Peapack Gladstone Financial Corp: Form 10-Q for the period ended Jun 30, 2026

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, asset quality, 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, 2025, which include the following:

• 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 impact of anticipated higher operating expenses in 2026 and beyond;
• 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, including potential recessionary conditions;
• declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
• declines in the value of 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;
• changes in the methodology and assumptions used to calculate the allowance for credit losses;
• higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
• inflation and changes in interest rates, 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;
• declines 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;
• the imposition of tariffs or other domestic or international governmental policies, trade restrictions and retaliatory measures impacting our borrowers and the broader economy;
• the impact of any federal government shutdown, debt ceiling impasses or fiscal uncertainty;
• the failure to maintain current technologies and/or to successfully implement future information technology enhancements and the operational risks associated with the adoption of artificial intelligence and other emerging technologies;
• risks associated with cybersecurity threats, data breaches, ransomware attacks, or other failures in our operational or security systems and infrastructure, including the risks arising from our dependence on third-party service providers and vendors;
• 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, including our expansion into New York City and Long Island;
• a reduction in our lower-cost funding sources;
• changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
• our inability to adapt to technological changes;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
• our inability to attract and retain key employees;
• demand for loans and deposits in our market areas;
• adverse changes in securities markets;
• changes in New York City rent regulation and real estate tax laws;
• changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary and fiscal policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
• changes in accounting policies and practices; and/or
• other unexpected material adverse changes in our financial condition, operations or earnings.

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.

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, 2025 contains a summary of the Company’s significant accounting policies.

The Company’s 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 the methodology for determining the allowance for credit losses or in these judgments, assumptions or estimates could materially impact our results of operations. This critical policy and its application are reviewed periodically with the Audit Committee and the Board of Directors.

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

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

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

(Dollars in thousands, except per share data)

54

(Dollars in thousands, except per share data)

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

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

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

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

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, 2025 under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Off-Balance Sheet Arrangements and Aggregate Contractual Obligations.”

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

The primary source of the Company’s operating income is net interest income, which is the difference between interest and dividends earned on interest-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 calculating 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.

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

(In thousands)

56

(In thousands)

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

(B) Includes equipment finance leases and loans.

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

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

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

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

Average Balance Sheet

Unaudited

Three Months Ended

(Dollars in thousands)

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

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

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

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

Average Balance Sheet

Unaudited

Six Months Ended

(Dollars in thousands)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 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 noninterest income as incurred.

At June 30, 2026, the Company had investment securities available for sale with a fair value of $752.4 million compared with $774.2 million at December 31, 2025. The decline in investment securities was primarily due to the sale of $97.0 million of mostly mortgage-backed securities during the six months ended June 30, 2026. A net unrealized loss (net of income tax) of $52.3 million and $49.3 million related to these securities were included in shareholders’ equity at June 30, 2026 and December 31, 2025, respectively.

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

The Company had one equity security (a CRA investment security) with a fair value of $13.3 million at June 30, 2026 compared to $13.5 million at December 31, 2025, with changes in fair value recognized in the Consolidated Statements of Income. The Company recorded unrealized losses of $55,000 and $139,000 for the three and six months ended June 30, 2026, respectively, compared to unrealized gains of $42,000 and $237,000 for the three and six months ended June 30, 2025.

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

(In thousands)

63

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

(A) Weighted-average yields are based on amortized cost with effective yields weighted for the contractual maturity of each security.

(B) Shown using stated final maturity.

OTHER INCOME: The following tables present further detail on other income which is summarized and discussed subsequently:

(In thousands)

64

(In thousands)

The Company recorded total other income of $22.1 million for the second quarter of 2026 compared to $21.5 million for the same 2025 period, reflecting an increase of $680,000. The increase was primarily due to increases in wealth management fee income and service charges and fees, partially offset by a decrease in the gain on sale of SBA loans and other income. The Company recorded total other income of $44.7 million for the six months ended June 30, 2026 compared to $40.3 million for the same 2025 period, reflecting an increase of $4.4 million. The increase was largely due to an increase in wealth management fee income and loan fee income, partially offset by a decrease in other income and a negative fair value adjustment of the CRA equity security during the six months ended June 30, 2026.

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

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

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

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

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

Letter of credit fee income increased for the six-month period as a result of the Company’s expansion into the metro New York area, which has driven higher utilization of trade finance products among a growing commercial client base.

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

The Company recorded a $55,000 negative fair value adjustment and a $42,000 positive fair value adjustment for CRA equity securities in the second quarters of 2026 and 2025, respectively. The Company recorded a $139,000 negative fair value adjustment and a $237,000 positive fair value adjustment for CRA equity securities for the six months ended June 30, 2026 and 2025, respectively. The decrease in 2026 was due to an increase in medium-term rates during the first six months of 2026, which results in a reduction in the fair value of our CRA equity securities.

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

(In thousands)

(In thousands)

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

WEALTH MANAGEMENT DIVISION: 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.

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

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

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

NONPERFORMING ASSETS: Loans past due in excess of 90 days and still accruing, nonaccrual loans, and other real estate owned are considered nonperforming assets.

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

(Dollars in thousands)

(A) Amounts reflect modifications that are paying according to modified terms.

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

(C) Nonperforming loans/assets do not include performing modifications.

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

Nonperforming assets increased by $4.0 million to $72.2 million at June 30, 2026, as compared to $68.2 million at December 31, 2025. The increase was driven by the classification of one $16.6 million multifamily relationship as nonaccrual and one $3.3 million multifamily loan as past due over 90 days or more and still accruing, partially offset by the liquidation of one commercial loan sale of $9.6 million and the sale of one multifamily loan of $7.2 million. During the second quarter of 2026, the Company recognized $4.8 million of charge-offs related to the sale of one multifamily loan with an outstanding balance of $7.2 million. A specific reserve of $2.4 million had been established on this loan in prior periods. Multifamily loans represented approximately 63 percent of nonperforming assets as of June 30, 2026.

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

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

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

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

The ACL as a percentage of loans was 1.04 percent at June 30, 2026 compared to 1.14 percent at December 31, 2025. The decline in the ratio was primarily attributable to $17.2 million in net charge-offs recorded during the six months ended June 30, 2026, of which $9.2 million of specific reserves were recorded in prior periods and loan growth. These charge-offs were partially offset by a provision for credit losses of $15.4 million for the six months ended June 30, 2026 driven by loan growth of $421.5 million for the six months ended June 30, 2026.

After considering charge-off activity, changes in portfolio risk characteristics, delinquency trends, economic conditions, and qualitative factors, Management believes the allowance remains adequate to absorb expected losses as of June 30, 2026. Management continues to closely monitor asset quality trends, including criticized and delinquent loan migration, and will adjust the ACL as conditions warrant. The ACL recorded on individually evaluated loans was $4.7 million at June 30, 2026 compared to $12.0 million as of December 31, 2025. Total individually evaluated loans were $68.0 million and $68.2 million as of June 30, 2026 and December 31, 2025, respectively. The general component of the allowance on loans collectively evaluated increased from $59.0 million at December 31, 2025 to $64.5 million at June 30, 2026.

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

(Dollars in thousands)

(A) Excludes provision of $76,000 at June 30, 2026, provision of $5,000 at March 31, 2026, provision of $12,000 at December 31, 2025, a credit of $81,000 at September 30, 2025, and provision of $9,000 at June 30, 2025 related to off-balance sheet commitments.

The decrease in the allowance for credit losses as a percentage of nonperforming loans was primarily due to an increase in nonperforming loans of $4.0 million to $72.2 million at June 30, 2026, as compared to nonperforming loans of $68.2 million at December 31, 2025, and a decrease in the ACL of $1.9 million to $69.2 million at June 30, 2026. The increase in nonperforming assets during the second quarter of 2026 was driven primarily by the reclassification of one $16.6 million multifamily relationship to nonaccrual and one $3.3 million multifamily loan as past due over 90 days and still accruing, partially offset by loan liquidations and sales discussed above. The latter loan had matured, and closing was pending resolution of certain legal matters as of June 30, 2026.

INCOME TAXES: Income tax expense for the quarter ended June 30, 2026 was $6.3 million as compared to $3.3 million for the same period in 2025. The increase in income tax expense reflected higher pretax income of $22.3 million for the quarter ended June 30, 2026 as compared to $11.3 million for the same quarter in 2025.

The effective tax rate for the three months ended June 30, 2026 was 28.4 percent compared to 29.5 percent for the same quarter in 2025.

Income tax expense for the six months ended June 30, 2026 was $11.9 million as compared to $6.2 million for the same period in 2025. The increase in income tax expense reflected higher pretax income of $42.0 million for the six months ended June 30, 2026 as compared to $21.7 million for the same period in 2025.

The effective tax rate for the six months ended June 30, 2026 was 28.3 percent compared to 28.4 percent for the same period in 2025.

CAPITAL RESOURCES: A solid capital base provides the Company with financial strength and the ability to support future growth and is essential to executing the Company’s current strategic plan. The Company’s capital strategy is 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 and bank holding companies. Maintaining an adequate capital position supports the Company’s goal of providing shareholders an attractive and stable long-term return on investment.

Capital increased as a result of net income available to common shareholders of $29.9 million and the issuance of 30,000 shares of Series B Preferred Stock totaling $30.0 million for the six months ended June 30, 2026. These increases were partially offset by cash dividends of $1.8 million, a preferred stock dividend of $195,000 and an increase in accumulated other comprehensive loss of $2.2 million during the six months ended June 30, 2026. Total accumulated other comprehensive loss grew to $49.8 million as of June 30, 2026 ($52.3 million loss related to the available for sale securities portfolio partially offset by a $2.5 million gain on the cash flow hedges), as compared to $47.6 million at December 31, 2025.

The Company employs quarterly capital stress testing by modeling adverse case and severely adverse case scenarios. In the most recent completed stress test based on March 31, 2026 financial information, under the severely adverse case, and no growth scenarios, the Bank remains well capitalized over a 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 June 30, 2026 and December 31, 2025, 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 below.

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

(Dollars in thousands)

(A) See footnote on following table.

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

(Dollars in thousands)

(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, stock 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 fulfilled through 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 June 30, 2026 were purchased in the open market.

On July 30, 2026, the Board of Directors declared a regular cash dividend of $0.05 per share payable on August 27, 2026 to shareholders of record on August 13, 2026.

Management believes the Company’s capital position and capital ratios were adequate at June 30, 2026. Further, Management believes the Company has sufficient 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, securities available for sale, customer deposit inflows, loan repayments and secured borrowings. Other liquidity sources include loan and security sales and loan participations.

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 $253.9 million at June 30, 2026. In addition, the Company had $752.4 million in securities designated as available for sale at June 30, 2026. 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 $419.3 million and $76.6 million as of June 30, 2026, respectively, were pledged to secure public funds and for other purposes required or permitted by law. None of the pledged securities are encumbered. In addition, the Company generates significant liquidity from scheduled and unscheduled principal repayments of loans and mortgage-backed securities.

As of June 30, 2026, the Company had approximately $4.0 billion of external borrowing capacity available on a same day basis (subject to any practical constraints affecting the FHLB or FRB), which when combined with balance sheet liquidity provided the Company with 204 percent coverage of our uninsured/unprotected deposits.

The Company has a Board-approved Contingency Funding Plan. 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. Management believes the Company’s liquidity position and sources were adequate at June 30, 2026.

ASSET/LIABILITY MANAGEMENT: The Company’s management Asset/Liability Committee (“ALCO”) is responsible for developing, implementing and monitoring asset/liability 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 the 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.

ALCO generally manages interest rate risk through the management of capital, cash flows and the 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. ALCO engages 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:

• Market C&I loans, which tend to have adjustable-rate features, and which generate customer relationships that can result in higher core deposit accounts;
• 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;
• 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;
• 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 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. In these swaps, the Company is receiving floating and paying fixed interest rates with a total notional value of $280.0 million as of June 30, 2026.

In addition, the Company maintains 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 June 30, 2026, $405.9 million of notional value in swaps were executed and outstanding with borrowers under this program.

As noted above, 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 believed to be reasonable as of June 30, 2026. 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 June 30, 2026.

The table below shows the estimated changes in the Company’s economic value of equity (“EVE”) and net interest income that would result from an immediate parallel change in the market interest rates at June 30, 2026.

($ in millions)

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

In an immediate and sustained 100 basis point increase in market rates at June 30, 2026, net interest income would decrease by 1.1 percent in year 1 and increase by 2.3 percent in year 2, compared to a flat interest rate scenario. In an immediate and sustained 100 basis point decrease in market rates at June 30, 2026, net interest income would increase 0.5 percent in year 1 and decrease 3.9 percent for year 2, compared to a flat interest rate scenario.

In an immediate and sustained 200 basis point increase in market rates at June 30, 2026, net interest income would decrease approximately 2.3 percent in year 1 and increase by 4.5 percent in year 2, compared to a flat interest rate scenario. In an immediate and sustained 200 basis point decrease in market rates at June 30, 2026, net interest income for year 1 would increase approximately 0.6 percent, when compared to a flat interest rate scenario. In year 2, net interest income would decrease 8.8 percent, when compared to a flat interest rate scenario.

The Company's interest rate sensitivity models indicate that, as of June 30, 2026, the Company is modestly liability sensitive in the near term, with net interest income declining in the first year under rising rate scenarios but improving in the second year, while sustained decreases in market rates would modestly benefit net interest income in the first year but result in pressure on net interest income, in the second year.

Certain shortcomings are inherent in the methodologies used in determining interest rate risk. Simulation modeling requires making certain assumptions that 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.

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, has 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 Exchange Act) 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 Company’s disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

The Company’s management, including the Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system reflects resource constraints. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been or will be detected. These inherent limitations include that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Further, controls can be circumvented. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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, 2025.