New Jersey Banker - Issue 2, 2024


CONTENTS What’s inside 10 NJ BANKS ARE OPEN FOR BUSINESS IN 2024, BUT THE ECONOMIC OUTLOOK IS BEING CHALLENGED BY FISCAL POLICY AND LEGISLATION DEPARTMENTS 05 CHAIR’S PLATFORM One of our great advantages is the strength of the region in which we operate. By most measures, the economy (both local and national) continues to provide opportunities to the residents and businesses that call this great state home. 06 FROM THE NJBANKERS PRESIDENT’S OFFICE Our industry is strong and resilient. We will continue to tell this story and amplify it. 08 POLITICS AND POLICY As the backbone of the economy, the banking sector plays a pivotal role in ensuring financial stability and growth. Therefore, a careful examination of the proposed budget is imperative to gauge potential repercussions for our membership. 13 WELCOME NEW ASSOCIATE MEMBERS 16 MEET SOME OF OUR ENDORSED AND SELECT PROVIDERS 22 IN THE SPOTLIGHT: CFO COMMITTEE ARTICLES 09 One Million Meals Campaign 10 NJ Banks Are Open for Business in 2024, but Economic Outlook is Being Challenged by Fiscal Policy and Legislation 12 NJBankers Emerging Leaders Network Volunteer Day 14 The Depository Landscape has Changed. Have Your Plans Changed? 18 Hold On! Bank Loan Quality Doesn’t Align with Wall Street Metrics 21 Q&A with a Bank CEO 25 NJBankers Economic Leadership Forum Featured Key Topics and Speakers 30 Income Protection: Protecting Your Most Valuable Asset (Your Paycheck) 14 THE DEPOSITORY LANDSCAPE HAS CHANGED. HAVE YOUR PLANS CHANGED? 18 HOLD ON! BANK LOAN QUALITY DOESN’T ALIGN WITH WALL STREET METRICS 28 BANK SHOTS 29 BANK NOTES 31 UPCOMING EVENTS 3

NJBankers Officers Patrick L. Ryan* First Vice Chair President/CEO First Bank Steven M. Klein* Chair Chair/President/CEO Northfield Bank Michael P. Affuso, Esq.* President/CEO New Jersey Bankers Association Craig L. Montanaro* Second Vice Chair President/CEO Kearny Bank NJBankers Officers Michael P. Affuso, Esq. President/CEO Jenn Zorn Executive Vice President/ Director of Education & Business Development Jessica Jakobson Vice President Professional Development John Mangini Vice President/Director of Marketing/Communications Brittany Wheeler Vice President/Director of Government Affairs Edward Yakely VP/Chief of Finance NJBankers/BCG Andrea Ganzman Director of Digital Marketing and Creative Lauren Barraza Chief of Staff Cynthia M. Zaccaro Senior Administrative Assistant, Business & Professional Development Diane Starr Marketing and Education Database Administrator Bankers Cooperative Group Staff Matthew W. Cooney President/CEO Mary Pat Boutmy Vice President and Board Secretary Andy Slobiski Employee Benefits Consultant Chris Corvil Client Services Analyst Doug Holcombe Employee Benefits Consultant Theresa Jolley Accounting Services Manager Emmy Luna Operations Coordinator Sarah Martorina Insurance Services Analyst Jon Robinson Benefits Analyst Contact New Jersey Bankers Association 411 North Avenue East Cranford, NJ 07016-2436 Phone: 908-272-8500 Email: Counsel Mary Kay Roberts, Esq. Riker, Danzig LLP Contributing Editor John Mangini Vice President of Marketing and Communications New Jersey Bankers Association NJBankers Board of directors John M. Bonhomme* Managing Director/Regional Director JPMorgan Chase Bank N.A. Daniel Cuneo Market President/ Southern New Jersey Truist Bank Former Chair John S. Fitzgerald* President/CEO Magyar Bank Nicholas A. Frungillo, Jr. President/CEO Brunswick Bank & Trust Company Effie Gikas SVP/Consumer Banking Region Executive Bank of America Jorge S. Gomes, Esq. President/CEO Lusitania Savings Bank James A. Hughes President/CEO Unity Bank Thomas J. Kemly President/CEO Columbia Bank Anthony Labozzetta President/CEO Provident Bank Kevin M. Lenihan President/COO Crown Bank Elizabeth Magennis President ConnectOne Bank Immediate Former Chair Christopher D. Maher* Chair/CEO OceanFirst Bank Martin P. Melilli Market President TD Bank, N.A. Kevin B. Peterson* President/CEO Haddon Savings Bank Jane E. Rey* President/COO Spencer Savings Bank Robert Rey President/CEO NVE Bank Ira Robbins* Chair/CEO Valley Bank William P. Taylor Chair/CEO Somerset Savings Bank, SLA Kenneth R. Totten Chair/President/CEO United Roosevelt Savings Bank Ferdinand R. Viaud President/CEO Ascendia Bank James H. Wainwright President/CEO Freehold Bank * Executive Committee 4

chair’s platform The Strength of New Jersey Banks STEVEN M. KLEIN, CHAIR/PRESIDENT/CEO, NORTHFIELD BANK This will be my final article as the Chair of the New Jersey Bankers Association. I have been humbled over the past year to work with so many peers to advance the banking industry in New Jersey. The year has passed quickly, but in these many months, with the hard work of NJBankers staff under the leadership of Michael Affuso, much has been accomplished for the benefit of our industry and the people and businesses of New Jersey. I find it fitting that the theme of this issue is the state of the economy and the strength of New Jersey banks. We have been faced with many economic challenges over the past several years that placed pressure on the industry as a whole. One of our great advantages is the strength of the region in which we operate. By most measures, the economy (both local and national) continues to provide opportunities to the residents and businesses that call this great state home. We, as New Jersey bankers, are fortunate to have one of the strongest industry advocate organizations in the country and the resources, guidance, and partnerships it provides are invaluable to navigating challenges and opportunities. Whether it is advocacy in the halls of Trenton (and beyond), professional development, or health and welfare benefits through Bankers Cooperative Group, NJBankers strives to meet the needs of its members. The health of the economy and state of the banking industry drive stability and growth. The two are intertwined in such a way that the economic landscape greatly impacts how we manage our financial institutions in both the short and the long term, and in turn how people and businesses perceive the banking sector and “their” bank. A strong economy serves as a tailwind to success, both for individuals and businesses of this great state and region. The overall health and vitality of our nation’s financial system, and the critical role of New Jersey banks, will be instrumental in achieving sustainable growth while avoiding stagnation or contraction. New Jersey banks and the New Jersey Bankers Association play a major role in shaping New Jersey’s economic trajectory. New Jersey’s finance industry employs more than 218,000 workers with an annual average wage of nearly $138,000. New Jersey boasts a diverse banking sector comprised of a mix of large national banks, regional institutions, and community banks. This diversity offers consumers and businesses a wide array of choices for their banking, investment, and insurance needs while fostering competition and innovation. Despite challenges, including competition from emerging Fintechs, the interest rate environment, cybersecurity and fraud risks, and economic uncertainty, the outlook for New Jersey’s banking industry remains promising. New Jersey banks have shown resilience and adapted to evolving market conditions while maintaining stability in the communities they serve. We have all embraced technological innovations to enhance convenience and efficiency for customers, while streamlining operations. Our commitment to developing strong risk management and governance procedures ensures the safety and soundness of WE, AS NEW JERSEY BANKERS, ARE FORTUNATE TO HAVE ONE OF THE STRONGEST INDUSTRY ADVOCATE ORGANIZATIONS IN THE COUNTRY AND THE RESOURCES, GUIDANCE, AND PARTNERSHIPS IT PROVIDES ARE INVALUABLE TO NAVIGATING CHALLENGES AND OPPORTUNITIES. WHETHER IT IS ADVOCACY IN THE HALLS OF TRENTON (AND BEYOND), PROFESSIONAL DEVELOPMENT, OR HEALTH AND WELFARE BENEFITS THROUGH BANKERS COOPERATIVE GROUP, NEW JERSEY BANKERS STRIVES TO MEET THE NEEDS OF ITS MEMBERS. our banking institutions, providing consumers and businesses with confidence in the financial system. The connection of the banking industry to the community unites us with our neighbors. Whether through financial support, employees volunteering their time and expertise, or providing financial literacy and fraud prevention tips, our industry has formed unique partnership with our community members. As we invest in our future, and the future of New Jersey, our commitment to the continued investment in developing the next generation of New Jersey banking leaders will be critical to building upon our successes. Your involvement with the New Jersey Bankers Association helps us continue to serve as a catalyst for growth and opportunity across the Garden State. We encourage you to volunteer for New Jersey Bankers Association committees, attend workshops and events, support the Future Ready Internship Program, promote financial literacy in your communities, and help recruit new bank and affiliate members. In closing, I would like to thank Michael Affuso and the entire New Jersey Bankers team for all that they do and for the support they have given me. It has been an honor to serve in this position and New Jersey Bankers is in great hands for many years to come. 5 chair’s platform

president’s office Striking Boldly into the Future MICHAEL P. AFFUSO, ESQ., PRESIDENT/CEO, NJBANKERS As I conclude my second year as CEO of NJBankers I am immensely proud of what we have achieved together. Together, we have broadened our reach in advocacy through expanded government and public affairs, and have grown our political presence. We have evolved our programming based on member feedback in order to continue to be the first source of professional development for our members. From this launchpad, we will move forward through 2024 and 2025. Our industry is strong and resilient. We will continue to tell the story and amplify it. You will see us highly visible in the media and social media speaking forthrightly about the collective strength of the industry and its value to our customers. Furthermore, we will continue our efforts to educate our elected officials about the strength of the industry and the harm that overbroad and overreaching regulations pose to our customers and their constituents, as well as to the system itself. We will also demonstrate the strength of the industry through our commitment to our communities. You will see NJBankers community efforts on behalf of the industry with ubiquity in the coming months with veterans, small businesses, and other community service organizations. The message in both word and deed is that our industry is here, and we are strong. While the events of March 2023 were one year ago, NJBankers will not view the events as a crisis in the rear-view mirror. The NJBankers Board of Directors, after robust discussion, sought to even the playing field between all institutions in the area of both implied and actual government backstops of deposits. The issue may be dormant, but it continues to be of great import to our members. Solutions range from careful monitoring, private insurance, a state insurance fund and/or increased FDIC insurance on certain accounts. The NJBankers Board of Directors has created a working group to fully vet the issue for the membership and recommend paths forward. While a working group does not signal quick action, it will create consensus which will allow for decisive action. In 2018, the Board took decisive action to bring a suit to enforce our First Amendment rights. We prevailed. In June 2024, the Supreme Court is poised to overturn a forty-year-old legal precedent that allowed great deference to administrative agencies when a statute was vague. This doctrine, Chevron deference, has been used as a shield from lawsuits by agencies to promulgate rules far beyond the scope of the authorizing legislation. This shield is likely to be greatly reduced. Therefore, regulated entities will have a greater chance of relief from courts where before there was none. NJBankers will begin to seek viable injuries to remedy through legal action. Such legal action may be individual or may be as part of a larger coalition. It is with great anticipation that we await the Court’s ruling. With similar anticipation we have launched a partnership with an Endorsed Service Provider, Keystate. Keystate, in close collaboration with Solar Landscape, the community Solar leader in New Jersey, and NJBankers members, will create a solar tax credit purchase program. The tax credits will reduce tax liabilities for purchasing institutions and the funding will be used to provide solar energy to low- and moderate-income households. In addition to the financial value to our members, program participants may be eligible for CRA credit. While this CRA portion of the program is not yet guaranteed, we may be on the precipice. These four initiatives are of long-term strategic value to our members. These efforts will not come to fruition overnight and will require the investment of both human and physical capital. We believe they will be worthy investments. While we will continue the advocacy and professional development efforts that you come to expect from NJBankers with a focus on what our members need in the here and now, we will also vault ahead into the future. OUR INDUSTRY IS STRONG AND RESILIENT. WE WILL CONTINUE TO TELL THE STORY AND AMPLIFY IT. YOU WILL SEE US HIGHLY VISIBLE IN THE MEDIA AND SOCIAL MEDIA SPEAKING FORTHRIGHTLY ABOUT THE COLLECTIVE STRENGTH OF THE INDUSTRY AND ITS VALUE TO OUR CUSTOMERS. FURTHERMORE, WE WILL CONTINUE OUR EFFORTS TO EDUCATE OUR ELECTED OFFICIALS ABOUT THE STRENGTH OF THE INDUSTRY AND THE HARM THAT OVERBROAD AND OVERREACHING REGULATIONS POSE TO OUR CUSTOMERS AND THEIR CONSTITUENTS, AS WELL AS TO THE SYSTEM ITSELF. WE WILL ALSO DEMONSTRATE THE STRENGTH OF THE INDUSTRY THROUGH OUR COMMITMENT TO OUR COMMUNITIES. 6 from the njbankers president’s office

politics and policy Governor Murphy’s FY2025 Budget Proposal and its Implications for the New Jersey Banking Industry BRITTANY WHEELER, VICE PRESIDENT/DIRECTOR OF GOVERNMENT AFFAIRS As Governor Phil Murphy unveils his proposed record-breaking Fiscal Year 2025 budget for the state of New Jersey, the financial landscape stands at a critical juncture, with ripple effects that could significantly impact various sectors, including the state’s banking industry. As the backbone of the economy, the banking sector plays a pivotal role in ensuring financial stability and growth. Therefore, a careful examination of the proposed budget is imperative to gauge its potential repercussions for our membership. At first glance, Governor Murphy’s proposed $56 billion budget seems to align with the administration’s overarching goal of rebuilding and fortifying the state’s economy post-pandemic. The proposed budget earmarks substantial funds for education, healthcare, and transportation and infrastructure, signaling a commitment to long-term economic development. However, the devil is in the details, and for the banking industry, certain aspects of the budget raise both eyebrows and concerns. One of the major points of contention for the banking sector and larger business community is the proposed increase in corporate taxes. Governor Murphy aims to raise revenue by implementing a corporate tax hike on businesses earning over a certain threshold. The Governor has proposed a 2.5% “Corporate Transit Fee,” a fancy name for a significant tax, that would serve as a direct funding source in perpetuity for NJTransit. While this may seem like a reasonable approach to bolster the state’s coffers, such measures will simply stifle economic growth and discourage business investments during a time when our industry is under attack from rogue regulators. Further, the societal benefit of this increased tax would disproportionally supplement regional commuters and, moreover, commuters with high-paying jobs traveling into New York City. So much for the working poor? Banks, as major corporate entities, would undoubtedly be affected by the proposed tax hike. The fear is that an increased tax burden could hinder the ability to expand operations, invest in technology, and offer competitive financial products and services. In a globally competitive market, where neighboring states like Delaware and Pennsylvania have adopted better business-friendly tax policies, such measures risk driving corporations, including financial institutions, away from the Garden State. We need to remain regionally competitive, not disadvantage ourselves with bad policy and bad politics. It was just last year that Governor Murphy committed to the sunset of the 2.5% corporate business surtax, only to re-introduce it in his proposal with a new name. Worse than the policy itself is the practice of saying one and doing the other, and the breach of faith this pattern creates. Governor Murphy’s proposal to increase spending on affordable housing initiatives is another point of interest for the banking industry. While supporting affordable housing is a commendable goal, the industry is concerned about potential regulatory changes and increased scrutiny in lending practices. Striking a balance between promoting affordable housing and ensuring responsible lending practices is crucial to prevent unintended consequences that may adversely affect the stability of financial institutions. While Governor Murphy’s proposed FY2025 budget demonstrates a commitment to the state’s continued recovery and future prosperity—our industry is approaching it with great caution and an acknowledgement that the budget process is long, arduous, and unpredictable. Governor Murphy proposed his FY2024 budget on February 28, 2023, and it was not approved until June 30, 2023. While our industry acknowledges the importance of investments in education, healthcare, and infrastructure we urge policymakers to consider the potential impact of tax hikes and regulatory changes. Striking a delicate balance between fiscal responsibility and supporting economic growth is mission critical to ensure a thriving banking industry that can contribute to the overall well-being of the Garden State. As always, NJBankers will partner with key stakeholders in the business community to drive good public policy and to the true benefit of our members. AS THE BACKBONE OF THE ECONOMY, THE BANKING SECTOR PLAYS A PIVOTAL ROLE IN ENSURING FINANCIAL STABILITY AND GROWTH. THEREFORE, A CAREFUL EXAMINATION OF THE PROPOSED BUDGET IS IMPERATIVE TO GAUGE ITS POTENTIAL REPERCUSSIONS FOR OUR MEMBERSHIP. 8 Politics and Policy

NJBANKERS 1 MILLION MEALS CAMPAIGN BY THE NUMBERS ABOUT THE 1 MILLION MEALS CAMPAIGN With the support of our members, together we can become champions for those facing hunger across New Jersey. NJBankers has partnered with the Community FoodBank of New Jersey (CFBNJ) to donate one million meals to families in need by 2027. WAYS TO SUPPORT THE CAMPAIGN DONATION PACKAGES By becoming a Fighting Hunger Hero or Fighting Hunger Ally, you can help us meet our goal of raising $334,000 to provide a total of one million meals to feed hungry seniors, parents and children across the state. These donation packages showcase your commitment to fighting hunger and will have a great impact toward helping us meet our goal. For more information on becoming a Fighting Hunger Hero or Fighting Hunger Ally, please contact John Mangini at 908-324-4026 or INDIVIDUAL DONATIONS CFBNJ estimates that $1 can provide three meals to NJ residents in need. Donations of any amount—no matter how large or small—will go a long way in the fight against hunger in our state. You can make an individual donation to the campaign at, or by scanning the QR code. THANK YOU TO OUR SUPPORTERS Fighting Hunger Hero Fighting Hunger Allies 480,705 Meals or $160,235 raised to date through the generous support of our members. $1,251 Average donation made by our campaign supporters. 48% Of the way to our goal of raising one million meals to assist the over 800,000 NJ residents facing hunger. 128 Donations made since the campaign launched in 2022. 5,303 Volunteer hours spent by our members at CFBNJ in support of the 1 Million Meals Campaign. 9 one million meals campaign

NJ Banks are Open for Business in 2024, but Economic Outlook is Being Challenged by Fiscal Policy and Legislation RICK KRAEMER, EVP & CHIEF BANKING OFFICER, VALLEY BANK OVER THE PAST 12 MONTHS THERE HAS BEEN A DELUGE OF PRESS REGARDING THE HEALTH OF THE REGIONAL AND COMMUNITY BANKING INDUSTRY. THE REALITY IS THAT NEW JERSEY HAS AN EXTREMELY ROBUST AND HEALTHY COMMUNITY BANKING SECTOR. AT YEAR-END 2023, NEW JERSEY BASED BANKS CARRIED HIGHER REGULATORY CAPITAL LEVELS THAN THE INDUSTRY AND HAD LOSS RATIOS THAT WERE ALMOST HALF OF THE INDUSTRY; A TESTAMENT TO CONSERVATIVE UNDERWRITING AND STRONG COLLATERAL. THIS IS NOT A PRODUCT OF MERE LUCK; MUCH OF THE CONSERVATIVE NATURE OF NEW JERSEY BASED BANKS COMES AS A RESULT OF MANAGING THROUGH DECADES OF DIFFICULT BUSINESS ENVIRONMENTS SPURRED BY UNINTENDED CONSEQUENCES OF STATE FISCAL POLICIES. Take into consideration, over the course of the past 30+ years, business establishments in New Jersey have grown at a total rate of 36%, while a more business-friendly state like Florida has grown at over 137%. Tax rates are an obvious catalyst. New Jersey sits among the top five highest corporate tax rates (ranking the 47th and 46th highest state in terms of top marginal personal income tax rate and top marginal corporate tax rate, respectively). While higher taxation has been a primary policy tool to manage escalating budget deficits, it almost always comes at the expense of business formation and population trends. As a result, New Jersey ranked 34th in cumulative GDP growth from 2011–2021 and 47th in cumulative domestic migration over the same period. Having said that, New Jersey still ranks as the 10th largest GDP by state in the country, driven by diverse industries, an attractive geography, and generational businesses and wealth. 10 feature

Despite some of the declining trends, New Jersey based banks continue to play a pivotal role in moving the local economy forward. On a national level, bank loan growth as a percentage of GDP has averaged 85% over the past 5 years. For New Jersey, that number has averaged closer to 217% of the state GDP. This implies that banks in New Jersey have been playing a disproportionately higher role in providing capital to our state’s businesses and households. Furthermore, New Jersey banks have grown their absolute levels of loans at rates comparable to that of the industry. This provides further credence to the fact our state’s banks are working overtime relative to banks outside the footprint (meaning the loan growth to GDP ratio isn’t purely a function of NJ’s lesser GDP growth). Another item for consideration in 2024 is the reality that 16% of New Jersey’s GDP comes from the real estate and rental leasing sectors. Federal Reserve rate tightening in recent years has adversely impacted real estate activity, which will likely further stress local economic activity in 2024. The silver lining for real estate (especially commercial) is that markets should begin to thaw in 2025 as a backlog of maturities normalizes into more manageable levels. Additionally, it’s widely expected the Federal Reserve will begin to ease monetary policy later in 2024 which could provide a tailwind to real estate activities. Given the State’s economic reliance on real estate, it’s not surprising to see New Jersey based banks hold larger concentrations of real estate in their respective loan portfolios. That said, over the past 30 years, New Jersey banks’ loan losses averaged around 0.13% of average loans, a rate less than 50% of the total banking industry. While popular narrative suggests most commercial real estate is problematic, history suggests that conservative underwriting, strong borrower relationships and valuable collateral are the key to New Jersey banks’ long track record of success. While the economic landscape for New Jersey has some hurdles to overcome in 2024, the local banking sector has been an important source to fuel the state’s economy. As legislative headwinds become more onerous for the banking sector, local economies may suffer if banks’ lending appetite declines. As exampled by several other states (GA, SC, TN, OH, NY, to name a few), legislators and private sector leaders working and planning together can create a more favorable business environment in New Jersey. Accordingly, the banking industry would be in an even better position to continue its support of the New Jersey economy. Such a collaborative approach would certainly help alleviate economic pressures in 2024 and set the state up for a more prosperous recovery in 2025 and beyond. Rick Kraemer is Executive Vice President and Chief Banking Officer at Valley Bank. Rick Kraemer feature

NJBankers emerging leaders network volunteer day FEBRUARY 29, 2024 BENEFITING THE COMMUNITY FOODBANK OF NJ 12 emerging leaders network volunteer day

welcome new associate members NJBankers would like to welcome the newest Associate Members to the Association. AAA LENDERS INC. Financial investments, real estate development and prudent investments in a diverse array of real estate categories, including commercial properties and single-family residences. Contact: Sunny Chadha, Managing Director 732-645-1544 | BCI FINANCIAL Creates and services prime indirect auto loans for community banks in the Northeast USA. They sell monthly portfolios to banks that have the right of refusal on any individual loan purchase. Contact: Tim Rourke, President/CEO 203-439-9400 | CHILDREN’S AID & FAMILY SERVICE Children's Aid and Family Services is one of northern New Jersey's leading nonprofit providers of human services and child welfare programs. Contact: Benita Miller, President/CEO 201-261-2800 | SHIELDS BUSINESS SOLUTIONS Leading provider of ATM, Armored Courier, TCR and Smart Safe Services for financial institutions and retailers. Contact: Mark McGrath, Sr., President 609-685-5036 | 46 Volunteers supporting the more than 800,000 children, families and seniors facing food insecurity across the state. 92 Volunteer hours spent sorting, inspecting and packing dry product donations in CFNJ’s Repack area. 218 Repack cases that will be distributed to CFNBJ’s partner network of more than 800 local feeding partners throughout New Jersey. 6,358 Meals supported by the work completed during the Emerging Leaders Network Volunteer Day. 13 emerging leaders network volunteer day New Associate Members

THE DEPOSITORY LANDSCAPE HAS CHANGED Have Your Plans Changed? RYAN SMITH, MANAGING DIRECTOR AT PIPER SANDLER IN THE FINANCIAL SERVICES GROUP BALANCE SHEETS, ASSET/LIABILITY MANAGEMENT, FUNDING, LIQUIDITY AND REGULATION HAVE CHANGED: IT MAY BE TIME TO REVIEW YOUR STRATEGY. BUT CHANGING STRATEGY DOES NOT MEAN CHANGING YOUR INSTITUTION—ADAPTING STRATEGIES TO THE CHANGING ENVIRONMENT CAN BETTER SERVE CUSTOMERS AND PRESERVE YOUR INSTITUTION’S ABILITY TO OPERATE ON YOUR OWN TERMS. AFTERALL, A TREE CAN CHANGE ITS LEAVES WITHOUT CHANGING ITS ROOTS. Two things happened in the last few years that haven’t occurred before in the lifetime of any financial institution manager reading this article: a global pandemic and the widespread use of mobile and online banking. Both events have changed the time-tested structures and rules for managing a depository and many institutions are faced with a call to evolve. BALANCE SHEETS HAVE CHANGED. In the last few years, balance sheets suddenly became liquid during the pandemic and then suddenly illiquid as rates skyrocketed. Security portfolios ballooned and institutions were stuck with large unrealized losses while wholesale funding worked to fill the gap. So, what should change in your company’s strategy? There are two items our team at Piper Sandler hears consistently from management teams: we don’t take losses on assets, and we don’t borrow wholesale money. Both comments should be under review in this updated world. FUNDING & LIQUIDITY HAS CHANGED. Core deposits were put to the test as technology allows for quick withdraws and transfers, and the ability to shop nationwide rates and open an account takes place in five minutes from your phone. What’s the solution? Own more of your options. The depositor at every institution owns the option to withdraw money any time, and, other than CDs, without penalty. Your institution can be defunded quickly unless you own more options on the funding side—this typically means term CDs, wholesale borrowings, brokered CDs, or other term funding. 14 feature

Additionally, your next dollar of funding could already exist on your balance sheet in the form of a security sale. Make no mistake— realizing a loss is not the scenario a manager hopes for, however, it could be the cheapest form of funding. Selling low yielding securities for liquidity allows you to reinvest in current, higher rates. Waiting for rates to come down so the losses are smaller means your reinvestment yield will also be lower. Companies executing loss-trades get their cash back in higher rate environments and can lock in new assets with those higher rates. Bear in mind— you are taking the loss either way—through a one-time realized loss on sale, or through your margin every day you own the securities. Choosing to take the loss when reinvestment rates are higher will support future earnings and provide cheaper liquidity. ASSET/LIABILITY SENSITIVITY HAS CHANGED. Historical rates left room to make money on spread. The last five quarters have squeezed the space between asset yields and funding costs, regardless of your A/L sensitivity. All the asset sensitive institutions turned out to be liability sensitive as deposit costs skyrocketed. So, are you asset or liability sensitive? The answer: neither and both—you’re just sensitive. Every rate move, up or down, impacts your institution, and whether you model asset or liability sensitive misses the point that protecting against volatility in both directions, is the only way to reduce broad sensitivity. A neutral A/L profile reduces overall sensitivity in both directions and mitigates overall volatility. Interest rate swaps allow managers to adjust their sensitivity and remove volatility and these swaps can be applied in either direction, depending on which side is overly sensitive. REGULATION HAS CHANGED. The failure of Silicon Valley Bank and others made waves in the regulatory community. Regulators have reacted and are now requiring more sources of funding, more testing of funding sources, and more policies and procedures to back it all up. Regulated institutions need to examine their options and be sure the results are varied and multitudinous. Telling a regulator that you fund with deposits doesn’t cut it; you must have many funding sources, policies for those sources, and ways to demonstrate testing of those sources. This includes collateral preparedness for the FHLB and Fed, and knowledge on how to issue brokered CDs. Some partner with Fin Tech deposit gathers or online listing services—all new sources should be explored—the regulators will be looking for them. With all these changes to traditional depository activities, it’s time for managers to look at their institution and decide if they are ready for a new standard. Change can be good. Afterall, the most expensive words in business are “that’s the way we’ve always done it.” Ryan Smith Ryan Smith is Managing Director at Piper Sandler in the Financial Services Group. 15 feature

ABA Insurance Services provides D&O, bond and cyber insurance for financial institutions, including trust companies and in organizations, through this program co-endorsed by NJBA and American Bankers Association. With over 30% market share countrywide, one in two New Jersey banks are insured in the program. Our tenured and experienced team of underwriting and claims professionals are highly regarded for their in-depth knowledge and expertise of the banking industry. We help mitigate risks with valuable loss control resources such as SafeTalk® newsletters, SafeAlert® bulletins and webinars. As a market leader that has been supporting the banking industry for over 35 years, 33 consecutive distributions have been declared by ABMI, the program’s primary reinsurer, totaling nearly $100 million. Other programs available include excess coverage, surety bonds, mortgage protection and property and casualty lines. Learn more at Patricia P. Williams, CPCU Business Development Manager 410-960-6878 Bank Marketing Center’s web-based platform puts you in complete control of the marketing production process for your bank—all for a fraction of your current marketing costs. We help eliminate advertising production costs from third-parties. You can create flyers, signs, print ads as well as other promotional and advertising products. Put professional looking posts for social media. It’s easy to use and easily customizable for your institution using your bank’s logos, colors and copy. BMC also provides a compliance approval process. As a registered user you will have access to thousands of professionally designed marketing materials and over eight million stock photos. Don’t take a chance with copyright infringement pulling photos off the web or other design platforms. In seconds you be will able to create “camera-ready” artwork for publication or printing. Learn more at Neal Reynolds President 678-528-6688 Heartland, a Global Payments Company, is a leading worldwide provider of payment technology and software solutions delivering innovative services to our customers globally. Our technologies, service and employee expertise enable us to provide a broad range of solutions including payment processing, payroll and HR solutions and point of sale solutions. Our focus is on the customer and partnering with them to accept various payment types and operate their business more efficiently across a variety of distribution channels in many markets around the world. Learn more at Annette Oriscello Senior Manager, U.S. Direct Sales 201-527-8613 16 Meet some of our endorsed and select providers

Mercadien helps financial institutions throughout the U.S.—including community and commercial banks—and other service entities—manage risk, maintain compliance, and increase strategic focus and profitability by providing responsive, forward thinking, and innovative solutions in audit, consulting, and accounting. Our team has extensive experience in the banking and regulatory compliance sectors and with industry insight and expertise, can help institutions successfully navigate changes and stay ahead of the curve in the areas of internal audit, model validation preparedness, staff augmentation, BSA and AML consulting, regulatory compliance, SOX and FDICIA consulting, Enterprise Risk Management and information technology audits. Learn more at PMC is a privately owned and operated IRA and HSA consulting, training, publishing and marketing services company. PMC has been at the forefront of IRA and HSA training and support since the inception of these investment vehicles in 1975. We’re proud of our reputation as the “go-to” source for up-to-date, reliable and verifiable information on IRAs and HSAs. We have trained tens of thousands of professionals nationwide. The widely attended fall and winter-spring Regional IRA Seminars, IRA Training Videos, IRA Online Learning Center and custom on-site training offer convenient, cost-effective, “one-stop” options to stay abreast of tax-law changes and pending legislation. PMC publishes the IRA Insider, a monthly newsletter and are premier providers of print and electronic forms. PMC also publishes brochures and the IRA Reference Manual (updated twice a year), IRA Digital Reference Manual (frequently updated); and the IRA Desk Reference & HSA Quick Reference and Training Guide (revised annually). NJBankers Members receive discounts on PMC products & services. Learn more at Don Beideman Director of Customer Service 610-251-0360 x 107 Wolf & Company is entering the second century of providing unparalleled guidance in audit, tax, risk management, and business advisory services throughout the Northeast. Our clients receive direct involvement from our principals, as well as the trusted and responsive service of our multi-disciplinary teams. Our collaborative service strategy and niche-focused structure results in a deep understanding of clients and their business needs, and enables us to help our clients maximize opportunities and navigate obstacles. Learn more at William Nowik Principal & Chief Information Security Officer 617-428-5469 Joe Romazello Senior Manager 973-863-7193 Sal Zerilli Managing Director; Chair, Financial Institutions Services 609-689-2344 Pranav Naik Supervising Senior 609-689-8720 17 meet some of our endorsed and select providers

Hold on! Bank loan quality doesn’t align with Wall Street metrics DAVID RUFFIN, PRINCIPAL OF INTELLICREDIT, A DIVISION OF QWICKRATE WELL… AT LEAST NOT IN REAL TIME. I recently heard a senior lending officer proclaim, with obvious relief, “Looks like we’ve dodged the recession bullet. We’re refocusing on loan growth opportunities.” The Fed- orchestrated “soft landing” is, of course, what our industry desires, but history clearly warns that it can take years before the effects of macro events such as pandemics, rate shocks and rampant inflation actually show up in lower credit quality. Even as these triggering events subside or abate, the lesson is clear: we shouldn’t let our guard down yet. THE GOOD Despite weaknesses in specific sectors of the economy, overall job growth and unemployment have remained resilient in the face of perceived economic pressures. The inflation rate in December fell to 3.4% vs. 6.5% a year earlier, and the Federal Reserve has hinted at lowering interest rates soon in response. While current rates are moderate compared to standards set in the ‘70s and ‘80s, cutting interest rates will certainly be a boon for the nearly-decimated mortgage industry and other lenders. 18 feature

THE BAD Despite those promising economic indicators, other data signals potential challenges ahead. ɨ A December 2023 study by renowned academics for the National Bureau of Economic Research indicated that about 44% of banks’ office loans are underwater (equity-to-loan value) with vacancies soaring. The study noted that a 10% default rate on broader commercial real estate (CRE) loans would result in about $80B in bank losses. Some fear that the drag of higher rates on the 1–4 family housing sector has created a multifamily housing bubble. ɨ The research group MSCI Real Capital Analytics reported last summer that the community and regional bank share of the U.S. CRE market had exploded from 17% to 27% just since the pandemic. While the smaller banks have increased their CRE loans, investors and larger institutions have shed CRE exposures due to credit quality concerns and heightened regulatory scrutiny. ɨ Weaknesses in the trucking sector were at the heart of a recent Midwest bank failure—the first credit quality focused closure in quite a while. ɨ There’s a growing dichotomy between consumers living paycheck-to-paycheck (and running up credit card levels to historic heights) and those with strong balance sheets and investment resources. While this issue may be primarily affecting the credit union industry, it could impact bank performance as well. ɨ The below chart of historical data from the QwickAnalytics® National Performance Trends Report (based on the proprietary QwickAnalytics Community Bank Index (QCBI) of true community banks) clearly indicates an approximate two-year lag between the end of rate hikes and the peak of non-performing loans (NPLs). This may be the most telling data supporting the continuing need for credit risk management vigilance! History Shows Non-Performing Loans Peak Two Years After Fed Rate Cuts ? Research Metrics $58,557,142 $43,917,856.725 $29,278,571.45 $14,639,286.175 $0.9 03/31/2007 09/30/2007 03/31/2008 09/30/2008 03/31/2009 09/30/2009 03/31/2010 09/30/2010 03/31/2011 09/30/2011 03/31/2012 09/30/2012 03/31/2013 09/30/2013 03/31/2014 09/30/2014 03/31/2015 09/30/2015 03/31/2016 09/30/2016 03/31/2017 09/30/2017 03/31/2018 09/30/2018 03/31/2019 09/30/2019 03/31/2020 09/30/2020 03/31/2021 09/30/2021 03/31/2022 09/30/2022 03/31/2023 09/30/2023 6.00% 4.50% 3.00% 1.49% 0.01% FRED Economic Data QCBI NPLs Projected NPLs Federal Funds Effective Rate 10,754,928 14,613,576 18,550,679 24,587,889 30,154,602 34,532,478 42,486,978 51,301,309 58,402,729 51,402,488 48,929,139 44,750,382 42,129,148 38,311,451 35,007,473 30,090,735 25,747,102 22,378,231 19,173,253 16,848,384 15,236,346 13,382,470 12,968,852 14,969,017 12,535,854 10,094,415 4.5 5.26 0.51 0.18 0.16 0.16 0.08 0.08 0.07 0.09 0.11 0.1 0.14 0.14 0.36 0.4 0.7 0.95 1.74 2.22 2.4 1.26 0.06 0.09 0.07 0.08 0.77 3.65 2.19 4.52 4.99 5.26 0.14 0.13 0.19 THE FED-ORCHESTRATED “SOFT LANDING” IS, OF COURSE, WHAT OUR INDUSTRY DESIRES, BUT HISTORY CLEARLY WARNS THAT IT CAN TAKE YEARS BEFORE THE EFFECTS OF MACRO EVENTS SUCH AS PANDEMICS, RATE SHOCKS AND RAMPANT INFLATION ACTUALLY SHOW UP IN LOWER CREDIT QUALITY. EVEN AS THESE TRIGGERING EVENTS SUBSIDE OR ABATE, THE LESSON IS CLEAR: WE SHOULDN’T LET OUR GUARD DOWN YET. 19 feature

THE NOW It’s clear that, given all of the data listed above, those directly responsible for your bank’s credit portfolio performance must stay vigilant. Consider directing attention to these key areas: ɨ Accept that regulatory scrutiny is increasing significantly, particularly in the CRE arena. Be sure to reinforce your adherence to both the December 2006 Interagency Guidance on CRE Concentrations (Fed SR7-1) and the more recent June 2023 Prudent CRE Loan Accommodations and Workouts (Fed SR23-5). Be proactive in anticipating CRE repricing and performance, monitoring concentrations unique to your bank and ensure that management and the board are fully informed. ɨ Enhance all aspects of loan review— whether performed internally (annually) or by an external independent provider— and ensure the quality and experience levels of those performing the reviews are up to the task. Remember, loan review is one of the most reliable tools for early detection of credit risk—a proven corollary to reduced loan losses. ɨ Perform stress tests, preferably paired with loan reviews, that go beyond providing theoretical losses. Also, focus on suspect borrowers who could potentially move the needle on losses higher. ɨ Embrace practical and affordable portfolio analysis tools that provide early detection of weakening trends and emerging hotspots, particularly within your bank’s lending concentrations. Your loan portfolio is your DNA, so know what it is telling you before regulators arrive. Smaller banks remain laggards in this area. Waiting for call report data to depict loan quality is a fool’s errand, because as they say, “Those horses are already out of the barn.” We all join in the optimism of the lending officer ready to put recession fears behind them, but history and current conditions mandate that the industry keep its guard up and manage what appears poised to be the greatest level of credit stress since 2008’s Great Recession. David Ruffin David Ruffin is Principal of IntelliCredit, a division of QwickRate. He has extensive experience in the financial industry including a long and pronounced emphasis on credit risk in a variety of roles that range from bank lender and senior credit officer to the co-founder of IntelliCredit and its technology that is revolutionizing a decades-old loan review process. For more information, visit intellicredit. com or email WE ALL JOIN IN THE OPTIMISM OF THE LENDING OFFICER READY TO PUT RECESSION FEARS BEHIND THEM, BUT HISTORY AND CURRENT CONDITIONS MANDATE THAT THE INDUSTRY KEEP ITS GUARD UP AND MANAGE WHAT APPEARS POISED TO BE THE GREATEST LEVEL OF CREDIT STRESS SINCE 2008’S GREAT RECESSION. 20 feature

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 IF YOU COULD SIT DOWN WITH YOUR BANK’S CEO AND ASK QUESTIONS ABOUT THEIR CAREER JOURNEY, THOUGHTS ABOUT THE BANKING INDUSTRY, OR EVEN WHAT THEY DO IN THEIR SPARE TIME, WHAT WOULD YOU ASK? IN THIS FEATURE, NEW JERSEY BANKER WILL ASK THE QUESTIONS FOR YOU! WE ASKED JOHN S. FITZGERALD, PRESIDENT & CEO, MAGYAR BANK, SOME QUESTIONS. THANKS FOR SITTING DOWN WITH US JOHN! How did you get started in banking? I started in banking working for Hudson United Bank in Union City in 1986 right after graduating college. What advice do you have for young bankers starting their career? Have a positive attitude and make yourself available to help your bank in any way possible, whether it be participating in community events or taking on extra work. Why do you feel it’s important for banks like Magyar to be associated with NJBankers? It is vital to advocate for the industry, both politically in Trenton and DC, and in getting out the message of the great things community banks are responsible for in their communities. What trait does the modern banker need to have to be successful? Be persistent and you don’t know what you can do until you try. Over the course of your career, what is the biggest shift you’ve seen in banking? COVID changed the human interaction in banking both internally within the Bank and with our interactions with our customer. We are slowly getting that back. What is the difference between being a boss and being a leader? Do not always try to find the perfect consensus. Great leaders are simplifiers who listens to input and offers a solution everyone can understand. Maybe not agree with, but understand. What piece of advice do you wish you had known when you started your career? Don’t be in awe of titles and experts but listen to everyone to learn. What community projects has Magyar participated in that touched you the most? We have a staff and culture that breeds service in the community. If it is making meals at a soup kitchen or Ronald McDonald House, providing financial literacy classes to our Spanish speaking neighbors or handing toys out to sick kids and their siblings at the hospital, every time I see our staff and customers provide for a need in our community I am touched. What’s the best advice you ever received? Be optimistic, it always serves you best in the end. What helps you stay objective? Having good and smart people around me and listening to their input. I know I am not the smartest person in the room so listening to others to form a solution is the best process. Where do you find your inspiration? Family and friends and realizing how lucky I am to have a strong support network. What was your biggest ‘aha’ moment? When I served on a committee evaluating and offering a solution regarding a project early in my career. I had just done a lot of research on the topic so I was asked to join. Certain members of the committee had their minds made up before the committee even met. I offered my opinion but was not asked to come back to the next meeting. The project was not successful, but I did learn having good people around you and listening to their input is important. What would be the title of your autobiography? Hard Work Pays Off. What leadership traits are overrated? Plans, consultants and theories do not matter as much as having good people around you to be successful. How has your life experience made you the leader you are today? Understanding there are many different people in the world and you need to try to relate to all of them. I grew up with people who went to Ivy League schools and some who went to prison, and I was able to get along with most of them. What was the last book you read? I reread “The Short Stories of Ernest Hemingway” and read “Once a Giant” by Gary Myers. Who is the most famous person you have ever met? Tony Bennet and Mayor Tom Lankey. If you could travel anywhere in the world, where would you go? Ireland. What is your guilty pleasure junk food? Anything salty—chips, nachos. Pizza—I’m hungry now. 21 questions and answers with featured bankers

George Boyan, III EVP/CFO, Unity Bank Jeremy Goss Partner, Forvis In the Spotlight: CFO COMMITTEE Q. What indicators or trends are you closely monitoring to gauge the health and stability of the economy, and how do they influence your strategic decision- making process? BOYAN: I closely track a diverse set of indicators, which can be broadly categorized into two main groups. Let’s delve into each category: 1. Traditional Indicators: ɨ These are the tried-and-true metrics that policymakers, including the Federal Reserve, pay close attention to. They provide valuable insights into the overall economic health. Here’s what I focus on: ɦ Quarterly GDP Growth Trends: Analyzing the ups and downs in our region’s economic output. ɦ Average Non-Farm Payroll Reports: Keeping an eye on employment figures across various sectors. ɦ Inflation Measures: Examining inflation rates and their impact on purchasing power. ɦ All these data points inform my perspective on the trajectory of shortterm interest rates. 2. Customer Insights: ɨ The second category involves listening to our valued customers at Unity Bank. Their experiences and feedback provide crucial context. Here are some key questions we explore: ɦ Small Business Performance: How are our small business customers faring? Are they thriving? ɦ Supply Chain Challenges: Can they easily source materials for their operations? ɦ Hiring and Staffing: What’s their experience with recruitment and staffing? ɦ Homeowners and Real Estate: Are homeowners finding good deals or caught up in bidding wars? How are home sellers faring in terms of asking price? ɦ By actively engaging with our customers, we gain insights that complement the traditional indicators. Much like a pilot flying an aircraft, I encounter a multitude of indicators. The challenge lies in their often divergent messages. Rarely do all the indicators align perfectly. However, when we weigh them collectively, the overall picture reveals that despite significant monetary policy tightening over the past 18 months, the New Jersey economy remains robust. GOSS: Many seem to 'feel like’ we must be in the later stages of the current economic cycle. The yield curve has been inverted for almost two years with less than stellar consumer confidence and delinquencies creeping up in certain credit classes. Because these conditions exist in a period of inflationary pressure and significant monetary policy tightening, recession fears loom. Yet other key indicators such as employment, GDP, housing prices and corporate profits (while admittedly lagging) remain relatively strong compared to historic norms. Competing narratives create uncertainty which is only compounded by the current political environment. Success is measured not by results in any given period, but by the ability to consistently put yourself in a position to take advantage of openings when they do arise. Especially in uncertain times, FORVIS looks for prudent opportunities to broaden our future prospects, whether through hiring new talent, releasing new products and services, expanding into new markets or through strategic partnerships with like-minded firms. Delivering unmatched client experiences is our primary focus in any stage of the economic cycle. Q. In light of recent economic developments, what adjustments, if any, have you made to your bank’s investment portfolio and lending practices? BOYAN: In 2023, the Federal Reserve implemented tighter monetary policies, leading to significant developments in the financial landscape. One of the most notable changes was the scarcity of deposits. As COVID stimulus funds were depleted, customers actively utilized their excess liquidity. Simultaneously, the failures of Silicon Valley Bank, Signature Bank, and First Republic reverberated nationwide, further exacerbating the deposit shortage. In response to these challenges, our institution adjusted its approach. We intensified our efforts to gather deposits, focusing primarily on owner-occupied businesses rather than investor-owned commercial real estate. Additionally, we strategically managed our investment portfolio as both a diversification tool on our balance sheet and a source of liquidity. Overall, 2023 marked a year of adaptability and resourcefulness as we navigated the changing financial landscape. GOSS: While the pace of new lending has slowed slightly given the interest rate environment, banks are still lending to high quality borrowers. Given the uncertainty in certain 22 In the spotlight: CFO Committee