11. INCOME TAXES

All of the Company's income tax expense as reported for the years ended December 31, 2025, 2024, and 2023 is attributable to domestic operations. The income tax expense included in the consolidated financial statements for the years ended December 31 is allocated as follows:


(In thousands)	2025			2024			2023
Federal:
Current expense	$	2,507		$	19,576		$	25,814
Deferred (benefit)/expense		8,341			(11,461	)		(11,862	)
State:
Current expense		4,692			6,685			7,889
Deferred (benefit)/expense		(557	)		(4,384	)		(3,414	)
Change in valuation allowance		—			1,548			—
Total income tax expense	$	14,983		$	11,964		$	18,427

Total income tax expense differed from the amounts computed by applying the U.S. Federal income tax rate of 21 percent for 2025, 2024, and 2023, respectively, to income before taxes as a result of the following:


(In thousands)	2025					2024							2023
	Amount		Percent			Amount			Percent				Amount			Percent
U.S. federal statutory rate	$	10,985		21.0	%	$	9,440			21.0		%	$	14,129			21.0		%
Federal reconciling items:
Nontaxable and nondeductible items, net		544		1.0			(215	)		(0.5	)			(68	)		(0.1	)
Change in valuation allowance		—		-			1,548			3.5				—			-
Other reconciling items		305		0.6			(627	)		(1.4	)			831			1.2
State and local income taxes, net of federal effect (1):		3,149		6.0			1,818			4.0				3,535			5.3
Total income tax expense	$	14,983		28.6	%	$	11,964			26.6		%	$	18,427			27.4		%

(1) State taxes in New Jersey made up the majority (greater than 50 percent) of the tax effect in this category.

The components of income taxes paid for the periods ended December 31, 2025, 2024, and 2023 were as follows:


(In thousands)	2025		2024		2023

Total Income Taxes Paid	$	19,681	$	17,672	$	18,474
Federal		15,286		11,700		11,600
State
New Jersey		1,354		3,200		2,802
New York		1,175		1,083		2,712
Other		1,866		1,689		1,360

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31 are as follows:


(In thousands)	2025			2024
Deferred tax assets:
Allowance for credit losses	$	19,240		$	19,430
Tax net operating loss carryforward		4,427			134
Capital loss carryforward		1,548			1,548
Unrealized loss on securities available for sale		17,950			27,182
Unrealized loss on equity security		417			558
Stock compensation expense		6,315			6,081
Accrued compensation		7,433			7,923
Accrued expenses		687			833
Discount accretion		1,138			1,441
Lease liabilities		11,714			11,486
Finance lease		407			516
Other		1,308			1,204
Total deferred tax assets	$	72,584		$	78,336
Deferred tax liabilities:
Lease financing	$	49,186		$	38,343
Cash flow hedge		671			2,078
Deferred loan origination costs and fees		2,353			2,090
Deferred income		4,478			4,420
Amortization of intangible assets		2,753			2,451
Lease right-of-use asset		10,792			10,619
Other		31			406
Total deferred tax liabilities		70,264			60,407
Net deferred tax asset/(liability) before valuation allowance		2,320			17,929
Valuation allowance		(1,548	)		(1,548	)
Net deferred tax asset/(liability)	$	772		$	16,381

Management believes that not all existing net deductible temporary differences that comprise the net deferred tax asset will reverse during periods in which the Company generates sufficient taxable income of appropriate character. Accordingly, management has established a valuation allowance on all of the Company’s capital loss carryforward. Based on all available evidence, Management believes it is more likely than not the Company will realize the remaining deferred tax assets. Significant changes in the Company's operations and or economic conditions could affect the benefits of the recognized net deferred tax assets.

At December 31, 2025, the Company had $2.8 million of Federal net operating loss carryforward balances available to offset future taxable income that do not expire and $1.5 million of state net operating loss carryforward balances available to offset future taxable income that have various expirations beginning in 2033.

On June 28 2024, the governor of New Jersey signed into law a new Corporate Transit Fee, which increases the New Jersey corporate tax rate from 9 percent to 11.5 percent. This fee will be imposed on businesses that have New Jersey taxable income of $10 million or more for tax years beginning January 1, 2024 through December 31, 2028.

The Company is subject to U.S. Federal income tax as well as income tax of various state jurisdictions. The Company is no longer subject to federal examination for tax years prior to 2022 or by state and local tax authorities for years prior to 2021.

Historical Timeline

Fiscal Year	Filed
2025	Mar 11, 2026	Showing above
2024	Mar 12, 2025

2023	Mar 12, 2024

2022	Mar 13, 2023

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

PEAPACK GLADSTONE FINANCIAL CORP Income Taxes Disclosure

Historical Timeline

About Income Taxes Disclosures

Other Available Disclosures