dependent on performance criteria for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		225,435		$	20.29
Granted during 2022		71,482			35.93
Vested during 2022		(58,077	)		25.77
Forfeited during 2022		(5,284	)		17.92
Balance, September 30, 2022		233,556		$	23.77

Schedule of Changes in Service-Based Restricted Stock Awards/Units

Changes in service-based restricted stock awards/units for the nine months ended September 30, 2022 were as follows:

				Weighted
				Average
	Number of			Grant Date
	Shares			Fair Value
Balance, January 1, 2022		701,145		$	21.93
Granted during 2022		235,534			36.86
Vested during 2022		(267,530	)		21.48
Forfeited during 2022		(22,868	)		23.46
Balance, September 30, 2022		646,281		$	27.50

Schedule of Calculation of Basic and Diluted Earnings per Share

The following is a reconciliation of the calculation of basic and diluted earnings per share. Basic net income per share is calculated by dividing net income available to shareholders by the weighted average shares outstanding during the reporting period. Diluted net income per share is computed similarly to that of basic net income per share, except that the denominator is increased to include the number of additional shares that would have been outstanding utilizing the Treasury Stock Method if all shares underlying potentially dilutive stock options were issued and all shares of restricted stock, stock warrants or restricted stock units were to vest during the reporting period.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Dollars in thousands, except per share data)	2022		2021		2022		2021
Net income available to common shareholders	$	20,126	$	14,171	$	53,667	$	41,767
Basic weighted average shares outstanding		18,072,385		18,763,316		18,244,691		18,891,601
Plus: common stock equivalents		348,276		510,515		407,351		498,921
Diluted weighted average shares outstanding		18,420,661		19,273,831		18,652,042		19,390,522
Net income per share
Basic	$	1.11	$	0.76	$	2.94	$	2.21
Diluted		1.09		0.74		2.88		2.15

XML

INVESTMENT SECURITIES (Tables)

9 Months Ended

Sep. 30, 2022

Investment Securities Available For Sale [Abstract]

Schedule of Amortized Cost and Approximate Fair Value of Securities Available for Sale

A summary of amortized cost and approximate fair value of investment securities available for sale and held to maturity included in the Consolidated Statements of Condition as of September 30, 2022 and December 31, 2021 follows:

	September 30, 2022
			Gross		Gross			Allowance
	Amortized		Unrealized		Unrealized			for		Fair
(In thousands)	Cost		Gains		Losses			Credit Losses		Value
Securities Available for Sale:
U.S government-sponsored agencies	$	244,770	$	—	$	(55,360	)	$	—	$	189,410
Mortgage-backed securities–residential		315,541		40		(48,034	)		—		267,547
SBA pool securities		33,538		2		(4,419	)		—		29,121
State and political subdivisions		2,613		—		(29	)		—		2,584
Corporate bond		10,000		—		(782	)		—		9,218
Total securities available for sale	$	606,462	$	42	$	(108,624	)	$	—	$	497,880
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	—	$	(4,869	)	$	—	$	35,131
Mortgage-backed securities–residential		63,551		—		(10,825	)		—		52,726
Total securities held to maturity	$	103,551	$	—	$	(15,694	)	$	—	$	87,857

	December 31, 2021
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(In thousands)	Cost		Gains		Losses			Value
Securities Available for Sale:
U.S government-sponsored agencies	$	280,045	$	—	$	(7,824	)	$	272,221
Mortgage-backed securities–residential		481,062		3,849		(7,937	)		476,974
SBA pool securities		40,649		12		(1,100	)		39,561
State and political subdivisions		5,431		45		—			5,476
Corporate bond		2,500		21		—			2,521
Total securities available for sale	$	809,687	$	3,927	$	(16,861	)	$	796,753
Securities Held to Maturity:
U.S. government-sponsored agencies	$	40,000	$	7	$	(25	)	$	39,982
Mortgage-backed securities–residential		68,680		67		(269	)		68,478
Total securities held to maturity	$	108,680	$	74	$	(294	)	$	108,460

Summary of Gross Gains, Gross Losses and Net Tax Benefit Related to Proceeds on Sales of Securities Available for Sale

The following table presents a summary of the gross gains, gross losses and net tax benefit related to proceeds on sales of securities available for sale for the nine months ended September 30, 2022:

(In thousands)	September 30, 2022
Proceeds from sales	$	118,972
Gross gains		3
Gross losses		(6,612	)
Net tax benefit		1,581

Schedule of Available for Sale Securities with Continuous Unrealized Losses and Approximate Fair Value of Investments

The following tables present the Company’s available for sale and held to maturity securities with continuous unrealized losses and the approximate fair value of these investments as of September 30, 2022 and December 31, 2021.

	September 30, 2022
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	—	$	—		$	189,410	$	(55,360	)	$	189,410	$	(55,360	)
Mortgage-backed securities residential		70,005		(5,425	)		166,924		(42,609	)		236,929		(48,034	)
SBA pool securities		3,788		(282	)		24,313		(4,137	)		28,101		(4,419	)
State and political subdivisions		2,584		(29	)		—		—			2,584		(29	)
Corporate bond		9,218		(782	)		—		—			9,218		(782	)
Total securities available for sale	$	85,595	$	(6,518	)	$	380,647	$	(102,106	)	$	466,242	$	(108,624	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	35,131	$	(4,869	)	$	—	$	—		$	35,131	$	(4,869	)
Mortgage-backed securities residential		52,726		(10,825	)		—		—			52,726		(10,825	)
Total securities held to maturity	$	87,857	$	(15,694	)	$	—	$	—		$	87,857	$	(15,694	)
Total securities	$	173,452	$	(22,212	)	$	380,647	$	(102,106	)	$	554,099	$	(124,318	)

	December 31, 2021
	Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In thousands)	Value		Losses			Value		Losses			Value		Losses
Securities Available for Sale:
U.S. government-sponsored agencies	$	243,187	$	(6,858	)	$	29,034	$	(966	)	$	272,221	$	(7,824	)
Mortgage-backed securities residential		265,403		(7,053	)		33,455		(884	)		298,858		(7,937	)
SBA pool securities		22,057		(567	)		10,562		(533	)		32,619		(1,100	)
Total securities available for sale	$	530,647	$	(14,478	)	$	73,051	$	(2,383	)	$	603,698	$	(16,861	)
Securities Held to Maturity:
U.S. government-sponsored agencies	$	24,975	$	(25	)	$	—	$	—		$	24,975	$	(25	)
Mortgage-backed securities residential		48,307		(269	)		—		—			48,307		(269	)
Total securities held to maturity	$	73,282	$	(294	)	$	—	$	—		$	73,282	$	(294	)
Total securities	$	603,929	$	(14,772	)	$	73,051	$	(2,383	)	$	676,980	$	(17,155	)

XML

LOANS AND LEASES (Tables)

9 Months Ended

Sep. 30, 2022

Receivables [Abstract]

Schedule of composition of loans categorized by the type of loan

Loans outstanding, excluding those held for sale, by general ledger classification, as of September 30, 2022 and December 31, 2021, consisted of the following:

			% of					% of
	September 30,		Totals			December 31,		Total
(Dollars in thousands)	2022		Loans			2021		Loans
Residential mortgage	$	517,755		10.00	%	$	498,300		10.37	%
Multifamily mortgage		1,856,675		35.87			1,595,866		33.20
Commercial mortgage		638,903		12.34			662,626		13.78
Commercial loans (including equipment financing) (1)		2,084,998		40.27			1,955,157		40.67
Commercial construction		4,817		0.09			20,044		0.42
Home equity lines of credit		36,375		0.70			40,803		0.85
Consumer loans, including fixed rate home equity loans		37,412		0.72			33,687		0.70
Other loans		259		0.01			238		0.01
Total loans	$	5,177,194		100.00	%	$	4,806,721		100.00	%

(1)Includes PPP loans of $1.9 million at September 30, 2022 and $13.8 million at December 31, 2021.

In determining an appropriate amount for the allowance, the Bank segments and aggregated the loan portfolio based on common characteristics. The following pool segments identified as of September 30, 2022 are based on the CECL methodology:

			% of
	September 30,		Totals
(Dollars in thousands)	2022		Loans
Primary residential mortgage	$	520,276		10.06	%
Junior lien loan on residence		40,216		0.78
Multifamily property		1,856,675		35.89
Owner-occupied commercial real estate		256,891		4.96
Investment commercial real estate		1,035,254		20.01
Commercial and industrial (1)		1,106,927		21.40
Lease financing		304,256		5.88
Construction		10,384		0.20
Consumer and other		42,506		0.82
Total loans		5,173,385		100.00	%
Net deferred costs		3,809
Total loans including net deferred costs	$	5,177,194

(1) Includes PPP loans of $1.9 million at September 30, 2022.

The portfolio classes identified as of December 31, 2021 are based on the incurred loss methodology and are segmented by federal Call Report codes:

			% of
	December 31,		Total
(Dollars in thousands)	2021		Loans
Primary residential mortgage	$	500,243		10.42	%
Home equity lines of credit		40,803		0.85
Junior lien loan on residence		3,191		0.07
Multifamily property		1,595,866		33.23
Owner-occupied commercial real estate		252,603		5.26
Investment commercial real estate		1,003,979		20.90
Commercial and industrial (1)		992,332		20.66
Lease financing		345,868		7.20
Farmland/agricultural production		6,871		0.14
Commercial construction loans		20,174		0.42
Consumer and other loans		40,828		0.85
Total loans		4,802,758		100.00	%
Net deferred costs		3,963
Total loans including net deferred costs	$	4,806,721

(1)Includes PPP loans of $13.8 million at December 31, 2021.

Schedule of recorded investment in nonaccrual and loans past due 90 days or over still on accrual

The following tables present the recorded investment in nonaccrual and loans past due 90 days or over still on accrual by class of loans as of September 30, 2022 and December 31, 2021:

	September 30, 2022
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	2,527	$	—
Owner-occupied commercial real estate		263		—
Investment commercial real estate		12,429		—
Commercial and industrial		505		—
Total	$	15,724	$	—

	December 31, 2021
			Loans Past Due
			90 Days or Over
			And Still
(In thousands)	Nonaccrual		Accruing Interest
Primary residential mortgage	$	1,851	$	—
Junior lien loan on residence		18		—
Owner-occupied commercial real estate		458		—
Investment commercial real estate		12,750		—
Commercial and industrial		496		—
Total	$	15,573	$	—

Schedule of aging of past due loans

The following tables present the aging of the recorded investment in past due loans as of September 30, 2022 and December 31, 2021 by class of loans, excluding nonaccrual loans:

	September 30, 2022
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	323	$	—	$	—	$	323
Commercial and industrial		6,925		—		—		6,925
Total	$	7,248	$	—	$	—	$	7,248

	December 31, 2021
	30-59		60-89		90 Days or
	Days		Days		Greater		Total
(In thousands)	Past Due		Past Due		Past Due		Past Due
Primary residential mortgage	$	639	$	—	$	—	$	639
Commercial and industrial		7,825		142		—		7,967
Total	$	8,464	$	142	$	—	$	8,606

Schedule of credit risk profile of loans

The following is a summary of the credit risk profile of loans by internally assigned grade as of September 30, 2022 based on originations for the periods indicated; the years represent the year of origination for non-revolving loans:

	Grade as of September 30, 2022 for Loans Originated During
											2017				Revolving-
(In thousands)	2022		2021		2020		2019		2018		and Prior		Revolving		Term		Total
Primary residential mortgage:
Pass	$	91,142	$	94,871	$	63,091	$	38,422	$	28,052	$	201,286	$	—	$	694	$	517,558
Special mention		—		—		—		—		—		98		—		—		98
Substandard		—		—		554		1,062		282		722		—		—		2,620
Doubtful		—		—		—		—		—		—		—		—		—
Total primary residential mortgages		91,142		94,871		63,645		39,484		28,334		202,106		—		694		520,276
Junior lien loan on residence:
Pass		1,545		185		46		664		354		1,047		35,867		—		39,708
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		508		—		508
Doubtful		—		—		—		—		—		—		—		—		—
Total junior lien loan on residence		1,545		185		46		664		354		1,047		36,375		—		40,216
Multifamily property:
Pass		449,363		683,097		118,815		229,869		43,062		317,365		981		1,830		1,844,382
Special mention		—		—		—		2,860		—		3,518		—		—		6,378
Substandard		—		—		—		—		—		5,915		—		—		5,915
Doubtful		—		—		—		—		—		—		—		—		—
Total multifamily property		449,363		683,097		118,815		232,729		43,062		326,798		981		1,830		1,856,675
Owner-occupied commercial real estate:
Pass		12,216		44,107		20,990		12,335		22,587		134,701		764		8,739		256,439
Special mention		—		—		—		—		—		189		—		—		189
Substandard		—		—		—		—		—		263		—		—		263
Doubtful		—		—		—		—		—		—		—		—		—
Total owner-occupied commercial real estate		12,216		44,107		20,990		12,335		22,587		135,153		764		8,739		256,891
Investment commercial real estate:
Pass		149,630		155,537		64,245		168,225		93,927		317,770		7,128		21,831		978,293
Special mention		—		—		—		13,069		—		13,379		—		14,588		41,036
Substandard		12,429		—		—		3,496		—		—		—		—		15,925
Doubtful		—		—		—		—		—		—		—		—		—
Total investment commercial real estate		162,059		155,537		64,245		184,790		93,927		331,149		7,128		36,419		1,035,254
Commercial and industrial:
Pass		277,681		250,700		87,541		89,923		30,915		6,107		298,246		33,082		1,074,195
Special mention		16,333		1,788		2,322		4,265		194		—		7,325		—		32,227
Substandard		—		—		—		—		283		186		36		—		505
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial and industrial		294,014		252,488		89,863		94,188		31,392		6,293		305,607		33,082		1,106,927
Lease financing:
Pass		51,120		76,975		61,758		56,022		34,009		20,422		—		—		300,306
Special mention		2,179		—		—		—		—		—		—		—		2,179
Substandard		—		—		—		1,771		—		—		—		—		1,771
Doubtful		—		—		—		—		—		—		—		—		—
Total lease financing		53,299		76,975		61,758		57,793		34,009		20,422		—		—		304,256
Construction loans:

Pass		—		—		—		1,444		—		—		4,848		4,092		10,384
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total commercial construction loans		—		—		—		1,444		—		—		4,848		4,092		10,384
Consumer and other loans:
Pass		—		396		200		13		—		5,980		32,661		3,256		42,506
Special mention		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total consumer and other loans		—		396		200		13		—		5,980		32,661		3,256		42,506
Total:
Pass		1,032,697		1,305,868		416,686		596,917		252,906		1,004,678		380,495		73,524		5,063,771
Special mention		18,512		1,788		2,322		20,194		194		17,184		7,325		14,588		82,107
Substandard		12,429		—		554		6,329		565		7,086		544		—		27,507
Doubtful		—		—		—		—		—		—		—		—		—
Total Loans	$	1,063,638	$	1,307,656	$	419,562	$	623,440	$	253,665	$	1,028,948	$	388,364	$	88,112	$	5,173,385

Schedule of the risk category of loans by class of loans

As of December 31, 2021, and based on the most recent analysis performed, the risk category of loans by class of loans was as follows:

			Special
(In thousands)	Pass		Mention		Substandard		Doubtful
Primary residential mortgage	$	494,444	$	557	$	5,242	$	—
Home equity lines of credit		40,274		—		529		—
Junior lien loan on residence		3,173		—		18		—
Multifamily property		1,579,776		7,720		8,370		—
Owner-occupied commercial real estate		251,229		663		711		—
Investment commercial real estate		901,877		87,297		14,805		—
Commercial and industrial		951,127		20,178		21,027		—
Lease financing		345,868		—		—		—
Farmland/agricultural production		6,871		—		—		—
Commercial construction loans		20,099		75		—		—
Consumer and other loans		40,828		—		—		—
Total	$	4,635,566	$	116,490	$	50,702	$	—

Schedule of loans modified as troubled debt restructurings

The following table presents loans by class modified as TDRs during the three-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		2	$	455	$	455
Total		2	$	455	$	455

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2022:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Investment commercial real estate		1	$	12,429	$	12,429
Total		1	$	12,429	$	12,429

The following table presents loans by class modified as TDRs during the nine-month period ended September 30, 2021:

			Pre-Modification		Post-Modification
			Outstanding		Outstanding
	Number of		Recorded		Recorded
(Dollars in thousands)	Loans		Investment		Investment
Primary residential mortgage		3	$	1,277	$	1,277
Commercial and industrial		1		2,194		2,194
Total		4	$	3,471	$	3,471

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2022:

	Number of		Recorded
(Dollars in thousands)	Loans		Investment
Primary residential mortgage		1	$	145
Total		1	$	145

The following table presents loans by class modified as TDRs that failed to comply with the modified terms in the twelve months following modification and resulted in a payment default at September 30, 2021:

XML

ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2022

Credit Loss [Abstract]

Schedule of loan balances by segment and the corresponding balances in the allowance for loan losses

The following table presents the loan balances by segment, and the corresponding balances in the allowance as of September 30, 2022. For the period ended September 30, 2022, the allowance was based on the CECL methodology.

	September 30, 2022
			Ending ACL				Ending ACL
	Total		Attributable		Total		Attributable
	Individually		To Individually		Loans		To Loans				Total
	Evaluated		Evaluated		Collectively		Collectively		Total		Ending
(In thousands)	Loans		Loans		Evaluated		Evaluated		Loans		ACL
Primary residential mortgage	$	133	$	—	$	520,143	$	2,279	$	520,276	$	2,279
Junior lien loan on residence		—		—		40,216		154		40,216		154
Multifamily property		—		—		1,856,675		15,317		1,856,675		15,317
Owner-occupied commercial real estate		263		—		256,628		4,907		256,891		4,907
Investment commercial real estate		12,429		2,429		1,022,825		8,897		1,035,254		11,326
Commercial and industrial		222		—		1,106,705		21,838		1,106,927		21,838
Lease financing		—		—		304,256		3,238		304,256		3,238
Construction loans		—		—		10,384		128		10,384		128
Consumer and other loans		—		—		42,506		496		42,506		496
Total ACL	$	13,047	$	2,429	$	5,160,338	$	57,254	$	5,173,385	$	59,683

The following table presents the loan balances by portfolio class, based on impairment method, and the corresponding balances in the allowance as of December 31, 2021. For the year ended December 31, 2021, the allowance was calculated based on the incurred loss methodology:

	December 31, 2021
	Total		Ending ALLL		Total		Ending ALLL
	Loans		Attributable		Loans		Attributable
	Individually		To Loans		Collectively		To Loans
	Evaluated		Individually		Evaluated		Collectively				Total
	For		Evaluated for		For		Evaluated for		Total		Ending
(In thousands)	Impairment		Impairment		Impairment		Impairment		Loans		ALLL
Primary residential mortgage	$	2,242	$	—	$	498,001	$	1,432	$	500,243	$	1,432
Home equity lines of credit		—		—		40,803		83		40,803		83
Junior lien loan on residence		18		—		3,173		5		3,191		5
Multifamily property		—		—		1,595,866		9,806		1,595,866		9,806
Owner-occupied commercial real estate		458		—		252,145		1,998		252,603		1,998
Investment commercial real estate		12,750		4,234		991,229		22,849		1,003,979		27,083
Commercial and industrial		2,584		—		989,748		17,509		992,332		17,509
Lease financing		—		—		345,868		3,440		345,868		3,440
Farmland/agricultural production		—		—		6,871		84		6,871		84
Commercial construction loans		—		—		20,174		42		20,174		42
Consumer and other loans		—		—		40,828		215		40,828		215
Total ALLL	$	18,052	$	4,234	$	4,784,706	$	57,463	$	4,802,758	$	61,697

Schedule of loans individually evaluated by segment

The following tables present collateral dependent loans individually evaluated by segment as of September 30, 2022:

	September 30, 2022
	Unpaid						Average
	Principal		Recorded		Related		Individually Evaluated
(In thousands)	Balance		Investment		Allowance		Loans
With no related allowance recorded:
Primary residential mortgage	$	136	$	133	$	—	$	249
Owner-occupied commercial real estate		301		263		—		307
Commercial and industrial		241		222		—		254
Total loans with no related allowance	$	678	$	618	$	—	$	810
With related allowance recorded:
Investment commercial real estate	$	12,500	$	12,429	$	2,429	$	12,531
Total loans with related allowance	$	12,500	$	12,429	$	2,429	$	12,531
Total loans individually evaluated	$	13,178	$	13,047	$	2,429	$	13,341

The following table presents, under previously applicable GAAP, loans individually evaluated for impairment as of December 31, 2021 (the average impaired loans on the following tables represent year to date impaired loans):

	December 31, 2021
	Unpaid						Average
	Principal		Recorded		Specific		Impaired
(In thousands)	Balance		Investment		Reserves		Loans
With no related allowance recorded:
Primary residential mortgage	$	2,453	$	2,242	$	—	$	1,818
Owner-occupied commercial real estate		492		458		—		540
Junior lien loan on residence		18		18		—		3
Commercial and industrial		4,549		2,584		—		3,153
Total loans with no related allowance	$	7,512	$	5,302	$	—	$	5,514
With related allowance recorded:
Investment commercial real estate	$	19,887	$	12,750	$	4,234	$	6,034
Total loans with related allowance	$	19,887	$	12,750	$	4,234	$	6,034
Total loans individually evaluated for impairment	$	27,399	$	18,052	$	4,234	$	11,548

Schedule of Activity in Allowance for Loan and Losses

The activity in the allowance for credit losses for the three months ended September 30, 2022 is summarized below:

	July 1,										September 30,
	2022										2022
	Beginning							Provision			Ending
(In thousands)	ACL		Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	2,154	$	—		$	15	$	110		$	2,279
Junior lien loan on residence		151		—			—		3			154
Multifamily property		15,790		—			—		(473	)		15,317
Owner-occupied commercial real estate		4,660		—			—		247			4,907
Investment commercial real estate		10,969		—			—		357			11,326
Commercial and industrial		20,998		—			—		840			21,838
Lease financing		3,352		—			—		(114	)		3,238
Construction loans		359		—			—		(231	)		128
Consumer and other loans		589		(19	)		—		(74	)		496
Total ACL	$	59,022	$	(19	)	$	15	$	665		$	59,683

(1) Provision to roll forward the ACL excludes a credit of $66,000 for off-balance sheet commitments.

The activity in the allowance for credit losses for the nine months ended September 30, 2022 is summarized below:

	December 31,													September 30,
	2021													2022
	Prior to adoption		Impact of								Provision			Ending
(In thousands)	of Topic 326		adopting Topic 326			Charge-offs			Recoveries		(Credit) (1)			ACL
Primary residential mortgage	$	1,510	$	717		$	—		$	15	$	37		$	2,279
Junior lien loan on residence		88		83			(3	)		—		(14	)		154
Multifamily property		9,806		4,072			—			—		1,439			15,317
Owner-occupied commercial real estate		1,998		2,902			—			—		7			4,907
Investment commercial real estate		27,083		(13,589	)		(250	)		—		(1,918	)		11,326
Commercial and industrial		17,509		(657	)		—			4		4,982			21,838
Lease financing		3,440		156			—			—		(358	)		3,238
Construction loans		48		361			—			—		(281	)		128
Consumer and other loans		215		419			(46	)		2		(94	)		496
Total ACL	$	61,697	$	(5,536	)	$	(299	)	$	21	$	3,800		$	59,683

(1) Provision to roll forward the ACL excludes a provision of $623,000 for off-balance sheet commitments.

For the accounting policy on the allowance for loan losses that was in effect prior to the adoption of Topic 326, refer to Note 1, Summary of Significant Accounting Policies in our Annual Report on Form 10-K for the year-ended December 31, 2021. The

activity in the allowance for loan and lease losses for the three months and nine months ended September 30, 2021 is summarized below:

	July 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,167	$	—		$	—	$	(92	)	$	2,075
Home equity lines of credit		123		—			—		(4	)		119
Junior lien loan on residence		8		—			—		(1	)		7
Multifamily property		10,615		—			—		(47	)		10,568
Owner-occupied commercial real estate		2,447		—			—		(154	)		2,293
Investment commercial real estate		27,886		—			—		2,098			29,984
Commercial and industrial		16,565		(19	)		50		(330	)		16,266
Lease financing		3,275		—			—		94			3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		159		—			—		6			165
Consumer and other loans		217		(4	)		1		15			229
Total ALLL	$	63,505	$	(23	)	$	51	$	1,600		$	65,133

	January 1,										September 30,
	2021										2021
	Beginning							Provision			Ending
(In thousands)	ALLL		Charge-offs			Recoveries		(Credit)			ALLL
Primary residential mortgage	$	2,905	$	(12	)	$	—	$	(818	)	$	2,075
Home equity lines of credit		218		—			85		(184	)		119
Junior lien loan on residence		15		—			—		(8	)		7
Multifamily property		9,945		—			—		623			10,568
Owner-occupied commercial real estate		3,050		—			—		(757	)		2,293
Investment commercial real estate		27,713		—			—		2,271			29,984
Commercial and industrial		19,047		(5,019	)		60		2,178			16,266
Lease financing		3,936		—			—		(567	)		3,369
Farmland/agricultural production		43		—			—		15			58
Commercial construction loans		158		—			—		7			165
Consumer and other loans		279		(24	)		9		(35	)		229
Total ALLL	$	67,309	$	(5,055	)	$	154	$	2,725		$	65,133

Schedule of Activity in ACL for Off Balance Sheet Commitments

The following table presets the activity in the ACL for off balance sheet commitments for the nine months ended September 30, 2022:

	December 31,
	2021						September 30,
	Prior to adoption		Impact of		Provision		2022
(In thousands)	of Topic 326		adopting Topic 326		(Credit)		Ending ACL
Off balance sheet commitments	$	—	$	302	$	623	$	925
Total ACL	$	—	$	302	$	623	$	925

XML

DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2022

Deposits [Abstract]

Schedule of Details of Total Deposits

The following table sets forth the details of total deposits as of September 30, 2022 and December 31, 2021:

	September 30,				December 31,
	2022				2021
(Dollars in thousands)
Noninterest-bearing demand deposits	$	1,317,954	24.87	%	$	956,482	18.16	%
Interest-bearing checking (1)		2,149,629	40.57			2,287,894	43.45
Savings		166,821	3.15			154,914	2.94
Money market		1,178,112	22.23			1,307,051	24.82
Certificates of deposit - retail		345,047	6.51			409,608	7.78
Certificates of deposit - listing service		30,647	0.58			31,382	0.60
Subtotal deposits		5,188,210	97.91			5,147,331	97.75
Interest-bearing demand - Brokered		85,000	1.60			85,000	1.61
Certificates of deposit - Brokered		25,974	0.49			33,818	0.64
Total deposits	$	5,299,184	100.00	%	$	5,266,149	100.00	%

(1)Interest-bearing checking includes $567.3 million at September 30, 2022 and $647.8 million at December 31, 2021 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace program.

Scheduled Maturities of Time Deposits

The scheduled maturities of certificates of deposit, including brokered certificates of deposit, as of September 30, 2022, are as follows:

(In thousands)
2022	$	84,432
2023		183,096
2024		76,793
2025		46,231
2026		10,314
2027 and later		802
Total	$	401,668

XML

BUSINESS SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Income and Total Assets for Reportable Segments

The following tables present the statements of income and total assets for the Company’s reportable segments for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	43,327	$	2,198	$	45,525
Noninterest income		2,955		13,428		16,383
Total income		46,282		15,626		61,908
Provision for credit losses		599		—		599
Compensation and benefits		15,343		7,313		22,656
Premises and equipment expense		3,908		626		4,534
FDIC expense		510		—		510
Other operating expense		3,235		2,625		5,860
Total operating expense		23,595		10,564		34,159
Income before income tax expense		22,687		5,062		27,749
Income tax expense		6,193		1,430		7,623
Net income	$	16,494	$	3,632	$	20,126

	Three Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	33,780	$	1,431	$	35,211
Noninterest income		3,476		14,305		17,781
Total income		37,256		15,736		52,992
Provision for loan and lease losses		1,600		—		1,600
Compensation and employee benefits		13,079		6,780		19,859
Premises and equipment expense		3,861		598		4,459
FDIC insurance expense		555		—		555
Other operating expense		4,657		2,655		7,312
Total operating expense		23,752		10,033		33,785
Income before income tax expense		13,504		5,703		19,207
Income tax expense		3,556		1,480		5,036
Net income	$	9,948	$	4,223	$	14,171

	Nine Months Ended September 30, 2022
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	122,404	$	5,636	$	128,040
Noninterest income		6,645		42,960		49,605
Total income		129,049		48,596		177,645
Provision for credit losses		4,423		—		4,423
Compensation and employee benefits		47,222		19,765		66,987
Premises and equipment expense		11,674		2,147		13,821
FDIC insurance expense		1,484		—		1,484
Other operating expense		10,613		7,483		18,096
Total operating expense		75,416		29,395		104,811
Income before income tax expense		53,633		19,201		72,834
Income tax expense		14,117		5,050		19,167
Net income	$	39,516	$	14,151	$	53,667
Total assets at period end	$	5,999,393	$	87,868	$	6,087,261

	Nine Months Ended September 30, 2021
			Peapack
(In thousands)	Banking		Private		Total
Net interest income	$	96,405	$	4,444	$	100,849
Noninterest income		12,810		40,469		53,279
Total income		109,215		44,913		154,128
Provision for loan and lease losses		2,725		—		2,725
Compensation and employee benefits		43,876		17,883		61,759
Premises and equipment expense		10,950		1,696		12,646
FDIC insurance expense		1,669		—		1,669
Other operating expense		10,865		7,524		18,389
Total operating expense		70,085		27,103		97,188
Income before income tax expense		39,130		17,810		56,940
Income tax expense		10,436		4,737		15,173
Net income	$	28,694	$	13,073	$	41,767
Total assets at period end	$	6,144,190	$	96,095	$	6,240,285

XML

FAIR VALUE (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Assets Measured at Fair Value on Recurring Basis

The following tables summarize, at the dates indicated, assets measured at fair value on a recurring basis, including financial assets for which the Corporation has elected the fair value option:

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Available for sale:
U.S. government-sponsored agencies	$	189,410	$	—	$	189,410	$	—
Mortgage-backed securities-residential		267,547		—		267,547		—
SBA pool securities		29,121		—		29,121		—
State and political subdivisions		2,584		—		2,584		—
Corporate bond		9,218		—		9,218		—
CRA investment fund		12,957		12,957		—		—
Loans held for sale, at fair value		1,333		—		1,333		—
Derivatives:
Cash flow hedges		10,462		—		10,462		—
Loan level swaps		41,018		—		41,018		—
Total	$	563,650	$	12,957	$	550,693	$	—
Liabilities:
Derivatives:
Loan level swaps	$	41,018	$	—	$	41,018	$	—
Total	$	41,018	$	—	$	41,018	$	—

Assets Measured on a Recurring Basis

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Securities available for sale:
U.S. government-sponsored agencies	$	272,221	$	—	$	272,221	$	—
Mortgage-backed securities-residential		476,974		—		476,974		—
SBA pool securities		39,561		—		39,561		—
State and political subdivisions		5,476		—		5,476		—
Corporate bond		2,521		—		2,521		—
CRA investment fund		14,685		14,685		—		—
Loans held for sale, at fair value		3,040		—		3,040		—
Derivatives:
Loan level swaps		32,326		—		32,326		—
Total	$	846,804	$	14,685	$	832,119	$	—
Liabilities:
Derivatives:
Cash flow hedges	$	3,479	$	—	$	3,479	$	—
Loan level swaps		34,569		—		34,569		—
Total	$	38,048	$	—	$	38,048	$	—

Schedule of Residential Loans Held for Sale

The following tables present residential loans held for sale, at fair value at the dates indicated:

(In thousands)	September 30, 2022		December 31, 2021
Residential loans contractual balance	$	1,326	$	2,992
Fair value adjustment		7		48
Total fair value of residential loans held for sale	$	1,333	$	3,040

Schedule of Assets Measured at Fair Value on Non-Recurring Basis

The following tables summarize, at the dates indicated, assets measured at fair value on a non-recurring basis:

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	September 30,		Assets		Inputs		Inputs
(In thousands)	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Individually evaluated loans:
Investment commercial real estate	$	10,000	$	—	$	—	$	10,000

			Fair Value Measurements Using
			Quoted
			Prices in
			Active		Significant
			Markets For		Other		Significant
			Identical		Observable		Unobservable
	December 31,		Assets		Inputs		Inputs
(In thousands)	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Impaired loans:
Investment commercial real estate	$	8,516	$	—	$	—	$	8,516

Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments at September 30, 2022 are as follows:

			Fair Value Measurements at September 30, 2022 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	108,280	$	108,280	$	—	$	—	$	108,280
Securities available for sale		497,880		—		497,880		—		497,880
Securities held to maturity		103,551		—		87,857		—		87,857
CRA investment fund		12,957		12,957		—		—		12,957
FHLB and FRB stock		14,986		—		—		—	N/A
Loans held for sale, at fair value		1,333		—		1,333		—		1,333
Loans held for sale, at lower of cost or fair value		10,102		—		11,152		—		11,152
Loans, net of allowance for credit losses		5,117,511		—		—		4,842,877		4,842,877
Accrued interest receivable		17,816		—		1,756		16,060		17,816
Accrued interest receivable loan level swaps (1)		2,048		—		2,048		—		2,048
Cash flow hedges		10,462		—		10,462		—		10,462
Loan level swaps		41,018		—		41,018		—		41,018
Financial liabilities
Deposits	$	5,299,184	$	4,897,516	$	387,933	$	—	$	5,285,449
Short-term borrowings		32,369		—		32,369		—		32,369
Subordinated debt		132,916		—		—		127,062		127,062
Accrued interest payable		2,910		1,187		357		1,366		2,910
Accrued interest payable loan level swaps (2)		2,048		—		2,048		—		2,048
Loan level swap		41,018		—		41,018		—		41,018

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

The carrying amounts and estimated fair values of financial instruments at December 31, 2021 are as follows:

			Fair Value Measurements at December 31, 2021 using
	Carrying
(In thousands)	Amount		Level 1		Level 2		Level 3		Total
Financial assets
Cash and cash equivalents	$	146,804	$	146,804	$	—	$	—	$	146,804
Securities available for sale		796,753		—		796,753		—		796,753
Securities held to maturity		108,680		—		108,460		—		108,460
CRA investment fund		14,685		14,685		—		—		14,685
FHLB and FRB stock		12,950		—		—		—	N/A
Loans held for sale, at fair value		3,040		—		3,040		—		3,040
Loans held for sale, at lower of cost or fair value		34,051		—		37,538		—		37,538
Loans, net of allowance for loan and lease losses		4,745,024		—		—		4,767,293		4,767,293
Accrued interest receivable		21,589		—		2,443		19,146		21,589
Accrued interest receivable loan level swaps (1)		4,842		—		4,842		—		4,842
Loan level swaps		32,326		—		32,326		—		32,326
Financial liabilities
Deposits	$	5,266,149	$	4,791,341	$	476,659	$	—	$	5,268,000
Subordinated debt		132,701		—		—		140,556		140,556
Accrued interest payable		651		130		446		75		651
Accrued interest payable loan level swaps (2)		4,842		—		4,842		—		4,842
Cash flow hedges		3,479		—		3,479		—		3,479
Loan level swaps		34,569		—		34,569		—		34,569

(1)Included in other assets in the Consolidated Statement of Condition.

(2)Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)

9 Months Ended

Sep. 30, 2022

Revenue From Contract With Customer [Abstract]

Schedule of Noninterest Income

The following tables present the sources of noninterest income for the periods indicated:

	For the Three Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	129	$	117
Interchange income		356		374
Other		575		468
Wealth management fees (1)		12,943		13,860
Corporate advisory fee income		102		84
Other (2)		2,278		2,878
Total noninterest other income	$	16,383	$	17,781

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Service charges on deposits
Overdraft fees	$	360	$	297
Interchange income		1,077		1,061
Other		1,638		1,343
Wealth management fees (1)		41,668		39,025
Corporate advisory fee income		1,696		1,303
Gains/(losses) on sales of OREO		—		51
Other (2)		3,166		10,199
Total noninterest other income	$	49,605	$	53,279

(1)Includes investment brokerage fees.

(2)All of the other category is outside the scope of ASC 606.

Schedule of Noninterest Income by Operating Segment

The following table presents the sources of noninterest income by operating segment for the periods indicated:

	For the Three Months Ended  September 30,						For the Three Months Ended  September 30,
	2022						2021
(In thousands)			Wealth						Wealth
Revenue by Operating Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	129	$	—	$	129	$	117	$	—	$	117
Interchange income		356		—		356		374		—		374
Other		575		—		575		468		—		468
Wealth management fees (1)		—		12,943		12,943		—		13,860		13,860
Corporate advisory fee income		102		—		102		84		—		84
Other (2)		1,793		485		2,278		2,433		445		2,878
Total noninterest income	$	2,955	$	13,428	$	16,383	$	3,476	$	14,305	$	17,781

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
(In thousands)	2022						2021
Revenue by Operating			Wealth						Wealth
Segment	Banking		Management		Total		Banking		Management		Total
Service charges on deposits
Overdraft fees	$	360	$	—	$	360	$	297	$	—	$	297
Interchange income		1,077		—		1,077		1,061		—		1,061
Other		1,638		—		1,638		1,343		—		1,343
Wealth management fees (1)		—		41,668		41,668		—		39,025		39,025
Corporate advisory fee income		1,696		—		1,696		1,303		—		1,303
Gains/(losses) on sales of OREO		—		—		—		51		—		51
Other (2)		1,874		1,292		3,166		8,755		1,444		10,199
Total noninterest income	$	6,645	$	42,960	$	49,605	$	12,810	$	40,469	$	53,279

(1)Includes investment brokerage fees.

(2)All of the other category is outside the scope of ASC 606.

XML

OTHER OPERATING EXPENSES (Tables)

9 Months Ended

Sep. 30, 2022

Other Income And Expenses [Abstract]

Schedule of Components of Other Operating Expenses

The following table presents the major components of other operating expenses for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2022		2021		2022		2021
Professional and legal fees	$	1,180	$	1,565	$	3,630	$	4,007
Telephone		403		342		1,085		988
Advertising		574		386		1,545		1,004
Amortization of intangible assets		384		431		1,204		1,167
Branch restructure		—		—		372		228
Write-off of subordinated debt costs		—		—		—		648
Other operating expenses		3,319		3,238		9,587		8,997
Total other operating expenses	$	5,860	$	5,962	$	17,423	$	17,039

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Tables)

9 Months Ended

Sep. 30, 2022

Stockholders Equity Note [Abstract]

Schedule of Accumulated Other Comprehensive Income/(Loss) Balances, Net of Tax

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the three months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Three Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	July 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(59,066	)	$	(23,563	)	$	—		$	(23,563	)	$	(82,629	)
Gain/(loss) on cash flow hedges		339			7,349			(42	)		7,307			7,646
Accumulated other comprehensive gain/(loss),    net of tax	$	(58,727	)	$	(16,214	)	$	(42	)	$	(16,256	)	$	(74,983	)

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Three Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	July 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(956	)	$	(4,293	)	$	—	$	(4,293	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(4,459	)		673			—		673			(3,786	)
Accumulated other comprehensive gain/(loss),    net of tax	$	(5,415	)	$	(3,620	)	$	—	$	(3,620	)	$	(9,035	)

The following is a summary of the accumulated other comprehensive income/(loss) balances, net of tax, for the nine months ended September 30, 2022 and 2021:

							Amount			Other
							Reclassified			Comprehensive
				Other			From			Income/(Loss)
				Comprehensive			Accumulated			Nine Months
	Balance at			Income/(Loss)			Other			Ended			Balance at
	January 1,			Before			Comprehensive			September 30,			September 30,
(In thousands)	2022			Reclassifications			Income/(Loss)			2022			2022
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	(9,873	)	$	(77,783	)	$	5,027		$	(72,756	)	$	(82,629	)
Gain/(loss) on cash flow hedges		(2,501	)		10,189			(42	)		10,147			7,646
Accumulated other comprehensive    gain/(loss), net of tax	$	(12,374	)	$	(67,594	)	$	4,985		$	(62,609	)	$	(74,983	)

							Amount		Other
							Reclassified		Comprehensive
				Other			From		Income/(Loss)
				Comprehensive			Accumulated		Nine Months
	Balance at			Income/(Loss)			Other		Ended			Balance at
	January 1,			Before			Comprehensive		September 30,			September 30,
(In thousands)	2021			Reclassifications			Income/(Loss)		2021			2021
Net unrealized holding gain/(loss) on    securities available for sale, net of tax	$	5,521		$	(10,770	)	$	—	$	(10,770	)	$	(5,249	)
Gain/(loss) on cash flow hedges		(6,913	)		2,521			606		3,127			(3,786	)
Accumulated other comprehensive    gain/(loss), net of tax	$	(1,392	)	$	(8,249	)	$	606	$	(7,643	)	$	(9,035	)

Schedule of Reclassifications Out of Accumulated Other Comprehensive Income/(loss)

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the three months ended September 30, 2022 and 2021:

	Three Months Ended
	September 30,
(In thousands)	2022			2021		Affected Line Item in Income Statement
Unrealized gains/(losses) on securities    available for sale:
Reclassification adjustment for gains on termination    of swaps included in net income	$	(58	)	$	—	Other income
Tax effect		16			—	Income tax expense
Total reclassifications, net of tax	$	(42	)	$	—

The following represents the reclassifications out of accumulated other comprehensive income/(loss) for the nine months ended September 30, 2022 and 2021:

	Nine Months Ended
	September 30,
(In thousands)	2022			2021			Affected Line Item in Income
Unrealized gains/(losses) on cash flow hedge    derivatives:
Reclassification adjustment for amounts    included in net income	$	6,609		$	—		Securities losses, net
Reclassification adjustment for (gains)/losses on   termination of swaps included in net income		(58	)		842		Other income
Tax effect		(1,566	)		(236	)	Income tax expense
Total reclassifications, net of tax	$	4,985		$	606

XML

DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2022

Schedule of Information about Interest Rate Swaps Designated as Cash Flow Hedges

The following table presents information about the interest rate swaps designated as cash flow hedges as of September 30, 2022 and December 31, 2021:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	290,000		$	230,000
Weighted average pay rate		1.78	%		1.99	%
Weighted average receive rate		1.53	%		0.20	%
Weighted average maturity	2.26 years			1.04 years
Unrealized gain/(loss), net	$	4,083		$	(3,479	)
Number of contracts		12			13

Schedule of Cash Flow Hedges Included in Financial Statements

	September 30, 2022
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	290,000	$	4,083
Total included in other assets		290,000		4,083
Total included in other liabilities		—		—

	December 31, 2021
	Notional		Fair
(In thousands)	Amount		Value
Interest rate swaps related to interest-bearing deposits	$	230,000	$	(3,479	)
Total included in other assets		—		—
Total included in other liabilities		230,000		(3,479	)

Schedule of Net Gains/(Loss) Recorded in Accumulated Other Comprehensive Income/(Loss)

The following table presents the net gain/(loss) recorded in accumulated other comprehensive income/(loss) and the consolidated financial statements relating to the cash flow derivative instruments for the three and nine months ended September 30, 2022 and 2021:

	For the Three Months Ended  September 30,				For the Nine Months Ended September 30,
(In thousands)	2022		2021		2022		2021
Interest rate contracts
Gain/(loss) recognized in other comprehensive income (effective portion)	$	10,048	$	936	$	13,999	$	3,507
Gain/(loss) reclassified from other comprehensive income to interest expense		—		—		—		—
Gain/(loss) recognized in other noninterest income		58		—		58		(842	)

Not Designated as Hedging Instrument [Member]

Schedule of Information about Interest Rate Swaps Designated as Cash Flow Hedges

Information about these swaps is as follows:

(Dollars in thousands)	September 30, 2022			December 31, 2021
Notional amount	$	627,502		$	702,210
Fair value	$	(38,969	)	$	32,326
Weighted average pay rates		3.96	%		4.00	%
Weighted average receive rates		4.88	%		1.83	%
Weighted average maturity	4.83 years			5.5 years
Number of contracts		80			86

XML

LEASES (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Operating Lease Liabilities by Contractual Maturity

The following is a schedule of the Company's operating lease liabilities by contractual maturity as of September 30, 2022:

(In thousands)
2022	$	711
2023		2,976
2024		2,299
2025		2,048
2026		1,487
Thereafter		6,194
Total lease payments		15,715
Less: imputed interest		1,614
Total present value of lease payments	$	14,101

Summary of Supplemental Cash Flow Information Related to Direct Finance and Operating Leases

The following table shows the supplemental cash flow information related to the Company’s direct finance and operating leases for the periods indicated:

	For the Nine Months Ended September 30,
(In thousands)	2022		2021
Right-of-use asset obtained in exchange for lease obligation	$	5,696	$	2,772
Operating cash flows from operating leases		2,008		1,844
Operating cash flows from direct finance leases		193		229
Financing cash flows from direct finance leases		561		561

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)	1 Months Ended	3 Months Ended				6 Months Ended	9 Months Ended
	May 31, 2020 shares	Sep. 30, 2022 USD ($) $ / shares shares	Sep. 30, 2021 USD ($) shares	Jun. 30, 2021 USD ($)	Sep. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) Segment $ / shares shares	Sep. 30, 2021 USD ($) shares	Jan. 01, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020
Summary Of Significant Accounting Policies [Line Items]
Net increase to retained earnings		$ 329,116,000					$ 329,116,000			$ 274,288,000
Reduction to allowance for credit losses		(925,000)					$ (925,000)
Number of operating segments | Segment							2
Federal funds sales periods							1 day
Interest-earning deposits maturities period							1 year
Servicing rights							$ 0
Amount of loans serviced		$ 145,600,000					$ 145,600,000			$ 97,500,000
Threshold period for loan							30 days
Threshold for determining nonaccrual status		90 days					90 days
Non-impaired special mention loans multiple										2.25
Non-impaired substandard loans multiple											3.25
Loan modifications							$ 947,000,000.0
Post-modification outstanding recorded investment			$ 455,000				$ 12,429,000	$ 3,471,000
Sale of loans servicing released to third party				$ 56,500,000	$ 355,000,000.0	$ 124,000,000
Closing stock price of common stock | $ / shares		$ 33.65					$ 33.65
Stock options granted | shares		0					0
Issuance of shares for Employee Stock Purchase Plan, shares | shares		6,441	6,889				20,369	21,661
Antidilutive securities | shares		112,241					296,687	261,610
Goodwill impairment							$ 0
Restricted stock [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares granted | shares		0					235,534
Compensation cost		$ 2,100,000	$ 1,800,000				$ 5,700,000	$ 5,300,000
Restricted stock [Member] | Tranche One [Member]
Summary Of Significant Accounting Policies [Line Items]
Stock option vesting term							3 years
Restricted stock [Member] | Tranche Two [Member]
Summary Of Significant Accounting Policies [Line Items]
Stock option vesting term							5 years
Performance Shares [Member]
Summary Of Significant Accounting Policies [Line Items]
Shares granted | shares		0					71,482
Restricted Stock Units [Member]
Summary Of Significant Accounting Policies [Line Items]
Unrecognized compensation cost		$ 17,000,000.0					$ 17,000,000.0
Weighted average period over which unrecognized compensation is expected to be recognized (in years)							1 year 4 months 20 days
Employee Stock [Member]
Summary Of Significant Accounting Policies [Line Items]
Compensation cost		$ 37,000	$ 37,000				$ 114,000	$ 93,000
Number of share purchase rights authorized | shares		150,000					150,000
Additional common stock to be issued | shares	200,000
Percentage of closing market price on purchase date							85.00%
Deferral [Member]
Summary Of Significant Accounting Policies [Line Items]
Post-modification outstanding recorded investment							$ 0
U.S. Small Business Administration (SBA) Loans [Member]
Summary Of Significant Accounting Policies [Line Items]
Paycheck Protection Program, maximum credit facility		$ 650,000,000					650,000,000
Paycheck protection program loans remaining balance		$ 1,900,000					$ 1,900,000
Consumer and Other [Member] | Closed-end Loans [Member]
Summary Of Significant Accounting Policies [Line Items]
Threshold for determining nonaccrual status		120 days					120 days
Consumer and Other [Member] | Open-end Loans [Member]
Summary Of Significant Accounting Policies [Line Items]
Threshold for determining nonaccrual status		180 days					180 days
Small Business Administration Loans [Member]
Summary Of Significant Accounting Policies [Line Items]
Loans held for sale		$ 10,100,000					$ 10,100,000			$ 32,500,000
Maximum [Member]
Summary Of Significant Accounting Policies [Line Items]
Cash equivalents original maturities period							90 days
Short term borrowings original maturities period							90 days
Paycheck Protection Loans Repayment Period							5 years
Finite-Lived Intangible Asset, Useful Life							15 years
Maximum [Member] | Employee Stock Option [Member]
Summary Of Significant Accounting Policies [Line Items]
Option term							10 years
Stock option vesting term							5 years
Maximum [Member] | Employee Stock [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of compensation contributable							15.00%
Minimum [Member]
Summary Of Significant Accounting Policies [Line Items]
Paycheck Protection Loans Repayment Period							2 years
Finite-Lived Intangible Asset, Useful Life							5 years
Minimum [Member] | Employee Stock [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of compensation contributable							1.00%
ASU 2016-13 [Member]
Summary Of Significant Accounting Policies [Line Items]
Net increase to retained earnings									$ 3,900,000
Reduction to allowance for credit losses									$ 5,500,000
Peapack-Gladstone Mortgage Group, Inc. [Member] | Peapack Ventures, LLC [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of interest owned		99.00%					99.00%
Peapack-Gladstone Mortgage Group, Inc. [Member] | Peapack-Gladstone Realty, Inc [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of interest owned		79.00%					79.00%
PGB Trust & Investments of Delaware [Member] | Peapack Ventures, LLC [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of interest owned		1.00%					1.00%
Peapack Ventures, LLC [Member] | Peapack-Gladstone Realty, Inc [Member]
Summary Of Significant Accounting Policies [Line Items]
Percentage of interest owned		21.00%					21.00%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Impact to Financial Statements Upon Adoption of ASC 326 (Details) - USD ($) $ in Thousands	Jan. 01, 2022	Sep. 30, 2022	Jun. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Summary Of Significant Accounting Policies [Line Items]
Allowance for credit losses on off-balance sheet commitments	$ (137)
Total impact from ASC 326 adoption	3,909	$ 515,514	$ 520,324	$ 546,388	$ 543,014	$ 538,459	$ 527,122
Tax Effect [Member]
Summary Of Significant Accounting Policies [Line Items]
Allowance for credit losses on off-balance sheet commitments	(51)
Total impact from ASC 326 adoption	1,439			$ 550,297
Impact to Consolidated Statement of Condition from ASC-326 Adoption [Member]
Summary Of Significant Accounting Policies [Line Items]
Allowance for credit losses on off-balance sheet commitments	188
Total impact from ASC 326 adoption	(5,348)
Allowance For Credit Losses on Loans [Member]
Summary Of Significant Accounting Policies [Line Items]
Assets	4,046
Allowance For Credit Losses on Loans [Member] | Tax Effect [Member]
Summary Of Significant Accounting Policies [Line Items]
Assets	1,490
Allowance For Credit Losses on Loans [Member] | Impact to Consolidated Statement of Condition from ASC-326 Adoption [Member]
Summary Of Significant Accounting Policies [Line Items]
Assets	$ (5,536)

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Changes in Options Outstanding) (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2022
Number of Options
Balance	31,340
Exercised	(9,660)
Forfeited	(900)
Balance	20,780
Vested and expected to vest	20,780
Exercisable	20,780
Weighted Average Exercise Price
Balance	$ 14.59
Exercised	13.14
Forfeited	13.11
Balance	15.33
Vested and expected to vest	15.33
Exercisable	$ 15.33
Weighted Average Remaining Contractual Term
Balance	5 months 8 days
Vested and expected to vest	5 months 8 days
Exercisable	5 months 8 days
Aggregate Intrinsic Value
Balance	$ 381
Vested and expected to vest	381
Exercisable	$ 381

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Changes in Restricted Common Shares) (Details) - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Performance Shares [Member]
Number of Shares
Balance at Beginning		225,435
Shares granted	0	71,482
Vested		(58,077)
Forfeited		(5,284)
Balance at end	233,556	233,556
Weighted Average Grant Date Fair Value
Balance at Beginning		$ 20.29
Granted		35.93
Vested		25.77
Forfeited		17.92
Balance at end	$ 23.77	$ 23.77
Restricted stock [Member]
Number of Shares
Balance at Beginning		701,145
Shares granted	0	235,534
Vested		(267,530)
Forfeited		(22,868)
Balance at end	646,281	646,281
Weighted Average Grant Date Fair Value
Balance at Beginning		$ 21.93
Granted		36.86
Vested		21.48
Forfeited		23.46
Balance at end	$ 27.50	$ 27.50

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule of Calculation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Accounting Policies [Abstract]
Net income available to common shareholders	$ 20,126	$ 14,171	$ 53,667	$ 41,767
Basic weighted average shares outstanding	18,072,385	18,763,316	18,244,691	18,891,601
Plus: common stock equivalents	348,276	510,515	407,351	498,921
Diluted weighted average shares outstanding	18,420,661	19,273,831	18,652,042	19,390,522
Net income per share
Basic	$ 1.11	$ 0.76	$ 2.94	$ 2.21
Diluted	$ 1.09	$ 0.74	$ 2.88	$ 2.15

XML

INVESTMENT SECURITIES (Schedule of Amortized Cost and Approximate Fair Value of Securities Available for Sale) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Securities Available for Sale:
Amortized Cost	$ 606,462	$ 809,687
Gross Unrealized Gains	42	3,927
Gross Unrealized Losses	(108,624)	(16,861)
Fair Value	497,880	796,753
Securities Held to Maturity:
Amortized Cost	103,551	108,680
Gross Unrealized Gains		74
Gross Unrealized Losses	(15,694)	(294)
Fair Value	87,857	108,460
U.S. Government-Sponsored Agencies [Member]
Securities Available for Sale:
Amortized Cost	244,770	280,045
Gross Unrealized Losses	(55,360)	(7,824)
Fair Value	189,410	272,221
Securities Held to Maturity:
Amortized Cost	40,000	40,000
Gross Unrealized Gains		7
Gross Unrealized Losses	(4,869)	(25)
Fair Value	35,131	39,982
Mortgage-Backed Securities-Residential [Member]
Securities Available for Sale:
Amortized Cost	315,541	481,062
Gross Unrealized Gains	40	3,849
Gross Unrealized Losses	(48,034)	(7,937)
Fair Value	267,547	476,974
Securities Held to Maturity:
Amortized Cost	63,551	68,680
Gross Unrealized Gains		67
Gross Unrealized Losses	(10,825)	(269)
Fair Value	52,726	68,478
SBA Pool Securities [Member]
Securities Available for Sale:
Amortized Cost	33,538	40,649
Gross Unrealized Gains	2	12
Gross Unrealized Losses	(4,419)	(1,100)
Fair Value	29,121	39,561
State and Political Subdivisions [Member]
Securities Available for Sale:
Amortized Cost	2,613	5,431
Gross Unrealized Gains		45
Gross Unrealized Losses	(29)
Fair Value	2,584	5,476
Corporate Bond [Member]
Securities Available for Sale:
Amortized Cost	10,000	2,500
Gross Unrealized Gains		21
Gross Unrealized Losses	(782)
Fair Value	$ 9,218	$ 2,521

XML

INVESTMENT SECURITIES - Summary of Gross Gains, Gross Losses and Net Tax Benefit Related to Proceeds on Sales of Securities Available for Sale (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Investments Debt And Equity Securities [Abstract]
Proceeds from sales	$ 118,972
Gross gains	3
Gross losses	(6,612)
Net tax (benefit)/expense	$ 1,581

XML

INVESTMENT SECURITIES (Schedule of Available for Sale Securities in Continuous Unrealized Loss Position and Approximate Fair Value of Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Available for Sale Securities, Fair Value
Less Than 12 Months	$ 85,595	$ 530,647
12 Months or Longer	380,647	73,051
Total	466,242	603,698
Approximate Fair Value
Less Than 12 Months	(6,518)	(14,478)
12 Months or Longer	(102,106)	(2,383)
Total	(108,624)	(16,861)
Held to Maturity Securities, Fair Value
Less Than 12 Months	87,857	73,282
12 Months or Longer		0
Total	87,857	73,282
Held to Maturity Securities, Unrealized Losses
Less Than 12 Months	(15,694)	(294)
12 Months or Longer		0
Total	(15,694)	(294)
Approximate Fair Value
Fair Value, Less than 12 months	173,452	603,929
Fair Value, 12 months or longer	380,647	73,051
Fair Value	554,099	676,980
Unrealized Losses
Unrealized Losses, Less than 12 months	(22,212)	(14,772)
Unrealized Losses, 12 months or longer	(102,106)	(2,383)
Unrealized Losses	(124,318)	(17,155)
U.S. Government-Sponsored Agencies [Member]
Available for Sale Securities, Fair Value
Less Than 12 Months		243,187
12 Months or Longer	189,410	29,034
Total	189,410	272,221
Approximate Fair Value
Less Than 12 Months		(6,858)
12 Months or Longer	(55,360)	(966)
Total	(55,360)	(7,824)
Held to Maturity Securities, Fair Value
Less Than 12 Months	35,131	24,975
12 Months or Longer		0
Total	35,131	24,975
Held to Maturity Securities, Unrealized Losses
Less Than 12 Months	(4,869)	(25)
12 Months or Longer		0
Total	(4,869)	(25)
Mortgage-Backed Securities-Residential [Member]
Available for Sale Securities, Fair Value
Less Than 12 Months	70,005	265,403
12 Months or Longer	166,924	33,455
Total	236,929	298,858
Approximate Fair Value
Less Than 12 Months	(5,425)	(7,053)
12 Months or Longer	(42,609)	(884)
Total	(48,034)	(7,937)
Held to Maturity Securities, Fair Value
Less Than 12 Months	52,726	48,307
12 Months or Longer		0
Total	52,726	48,307
Held to Maturity Securities, Unrealized Losses
Less Than 12 Months	(10,825)	(269)
12 Months or Longer		0
Total	(10,825)	(269)
SBA Pool Securities [Member]
Available for Sale Securities, Fair Value
Less Than 12 Months	3,788	22,057
12 Months or Longer	24,313	10,562
Total	28,101	32,619
Approximate Fair Value
Less Than 12 Months	(282)	(567)
12 Months or Longer	(4,137)	(533)
Total	(4,419)	$ (1,100)
State and Political Subdivisions [Member]
Available for Sale Securities, Fair Value
Less Than 12 Months	2,584
12 Months or Longer	0
Total	2,584
Approximate Fair Value
Less Than 12 Months	(29)
12 Months or Longer	0
Total	(29)
Corporate Bond [Member]
Available for Sale Securities, Fair Value
Less Than 12 Months	9,218
12 Months or Longer	0
Total	9,218
Approximate Fair Value
Less Than 12 Months	(782)
12 Months or Longer	0
Total	$ (782)

XML

INVESTMENT SECURITIES - Additional Information (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021
Schedule Of Available For Sale Securities [Line Items]
Investment with fair value classified as equity security	$ 12,957,000	$ 12,957,000	$ 14,685,000
Loss on securities sale, net		6,609,000
CRA Investment Fund [Member]
Schedule Of Available For Sale Securities [Line Items]
Investment with fair value classified as equity security	13,000,000.0	13,000,000.0
Loss on securities sale, net	$ 571,000	$ 1,700,000

XML

LOANS AND LEASES (Schedule of Loans Outstanding, by Type of Loan) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2022	Dec. 31, 2021
Total loans		$ 5,177,194	$ 4,806,721
Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		100.00%	100.00%
Unallocated Financing Receivables [Member]
Total loans		$ 259	$ 238
Unallocated Financing Receivables [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		0.01%	0.01%
Primary Residential Mortgage [Member] | Residential Portfolio Segment [Member]
Total loans		$ 517,755	$ 498,300
Primary Residential Mortgage [Member] | Residential Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		10.00%	10.37%
Multifamily Property [Member] | Residential Portfolio Segment [Member]
Total loans		$ 1,856,675	$ 1,595,866
Multifamily Property [Member] | Residential Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		35.87%	33.20%
Commercial Mortgage [Member] | Commercial Real Estate Portfolio Segment [Member]
Total loans		$ 638,903	$ 662,626
Commercial Mortgage [Member] | Commercial Real Estate Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		12.34%	13.78%
Commercial Loans Including Equipment Financing [Member] | Commercial Real Estate Portfolio Segment [Member]
Total loans	[1]	$ 2,084,998	$ 1,955,157
Commercial Loans Including Equipment Financing [Member] | Commercial Real Estate Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)	[1]	40.27%	40.67%
Construction [Member] | Commercial Portfolio Segment [Member]
Total loans		$ 4,817	$ 20,044
Construction [Member] | Commercial Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		0.09%	0.42%
Home Equity Line of Credit [Member] | Residential Portfolio Segment [Member]
Total loans		$ 36,375	$ 40,803
Home Equity Line of Credit [Member] | Residential Portfolio Segment [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		0.70%	0.85%
Consumer Loans, Including Home Equity Loans [Member] | Consumer and Other Loans [Member]
Total loans		$ 37,412	$ 33,687
Consumer Loans, Including Home Equity Loans [Member] | Consumer and Other Loans [Member] | Loans and Finance Receivables, Gross [Member] | Credit Concentration Risk [Member]
Total loans (in percent)		0.72%	0.70%

[1] Includes PPP loans of $1.9 million at September 30, 2022 and $13.8 million at December 31, 2021.

XML

LOANS AND LEASES (Schedule of Loans Outstanding, by Type of Loan) (Parenthetical) (Details) - USD ($) $ in Thousands		Sep. 30, 2022	Dec. 31, 2021
Total loans		$ 5,177,194	$ 4,806,721
Commercial Loans Including Equipment Financing [Member] | Commercial Real Estate Portfolio Segment [Member]
Total loans	[1]	2,084,998	1,955,157
U.S. Small Business Administration (SBA) Loans [Member] | Commercial Loans Including Equipment Financing [Member] | Commercial Real Estate Portfolio Segment [Member]
Total loans		$ 1,900	$ 13,800

[1] Includes PPP loans of $1.9 million at September 30, 2022 and $13.8 million at December 31, 2021.

XML

LOANS AND LEASES (Schedule of Loan Balances by Pool Segment and Portfolio Class) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2022	Dec. 31, 2021
Total loans		$ 5,173,385	$ 4,802,758
Net deferred costs			3,963
Total loans including net deferred costs		5,177,194	$ 4,806,721
Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			100.00%
Current Expected Credit Loss Methodology [Member]
Total loans		5,173,385
Net deferred costs		3,809
Total loans including net deferred costs		5,177,194
Primary Residential Mortgages [Member]
Total loans		520,276
Construction [Member]
Total loans		10,384
Construction [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 10,384
Construction [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		0.20%
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total loans		$ 520,276	$ 500,243
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			10.42%
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 520,276
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		10.06%
Residential Portfolio Segment [Member] | Multifamily Property [Member]
Total loans		$ 1,856,675	$ 1,595,866
Total loans including net deferred costs		1,856,675	$ 1,595,866
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			33.23%
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 1,856,675
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		35.89%
Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member]
Total loans			$ 40,803
Total loans including net deferred costs		$ 36,375	$ 40,803
Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			0.85%
Residential Portfolio Segment [Member] | Junior Lien [Member]
Total loans		40,216	$ 3,191
Residential Portfolio Segment [Member] | Junior Lien [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			0.07%
Residential Portfolio Segment [Member] | Junior Lien [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 40,216
Residential Portfolio Segment [Member] | Junior Lien [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		0.78%
Commercial Real Estate Portfolio Segment [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 256,891
Commercial Real Estate Portfolio Segment [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		4.96%
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Total loans		$ 256,891	$ 252,603
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			5.26%
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Total loans		1,035,254	$ 1,003,979
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			20.90%
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 1,035,254
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		20.01%
Commercial Portfolio Segment [Member] | Construction [Member]
Total loans		$ 10,384	$ 20,174
Total loans including net deferred costs		4,817	$ 20,044
Commercial Portfolio Segment [Member] | Construction [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			0.42%
Consumer and Other Loans [Member]
Total loans		42,506	$ 40,828
Consumer and Other Loans [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			0.85%
Consumer and Other Loans [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 42,506
Consumer and Other Loans [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		0.82%
Commercial and Industrial [Member] | Current Expected Credit Loss Methodology [Member]
Total loans	[1]	$ 1,106,927
Commercial and Industrial [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)	[1]	21.40%
Commercial and Industrial [Member] | Commercial Portfolio Segment [Member]
Total loans		$ 1,106,927	$ 992,332	[2]
Commercial and Industrial [Member] | Commercial Portfolio Segment [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)	[2]		20.66%
Lease Financing [Member]
Total loans		304,256	$ 345,868
Lease Financing [Member] | Current Expected Credit Loss Methodology [Member]
Total loans		$ 304,256
Lease Financing [Member] | Current Expected Credit Loss Methodology [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)		5.88%
Lease Financing [Member] | Commercial Portfolio Segment [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			7.20%
Secured by Farmland and Agricultural [Member]
Total loans			$ 6,871
Secured by Farmland and Agricultural [Member] | Customer Concentration Risk [Member] | Loans and Finance Receivables, Gross [Member]
Total loans (in percent)			0.14%

[1] Includes PPP loans of $1.9 million at September 30, 2022.

[2] Includes PPP loans of $13.8 million at December 31, 2021.

XML

LOANS AND LEASES (Schedule of Loan Balances by Pool Segment and Portfolio Class) (Parenthetical) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Total loans	$ 5,177,194	$ 4,806,721
U.S. Small Business Administration (SBA) Loans [Member] | Commercial and Industrial [Member] | Commercial Portfolio Segment [Member]
Total loans	$ 1,900	$ 13,800

XML

LOANS AND LEASES (Schedule of Recorded Investment in Nonaccrual and Loans Past Due 90 Days or Over Still On Accrual) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Impaired non-accrual loans	$ 15,724	$ 15,573
Loans Past Due 90 Days or Over And Still Accruing Interest	0	0
Residential Portfolio Segment [Member] | Junior Lien [Member]
Impaired non-accrual loans		18
Loans Past Due 90 Days or Over And Still Accruing Interest		0
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Impaired non-accrual loans	2,527	1,851
Loans Past Due 90 Days or Over And Still Accruing Interest	0	0
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Impaired non-accrual loans	263	458
Loans Past Due 90 Days or Over And Still Accruing Interest		0
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Impaired non-accrual loans	12,429	12,750
Loans Past Due 90 Days or Over And Still Accruing Interest		0
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Impaired non-accrual loans	$ 505	496
Loans Past Due 90 Days or Over And Still Accruing Interest		$ 0

XML

LOANS AND LEASES (Schedule of Aging of Past Due Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
30 to 59 Days Past Due [Member]
Total past due loans	$ 7,248	$ 8,464
30 to 59 Days Past Due [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total past due loans	323	639
30 to 59 Days Past Due [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total past due loans	6,925	7,825
60 to 89 Days Past Due [Member]
Total past due loans		142
60 to 89 Days Past Due [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total past due loans		142
90 Days or Greater [Member]
Total past due loans	0	0
90 Days or Greater [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total past due loans	0	0
Total Past Due [Member]
Total past due loans	7,248	8,606
Total Past Due [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total past due loans	323	639
Total Past Due [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total past due loans	$ 6,925	$ 7,967

XML

LOANS AND LEASES - Additional Information (Details)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022 USD ($) Loan	Sep. 30, 2021 Loan	Sep. 30, 2022 USD ($) Contract Loan	Sep. 30, 2021 Loan	Dec. 31, 2021 USD ($)
Financing Receivable Recorded Investment Past Due [Line Items]
Loan receivable, validate risk ratings performed for large sample or new lending to existing relationships	$ 1,000,000		$ 1,000,000
Loan receivable, validate risk ratings performed for criticized and classified rated borrowers with relationship exposure, value	500,000		500,000
Loan receivable, validate risk ratings performed for new regulation "O" loan commitments, value	1,000,000		1,000,000
Loan receivable validate risk ratings performed for leveraged loans, value	1,000,000		1,000,000
Loan receivable validate risk ratings performed for no borrower with commitments, value	500,000		500,000
Loan modifications			947,000,000.0
Troubled debt restructurings specific reserves	$ 2,400,000		$ 2,400,000		$ 0
Number of Loans | Loan	0	2	1	4
Troubled debt restructuring, payments default, number of loans | Loan			1	1
Deferral [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Bank modified loans and contracts | Contract			542
Substandard [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Financing receivable individually evaluated loan			$ 13,000,000.0		$ 15,700,000
Minimum [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loan receivable, validate risk ratings performed for large sample of borrowers with relationship, value	$ 1,000,000		1,000,000
Maximum [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Loan receivable, validate risk ratings performed for small sample of borrowers with relationship, value	$ 1,000,000		$ 1,000,000

XML

LOANS AND LEASES (Summary of Credit Risk Profile of Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
2022	$ 1,063,638
2021	1,307,656
2020	419,562
2019	623,440
2018	253,665
2017 and Prior	1,028,948
Revolving	388,364
Revolving-Term	88,112
Total loans	5,173,385	$ 4,802,758
Pass [Member]
2022	1,032,697
2021	1,305,868
2020	416,686
2019	596,917
2018	252,906
2017 and Prior	1,004,678
Revolving	380,495
Revolving-Term	73,524
Total loans	5,063,771	4,635,566
Special Mention [Member]
2022	18,512
2021	1,788
2020	2,322
2019	20,194
2018	194
2017 and Prior	17,184
Revolving	7,325
Revolving-Term	14,588
Total loans	82,107	116,490
Substandard [Member]
2022	12,429
2020	554
2019	6,329
2018	565
2017 and Prior	7,086
Revolving	544
Total loans	27,507	50,702
Lease Financing [Member]
2022	53,299
2021	76,975
2020	61,758
2019	57,793
2018	34,009
2017 and Prior	20,422
Total loans	304,256	345,868
Lease Financing [Member] | Pass [Member]
2022	51,120
2021	76,975
2020	61,758
2019	56,022
2018	34,009
2017 and Prior	20,422
Total loans	300,306	345,868
Lease Financing [Member] | Special Mention [Member]
2022	2,179
Total loans	2,179
Lease Financing [Member] | Substandard [Member]
2019	1,771
Total loans	1,771
Primary Residential Mortgages [Member]
Total loans	520,276
Construction [Member]
Total loans	10,384
Residential Portfolio Segment [Member]
2022	91,142
2021	94,871
2020	63,645
2019	39,484
2018	28,334
2017 and Prior	202,106
Revolving-Term	694
Residential Portfolio Segment [Member] | Substandard [Member]
Total loans	2,620
Residential Portfolio Segment [Member] | Junior Lien [Member]
2022	1,545
2021	185
2020	46
2019	664
2018	354
2017 and Prior	1,047
Revolving	36,375
Total loans	40,216	3,191
Residential Portfolio Segment [Member] | Junior Lien [Member] | Pass [Member]
2022	1,545
2021	185
2020	46
2019	664
2018	354
2017 and Prior	1,047
Revolving	35,867
Total loans	39,708	3,173
Residential Portfolio Segment [Member] | Junior Lien [Member] | Substandard [Member]
Revolving	508
Total loans	508	18
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
2022	91,142
2021	94,871
2020	63,091
2019	38,422
2018	28,052
2017 and Prior	201,286
Revolving-Term	694
Total loans	520,276	500,243
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Pass [Member]
Total loans	517,558	494,444
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Special Mention [Member]
2017 and Prior	98
Total loans	98	557
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Substandard [Member]
2020	554
2019	1,062
2018	282
2017 and Prior	722
Total loans		5,242
Residential Portfolio Segment [Member] | Multifamily Property [Member]
2022	449,363
2021	683,097
2020	118,815
2019	232,729
2018	43,062
2017 and Prior	326,798
Revolving	981
Revolving-Term	1,830
Total loans	1,856,675	1,595,866
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Pass [Member]
2022	449,363
2021	683,097
2020	118,815
2019	229,869
2018	43,062
2017 and Prior	317,365
Revolving	981
Revolving-Term	1,830
Total loans	1,844,382	1,579,776
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Special Mention [Member]
2019	2,860
2017 and Prior	3,518
Total loans	6,378	7,720
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Substandard [Member]
2017 and Prior	5,915
Total loans	5,915	8,370
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
2022	12,216
2021	44,107
2020	20,990
2019	12,335
2018	22,587
2017 and Prior	135,153
Revolving	764
Revolving-Term	8,739
Total loans	256,891
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Pass [Member]
2022	12,216
2021	44,107
2020	20,990
2019	12,335
2018	22,587
2017 and Prior	134,701
Revolving	764
Revolving-Term	8,739
Total loans	256,439	251,229
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Special Mention [Member]
2017 and Prior	189
Total loans	189	663
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Substandard [Member]
2017 and Prior	263
Total loans	263	711
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
2022	162,059
2021	155,537
2020	64,245
2019	184,790
2018	93,927
2017 and Prior	331,149
Revolving	7,128
Revolving-Term	36,419
Total loans	1,035,254	1,003,979
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Pass [Member]
2022	149,630
2021	155,537
2020	64,245
2019	168,225
2018	93,927
2017 and Prior	317,770
Revolving	7,128
Revolving-Term	21,831
Total loans	978,293	901,877
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Special Mention [Member]
2019	13,069
2017 and Prior	13,379
Revolving-Term	14,588
Total loans	41,036	87,297
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Substandard [Member]
2022	12,429
2019	3,496
Total loans	15,925	14,805
Consumer and Other [Member]
2021	396
2020	200
2019	13
2017 and Prior	5,980
Revolving	32,661
Revolving-Term	3,256
Total loans	42,506	40,828
Consumer and Other [Member] | Pass [Member]
2021	396
2020	200
2019	13
2017 and Prior	5,980
Revolving	32,661
Revolving-Term	3,256
Total loans	42,506	40,828
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
2022	294,014
2021	252,488
2020	89,863
2019	94,188
2018	31,392
2017 and Prior	6,293
Revolving	305,607
Revolving-Term	33,082
Total loans	1,106,927	992,332	[1]
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Pass [Member]
2022	277,681
2021	250,700
2020	87,541
2019	89,923
2018	30,915
2017 and Prior	6,107
Revolving	298,246
Revolving-Term	33,082
Total loans	1,074,195	951,127
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Special Mention [Member]
2022	16,333
2021	1,788
2020	2,322
2019	4,265
2018	194
Revolving	7,325
Total loans	32,227	20,178
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member] | Substandard [Member]
2018	283
2017 and Prior	186
Revolving	36
Total loans	505	21,027
Commercial Portfolio Segment [Member] | Construction [Member]
2019	1,444
Revolving	4,848
Revolving-Term	4,092
Total loans	10,384	20,174
Commercial Portfolio Segment [Member] | Construction [Member] | Pass [Member]
2019	1,444
Revolving	4,848
Revolving-Term	4,092
Total loans	$ 10,384	20,099
Commercial Portfolio Segment [Member] | Construction [Member] | Special Mention [Member]
Total loans		$ 75

[1] Includes PPP loans of $13.8 million at December 31, 2021.

XML

LOANS AND LEASES (Schedule of Risk Category of Loans by Class of Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Total loans	$ 5,173,385	$ 4,802,758
Lease Financing [Member]
Total loans	304,256	345,868
Secured by Farmland and Agricultural [Member]
Total loans		6,871
Primary Residential Mortgages [Member]
Total loans	520,276
Construction [Member]
Total loans	10,384
Residential Portfolio Segment [Member] | Junior Lien [Member]
Total loans	40,216	3,191
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total loans	520,276	500,243
Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member]
Total loans		40,803
Residential Portfolio Segment [Member] | Multifamily Property [Member]
Total loans	1,856,675	1,595,866
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Total loans	256,891
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Total loans	1,035,254	1,003,979
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total loans	1,106,927	992,332	[1]
Commercial Portfolio Segment [Member] | Construction [Member]
Total loans	10,384	20,174
Consumer and Other Loans [Member]
Total loans	42,506	40,828
Pass [Member]
Total loans	5,063,771	4,635,566
Pass [Member] | Lease Financing [Member]
Total loans	300,306	345,868
Pass [Member] | Secured by Farmland and Agricultural [Member]
Total loans		6,871
Pass [Member] | Residential Portfolio Segment [Member] | Junior Lien [Member]
Total loans	39,708	3,173
Pass [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total loans	517,558	494,444
Pass [Member] | Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member]
Total loans		40,274
Pass [Member] | Residential Portfolio Segment [Member] | Multifamily Property [Member]
Total loans	1,844,382	1,579,776
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Total loans	256,439	251,229
Pass [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Total loans	978,293	901,877
Pass [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total loans	1,074,195	951,127
Pass [Member] | Commercial Portfolio Segment [Member] | Construction [Member]
Total loans	10,384	20,099
Pass [Member] | Consumer and Other Loans [Member]
Total loans	42,506	40,828
Special Mention [Member]
Total loans	82,107	116,490
Special Mention [Member] | Lease Financing [Member]
Total loans	2,179
Special Mention [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total loans	98	557
Special Mention [Member] | Residential Portfolio Segment [Member] | Multifamily Property [Member]
Total loans	6,378	7,720
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Total loans	189	663
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Total loans	41,036	87,297
Special Mention [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total loans	32,227	20,178
Special Mention [Member] | Commercial Portfolio Segment [Member] | Construction [Member]
Total loans		75
Substandard [Member]
Total loans	27,507	50,702
Substandard [Member] | Lease Financing [Member]
Total loans	1,771
Substandard [Member] | Residential Portfolio Segment [Member]
Total loans	2,620
Substandard [Member] | Residential Portfolio Segment [Member] | Junior Lien [Member]
Total loans	508	18
Substandard [Member] | Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Total loans		5,242
Substandard [Member] | Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member]
Total loans		529
Substandard [Member] | Residential Portfolio Segment [Member] | Multifamily Property [Member]
Total loans	5,915	8,370
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Total loans	263	711
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Total loans	15,925	14,805
Substandard [Member] | Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Total loans	$ 505	$ 21,027

[1] Includes PPP loans of $13.8 million at December 31, 2021.

XML

LOANS AND LEASES (Schedule of Loan Modifications) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2022 Loan	Sep. 30, 2021 USD ($) Loan	Sep. 30, 2022 USD ($) Loan	Sep. 30, 2021 USD ($) Loan
Number of Loans | Loan	0	2	1	4
Post-Modification Outstanding Recorded Investment		$ 455,000	$ 12,429,000	$ 3,471,000
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Number of Loans | Loan			1	1
Post-Modification Outstanding Recorded Investment			$ 12,429,000	$ 2,194,000
Deferral [Member]
Post-Modification Outstanding Recorded Investment			$ 0

XML

LOANS AND LEASES (Schedule of Loans Modified as Troubled Debt Restructurings) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022 Loan	Sep. 30, 2021 USD ($) Loan	Sep. 30, 2022 USD ($) Loan	Sep. 30, 2021 USD ($) Loan
Number of Loans | Loan	0	2	1	4
Pre-Modification Outstanding Recorded Investment		$ 455	$ 12,429	$ 3,471
Post-Modification Outstanding Recorded Investment		$ 455	$ 12,429	$ 3,471
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Number of Loans | Loan		2
Pre-Modification Outstanding Recorded Investment		$ 455
Post-Modification Outstanding Recorded Investment		$ 455
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Number of Loans | Loan				3
Pre-Modification Outstanding Recorded Investment				$ 1,277
Post-Modification Outstanding Recorded Investment				$ 1,277
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Number of Loans | Loan			1	1
Pre-Modification Outstanding Recorded Investment			$ 12,429	$ 2,194
Post-Modification Outstanding Recorded Investment			$ 12,429	$ 2,194

XML

LOANS AND LEASES (Schedule of Modified as Troubled Debt Restructurings Subsequently Defaulted) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) Loan	Sep. 30, 2021 USD ($) Loan
Number of Subsequently Defaulted Loans | Loan	1	1
Pre-Modification Outstanding Subsequently Defaulted Recorded Investment		$ 221
Post-Modification Outstanding Subsequently Defaulted Recorded Investment		$ 221
Subsequently Defaulted Recorded Investment	$ 145
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Number of Subsequently Defaulted Loans | Loan	1	1
Pre-Modification Outstanding Subsequently Defaulted Recorded Investment		$ 221
Post-Modification Outstanding Subsequently Defaulted Recorded Investment		$ 221
Subsequently Defaulted Recorded Investment	$ 145

XML

ALLOWANCE FOR CREDIT LOSSES - Additional Information (Details) - USD ($)		9 Months Ended
		Sep. 30, 2022		Sep. 30, 2021	Jun. 30, 2022	Jan. 01, 2022	Dec. 31, 2021		Jun. 30, 2021	Dec. 31, 2020
Financing Receivable Recorded Investment Past Due [Line Items]
Accrued interest receivable		$ 17,816,000					$ 21,589,000
Individually evaluated loans balance		12,500,000					19,887,000
Individually evaluated include Nonaccrual loans		13,000,000.0					15,600,000
Recording charge-off							7,400,000
Individually evaluated non-accrual loans performing troubled debt restructured		0					2,500,000
Allowance allocated to troubled debt restructured loans		2,400,000					0
Allowance for credit losses		59,683,000	[1]	$ 65,133,000	$ 59,022,000		$ 61,697,000	[1]	$ 63,505,000	$ 67,309,000
Reduction to allowance for credit losses		(925,000)
Provision for credit losses	[2]	$ 4,423,000		2,725,000
Allowance for credit losses, percentage of loans		1.15%					1.28%
ASU 2016-13 [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Reduction to allowance for credit losses						$ 5,500,000
Commercial Real Estate Portfolio Segment [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Individually evaluated loans balance				$ 12,400,000
Loans [Member]
Financing Receivable Recorded Investment Past Due [Line Items]
Accrued interest receivable		$ 16,100,000					$ 19,100,000

[1] Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss ("CECL") methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

[2] Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

XML

ALLOWANCE FOR CREDIT LOSSES (Schedule of Balances by Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2022		Jun. 30, 2022	Dec. 31, 2021		Sep. 30, 2021	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment	$ 13,047			$ 18,052
Ending ACL Attributable to Loans Individually Evaluated for Impairment	2,429			4,234
Total Loans Collectively Evaluated for Impairment	5,160,338			4,784,706
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	57,254			57,463
Total Loans	5,173,385			4,802,758
Total Ending ACL	59,683	[1]	$ 59,022	61,697	[1]	$ 65,133	$ 63,505	$ 67,309
Lease Financing [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment	304,256			345,868
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	3,238			3,440
Total Loans	304,256			345,868
Total Ending ACL	3,238			3,440
Secured by Farmland and Agricultural [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment				6,871
Ending ACL Attributable to Loans Collectively Evaluated for Impairment				84
Total Loans				6,871
Total Ending ACL				84		58	43
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment	222			2,584
Total Loans Collectively Evaluated for Impairment	1,106,705			989,748
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	21,838			17,509
Total Loans	1,106,927			992,332	[2]
Total Ending ACL	21,838		20,998	17,509		16,266	16,565	19,047
Consumer and Other [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment	42,506			40,828
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	496			215
Total Loans	42,506			40,828
Total Ending ACL	496		589	215		229	217	279
Junior Lien [Member] | Residential Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment				18
Total Loans Collectively Evaluated for Impairment	40,216			3,173
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	154			5
Total Loans	40,216			3,191
Total Ending ACL	154		151	5		7	8	15
Primary Residential Mortgages [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans	520,276
Primary Residential Mortgages [Member] | Residential Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment	133			2,242
Total Loans Collectively Evaluated for Impairment	520,143			498,001
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	2,279			1,432
Total Loans	520,276			500,243
Total Ending ACL	2,279		2,154	1,432		2,075	2,167	2,905
Home Equity Line of Credit [Member] | Residential Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment				40,803
Ending ACL Attributable to Loans Collectively Evaluated for Impairment				83
Total Loans				40,803
Total Ending ACL				83		119	123	218
Multifamily Property [Member] | Residential Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment	1,856,675			1,595,866
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	15,317			9,806
Total Loans	1,856,675			1,595,866
Total Ending ACL	15,317		15,790	9,806		10,568	10,615	9,945
Owner Occupied Property [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment	263			458
Total Loans Collectively Evaluated for Impairment	256,628			252,145
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	4,907			1,998
Total Loans	256,891			252,603
Total Ending ACL	4,907		4,660	1,998		2,293	2,447	3,050
Investment Property [Member] | Commercial Real Estate Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Individually Evaluated for Impairment	12,429			12,750
Ending ACL Attributable to Loans Individually Evaluated for Impairment	2,429			4,234
Total Loans Collectively Evaluated for Impairment	1,022,825			991,229
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	8,897			22,849
Total Loans	1,035,254			1,003,979
Total Ending ACL	11,326		10,969	27,083		29,984	27,886	27,713
Construction [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment	10,384
Ending ACL Attributable to Loans Collectively Evaluated for Impairment	128
Total Loans	10,384
Total Ending ACL	128		$ 359
Construction [Member] | Commercial Portfolio Segment [Member]
Financing Receivable Allowance For Credit Losses [Line Items]
Total Loans Collectively Evaluated for Impairment				20,174
Ending ACL Attributable to Loans Collectively Evaluated for Impairment				42
Total Loans	$ 10,384			20,174
Total Ending ACL				$ 42		$ 165	$ 159	$ 158

[1] Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss ("CECL") methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

[2] Includes PPP loans of $13.8 million at December 31, 2021.

XML

ALLOWANCE FOR CREDIT LOSSES (Schedule of Loans Individually Evaluated by Segment) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021
Unpaid Principal Balance
With no related allowance recorded	$ 678	$ 7,512
With related allowance recorded:	12,500	19,887
Total loans individually evaluated	13,178	27,399
Recorded Investment
With no related allowance recorded	618	5,302
With related allowance recorded:	12,429	12,750
Total loans individually evaluated	13,047	18,052
Related Allowance	2,429	4,234
Average Individually Evaluated Loans
With no related allowance recorded	810	5,514
With related allowance recorded:	12,531	6,034
Total loans individually evaluated	13,341	11,548
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Unpaid Principal Balance
With no related allowance recorded	136	2,453
Recorded Investment
With no related allowance recorded	133	2,242
Average Individually Evaluated Loans
With no related allowance recorded	249	1,818
Residential Portfolio Segment [Member] | Junior Lien [Member]
Unpaid Principal Balance
With no related allowance recorded		18
Recorded Investment
With no related allowance recorded		18
Average Individually Evaluated Loans
With no related allowance recorded		3
Commercial Real Estate Portfolio Segment [Member]
Unpaid Principal Balance
With related allowance recorded:			$ 12,400
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Unpaid Principal Balance
With no related allowance recorded	301	492
Recorded Investment
With no related allowance recorded	263	458
Average Individually Evaluated Loans
With no related allowance recorded	307	540
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Unpaid Principal Balance
With related allowance recorded:	12,500	19,887
Recorded Investment
With related allowance recorded:	12,429	12,750
Related Allowance	2,429	4,234
Average Individually Evaluated Loans
With related allowance recorded:	12,531	6,034
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Unpaid Principal Balance
With no related allowance recorded	241	4,549
Recorded Investment
With no related allowance recorded	222	2,584
Average Individually Evaluated Loans
With no related allowance recorded	$ 254	$ 3,153

XML

ALLOWANCE FOR CREDIT LOSSES (Schedule of Activity in Allowance for Loan Losses) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2022		Sep. 30, 2021	Sep. 30, 2022		Sep. 30, 2021
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	$ 59,022		$ 63,505	$ 61,697	[1]	$ 67,309
Charge-Offs	(19)		(23)	(299)		(5,055)
Recoveries	15		51	21		154
Provision (Credit)	665		1,600	3,800		2,725
Ending ALLL	59,683	[1]	65,133	59,683	[1]	65,133
Secured by Farmland and Agricultural [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL			43	84
Provision (Credit)			15
Ending ALLL			58			58
Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				61,697
Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				(5,536)
Secured by Farmland and Agricultural [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL						43
Provision (Credit)						15
Ending ALLL			58			58
Construction [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	359
Provision (Credit)	(231)			(281)
Ending ALLL	128			128
Construction [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				48
Construction [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				361
Residential Portfolio Segment [Member] | Junior Lien [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	151		8	5		15
Charge-Offs				(3)
Provision (Credit)	3		(1)	(14)		(8)
Ending ALLL	154		7	154		7
Residential Portfolio Segment [Member] | Junior Lien [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				88
Residential Portfolio Segment [Member] | Junior Lien [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				83
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	2,154		2,167	1,432		2,905
Charge-Offs						(12)
Recoveries	15			15
Provision (Credit)	110		(92)	37		(818)
Ending ALLL	2,279		2,075	2,279		2,075
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				1,510
Residential Portfolio Segment [Member] | Primary Residential Mortgages [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				717
Residential Portfolio Segment [Member] | Home Equity Line of Credit [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL			123	83		218
Recoveries						85
Provision (Credit)			(4)			(184)
Ending ALLL			119			119
Residential Portfolio Segment [Member] | Multifamily Property [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	15,790		10,615	9,806		9,945
Provision (Credit)	(473)		(47)	1,439		623
Ending ALLL	15,317		10,568	15,317		10,568
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				9,806
Residential Portfolio Segment [Member] | Multifamily Property [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				4,072
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	4,660		2,447	1,998		3,050
Provision (Credit)	247		(154)	7		(757)
Ending ALLL	4,907		2,293	4,907		2,293
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				1,998
Commercial Real Estate Portfolio Segment [Member] | Owner Occupied Property [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				2,902
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	10,969		27,886	27,083		27,713
Charge-Offs				(250)
Provision (Credit)	357		2,098	(1,918)		2,271
Ending ALLL	11,326		29,984	11,326		29,984
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				27,083
Commercial Real Estate Portfolio Segment [Member] | Investment Property [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				(13,589)
Commercial Portfolio Segment [Member] | Commercial and Industrial [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	20,998		16,565	17,509		19,047
Charge-Offs			(19)			(5,019)
Recoveries			50	4		60
Provision (Credit)	840		(330)	4,982		2,178
Ending ALLL	21,838		16,266	21,838		16,266
Commercial Portfolio Segment [Member] | Pre-ASC-326 Adoption [Member] | Commercial and Industrial [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				17,509
Commercial Portfolio Segment [Member] | Impact of ASC-326 Adoption [Member] | Commercial and Industrial [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				(657)
Commercial Portfolio Segment [Member] | Lease Financing [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	3,352		3,275			3,936
Provision (Credit)	(114)		94	(358)		(567)
Ending ALLL	3,238		3,369	3,238		3,369
Commercial Portfolio Segment [Member] | Lease Financing [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				3,440
Commercial Portfolio Segment [Member] | Lease Financing [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				156
Commercial Portfolio Segment [Member] | Construction [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL			159	42		158
Provision (Credit)			6			7
Ending ALLL			165			165
Consumer and Other [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL	589		217	215		279
Charge-Offs	(19)		(4)	(46)		(24)
Recoveries			1	2		9
Provision (Credit)	(74)		15	(94)		(35)
Ending ALLL	$ 496		$ 229	496		$ 229
Consumer and Other [Member] | Pre-ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Beginning ALLL				215
Consumer and Other [Member] | Impact of ASC-326 Adoption [Member]
Loans And Leases Receivable Disclosure [Line Items]
Impact of adopting Topic 326				$ 419

[1] Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss ("CECL") methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

XML

ALLOWANCE FOR CREDIT LOSSES (Schedule of Activity in Allowance for Loan Losses) (Parenthetical) (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Credit Loss [Abstract]
Off-balance sheet commitments, provision	$ 66,000	$ 623,000

XML

ALLOWANCE FOR CREDIT LOSSES (Schedule of Activity in ACL for Off Balance Sheet Commitments) (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Credit Loss [Abstract]
Off balance sheet commitments, Impact of adiopting Topic 326		$ 302,000
Off balance sheet commitments, Provision (Credit)	$ 66,000	623,000
Off balance sheet commitments, Ending ACL	925,000	925,000
Total ACL, Impact of adopting Topic 326		302,000
Total ACL, Provision (Credit)		623,000
Total ACL, Ending ACL	$ 925,000	$ 925,000

XML

DEPOSITS - Additional Information (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Deposits [Abstract]
Time deposits met or exceeded $250,000	$ 107.8	$ 140.4

XML

DEPOSITS (Schedule of Details of Total Deposits) (Details) - USD ($) $ in Thousands		Sep. 30, 2022	Dec. 31, 2021
Deposits:
Noninterest-bearing demand deposits		$ 1,317,954	$ 956,482
Interest-bearing checking	[1]	2,149,629	2,287,894
Savings		166,821	154,914
Money market		1,178,112	1,307,051
Certificates of deposit - retail		345,047	409,608
Certificates of deposit - listing service		30,647	31,382
Subtotal deposits		5,188,210	5,147,331
Interest-bearing demand - Brokered		85,000	85,000
Certificates of deposit - Brokered		25,974	33,818
Total deposits		$ 5,299,184	$ 5,266,149
%
Noninterest-bearing demand deposits		24.87%	18.16%
Interest-bearing checking	[1]	40.57%	43.45%
Savings		3.15%	2.94%
Money market		22.23%	24.82%
Certificates of deposit - retail		6.51%	7.78%
Certificates of deposit - listing service		0.58%	0.60%
Subtotal deposits		97.91%	97.75%
Interest-bearing demand - Brokered		1.60%	1.61%
Certificates of deposit - Brokered		0.49%	0.64%
Total deposits		100.00%	100.00%

[1] Interest-bearing checking includes $567.3 million at September 30, 2022 and $647.8 million at December 31, 2021 of reciprocal balances in the Reich & Tang or Promontory Demand Deposit Marketplace program.

XML

DEPOSITS (Details of Total Deposits) (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Deposits:
Reciprocal balances	$ 567.3	$ 647.8

XML

DEPOSITS (Scheduled Maturities of Time Deposits) (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Scheduled maturities of time deposits
2022	$ 84,432
2023	183,096
2024	76,793
2025	46,231
2026	10,314
2027 and later	802
Total	$ 401,668

XML

FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS - Additional Information (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Overnight borrowings with FHLB	$ 32,369
FHLB interest rate	3.29%
Unused commitments from FHLB	$ 1,800,000
Unused short-term or overnight borrowings from correspondent banks	22,000
Unused short-term or overnight borrowings from FRB	1,700,000
Federal Reserve Bank of New York [Member]
Debt Instrument [Line Items]
Overnight borrowings with FHLB	$ 32,400	$ 0

XML

BUSINESS SEGMENTS - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022 Segment
Segment Reporting [Abstract]
Number of Operating Segments	2

XML

BUSINESS SEGMENTS - Schedule of Income and Total Assets for Reportable Segments (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Net interest income (expense)		$ 45,525	$ 35,211	$ 128,040	$ 100,849
Noninterest income		16,383	17,781	49,605	53,279
Total income		61,908	52,992	177,645	154,128
Provision for credit losses	[1]	599	1,600	4,423	2,725
Compensation and employee benefits		22,656	19,859	66,987	61,759
Premises and equipment		4,534	4,459	13,821	12,646
FDIC insurance expense		510	555	1,484	1,669
Other operating expense		5,860	7,312	18,096	18,389
Total operating expense		34,159	33,785	104,811	97,188
INCOME BEFORE INCOME TAX EXPENSE		27,749	19,207	72,834	56,940
Income tax expense		7,623	5,036	19,167	15,173
NET INCOME		20,126	14,171	53,667	41,767
Total assets at period end		6,087,261	6,240,285	6,087,261	6,240,285	$ 6,077,993
Banking Segment [Member]
Net interest income (expense)		43,327	33,780	122,404	96,405
Noninterest income		2,955	3,476	6,645	12,810
Total income		46,282	37,256	129,049	109,215
Provision for credit losses		599	1,600	4,423	2,725
Compensation and employee benefits		15,343	13,079	47,222	43,876
Premises and equipment		3,908	3,861	11,674	10,950
FDIC insurance expense		510	555	1,484	1,669
Other operating expense		3,235	4,657	10,613	10,865
Total operating expense		23,595	23,752	75,416	70,085
INCOME BEFORE INCOME TAX EXPENSE		22,687	13,504	53,633	39,130
Income tax expense		6,193	3,556	14,117	10,436
NET INCOME		16,494	9,948	39,516	28,694
Total assets at period end		5,999,393	6,144,190	5,999,393	6,144,190
Peapack Private Segment [Member]
Net interest income (expense)		2,198	1,431	5,636	4,444
Noninterest income		13,428	14,305	42,960	40,469
Total income		15,626	15,736	48,596	44,913
Compensation and employee benefits		7,313	6,780	19,765	17,883
Premises and equipment		626	598	2,147	1,696
Other operating expense		2,625	2,655	7,483	7,524
Total operating expense		10,564	10,033	29,395	27,103
INCOME BEFORE INCOME TAX EXPENSE		5,062	5,703	19,201	17,810
Income tax expense		1,430	1,480	5,050	4,737
NET INCOME		3,632	4,223	14,151	13,073
Total assets at period end		$ 87,868	$ 96,095	$ 87,868	$ 96,095

[1] Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

XML

FAIR VALUE - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value transfers between level 1 and level 2	$ 0
Loans [Member] | Property A [Member]
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Discount rate	15.00%
Age of appraisal	12 months

XML

FAIR VALUE (Schedule of Assets Measured on a Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Securities available for sale	$ 497,880	$ 796,753
Loans held for sale, at fair value	1,333	3,040
Recurring Basis [Member]
Loans held for sale, at fair value	1,333	3,040
Total	563,650	846,804
Derivatives	41,018	38,048
Recurring Basis [Member] | Designated as Hedging Instrument [Member]
Derivatives	10,462
Derivatives		3,479
Recurring Basis [Member] | Not Designated as Hedging Instrument [Member]
Derivatives	41,018	32,326
Derivatives	41,018	34,569
Recurring Basis [Member] | Quoted Prices in Active Market For Identical Assets (Level 1) [Member]
Total	12,957	14,685
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Loans held for sale, at fair value	1,333	3,040
Total	550,693	832,119
Derivatives	41,018	38,048
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Designated as Hedging Instrument [Member]
Derivatives	10,462
Derivatives		3,479
Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member] | Not Designated as Hedging Instrument [Member]
Derivatives	41,018	32,326
Derivatives	41,018	34,569
U.S. Government-Sponsored Agencies [Member]
Securities available for sale	189,410	272,221
U.S. Government-Sponsored Agencies [Member] | Recurring Basis [Member]
Securities available for sale	189,410	272,221
U.S. Government-Sponsored Agencies [Member] | Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities available for sale	189,410	272,221
Mortgage-Backed Securities-Residential [Member]
Securities available for sale	267,547	476,974
Mortgage-Backed Securities-Residential [Member] | Recurring Basis [Member]
Securities available for sale	267,547	476,974
Mortgage-Backed Securities-Residential [Member] | Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities available for sale	267,547	476,974
SBA Pool Securities [Member]
Securities available for sale	29,121	39,561
SBA Pool Securities [Member] | Recurring Basis [Member]
Securities available for sale	29,121	39,561
SBA Pool Securities [Member] | Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities available for sale	29,121	39,561
State and Political Subdivisions [Member]
Securities available for sale	2,584	5,476
State and Political Subdivisions [Member] | Recurring Basis [Member]
Securities available for sale	2,584	5,476
State and Political Subdivisions [Member] | Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities available for sale	2,584	5,476
Corporate Bond [Member]
Securities available for sale	9,218	2,521
Corporate Bond [Member] | Recurring Basis [Member]
Securities available for sale	9,218	2,521
Corporate Bond [Member] | Recurring Basis [Member] | Significant Other Observable Inputs (Level 2) [Member]
Securities available for sale	9,218	2,521
CRA Investment Fund [Member] | Recurring Basis [Member]
Securities available for sale	12,957	14,685
CRA Investment Fund [Member] | Recurring Basis [Member] | Quoted Prices in Active Market For Identical Assets (Level 1) [Member]
Securities available for sale	$ 12,957	$ 14,685

XML

FAIR VALUE (Schedule of Residential Loans Held for Sale, at Fair Value) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Residential loans contractual balance	$ 1,326	$ 2,992
Fair value adjustment	7	48
Total fair value of residential loans held for sale	$ 1,333	$ 3,040

XML

FAIR VALUE (Schedule of Assets Measured on a Non-Recurring Basis) (Details) - Investment Property [Member] - Non-Recurring Basis [Member] - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Individually evaluated loans	$ 10,000	$ 8,516
Significant Unobservable Inputs (Level 3) [Member]
Individually evaluated loans	$ 10,000	$ 8,516

XML

FAIR VALUE (Schedule of Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2022		Dec. 31, 2021
Financial Assets:
Securities available for sale	$ 497,880		$ 796,753
Securities held to maturity	103,551		108,680
FHLB and FRB stock	14,986		12,950
Loans held for sale, at fair value	1,333		3,040
Loans held for sale, at lower of cost or fair value	10,102		34,051
Accrued interest receivable	17,816		21,589
Carrying Value [Member]
Financial Assets:
Cash and cash equivalents	108,280		146,804
Securities available for sale	497,880		796,753
Securities held to maturity	103,551		108,680
CRA investment fund	12,957		14,685
FHLB and FRB stock	14,986		12,950
Loans held for sale, at fair value	1,333		3,040
Loans held for sale, at lower of cost or fair value	10,102		34,051
Loans, net of allowance for credit losses	5,117,511
Loans, net of allowance for loan and lease losses			4,745,024
Accrued interest receivable	17,816		21,589
Financial Liabilities:
Deposits	5,299,184		5,266,149
Short-term borrowings	32,369
Subordinated debt	132,916		132,701
Accrued interest payable	2,910		651
Carrying Value [Member] | Not Designated as Hedging Instrument [Member]
Financial Assets:
Accrued interest receivable	2,048	[1]	4,842	[2]
Derivatives	41,018		32,326
Financial Liabilities:
Accrued interest payable	2,048	[3]	4,842	[4]
Derivatives			34,569
Carrying Value [Member] | Designated as Hedging Instrument [Member]
Financial Assets:
Derivatives	10,462
Financial Liabilities:
Derivatives	41,018		3,479
Fair value [Member]
Financial Assets:
Cash and cash equivalents	108,280		146,804
Securities available for sale	497,880		796,753
Securities held to maturity	87,857		108,460
CRA investment fund	12,957		14,685
Loans held for sale, at fair value	1,333		3,040
Loans held for sale, at lower of cost or fair value	11,152		37,538
Loans, net of allowance for credit losses	4,842,877
Loans, net of allowance for loan and lease losses			4,767,293
Accrued interest receivable	17,816		21,589
Financial Liabilities:
Deposits	5,285,449		5,268,000
Short-term borrowings	32,369
Subordinated debt	127,062		140,556
Accrued interest payable	2,910		651
Fair value [Member] | Quoted Prices in Active Market For Identical Assets (Level 1) [Member]
Financial Assets:
Cash and cash equivalents	108,280		146,804
CRA investment fund	12,957		14,685
Financial Liabilities:
Deposits	4,897,516		4,791,341
Accrued interest payable	1,187		130
Fair value [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Securities available for sale	497,880		796,753
Securities held to maturity	87,857		108,460
Loans held for sale, at fair value	1,333		3,040
Loans held for sale, at lower of cost or fair value	11,152		37,538
Accrued interest receivable	1,756		2,443
Financial Liabilities:
Deposits	387,933		476,659
Short-term borrowings	32,369
Accrued interest payable	357		446
Fair value [Member] | Significant Unobservable Inputs (Level 3) [Member]
Financial Assets:
Loans, net of allowance for credit losses	4,842,877
Loans, net of allowance for loan and lease losses			4,767,293
Accrued interest receivable	16,060		19,146
Financial Liabilities:
Subordinated debt	127,062		140,556
Accrued interest payable	1,366		75
Fair value [Member] | Not Designated as Hedging Instrument [Member]
Financial Assets:
Accrued interest receivable	2,048	[1]	4,842	[2]
Derivatives	41,018		32,326
Financial Liabilities:
Accrued interest payable	2,048	[3]	4,842	[4]
Derivatives			34,569
Fair value [Member] | Not Designated as Hedging Instrument [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Accrued interest receivable	2,048	[1]	4,842	[2]
Derivatives	41,018		32,326
Financial Liabilities:
Accrued interest payable	2,048	[3]	4,842	[4]
Derivatives			34,569
Fair value [Member] | Designated as Hedging Instrument [Member]
Financial Assets:
Derivatives	10,462
Financial Liabilities:
Derivatives	41,018		3,479
Fair value [Member] | Designated as Hedging Instrument [Member] | Significant Other Observable Inputs (Level 2) [Member]
Financial Assets:
Derivatives	10,462
Financial Liabilities:
Derivatives	$ 41,018		$ 3,479

[1] Included in other assets in the Consolidated Statement of Condition.

[2] Included in other assets in the Consolidated Statement of Condition.

[3] Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

[4] Included in accrued expenses and other liabilities in the Consolidated Statement of Condition.

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Schedule of Noninterest Income) (Details) - USD ($)		3 Months Ended				9 Months Ended
		Sep. 30, 2022		Sep. 30, 2021		Sep. 30, 2022	Sep. 30, 2021
Service charges on deposits
Overdraft fees		$ 129,000		$ 117,000		$ 360,000	$ 297,000
Interchange income		356,000		374,000		1,077,000	1,061,000
Other		575,000		468,000		1,638,000	1,343,000
Wealth management fees	[1]	12,943,000		13,860,000		41,668,000	39,025,000
Corporate advisory fee income		102,000		84,000		1,696,000	1,303,000
Gains/(losses) on sales of OREO						0	51,000
Other	[2]	2,278,000	[3]	2,878,000	[3]	3,166,000	10,199,000
Total noninterest other income		$ 16,383,000		$ 17,781,000		$ 49,605,000	$ 53,279,000

[1] Includes investment brokerage fees.

[2] All of the other category is outside the scope of ASC 606.

[3] All of the other category is outside the scope of ASC 606.

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS (Schedule of Noninterest Income by Operating Segment) (Details) - USD ($)		3 Months Ended				9 Months Ended
		Sep. 30, 2022		Sep. 30, 2021		Sep. 30, 2022		Sep. 30, 2021
Service charges on deposits
Overdraft fees		$ 129,000		$ 117,000		$ 360,000		$ 297,000
Interchange income		356,000		374,000		1,077,000		1,061,000
Other		575,000		468,000		1,638,000		1,343,000
Wealth management fees	[1]	12,943,000		13,860,000		41,668,000		39,025,000
Corporate advisory fee income		102,000		84,000		1,696,000		1,303,000
Gains/(losses) on sales of OREO						0		51,000
Other	[2]	2,278,000	[3]	2,878,000	[3]	3,166,000		10,199,000
Total noninterest other income		16,383,000		17,781,000		49,605,000		53,279,000
Banking Segment [Member]
Service charges on deposits
Overdraft fees		129,000		117,000		360,000		297,000
Interchange income		356,000		374,000		1,077,000		1,061,000
Other		575,000		468,000		1,638,000		1,343,000
Wealth management fees	[4]	0		0		0		0
Corporate advisory fee income		102,000		84,000		1,696,000		1,303,000
Gains/(losses) on sales of OREO						0		51,000
Other		1,793,000	[3]	2,433,000	[2]	1,874,000	[3]	8,755,000	[2]
Total noninterest other income		2,955,000		3,476,000		6,645,000		12,810,000
Wealth Management Division [Member]
Service charges on deposits
Overdraft fees				0		0		0
Interchange income				0		0		0
Other				0		0		0
Wealth management fees	[4]	12,943,000		13,860,000		41,668,000		39,025,000
Corporate advisory fee income				0		0		0
Gains/(losses) on sales of OREO						0		0
Other		485,000	[3]	445,000	[2]	1,292,000	[2]	1,444,000	[2]
Total noninterest other income		$ 13,428,000		$ 14,305,000		$ 42,960,000		$ 40,469,000

[1] Includes investment brokerage fees.

[2] All of the other category is outside the scope of ASC 606.

[3] All of the other category is outside the scope of ASC 606.

[4] Includes investment brokerage fees.

XML

REVENUE FROM CONTRACTS WITH CUSTOMERS - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Interchange income	$ 356,000	$ 374,000	$ 1,077,000	$ 1,061,000
Gains on sales of OREO			0	51,000
Cardholder Rewards [Member]
Interchange income	$ 36,000	$ 34,000	$ 100,000	$ 95,000

XML

OTHER OPERATING EXPENSES (Schedule of Components of Other Operating Expenses) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Other operating expenses
Professional and legal fees	$ 1,180	$ 1,565	$ 3,630	$ 4,007
Telephone	403	342	1,085	988
Advertising	574	386	1,545	1,004
Amortization of intangible assets	384	431	1,204	1,167
Branch restructure			372	228
Write-off of subordinated debt costs				648
Other operating expenses	3,319	3,238	9,587	8,997
Total other operating expenses	$ 5,860	$ 5,962	$ 17,423	$ 17,039

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Schedule of Accumulated Other Comprehensive Income/(Loss) Balances, Net of Tax) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	$ 520,324	$ 538,459	$ 546,388	$ 527,122
Total other comprehensive income/(loss)	(16,256)	(3,620)	(62,609)	(7,643)
Balance	515,514	543,014	515,514	543,014
Net Unrealized Holding Gain/(Loss) on Securities Available for Sale, Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(59,066)	(956)	(9,873)	5,521
Other Comprehensive Income/(Loss) Before Reclassifications	(23,563)	(4,293)	(77,783)	(10,770)
Amount Reclassified From Accumulated Other Comprehensive Income/(Loss)			5,027
Total other comprehensive income/(loss)	(23,563)	(4,293)	(72,756)	(10,770)
Balance	(82,629)	(5,249)	(82,629)	(5,249)
Gain/(Loss) on Cash Flow Hedge [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	339	(4,459)	(2,501)	(6,913)
Other Comprehensive Income/(Loss) Before Reclassifications	7,349	673	10,189	2,521
Amount Reclassified From Accumulated Other Comprehensive Income/(Loss)	(42)		(42)	606
Total other comprehensive income/(loss)	7,307	673	10,147	3,127
Balance	7,646	(3,786)	7,646	(3,786)
Accumulated Other Comprehensive Gain/(Loss), Net of Tax [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Balance	(58,727)	(5,415)	(12,374)	(1,392)
Other Comprehensive Income/(Loss) Before Reclassifications	(16,214)	(3,620)	(67,594)	(8,249)
Amount Reclassified From Accumulated Other Comprehensive Income/(Loss)	(42)		4,985	606
Total other comprehensive income/(loss)	(16,256)	(3,620)	(62,609)	(7,643)
Balance	$ (74,983)	$ (9,035)	$ (74,983)	$ (9,035)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME/(LOSS) (Schedule of Reclassifications Out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Interest expense	$ (9,488)	$ (4,856)	$ (19,633)	$ (17,143)
Income tax expense	(7,623)	(5,036)	(19,167)	(15,173)
NET INCOME	20,126	$ 14,171	53,667	41,767
Reclassification out of Accumulated Other Comprehensive Income | Gain/(Loss) on Cash Flow Hedge [Member]
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Securities losses, net			6,609
Other Income	(58)		(58)	842
Income tax expense	16		(1,566)	(236)
NET INCOME	$ (42)		$ 4,985	$ 606

XML

DERIVATIVES - Additional Information (Details)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2022 USD ($)	Mar. 31, 2022 USD ($) Contract	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Derivative [Line Items]
Unrealized gain				$ 6,400,000
Net interest income (expense)	$ 45,525,000		$ 35,211,000	128,040,000	$ 100,849,000
Swap valuation allowance			1,350,000	673,000	1,350,000
Accrued interest receivable	17,816,000			17,816,000		$ 21,589,000
Not Designated as Hedging Instrument [Member] | Commercial Real Estate Loan [Member]
Derivative [Line Items]
Swap valuation provision placed on non-accrual status						2,100,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Notional amount	290,000,000.0			290,000,000.0		230,000,000.0
Unrealized after-tax gain of accumulated other comprehensive income (loss)	167,000
Unrealized gain				4,083,000		(3,479,000)
Net interest income (expense)	(11,000)		$ 1,000,000.0	1,700,000	$ 3,300,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member]
Derivative [Line Items]
Notional amount	$ 290,000,000			$ 290,000,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Other Liabilities [Member]
Derivative [Line Items]
Notional amount						230,000,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member] | Forward Contracts [Member]
Derivative [Line Items]
Notional amount		$ 100,000,000.0
Derivative, maturity year		2023
Derivative, maturity term		5 years
Weighted-average fixed pay rate	2.25%			2.25%
Number of forward contract | Contract		4
Loan Level Swaps [Member] | Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Notional amount	$ 627,502,000			$ 627,502,000		702,210,000
Loan Level Swaps [Member] | Not Designated as Hedging Instrument [Member] | Other Assets [Member]
Derivative [Line Items]
Accrued interest receivable	2,000,000.0			2,000,000.0		2,000,000.0
Loan Level Swaps [Member] | Not Designated as Hedging Instrument [Member] | Other Liabilities [Member]
Derivative [Line Items]
Accrued interest payable	$ 4,800,000			$ 4,800,000		$ 4,800,000

XML

DERIVATIVES - (Schedule of Information about Interest Rate Swaps Designated as Cash Flow Hedges) (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2022 USD ($) Contract	Dec. 31, 2021 USD ($) Contract
Derivative [Line Items]
Unrealized gain/(loss), net	$ 6,400,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Notional amount	290,000,000.0	$ 230,000,000.0
Fair Value	$ 4,083,000	$ (3,479,000)
Weighted average pay rate	1.78%	1.99%
Weighted average receive rate	1.53%	0.20%
Weighted average maturity	2 years 3 months 3 days	1 year 14 days
Unrealized gain/(loss), net	$ 4,083,000	$ (3,479,000)
Number of contracts | Contract	12	13
Loan Level Swaps [Member] | Not Designated as Hedging Instrument [Member]
Derivative [Line Items]
Notional amount	$ 627,502,000	$ 702,210,000
Fair Value	$ 38,969,000	$ 32,326,000
Weighted average pay rate	3.96%	4.00%
Weighted average receive rate	4.88%	1.83%
Weighted average maturity	4 years 9 months 29 days	5 years 6 months
Number of contracts | Contract	80	86

XML

DERIVATIVES - (Schedule of Cash Flow Hedges Included in Financial Statements) (Details) - Interest Rate Swap [Member] - Designated as Hedging Instrument [Member] - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Derivative [Line Items]
Notional Amount	$ 290,000,000.0	$ 230,000,000.0
Fair Value	4,083,000	(3,479,000)
Other Assets [Member]
Derivative [Line Items]
Notional Amount	290,000,000
Fair Value	$ 4,083,000
Other Liabilities [Member]
Derivative [Line Items]
Notional Amount		230,000,000
Fair Value		$ (3,479,000)

XML

DERIVATIVES - (Schedule of Net Gains/(Loss) Recorded in Accumulated Other Comprehensive Income/(Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Derivative [Line Items]
Gain/(loss) recognized in other comprehensive income (effective portion)	$ 7,307	$ 673	$ 10,147	$ 3,127
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative [Line Items]
Gain/(loss) recognized in other comprehensive income (effective portion)	10,048	$ 936	13,999	3,507
Gain/(loss) recognized in other noninterest income	$ 58		$ 58	$ (842)

XML

SUBORDINATED DEBT - Additional Information (Details) - Subordinated Debt [Member] - USD ($) $ in Thousands	1 Months Ended
	Dec. 31, 2020	Dec. 31, 2017
Debt Instrument [Line Items]
Principal amount	$ 100,000	$ 35,000
Non-callable term	5 years	5 years
Notes maturity date	Dec. 22, 2030	Dec. 15, 2027
Fixed interest rate	3.50%	4.75%
LIBOR spread	3.26%	2.54%
Debt issuance costs	$ 1,900	$ 875

XML

LEASES - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Lessee Lease Description [Line Items]
Operating lease right-of-use assets	$ 13,404,000		$ 13,404,000		$ 9,775,000
Operating lease liabilities	$ 14,101,000		$ 14,101,000		$ 10,111,000
Weighted average discount rate	2.65%		2.65%		2.78%
Weighted average lease term	7 years 6 months 10 days		7 years 6 months 10 days		6 years 1 month 2 days
Operating lease costs	$ 868,000	$ 697,000	$ 2,600,000	$ 2,100,000
Variable lease costs	$ 76,000	$ 75,000	$ 229,000	$ 242,000
Minimum [Member]
Lessee Lease Description [Line Items]
Remaining lease term			2 months		4 months
Maximum [Member]
Lessee Lease Description [Line Items]
Remaining lease term			14 years		15 years

XML

LEASES (Schedule of Operating Lease Liabilities by Contractual Maturity) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Leases [Abstract]
2022	$ 711
2023	2,976
2024	2,299
2025	2,048
2026	1,487
Thereafter	6,194
Total lease payments	15,715
Less: imputed interest	1,614
Total present value of lease payments	$ 14,101	$ 10,111

XML

LEASES (Summary of Supplemental Cash Flow Information Related to Direct Finance and Operating Leases) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Right-of-use asset obtained in exchange for lease obligation	$ 5,696	$ 2,772
Operating cash flows from operating leases	2,008	1,844
Operating cash flows from direct finance leases	193	229
Financing cash flows from direct finance leases	$ 561	$ 561