PROVIDENT FINANCIAL SERVICES INC Administration’s Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (kind 10-Okay)

Normal

On January 15, 2003, the Firm grew to become the holding firm for the Financial institution,
following the completion of the conversion of the Financial institution to a New Jersey-chartered
capital inventory financial savings financial institution. The Firm issued an combination of 59,618,300 shares
of its frequent inventory in a subscription providing to eligible depositors.
Concurrent with the conversion, the Firm contributed an extra 1,920,000
shares of its frequent inventory and $4.8 million in money to The Provident Financial institution
Basis, a charitable basis established by the Financial institution.

The Firm conducts enterprise by its subsidiary, the Financial institution, a community- and
customer-oriented financial institution at the moment working full-service branches and mortgage
manufacturing workplaces all through northern and central New Jersey, in addition to Bucks,
Lehigh and Northampton counties in Pennsylvania and Queens County, New York. The
Financial institution additionally supplies fiduciary and wealth administration providers by its wholly
owned subsidiary, Beacon Belief Firm and insurance coverage providers by its wholly
owned subsidiary, SB One Insurance coverage Company, Inc.

Technique

Established in 1839, the Financial institution is the oldest New Jersey-chartered financial institution within the
state. The Financial institution provides a full vary of business and retail mortgage and deposit
merchandise, and emphasizes private service and comfort.

The Financial institution’s technique is to develop profitably by a dedication to credit score high quality
and increasing market share by buying, retaining and increasing buyer
relationships, whereas fastidiously managing rate of interest threat.

The Financial institution continues to keep up a diversified mortgage portfolio with an emphasis on
industrial mortgage, multi-family, building and industrial loans in its
efforts to cut back rate of interest threat. Some of these loans usually have
adjustable charges that originally are larger than residential mortgage loans and
usually have the next price of credit score threat. The Financial institution's lending coverage focuses
on high quality underwriting requirements and shut monitoring of the mortgage portfolio. At
December 31, 2021, these industrial mortgage sorts accounted for 84.1% of the mortgage
portfolio and retail loans accounted for 15.9%. The Firm intends to proceed
to give attention to industrial mortgage, multi-family, building and industrial
lending relationships.

The Firm's relationship banking technique focuses on rising core accounts
and increasing relationships by its department community, cellular banking, on-line
banking and different digital providers. The Firm continues to guage
alternatives to extend market share by increasing inside current and
contiguous markets. Core deposits, consisting of financial savings and
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demand deposit accounts, are usually a steady, comparatively cheap supply
of funds. At December 31, 2021, core deposits had been 93.8% of whole deposits.

The Firm's outcomes of operations are primarily dependent upon web curiosity
revenue, the distinction between curiosity earned on interest-earning property and
the curiosity paid on interest-bearing liabilities. Modifications in rates of interest
might have an hostile impact on web curiosity revenue to the extent the Firm's
interest-bearing property and interest-bearing liabilities reprice or mature at
totally different occasions or relative rates of interest. The Firm believes primarily based upon its
present steadiness sheet combine that property could reprice extra rapidly than liabilities.
Subsequently, as a result of present traditionally low curiosity atmosphere, and with
deposit charges at or close to zero, a lower in rates of interest could lead to a
lower within the Firm's common rate of interest unfold and web revenue, which
might have a detrimental impact on profitability. The Firm generates
non-interest revenue corresponding to revenue from retail and enterprise account charges, mortgage
servicing charges, mortgage origination charges, mortgage stage swap charges, appreciation within the
money give up worth of Financial institution-owned life insurance coverage, revenue from mortgage or
securities gross sales, charges from wealth administration providers, funding product
gross sales, insurance coverage brokerage charges and different charges. The Firm's working bills
consist primarily of compensation and advantages expense, occupancy and tools
expense, information processing expense, the amortization of intangible property,
advertising and promoting expense and different common and administrative bills.
The Firm's outcomes of operations are additionally affected by common financial
situations, adjustments in market rates of interest, adjustments in asset high quality, adjustments
in asset values, actions of regulatory businesses and authorities insurance policies.

Acquisitions

SB One Bancorp

On July 31, 2020, the Firm accomplished its acquisition of SB One Bancorp ("SB
One"), which added $2.20 billion to whole property, $1.77 billion to whole loans,
which included PCD loans totaling $294.2 million, and $1.76 billion to whole
deposits, and added 18 full-service banking workplaces in New Jersey and New York.
As a part of the acquisition, the addition of SB One Insurance coverage Company, Inc. permits
the Firm to increase its merchandise choices to its clients to incorporate an
array of business and private insurance coverage merchandise.

Underneath the merger settlement, every share of SB One frequent inventory was exchanged for
1.357 shares of the Firm's frequent inventory. The Firm issued 12.8 million
shares of frequent inventory from treasury inventory, plus money in lieu of fractional
shares within the acquisition of SB One. The whole consideration paid within the
acquisition of SB One was $180.8 million. In reference to the acquisition, SB
One Financial institution, an entirely owned subsidiary of SB One, was merged with and into
Provident Financial institution, an entirely owned subsidiary of the Firm.

The acquisition was accounted for below the acquisition methodology of accounting.
Underneath this methodology of accounting, the acquisition worth has been allotted to the
respective property acquired and liabilities assumed primarily based upon their estimated
honest values, web of tax. The surplus of consideration paid over the estimated
honest worth of the online property acquired was recorded as goodwill and initially
totaled $22.4 million. The calculation of goodwill was topic to vary for up
to 1 yr after the date of acquisition as further info relative to
the deadline estimates and uncertainties grow to be obtainable.

The Firm up to date sure estimates used within the buy worth allocation,
primarily with respect to the marginal tax price of deferred tax property ("DTA").
Because of this, the honest worth of the online property acquired decreased by
$1.4 million. The affect of those measurement interval changes elevated
goodwill to $23.9 million. The Firm has finalized the acquisition worth
allocation and these measurement interval changes are recorded as present
interval changes in accordance with ASU 2015-16. Goodwill isn't deductible
for tax functions and can be evaluated yearly for impairment.

Acquisition of Tirschwell & Loewy, Inc.

On April 1, 2019, Beacon Belief Firm ("Beacon") accomplished its acquisition of
sure property of Tirschwell & Loewy, Inc. ("T&L"), a New York Metropolis-based
impartial registered funding adviser. Beacon is an entirely owned subsidiary
of Provident Financial institution. This acquisition expanded the Firm's wealth administration
enterprise by $822.4 million of property below administration on the time of
acquisition.

The acquisition was accounted for below the acquisition methodology of accounting.
The Firm recorded goodwill of $8.2 million, a buyer relationship
intangible of $12.6 million and $800,000 of different identifiable intangibles
associated to the acquisition. As well as, the Firm recorded a contingent
consideration legal responsibility at its honest worth of $6.6 million. The contingent
consideration association requires the Firm to pay more money
consideration to T&L's former stakeholders over a three-year interval after the
deadline of the acquisition if sure monetary and enterprise retention
targets are met. The acquisition settlement limits the overall further cost
to a most of $11.0 million, to be decided primarily based on precise future outcomes.
Complete value of the acquisition was $21.6 million, which included money
consideration of $15.0 million and
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contingent consideration with a good worth of $6.6 million. Tangible property
acquired within the transaction had been nominal. No liabilities had been assumed within the
acquisition. The goodwill recorded within the transaction was deductible for tax
functions.

Within the fourth quarter of 2019, the Firm acknowledged a $2.8 million improve in
the estimated honest worth of the contingent consideration legal responsibility. In Could of
2021, a $4.0 million earn out was paid as sure acquisition settlement limits
had been glad in yr two of the acquisition. Moreover, in September of
2021, because of declining asset valuations, a $3.4 million discount within the
contingent consideration associated to doable future earn-out provisions was
made. Because of this, the estimated honest worth of the contingent consideration
legal responsibility at December 31, 2021 was $2.0 million.

Essential Accounting Insurance policies

The Firm considers sure accounting insurance policies to be critically vital to
the honest presentation of its monetary situation and outcomes of operations.
These insurance policies require administration to make advanced judgments on issues which by
their nature have components of uncertainty. The sensitivity of the Firm's
consolidated monetary statements to those vital accounting insurance policies, and the
assumptions and estimates utilized, might have a major affect on its
monetary situation and outcomes of operations. These assumptions, estimates and
judgments made by administration could be influenced by various components, together with
the final financial atmosphere. The Firm has recognized the next as
vital accounting insurance policies:

•Adequacy of the allowance for credit score losses on loans
•Valuation of deferred tax property

On January 1, 2020, the Firm adopted ASU 2016-13, "Measurement of Credit score
Losses on Monetary Devices," which replaces the incurred loss methodology
with the present anticipated credit score loss ("CECL") methodology. It additionally applies to
off-balance sheet credit score exposures, together with mortgage commitments and contours of
credit score. The adoption of the brand new customary resulted within the Firm recording a
$7.9 million improve to the allowance for credit score losses and a $3.2 million
legal responsibility for off-balance sheet credit score exposures. The adoption of the usual
didn't lead to a change to the Firm's outcomes of operations upon adoption
because it was recorded as an $8.3 million cumulative impact adjustment, web of
revenue taxes, to retained earnings.

The allowance for credit score losses is a valuation account that displays
administration's analysis of the present anticipated credit score losses within the mortgage
portfolio. The Firm maintains the allowance for credit score losses by
provisions for credit score losses which might be charged to revenue. Cost-offs towards the
allowance for credit score losses are taken on loans the place administration determines that
the gathering of mortgage principal and curiosity is unlikely. Recoveries made on
loans which were charged-off are credited to the allowance for credit score
losses.

The calculation of the allowance for credit score losses is a vital accounting
coverage of the Firm. Administration estimates the allowance steadiness utilizing related
obtainable info, from inside and exterior sources, associated to previous
occasions, present situations, and an inexpensive and supportable forecast.
Historic credit score loss expertise for each the Firm and friends supplies the
foundation for the estimation of anticipated credit score losses, the place noticed credit score losses
are transformed to likelihood of default price ("PDR") curves by the usage of
segment-specific loss given default ("LGD") threat components that convert default
charges to loss severity primarily based on industry-level, noticed relationships between
the 2 variables for every section, primarily as a result of nature of the
underlying collateral. These threat components had been assessed for reasonableness
towards the Firm's personal loss expertise and adjusted in sure instances when the
relationship between the Firm's historic default and loss severity deviate
from that of the broader {industry}. The historic PDR curves, along with
corresponding financial situations, set up a quantitative relationship between
financial situations and mortgage efficiency by an financial cycle.

Utilizing the historic relationship between financial situations and mortgage
efficiency, administration's expectation of future mortgage efficiency is included
utilizing an externally developed financial forecast. This forecast is utilized over a
interval that administration has decided to be affordable and supportable. Past
the interval over which administration can develop or supply an inexpensive and
supportable forecast, the mannequin will revert to long-term common financial
situations utilizing a straight-line, time-based methodology. The Firm's present
forecast interval is six quarters, with a 4 quarter reversion interval to
historic common macroeconomic components. The Firm's financial forecast is
authorized by the Firm's Asset-Legal responsibility Committee.

The allowance for credit score losses is measured on a collective (pool) foundation, with
each a quantitative and qualitative evaluation that's utilized on a quarterly
foundation, when comparable threat traits exist. The respective quantitative
allowance for every mortgage section is measured utilizing an econometric, discounted
PDR/LGD modeling methodology by which distinct, segment-specific multi-variate
regression fashions are utilized to an exterior financial forecast. Underneath the
discounted money flows methodology, anticipated credit score losses are estimated over the
efficient lifetime of the loans by measuring the distinction between the online current
worth of modeled money flows and amortized value foundation. Contractual money flows
over the contractual lifetime of the loans are the idea for modeled money flows,
adjusted for modeled defaults and anticipated prepayments and discounted on the
loan-level efficient
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rate of interest. The contractual time period excludes anticipated extensions, renewals, and
modifications except both of the next applies: administration has a
affordable expectation on the reporting date {that a} troubled debt restructuring
("TDR") can be executed with a person borrower or the extension or renewal
choices are included within the authentic or modified contract on the reporting date
and usually are not unconditionally cancellable by the Firm.

The Firm considers qualitative changes to credit score loss estimates for
info not already captured within the quantitative element of the loss
estimation course of. Qualitative components are primarily based on portfolio focus
ranges, mannequin imprecision, adjustments in {industry} situations, adjustments within the
Firm’s mortgage evaluation course of, adjustments within the Firm’s mortgage insurance policies and
procedures, and financial forecast uncertainty.

Portfolio section is outlined as the extent at which an entity develops and
paperwork a scientific methodology to find out its allowance for credit score losses.
Administration developed segments for estimating loss primarily based on sort of borrower and
collateral which is mostly primarily based upon federal name report segmentation. The
segments have been mixed or sub-segmented as wanted to make sure loans of
comparable threat profiles are appropriately pooled. As of December 31, 2021, the
portfolio and sophistication segments for the Firm's mortgage portfolio had been:

•Mortgage Loans - Residential, Industrial Actual Property, Multi-Household and
Building
•Industrial Loans - Industrial Proprietor Occupied and Industrial Non-Proprietor Occupied
•Client Loans - First Lien Dwelling Fairness and Different Client

The allowance for credit score losses on loans individually evaluated for impairment
is predicated upon loans which were recognized by the Firm's regular mortgage
monitoring course of. This course of consists of the evaluation of delinquent and drawback
loans on the Firm's Delinquency, Credit score, Credit score Threat Administration and Allowance
Committees; or which can be recognized by the Firm's mortgage evaluation
course of. Usually, the Firm solely evaluates loans individually for impairment
if the mortgage is non-accrual, non-homogeneous and the steadiness is at the least $1.0
million, or if the mortgage was modified as a TDR.

For all lessons of loans deemed collateral-dependent, the Firm estimates
anticipated credit score losses primarily based on the honest worth of the collateral much less any
promoting prices. If the mortgage isn't collateral dependent, the allowance for credit score
losses associated to individually assessed loans is predicated on discounted anticipated
money flows utilizing the mortgage's preliminary efficient rate of interest.

A mortgage for which the phrases have been modified leading to a concession by the
Firm, and for which the borrower is experiencing monetary difficulties is
thought of to be a TDR. The allowance for credit score losses on a TDR is measured
utilizing the identical methodology as all different impaired loans, besides that the unique
rate of interest is used to low cost the anticipated money flows, not the speed
specified throughout the restructuring.

For loans acquired which have skilled more-than-insignificant deterioration
in credit score high quality since their origination are thought of PCD loans. The Firm
evaluates acquired loans for deterioration in credit score high quality primarily based on any of,
however not restricted to, the next: (1) non-accrual standing; (2) troubled debt
restructured designation; (3) threat scores of particular point out, substandard or
uncertain; (4) watchlist credit; and (5) delinquency standing, together with loans
which might be present on acquisition date, however had been beforehand delinquent. On the
acquisition date, an estimate of anticipated credit score losses is made for teams of
PCD loans with comparable threat traits and particular person PCD loans with out
comparable threat traits. Subsequent to the acquisition date, the preliminary
allowance for credit score losses on PCD loans will improve or lower primarily based on
future evaluations, with adjustments acknowledged within the provision for credit score losses.

Administration believes the first dangers inherent within the portfolio are a common
decline within the economic system, a decline in actual property market values, rising
unemployment or a protracted interval of elevated unemployment, rising emptiness
charges in industrial funding properties and doable will increase in curiosity
charges within the absence of financial enchancment. Because the affect of COVID-19
continues to unfold, the effectiveness of medical advances, authorities packages,
and the ensuing affect on shopper habits and employment situations will
have a fabric bearing on future credit score situations. Anybody or a mixture of
these occasions could adversely have an effect on debtors' potential to repay the loans,
leading to elevated delinquencies, credit score losses and better ranges of
provisions. Administration considers it vital to keep up the ratio of the
allowance for credit score losses to whole loans at a suitable stage given present
and forecasted financial situations, rates of interest and the composition of the
portfolio.

Though administration believes that the Firm has established and maintained the
allowance for credit score losses at applicable ranges, additions could also be crucial if
future financial and different situations differ considerably from the present
working atmosphere and financial forecast. Administration evaluates its estimates
and assumptions on an ongoing foundation giving consideration to forecasted financial
components, historic loss expertise and different components. Such estimates and
assumptions are adjusted when details and circumstances dictate. Along with
the continuing affect of COVID-19, illiquid credit score markets, risky securities
markets, and declines within the housing and industrial actual property markets and the
economic system typically
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could improve the uncertainty inherent in such estimates and assumptions. As
future occasions and their results can't be decided with precision, precise
outcomes might differ considerably from these estimates. Modifications in estimates
ensuing from persevering with adjustments within the financial atmosphere can be mirrored
within the monetary statements in future intervals. As well as, varied regulatory
businesses periodically evaluation the adequacy of the Firm's allowance for credit score
losses as an integral a part of their examination course of. Such businesses could
require the Firm to acknowledge additions to the allowance or further
write-downs primarily based on their judgments about info obtainable to them on the
time of their examination. Though administration makes use of the very best info
obtainable, the extent of the allowance for credit score losses stays an estimate that
is topic to important judgment and short-term change.

The CECL method to calculate the allowance for credit score losses on loans is
considerably influenced by the composition, traits and high quality of the
Firm's mortgage portfolio, in addition to the prevailing financial situations and
forecast utilized. Materials adjustments to those and different related components creates
larger volatility to the allowance for credit score losses, and due to this fact, larger
volatility to the Firm's reported earnings. For the yr ended December 31,
2021, the altering financial forecasts attributable to COVID-19 and the projected
financial restoration led the Firm to file a detrimental provision for credit score
losses, in comparison with a rise within the provision for a similar interval final yr.
See Observe 7 to the Consolidated Monetary Statements for extra info on the
allowance for credit score losses on loans.

The willpower of whether or not deferred tax property can be realizable is
predicated on the reversal of current deferred tax liabilities and estimates of
future taxable revenue. Such estimates are topic to administration's judgment. A
valuation allowance is established when administration is unable to conclude that it
is extra seemingly than not that it'll understand deferred tax property primarily based on the
nature and timing of this stuff. The Firm didn't require a valuation
allowance at December 31, 2021 and 2020.

Evaluation of Internet Curiosity Earnings

Internet curiosity revenue represents the distinction between revenue on interest-earning
property and expense on interest-bearing liabilities. Internet curiosity revenue relies upon
on the relative quantities of interest-earning property and interest-bearing
liabilities and the charges of curiosity earned on such property and paid on such
liabilities.

Common Steadiness Sheet. The next desk units forth sure info for
the years ended December 31, 2021, 2020 and 2019. For the intervals indicated, the
whole greenback quantity of curiosity revenue from common interest-earning property and
the resultant yields, in addition to the curiosity expense on common
interest-bearing liabilities is expressed each in {dollars} and charges. No tax
equal changes had been made. Common balances are day by day averages.
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                                                                                                           For the Years Ended December 31,
                                                           2021                                                          2020                                                          2019
                                      Common             Curiosity            Common               Common             Curiosity            Common              Common             Curiosity            Common
                                    Excellent           Earned/              Yield/             Excellent           Earned/              Yield/            Excellent           Earned/              Yield/
                                      Steadiness               Paid                Price                Steadiness               Paid                Price               Steadiness               Paid                Price
                                                                                                                ({Dollars} in hundreds)
Curiosity-earning property:
Deposits                          $    421,898          $     533                 0.13  %       $    199,234          $     478                 0.24  %       $    41,913          $     854                 2.03  %
Federal funds offered and short-term
investments                            181,982              2,192                 1.20               124,979              1,920                 1.54               61,032              1,870                 3.07
Held to maturity debt securities       437,994             10,743                 2.45               446,666             11,461                 2.57              467,711             12,424                 2.66
Accessible on the market debt
securities                           1,539,811             21,515                 1.40             1,043,799             21,736                 2.08            1,072,106             27,455                 2.56
Fairness Securities, At Honest Worth         1,063                  -                    -                   822                  -                    -                  724                  -                    -
Federal Dwelling Mortgage Financial institution NY Inventory         41,671              2,283                 5.48                61,824              3,710                 6.00               66,285              4,387                 6.62
Internet loans(2)                         9,556,702            365,073                 3.82             8,367,663            324,004                 3.87            7,190,113            324,480                 4.51
Complete interest-earning property       12,181,121            402,339                 3.30            10,244,987            363,309                 3.55            8,899,884            371,470                 4.17
Non-interest incomes property          1,157,790                                                     1,092,153                                                      920,948
Complete property                      $ 13,338,911                                                  $ 11,337,140                                                  $ 9,820,832
Curiosity-bearing liabilities:
Financial savings deposits                  $  1,414,560          $   1,604                 0.11  %       $  1,143,381          $   1,689                 0.15  %       $ 1,015,547          $   1,681                 1.17  %
Demand deposits                      5,794,398             20,458                 0.35             4,364,257             22,763                 0.52            3,625,989             29,542                 0.81
Time deposits                          868,185              4,451                 0.51               868,161              9,137                 1.05              801,374             14,271                 1.78
Borrowed funds                         789,838              8,614                 1.09             1,227,894             16,638                 1.36            1,336,631             28,003                 2.10
Subordinated debentures                 24,794              1,189                 4.79                10,439                512                 4.90                    -                  -                    -
Complete interest-bearing
liabilities                          8,891,775             36,316                 0.41             7,614,132             50,739                 0.67            6,779,541             73,497                 1.08
Non-interest bearing liabilities:
Non-interest bearing deposits        2,543,287                                                     1,984,420                                            

1,502,672

Different Non-interest bearing
liabilities                            230,134                                                       244,025                                            

143,760

Complete Non-Curiosity Bearing
Liabilities                          2,773,421                                                     2,228,445                                            

1,646,432

Complete liabilities                   11,665,196                                                     9,842,577                                            

8,425,973

Stockholders' fairness                 1,673,715                                                     1,494,563                                            

1,394,859

Complete liabilities and fairness      $ 13,338,911                                                  $ 11,337,140                                                  $ 9,820,832
Internet curiosity revenue                                     $ 366,023                                                     $ 312,570                                                    $ 297,973
Internet rate of interest unfold                                                          2.89  %                                                       2.88  %                                                      3.09  %
Internet curiosity incomes property       $  3,289,346                                                  $  2,506,423                                                  $ 2,115,022
Internet curiosity margin(3)(4)                                                         3.00  %                                                       3.05  %                                                      3.35  %
Ratio of interest-earning property
to whole interest-bearing
liabilities                                 1.37x                                                         1.33x                                                        1.31x


(1) Common excellent steadiness quantities are at amortized value.
(2) Common excellent balances are web of the allowance for credit score losses,
deferred mortgage charges and bills, and mortgage premiums and reductions and embrace
non-accrual loans.
(3) Internet curiosity revenue divided by common interest-earning property.
(4) The beforehand reported common balances of the curiosity bearing money and
non-interest bearing money for the years ended December 31, 2020 and December 31,
2019 had been recalculated. These recalculations resulted within the beforehand reported
web curiosity margin of 2020 altering from 3.09% to three.05%, whereas there was no
change to the beforehand reported web curiosity margin of 2019.
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Price/Quantity Evaluation. The next desk presents the extent to which adjustments
in rates of interest and adjustments within the quantity of interest-earning property and
interest-bearing liabilities have affected curiosity revenue and curiosity expense
in the course of the intervals indicated. Info is offered in every class with
respect to: (i) adjustments attributable to adjustments in quantity (adjustments in quantity
multiplied by prior price); (ii) adjustments attributable to adjustments in price (adjustments
in price multiplied by prior quantity); and (iii) the online change. The adjustments
attributable to the mixed affect of quantity and price have been allotted
proportionately to the adjustments on account of quantity and the adjustments on account of price.

                                                                                 Years Ended December 31,
                                                         2021 vs. 2020                                               2020 vs. 2019

                                           Enhance/(Lower)                  Complete                  Enhance/(Lower)                  Complete
                                                  Because of                      Enhance/                       Because of                      Enhance/
                                         Quantity              Price             (Lower)            Quantity               Price             (Lower)
                                                                                      (In hundreds)
Curiosity-earning property:
Deposits, Federal funds offered and
short-term investments               $     5,335          $ (5,008)         

$ 327 $ 7,785 $ (8,110) $ (325)
Funding securities

                       (219)             (499)                (718)               (968)                 5                 (963)
Securities obtainable on the market              8,321            (8,542)                (221)               (623)            (5,096)              (5,719)
Federal Dwelling Mortgage Financial institution Inventory              (1,126)             (301)              (1,427)               (284)              (393)                (677)
Loans                                     45,467            (4,398)              41,069              49,100            (49,576)                (476)
Complete interest-earning property             57,778           (18,748)              39,030              55,010            (63,170)              (8,160)
Curiosity-bearing liabilities:
Financial savings deposits                             353              (439)                 (86)              2,606             (2,597)                   9
Demand deposits                            6,240            (8,544)              (2,304)              5,235            (12,014)              (6,779)
Time deposits                                  -            (4,686)              (4,686)              1,107             (6,241)              (5,134)
Borrowed funds                            (5,187)           (2,837)              (8,024)             (2,128)            (9,237)             (11,365)
Subordinated debentures                      689               (12)                 677                 512                  -                  512
Complete interest-bearing liabilities         2,095           (16,518)             (14,423)              7,332            (30,089)             (22,757)
Internet curiosity revenue                  $    55,683          $ (2,230)         $    53,453          $   47,678          $ (33,081)         $    14,597

There have been no out-of-period gadgets and/or changes that had a fabric affect
on the speed/quantity evaluation for the intervals aforementioned within the desk above.

Comparability of Monetary Situation at December 31, 2021 and December 31, 2020

Complete property at December 31, 2021 had been $13.78 billion, an $861.5 million
improve from December 31, 2020. The rise in whole property was primarily due
to a $912.7 million improve in whole investments and a $180.1 million improve
in money and money equivalents, partially offset by a $241.3 million lower in
whole loans.

The Firm's mortgage portfolio decreased $241.3 million to $9.58 billion at
December 31, 2021, from $9.82 billion at December 31, 2020, regardless of robust
originations, as prepayments, together with Paycheck Safety Program ("PPP") mortgage
forgiveness, had been elevated. Complete PPP loans excellent decreased $378.3 million
to $94.9 million at December 31, 2021, from $473.2 million at December 31, 2020.
Excluding the online lower in PPP loans, loans elevated $137.0 million to $9.49
billion at December 31, 2021, from $9.35 billion at December 31, 2020. For the
yr ended December 31, 2021, mortgage fundings, together with advances on strains of
credit score, totaled $3.52 billion, in contrast with $3.50 billion for 2020.
Originations below PPP packages totaled $208.7 million and $397.8 million for
the years ended December 31, 2021 and 2020, respectively. Excluding the online
lower in PPP loans, in the course of the yr ended December 31, 2021, the mortgage
portfolio had web will increase of $368.7 million in industrial mortgage loans and
$141.2 million in building loans, partially offset by web decreases of
$165.1 million in shopper loans, $120.1 million in multi-family mortgage loans,
$92.1 million in residential mortgage loans and $304,000 in industrial loans.
Industrial actual property, industrial and building loans represented 84.1% of
the overall mortgage portfolio at December 31, 2021, in comparison with 81.8% at December 31,
2020.
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Industrial loans, consisting of business actual property, multi-family,
building and industrial loans, totaled $8.06 billion, accounting for 84.1%
of the mortgage portfolio at December 31, 2021, in comparison with $8.05 billion, or 81.8%
of the mortgage portfolio at December 31, 2020. The Firm intends to proceed to
give attention to the origination of commercially-oriented loans. Retail loans, which
include one- to four-family residential mortgage and shopper loans, corresponding to
fixed-rate residence fairness loans and contours of credit score, totaled $1.53 billion and
accounted for 15.9% of the mortgage portfolio at December 31, 2021, in comparison with
$1.79 billion, or 18.2%, of the mortgage portfolio at December 31, 2020.

The Firm participates in loans originated by different banks, together with
participations designated as Shared Nationwide Credit ("SNC"). The Firm's
gross commitments and excellent balances as a participant in SNCs had been $167.1
million and $78.5 million, respectively, at December 31, 2021. At December 31,
2021, no SNC relationships had been categorized as substandard or worse.

The Firm had excellent junior lien mortgages totaling $139.4 million at
December 31, 2021. Of this whole, 9 loans totaling $376,900 had been 90 days or
extra delinquent, and had been allotted whole loss reserves of $5,415.

At December 31, 2021, the Firm's allowance for credit score losses associated to the
mortgage portfolio was 0.84% of whole loans, in comparison with 1.03% of whole loans at
December 31, 2020. For the yr ended December 31, 2021, the Firm recorded a
detrimental provision of $24.3 million for credit score losses associated to loans, in contrast
to a $29.7 million provision for yr ended December 31, 2020. The Firm had
web recoveries of $3.6 million for the yr ended December 31, 2021, in comparison with
web charge-offs of $5.3 million in 2020. The discount in provision for credit score
losses for the yr ended December 31, 2021, in comparison with the identical interval within the
prior yr, was primarily the results of an improved financial forecast and
improved asset high quality. The web recoveries realized for the yr ended December
31, 2021 additional contributed to the detrimental provision for credit score losses within the
interval.

Complete non-performing loans at December 31, 2021 had been $48.0 million, or 0.50% of
whole loans, in contrast with $87.1 million, or 0.89% of whole loans at
December 31, 2020. The lower in non-performing loans in 2021 displays the
ongoing financial restoration from the depths of the pandemic recession as enhancing
financial situations and traditionally low rates of interest positively affected
debtors' potential to repay contractually due principal and curiosity funds.
At December 31, 2021, impaired loans totaled $52.3 million with associated particular
reserves of $4.3 million, in contrast with impaired loans totaling $86.0 million
with associated particular reserves of $9.0 million at December 31, 2020. Inside
whole impaired loans, there have been $34.2 million of loans for which the current
worth of anticipated future money flows or present collateral valuations exceeded
the carrying quantities of the loans and for which no particular reserves had been
required in accordance with GAAP.

Non-performing industrial mortgage loans decreased $15.1 million to $16.9
million at December 31, 2021, from $32.0 million at December 31, 2020. At
December 31, 2021, non-performing industrial mortgage loans consisted of 14
loans at December 31, 2021. Of those 14 loans, 7 loans totaling $9.0 million
had been PCD loans. The most important non-performing industrial mortgage mortgage was a $6.7
million mortgage secured by a primary mortgage on a property positioned in Woodside, New
York. This mortgage is at the moment paying in accordance with its restructured phrases.

Non-performing industrial loans decreased $21.5 million to $20.6 million at
December 31, 2021, from $42.1 million at December 31, 2020. Non-performing
industrial loans at December 31, 2021 consisted of 51 loans, of which 31 loans
had been below 90 days accruing. Of those non-performing industrial loans, 21 had been
PCD loans totaling $6.4 million. The most important non-performing industrial mortgage
relationship consisted of 4 loans with whole excellent balances of $3.2
million at December 31, 2021. All of those loans are unsecured/non-real property
secured. These loans are at the moment paying in accordance with their restructured
phrases.

Non-performing building loans elevated $973,000 to $2.4 million at
December 31, 2021. Non-performing building loans at December 31, 2021
consisted of two PCD loans. There have been $1.4 million non-performing building
loans at December 31, 2020.

Non-performing multi-family mortgage loans totaled $439,000 at December 31,
2021
. There have been no non-performing multi-family mortgage loans at December 31,
2020
.

At December 31, 2021, the Firm held $8.7 million of foreclosed property,
in contrast with $4.5 million at December 31, 2020. Foreclosed property are carried
on the decrease of the excellent mortgage steadiness on the time of foreclosures or honest
worth, much less estimated prices to promote. In the course of the yr ended December 31, 2021,
there have been 4 additions to foreclosed property with an combination carrying worth
of $8.0 million and ten properties offered with an combination carrying worth of $2.6
million and valuation expenses of $1.2 million.

Non-performing property totaled $56.8 million, or 0.41% of whole property at
December 31, 2021, in comparison with $91.6 million, or 0.71% of whole property at
December 31, 2020. If the non-accrual loans had carried out in accordance with
their authentic phrases,

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curiosity revenue would have elevated by $1.2 million in the course of the yr ended
December 31, 2021. The amount of money foundation curiosity revenue that was acknowledged
on impaired loans in the course of the yr ended December 31, 2021 was not materials.

Complete deposits elevated $1.40 billion for the yr ended December 31, 2021 to
$11.23 billion. Complete financial savings and demand deposit accounts elevated $1.80
billion to $10.54 billion at December 31, 2021, whereas whole time deposits
decreased $401.7 million to $692.5 million at December 31, 2021. The rise in
whole financial savings and demand deposit accounts for the yr ended December 31, 2021
was largely attributable to a $913.6 million improve in curiosity bearing demand
deposits, because the Firm shifted $450.0 million of maturing Federal Dwelling Mortgage
Financial institution of New York ("FHLB") borrowings into lower-costing brokered demand
deposits, a $424.8 million improve in non-interest bearing demand deposits,
which partially benefited from deposits retained from exercise related to
PPP loans and stimulus funding, a $347.1 million improve in cash market
deposits and a $112.4 million improve in financial savings deposits. The lower in time
deposits was primarily as a result of outflow of brokered time deposits, mixed
with further maturities of longer-term retail time deposits.

Borrowed funds decreased $549.2 million for the yr ended December 31, 2021, to
$626.8 million. The lower for the interval was largely as a result of maturity and
substitute of FHLB borrowings with lower-costing brokered deposits and the online
influx of retail deposits. Borrowed funds represented 4.5% of whole property at
December 31, 2021, a lower from 9.1% at December 31, 2020.

Stockholders' fairness elevated $77.3 million in the course of the yr ended December 31,
2021 to $1.70 billion, primarily on account of web revenue earned for the yr,
partially offset by dividends paid to stockholders, frequent inventory repurchases and
a lower in unrealized features on obtainable on the market debt securities. For the
yr ended December 31, 2021, frequent inventory repurchases totaled 965,223 shares at
a mean worth per share of $22.43, of which 44,078 shares, at a mean
worth per share of $21.81, had been made in reference to withholding to cowl
revenue taxes on the vesting of stock-based compensation. At December 31, 2021,
3.2 million shares remained eligible for repurchase below the present
authorization.

Comparability of Working Outcomes for the Years Ended December 31, 2021 and
December 31, 2020

Normal. Internet revenue for the yr ended December 31, 2021 was $167.9 million,
in comparison with $97.0 million for the yr ended December 31, 2020. Primary and
diluted earnings per share had been $2.20 and $2.19 per share, respectively,
in comparison with fundamental and diluted earnings per share of $1.39 for the yr ended
December 31, 2020.

Earnings for the yr ended December 31, 2021 had been favorably impacted by development
in common curiosity incomes property, together with property acquired within the July 31,
2020 merger with SB One Bancorp ("SB One") and the deployment of liquidity
arising from elevated deposits, into incomes property. Earnings for the yr
ended December 31, 2021 additional benefited from a detrimental provision for credit score
losses attributable to an improved financial forecast and improved asset high quality.
The Firm recorded a $24.3 million detrimental provision for the yr ended
December 31, 2021, in comparison with a $29.7 million provision for credit score losses for
2020.

Internet Curiosity Earnings. Internet curiosity revenue elevated $53.5 million to $366.0
million for 2021, from $312.6 million for 2020. The rate of interest unfold
elevated one foundation level to 2.89% for 2021, from 2.88% for 2020. The web
curiosity margin decreased 5 foundation factors to three.00% for 2021, in comparison with 3.05%
for 2020. For the yr ended December 31, 2021, the lower in web curiosity
margin was primarily attributable to will increase within the common steadiness of each
lower-yielding money and obtainable on the market debt securities portfolios, mixed
with the downward repricing of sure adjustable price loans. This lower was
partially offset by the influx of lower-costing core deposits, together with an
improve within the accelerated recognition of charges associated to the forgiveness of
PPP loans in 2021. For the yr ended December 31, 2021, charges associated to the
forgiveness of PPP loans totaled $11.3 million, which was acknowledged in curiosity
revenue, in comparison with $3.8 million for the yr ended December 31, 2020.

Curiosity revenue elevated $39.0 million to $402.3 million for 2021, in comparison with
$363.3 million for 2020. The rise in curiosity revenue was attributable to
curiosity revenue from the SB One mortgage portfolio, partially offset by the downward
repricing of sure adjustable price property and decrease charges on newly originated
loans. Common interest-earning property elevated $1.94 billion to $12.18 billion
for 2021, in comparison with $10.24 billion for 2020. The rise in common incomes
property was largely on account of a $1.19 billion improve in common excellent mortgage
balances to $9.56 billion for 2021, attributable to the mortgage portfolios acquired
from SB One and PPP mortgage originations. The yield on interest-earning property
decreased 25 foundation factors to three.30% for 2021, from 3.55% for 2020. The weighted
common yield on whole loans decreased 5 foundation factors to three.82% for 2021 and
the weighted common yield on obtainable on the market debt securities decreased 68
foundation factors to 1.40% for 2021, from 2.08% for 2020. The weighted common yield
on FHLBNY inventory decreased to five.48% for 2021, in comparison with 6.00% for 2020.

Curiosity expense decreased $14.4 million to $36.3 million for 2021, from $50.7
million for 2020. The lower in curiosity expense was primarily attributable to
a lower in the price of interest-bearing liabilities, partially offset by an
improve in common interest-bearing deposits. The typical price paid on
interest-bearing liabilities decreased 26 foundation factors to 0.41% for
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2021, in comparison with 2020. The typical price paid on interest-bearing deposits
decreased 20 foundation factors to 0.33% for 2021, from 0.53% for 2020. The typical
price paid on borrowings decreased 27 foundation factors to 1.09% for 2021, from 1.36%
for 2020. The typical price paid on subordinated debentures assumed within the SB One
acquisition was 4.79% for 2021. Common interest-bearing deposits elevated
$1.70 billion to $8.08 billion for 2021, from $6.38 billion for 2020. The
common steadiness of interest-bearing liabilities elevated $1.28 billion to $8.89
billion for 2021, in comparison with $7.61 billion for 2020. Inside common
interest-bearing deposits, common interest-bearing core deposits elevated
$1.70 billion to $7.21 billion for 2021, in contrast with 2020. Common
non-interest bearing demand deposits elevated $558.9 million to $2.54 billion
for 2021, from $1.98 billion for 2020. Common excellent borrowings decreased
$438.1 million to $789.8 million for 2021, in comparison with 2020. Common excellent
subordinated debentures for 2021 was $24.8 million.

Provision for Credit score Losses. Provisions for credit score losses are charged to
operations in an effort to preserve the allowance for credit score losses at a stage
administration considers crucial to soak up projected credit score losses that will come up
over the anticipated time period of every mortgage within the portfolio. In figuring out the extent
of the allowance for credit score losses, administration estimates the allowance steadiness
utilizing related obtainable info from inside and exterior sources relating
to previous occasions, present situations and an inexpensive and supportable forecast.
The quantity of the allowance is predicated on estimates, and the final word losses could
fluctuate from such estimates as extra info turns into obtainable or later occasions
change. Administration assesses the adequacy of the allowance for credit score losses on a
quarterly foundation and makes provisions for credit score losses, if crucial, so as
to keep up the valuation of the allowance.

For the yr ended December 31, 2021, the Firm recorded a $24.3 million
detrimental provision for credit score losses on loans, in comparison with a $29.7 million
provision for 2020. The Firm, for the yr ended December 31, 2021, had web
mortgage recoveries of $3.6 million, in comparison with web charge-offs of $5.3 million for
2020. Complete charge-offs for the yr ended December 31, 2021 had been $5.5 million,
in comparison with $7.9 million for the yr ended December 31, 2020. Recoveries for
the yr ended December 31, 2021, had been $9.0 million, in comparison with $2.6 million
for the yr ended December 31, 2020. The discount in provision for credit score
losses for the yr ended December 31, 2021, in comparison with the prior yr, was
primarily the results of an improved financial forecast and improved asset
high quality. The web recoveries realized for the yr ended December 31, 2021
additional contributed to the detrimental provision for credit score losses within the yr.

Non-Curiosity Earnings. For the yr ended December 31, 2021, non-interest revenue
totaled $86.8 million, a rise of $14.4 million from 2020. Insurance coverage company
revenue totaled $10.2 million, a rise of $6.3 million for the yr ended
December 31, 2021, in comparison with the identical interval in 2020, ensuing from the prior
yr acquisition of SB One. Payment revenue elevated $6.1 million to $30.0 million,
in comparison with the identical interval in 2020, largely on account of a $3.8 million improve in
prepayment charges on industrial loans, a $973,000 improve in loan-related payment
revenue, a $743,000 improve in non-deposit funding payment revenue and a $601,000
improve in deposit associated payment revenue. These will increase had been partially offset by
a $362,000 lower in debit card revenues. The will increase in payment revenue are
partially attributable to the addition of the SB One buyer base in addition to a
recovering economic system in comparison with the extreme detrimental results that COVID-19 had on
shopper and enterprise actions within the prior yr. The lower in debit card
income was largely on account of interchange transaction payment limitations imposed by
the Durbin modification, which grew to become efficient for the Firm on July 1, 2021,
mitigated by a rise in transaction charges associated to the SB One buyer
base. Wealth administration revenue elevated $5.0 million to $30.8 million for the
yr ended December 31, 2021, in comparison with $25.7 million for a similar interval in
2020, primarily on account of a rise out there worth of property below
administration because of robust fairness market efficiency and new enterprise
era. Moreover, BOLI revenue elevated $1.4 million to $7.9 million for
the yr ended December 31, 2021, in comparison with the identical interval in 2020, primarily
on account of a rise in profit claims, further revenue associated to the BOLI
property acquired from SB One and better fairness valuations. Partially offsetting
these will increase, different revenue decreased $5.1 million to $7.7 million for the
yr ended December 31, 2021, primarily on account of an $8.2 million lower in web
charges on loan-level rate of interest swap transactions, an $884,000 lower in web
features on the sale of fastened property and a $334,000 lower in web features on sale
of foreclosed actual property, partially offset by revenue acknowledged from a $3.4
million discount within the contingent consideration associated to the earn-out
provisions of the 2019 buy of Tirschwell & Loewy, Inc. by Beacon Belief
Firm.

Non-Curiosity Expense. Non-interest expense for the yr ended December 31, 2021
was $250.1 million, a rise of $22.3 million from 2020. Compensation and
advantages expense elevated $12.5 million to $143.4 million for the yr ended
December 31, 2021, in comparison with $130.9 million for the yr ended December 31,
2020. This improve was primarily on account of will increase in wage expense and
worker medical advantages related to the addition of former SB One
workers, mixed with a rise within the accrual for incentive compensation,
company-wide annual advantage will increase and a rise in stock-based compensation,
partially offset by a lower in severance expense. Internet occupancy prices
elevated $5.8 million to $32.9 million for the yr ended December 31, 2021,
in comparison with 2020, primarily on account of will increase in hire, depreciation, utilities and
upkeep bills associated to the amenities acquired from SB One, together with
a rise in snow removing prices incurred earlier within the yr. FDIC insurance coverage
expense elevated $3.1 million to $6.3 million for yr ended December 31, 2021,
in comparison with $3.1 million for 2020, primarily on account of a rise within the insurance coverage
evaluation price and a rise in whole property topic to evaluation, together with
property acquired from SB One, together with the receipt of the small financial institution evaluation
credit score within the
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prior yr that was not obtainable in 2021. Different working bills elevated
$2.4 million to $38.6 million for the yr ended December 31, 2021, in comparison with
$36.2 million for the yr ended December 31, 2020, largely on account of a valuation
adjustment on foreclosed property and will increase in debit card upkeep,
insurance coverage and enterprise growth bills, because of the addition of SB
One, partially offset by non-recurring merger associated bills incurred within the
prior yr. Partially offsetting these will increase in non-interest expense, information
processing prices decreased $1.0 million to $19.8 million, in contrast with 2020,
primarily on account of non-recurring core system conversion prices associated to the SB
One acquisition within the prior yr, partially offset by will increase in software program
subscription service expense and on-line banking prices. Moreover, promoting
expense decreased $449,000 for the yr ended December 31, 2021, in contrast with
2020, primarily as a result of curtailment of sure product advertising campaigns in
the present yr.

Earnings Tax Expense. For the yr ended December 31, 2021, the Firm's revenue
tax expense was $59.2 million, in contrast with $30.6 million for 2020. The
Firm's efficient tax price was 26.1% for the yr ended December 31, 2021,
in contrast with 24.0% for the yr ended December 31, 2020. The rise in tax
expense and the efficient tax price for the yr ended December 31, 2021,
in contrast with the identical interval in 2020, was partially attributable to will increase
in taxable revenue and the decreased proportion of revenue derived from tax exempt
sources to whole pre-tax revenue. Additional, upon the submitting of the 2020 state
revenue tax returns within the fourth quarter of 2021, a discrete merchandise leading to
further tax expense was recorded associated to the apportionment of revenue
topic to state revenue taxes.

Comparability of Working Outcomes for the Years Ended December 31, 2020 and
December 31, 2019

Normal. Internet revenue for the yr ended December 31, 2020 was $97.0 million,
in comparison with $112.6 million for the yr ended December 31, 2019. Primary and
diluted earnings per share had been $1.39 for the yr ended December 31, 2020,
in comparison with fundamental and diluted earnings per share of $1.74 for 2019.

The Firm's earnings for the yr ended December 31, 2020 had been aided by the
July 31, 2020 acquisition of SB One which added $2.20 billion to whole property,
$1.77 billion to loans, and $1.76 billion to deposits. Earnings for the yr
had been additionally affected by the January 1, 2020 adoption of a brand new accounting customary
requiring the present recognition of allowances for losses anticipated to be
incurred over the lifetime of lined property ("CECL"). The acquisition of SB One and
altering financial forecasts attributable to the COVID-19 pandemic and projected
financial restoration considerably impacted provisions for credit score losses and
off-balance sheet credit score exposures and resulted in year-over-year fluctuations.
For the yr ended December 31, 2020, provisions for credit score losses on loans had been
$29.7 million and provisions for credit score losses on off-balance sheet credit score
exposures had been $1.8 million, reflecting the acquisition of SB One and the
financial challenges offered by the COVID-19 pandemic.

The outcomes of operations for the yr ended December 31, 2020 included pre-tax
non-recurring expenses associated to the acquisition and integration of SB One
totaling $6.3 million and direct COVID-19 associated prices corresponding to supplemental pay
for department workers and private protecting tools totaling $1.4 million.

Internet Curiosity Earnings. Internet curiosity revenue elevated $14.6 million to $312.6
million for 2020, from $298.0 million for 2019. The rate of interest unfold
decreased 18 foundation factors to 2.92% for 2020, from 3.10% for 2019. The web
curiosity margin decreased 26 foundation factors to three.09% for 2020, in comparison with 3.35%
for 2019. For the yr ended December 31, 2020, the online curiosity margin was
favorably impacted by the online property acquired from SB One, partially offset by
year-over-year compression within the web curiosity margin because the lower within the
yield on interest-earning property outpaced the decline within the Firm's value of
interest-bearing liabilities. The diploma of web curiosity margin compression was
tempered by development in each common loans excellent and lower-costing common
interest-bearing and non-interest bearing core deposits, which mitigated the
Firm's must make the most of higher-cost sources to fund common interest-earning
property. Within the yr ended December 31, 2019, the Firm acknowledged the
accelerated accretion of $2.2 million in curiosity revenue upon the prepayment of
loans which had been non-accruing.

Curiosity revenue decreased $8.2 million to $363.3 million for 2020, in comparison with
$371.5 million for 2019. The lower in curiosity revenue was attributable to the
downward repricing of sure adjustable price property and decrease charges on newly
originated loans, partially offset by curiosity revenue from the SB One mortgage
portfolio. Common interest-earning property elevated $1.23 billion to $10.12
billion for 2020, in comparison with $8.89 billion for 2019. The rise in common
incomes property was largely on account of a $1.18 billion improve in common
excellent mortgage balances to $8.37 billion for 2020, attributable to the mortgage
portfolios acquired from SB One and PPP mortgage originations. The yield on
interest-earning property decreased 59 foundation factors to three.59% for 2020, from 4.18%
for 2019. The weighted common yield on whole loans decreased 64 foundation factors to
3.87% for 2020 and the weighted common yield on obtainable on the market debt
securities decreased 48 foundation factors to 2.08% for 2020, from 2.56% for 2019. The
weighted common yield on FHLBNY inventory decreased to six.00% for 2020, in comparison with
6.62% for 2019.

Curiosity expense decreased $22.8 million to $50.7 million for 2020, from $73.5
million for 2019. The lower in curiosity expense was primarily attributable to
a lower in the price of interest-bearing liabilities, partially offset by an
improve in
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common interest-bearing deposits. The typical price paid on interest-bearing
liabilities decreased 41 foundation factors to 0.67% for 2020, in comparison with 2019. The
common price paid on interest-bearing deposits decreased 31 foundation factors to
0.53% for 2020, from 0.84% for 2019. The typical price paid on borrowings
decreased 74 foundation factors to 1.36% for 2020, from 2.10% for 2019. The typical
price paid on subordinated debentures assumed within the SB One acquisition was 4.90%
for 2020. Common interest-bearing deposits elevated $932.9 million to $6.38
billion for 2020, from $5.44 billion for 2019. The typical steadiness of
interest-bearing liabilities elevated $834.6 million to $7.61 billion for 2020,
in comparison with $6.78 billion for 2019. Inside common interest-bearing deposits,
common interest-bearing core deposits elevated $866.1 million to $4.64 billion
for 2020, in contrast with 2019, whereas common time deposits elevated $66.8
million for 2020, in contrast with 2019. Common non-interest bearing demand
deposits elevated $481.7 million to $1.98 billion for 2020, from $1.50 billion
for 2019. Common excellent borrowings decreased $108.7 million to
$1.23 billion for 2020, in comparison with 2019. Common excellent subordinated
debentures for 2020 was $10.4 million.

Provision for Credit score Losses. The supply for mortgage losses was $29.7 million in
2020, in comparison with $13.1 million in 2019. Internet charge-offs for 2020 had been $5.3
million, in comparison with $13.1 million for 2019. Complete charge-offs for the yr
ended December 31, 2020 had been $7.9 million, in comparison with $15.0 million for the
yr ended December 31, 2019. Recoveries for the yr ended December 31, 2020,
had been $2.6 million, in comparison with $1.9 million for the yr ended December 31,
2019. The rise within the provision for credit score losses for the yr ended
December 31, 2020 in comparison with the identical interval in 2019 was associated to the January
1, 2020 adoption of CECL, the present weak financial forecast attributable to the
COVID-19 pandemic and a $15.5 million provision for credit score losses associated to the
acquisition of the SB One mortgage portfolio. Future credit score loss provisions are
topic to important uncertainty given the undetermined nature of potential
adjustments in financial situations, because the affect of the COVID-19 pandemic continues
to unfold. The effectiveness of medical advances, authorities packages, and the
ensuing affect on shopper habits and employment situations can have a
materials bearing on future credit score situations and reserve necessities.

Non-Curiosity Earnings. For the yr ended December 31, 2020, non-interest revenue
totaled $72.4 million, a rise of $8.6 million, in comparison with the identical interval
in 2019. Different revenue elevated $6.2 million to $12.8 million for the yr ended
December 31, 2020, primarily on account of a $4.3 million improve in web charges on
loan-level rate of interest swap transactions, a $931,000 improve in web features on
the sale of fastened property, a $723,000 improve in web features on the sale of
foreclosed actual property and a $451,000 improve in web features from the sale of
loans. Insurance coverage company revenue totaled $3.5 million following the July 31, 2020
acquisition of SB One. Wealth administration revenue elevated $3.2 million to $25.7
million for the yr ended December 31, 2020, in comparison with $22.5 million for the
similar interval in 2019, primarily on account of development in property below administration from the
April 2019 T&L acquisition, mixed with a rise out there worth of
property below administration. Partially offsetting these will increase, payment revenue
decreased $4.5 million to $23.8 million, in comparison with the identical interval in 2019,
largely on account of a $2.6 million lower in deposit associated payment revenue, a $1.7
million lower in prepayment charges on industrial loans and a $400,000 lower
in different loan-related payment revenue, all largely as a result of results of COVID-19 on
shopper and enterprise actions.

Non-Curiosity Expense. Non-interest expense for the yr ended December 31, 2020
was $227.7 million, a rise of $26.1 million from 2019. Non-interest expense
for the yr ended December 31, 2020, included $6.3 million of non-recurring
prices associated to the acquisition and integration of SB One and $1.4 million of
COVID-19 associated bills. Compensation and advantages expense elevated $14.0
million to $130.9 million for the yr ended December 31, 2020, in comparison with
$116.8 million for the yr ended December 31, 2019. This improve was primarily
on account of a rise in wage expense related to the addition of former SB
One and T&L workers, a rise in severance expense, a rise within the
accrual for incentive compensation, and COVID-19 supplemental pay for department
workers, partially offset by the elevated deferral of wage expense associated
to PPP mortgage originations and a lower in stock-based compensation. For the
yr ended December 31, 2020, information processing prices elevated $3.9 million to
$20.8 million, in contrast with 2019, primarily on account of non-recurring core system
conversion prices associated to the SB One acquisition and will increase in software program
subscription service expense and on-line banking prices. Different working bills
elevated $2.4 million to $36.2 million for the yr ended December 31, 2020,
in comparison with $33.8 million for the yr ended December 31, 2019. This improve
was largely on account of will increase in consulting and authorized bills primarily associated
to the SB One acquisition, a rise in debit card upkeep expense and a
market valuation adjustment on foreclosed actual property, partially offset by a
$2.8 million prior yr estimated honest worth adjustment of the contingent
consideration associated to the T&L acquisition. FDIC insurance coverage expense elevated
$1.8 million to $3.1 million for yr ended December 31, 2020, in comparison with $1.3
million for a similar interval in 2019, largely as a result of receipt of the small
financial institution evaluation credit score within the prior yr, the addition of SB One and will increase
in each the insurance coverage evaluation price and whole property topic to evaluation.
For the yr ended December 31, 2020, credit score loss expense for off-balance sheet
credit score exposures totaled $1.8 million primarily based upon the January 1, 2020 adoption of
CECL and the following adjustments in loss components on account of adjustments within the financial
forecast, the pipeline of loans authorized awaiting closing and the provision
on dedicated strains of credit score. Moreover, web occupancy prices elevated $1.2
million to $27.1 million for the yr ended December 31, 2020, in comparison with 2019,
primarily on account of a rise in hire expense, a portion of which was associated to
the addition of SB One
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amenities, and a full yr of the T&L acquisition, whereas the amortization of
intangibles elevated $685,000 for the yr ended December 31, 2020, in contrast
with 2019, primarily on account of a rise within the buyer relationship intangible
amortization attributable to the acquisition of SB One Insurance coverage Company,
partially offset by scheduled reductions in amortization.

Earnings Tax Expense. For the yr ended December 31, 2020, the Firm's revenue
tax expense was $30.6 million, in contrast with $34.5 million, for a similar interval
in 2019. The Firm's efficient tax price was 24.0% for the yr ended December
31, 2020, in contrast with 23.4% for the yr ended December 31, 2019. The lower
in tax expense and the upper efficient tax price for the yr ended December 31,
2020 was largely the results of corresponding adjustments in taxable revenue, whereas
the adjustments within the efficient tax charges for the yr ended December 31, 2020
in contrast with the identical interval in 2019 had been primarily as a result of proportion of
revenue derived from tax exempt sources to whole pre-tax revenue.

Liquidity and Capital Sources

Liquidity refers back to the Firm's potential to generate ample quantities of money
to satisfy monetary obligations to its depositors, to fund loans and securities
purchases, deposit outflows and working bills. Sources of funds embrace
scheduled amortization of loans, mortgage prepayments, scheduled maturities of
unpledged investments, money flows from mortgage-backed securities and the
potential to borrow funds from the FHLBNY and authorized broker-dealers.

Money flows from mortgage funds and maturing funding securities are pretty
predictable sources of funds. Modifications in rates of interest, native financial
situations, the COVID-19 pandemic and associated authorities response and the
aggressive market can affect mortgage prepayments, prepayments on
mortgage-backed securities and deposit flows. For every of the years ended
December 31, 2021 and 2020, mortgage repayments totaled $3.69 billion and $2.60
billion
, respectively.

In response to the COVID-19 pandemic, the Firm has escalated the monitoring
of deposit habits, utilization of credit score strains, and borrowing capability with
the FHLBNY and FRBNY, and is enhancing its collateral place with these
funding sources.

Industrial actual property loans, multi-family loans, industrial loans, one- to
four-family residential loans and shopper loans are the first investments of
the Firm. Buying securities for the funding portfolio is a secondary
use of funds and the funding portfolio is structured to enhance and
facilitate the Firm's lending actions and guarantee ample liquidity. Mortgage
originations and purchases totaled $3.52 billion for the yr ended December 31,
2021, in comparison with $3.50 billion for the yr ended December 31, 2020. Purchases
for the funding portfolio totaled $1.44 billion for the yr ended
December 31, 2021, in comparison with $298.1 million for the yr ended December 31,
2020. At December 31, 2021, the Financial institution had excellent mortgage commitments to
debtors of $2.05 billion, together with undisbursed residence fairness strains and private
credit score strains of $252.9 million.

Complete deposits elevated $1.40 billion for the yr ended December 31, 2021.
Deposit exercise is affected by adjustments in rates of interest, aggressive pricing
and product choices within the market, native financial situations, buyer
confidence and different components corresponding to inventory market volatility. Certificates of
deposit accounts which might be scheduled to mature inside one yr totaled $534.5
million at December 31, 2021. Based mostly on its present pricing technique and buyer
retention expertise, the Financial institution expects to retain a major share of those
accounts. The Financial institution manages liquidity every day and expects to have
ample money to satisfy all of its funding necessities.

As of December 31, 2021, the Financial institution exceeded all minimal regulatory capital
necessities. At December 31, 2021, the Financial institution's leverage (Tier 1) capital ratio
was 8.86%. FDIC laws require banks to keep up a minimal leverage ratio
of Tier 1 capital to adjusted whole property of 4.00%. At December 31, 2021, the
Financial institution's whole risk-based capital ratio was 11.53%. Underneath present laws, the
minimal required ratio of whole capital to risk-weighted property is 10.50%. A
financial institution is taken into account to be well-capitalized if it has a leverage (Tier 1) capital
ratio of at the least 5.00% and a complete risk-based capital ratio of at the least 10.00%.

Off-balance sheet commitments include unused commitments to debtors for
time period loans, unused strains of credit score and excellent letters of credit score. Complete
off-balance sheet obligations had been $2.05 billion at December 31, 2021, an
improve of $62.6 million, or 3.1%, from $1.99 billion at December 31, 2020.

Contractual obligations include certificates of deposit liabilities. Complete
certificates of deposits at December 31, 2021 had been $692.5 million, a lower of
$401.7 million, in comparison with $1.09 billion at December 31, 2020. There have been no
safety purchases in 2021 which settled in January 2022, whereas for 2020, there
was one safety buy for $1.0 million which settled in 2021.

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