What changed in this filing

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Item 1. Financial Statements

2025-08-11 compared with 2025-05-02 · 803 added, 306 removed, 1629 unchanged (41% of the section changed)

55 unchanged sentences

Authorized 5,000,000 shares;

issued 115,000 shares as of March 31, 2025 and as of December 31, 2024;

outstanding 115,000 shares as of March 31, 2025 and as of December 31, 2024

issued 115,000 shares as of June 30, 2025 and as of December 31, 2024;

outstanding 115,000 shares as of June 30, 2025 and as of December 31, 2024

110,927 110,927

1 unchanged sentence

Authorized 100,000,000 shares;

issued 42,355,523 shares as of March 31, 2025 and 42,255,865 shares as of December 31, 2024;

outstanding 38,469,975 shares as of March 31, 2025 and 38,370,317 as of December 31, 2024

issued 54,155,710 shares as of June 30, 2025 and 42,255,865 shares as of December 31, 2024;

outstanding 50,270,162 shares as of June 30, 2025 and 38,370,317 as of December 31, 2024

857,765 586,946

4 unchanged sentences

Treasury stock, at cost:

3,885,548 common shares as of March 31, 2025 and December 31, 2024

3,885,548 common shares as of June 30, 2025 and December 31, 2024

( 76,116 ) ( 76,116 )

8 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

Three Months Ended

Six Months Ended

(dollars in thousands, except for per share data)

13 unchanged sentences

Net gains on sale of loans held-for-sale

Net gains on equity securities

Net gains (losses) on equity securities

Total noninterest income

11 unchanged sentences

Total noninterest expenses

Income before income tax expense

Income tax expense

(Loss) income before income tax expense

Income tax (benefit) expense

Net (loss) income

Preferred dividends

Net income available to common stockholders

Net (loss) income available to common stockholders

Earnings per common share

2 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

Three Months Ended

Six Months Ended

(dollars in thousands)

Other comprehensive income (loss), net of tax:

Net (loss) income

Other comprehensive (loss) income, net of tax:

Net unrealized holding gains (losses) on available-for-sale securities arising during the period

1 unchanged sentence

Pension plan adjustments

Total other comprehensive loss, net of tax

Total comprehensive income

Total other comprehensive income (loss), net of tax

Total comprehensive (loss) income

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Comprehensive

2 unchanged sentences

(Loss) Income

Balance as of December 31, 2024

Balance as of March 31, 2025

$ 110,927 $ 586,946 $ 36,007 $ 643,265 $ ( 76,116 ) $ ( 48,090 ) $ 1,252,939

- - - ( 20,293 ) - - ( 20,293 )

Other comprehensive income, net of tax

- - - - - 685 685

Cash dividends paid on preferred stock ($ 0.328125 per depositary share)

- - - ( 1,509 ) - - ( 1,509 )

Cash dividends paid on common stock ($ 0.18 per share)

- - - ( 6,931 ) - - ( 6,931 )

Restricted stock grants, net of forfeitures ( 32,709 shares)

- - - - - - -

Share redemption for tax withholdings on restricted stock units for FLIC ( 22,638 shares)

- - ( 507 ) - - - ( 507 )

Stock-based compensation expense

- - 1,228 - - - 1,228

Stock issued in connection with FLIC merger ( 11,790,116 shares)

- 270,819 - - - - 270,819

Balance as of June 30, 2025

$ 110,927 $ 857,765 $ 36,728 $ 614,532 $ ( 76,116 ) $ ( 47,405 ) $ 1,496,431

Three Months Ended June 30, 2024

Comprehensive

Stockholders’

(in thousands, except share data)

(Loss) Income

Balance as of March 31, 2024

$ 110,927 $ 586,946 $ 32,866 $ 600,118 $ ( 76,116 ) $ ( 38,132 ) $ 1,216,609

- - - 19,056 - - 19,056

Other comprehensive loss, net of tax

- - - - - ( 4,112 ) ( 4,112 )

Cash dividends declared on preferred stock ($ 0.328125 per depositary share)

- - - ( 1,509 ) - - ( 1,509 )

Cash dividends declared on common stock ($ 0.18 per share)

- - - ( 6,906 ) - - ( 6,906 )

Restricted stock grants, net of forfeitures ( 32,016 shares)

- - - - - - -

Stock-compensation expense

- - 1,089 - - - 1,089

Balance as of June 30, 2024

$ 110,927 $ 586,946 $ 33,955 $ 610,759 $ ( 76,116 ) $ ( 42,244 ) $ 1,224,227

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Six Months Ended June 30, 2025

Comprehensive

Stockholders’

(in thousands, except share data)

(Loss) Income

Balance as of December 31, 2024

$ 110,927 $ 586,946 $ 36,347 $ 631,446 $ ( 76,116 ) $ ( 47,846 ) $ 1,241,704

- - - ( 51 ) - - ( 51 )

Other comprehensive income, net of tax

- - - - - 441 441

Cash dividends paid on preferred stock ($ 0.65625 per depositary share)

10 unchanged sentences

- - - - - - -

Share redemption for tax withholdings on restricted stock units for FLIC ( 22,638 shares)

- - ( 507 ) - - - ( 507 )

Share redemption for tax withholdings on performance units and deferred stock units earned

- - ( 1,627 ) - - - ( 1,627 )

Stock-based compensation expense

Stock-based compensation

- - 2,515 - - - 2,515

Balance as of March 31, 2025

Stock issued in connection with FLIC merger ( 11,790,116 shares)

- 270,819 - - - - 270,819

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Three Months Ended March 31, 2024

Balance as of June 30, 2025

$ 110,927 $ 857,765 $ 36,728 $ 614,532 $ ( 76,116 ) $ ( 47,405 ) $ 1,496,431

Six Months Ended June 30, 2024

Comprehensive

25 unchanged sentences

- - - - ( 5,820 ) - ( 5,820 )

Balance as of March 31, 2024

Balance as of June 30, 2024

$ 110,927 $ 586,946 $ 33,955 $ 610,759 $ ( 76,116 ) $ ( 42,244 ) $ 1,224,227

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(dollars in thousands)

Cash flows from operating activities

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

$ ( 51 ) $ 36,261

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization of premises and equipment

3 unchanged sentences

Net accretion of loans

( 3,745 ) ( 472 )

Accretion on bank premises

Accretion on deposits

( 24 ) ( 24 )

Amortization (accretion) on deposits

Amortization on borrowings, net

Stock-based compensation

Gains on equity securities, net

(Gains) losses on equity securities, net

Gains on sale of loans held-for-sale, net

( 513 ) ( 1,783 )

Loans originated for resale

( 10,798 ) ( 12,511 )

Proceeds from sale of loans held-for-sale

11,027 13,859

Increase in cash surrender value of bank owned life insurance

( 3,671 ) ( 3,341 )

Amortization of premium and accretion of discounts on securities available-for-sale

Amortization of subordinated debentures issuance costs

Increase in accrued interest receivable

(Increase) decrease in accrued interest receivable

( 1,736 ) 846

Net change in operating leases

Increase in other assets

(Decrease) increase in other liabilities

(Increase) decrease in other assets

( 15,950 ) 1,176

Increase (decrease) in other liabilities

160 ( 3,251 )

Net cash provided by operating activities

21,348 42,819

Cash flows from investing activities

Investment securities available-for-sale:

( 330,264 ) ( 48,814 )

Maturities, calls and principal repayments

48,258 30,209

Purchase of equity securities

( 1,113 ) ( 1,302 )

Proceeds from equity securities sold

1 unchanged sentence

Net decrease in loans

32,031 181,281

Proceeds from bank owned life insurance

Purchases of premises and equipment

( 331 ) ( 263 )

Cash acquired, net of cash consideration paid in acquisition

Net cash provided by investing activities

99,048 169,165

Cash flows from financing activities

Net (decrease) increase in deposits

Advances of Federal Home Loan Bank (“FHLB”) borrowings

Net increase in deposits

206,993 39,877

Proceeds from issuance of subordinated debt

Payment of subordinated debt issuance costs

Advances of FHLB borrowings

740,000 595,587

Repayments of FHLB borrowings

( 1,004,621 ) ( 773,033 )

Cash dividends on preferred stock

( 3,018 ) ( 3,018 )

Cash dividends paid on common stock

( 13,845 ) ( 13,454 )

Repurchase of treasury stock

Share redemption for tax withholdings on performance units and deferred stock units earned

Net cash used in financing activities

( 2,134 ) ( 1,324 )

Net cash provided by (used in) financing activities

119,649 ( 161,185 )

Net change in cash and cash equivalents

240,045 50,799

Cash and cash equivalents at beginning of period

356,488 242,714

Cash and cash equivalents at end of period

$ 596,533 $ 293,513

Supplemental disclosures of cash flow information

1 unchanged sentence

Interest paid on deposits and borrowings

$ 119,053 $ 137,520

36,173 15,594

Supplemental disclosures of noncash activities

Business Combination

Fair value of assets acquired

Fair value of liabilities assumed

Stock issued in connection with FLIC merger

See accompanying notes to unaudited consolidated financial statements.

11 unchanged sentences

(a New Jersey real estate investment trust), Center Financial Group, LLC (a New Jersey financial services company), Center Advertising, Inc.

(a New Jersey advertising company), Morris Property Company, LLC, (a New Jersey limited liability company), Volosin Holdings, LLC, (a New Jersey limited liability company), NJCB Spec- 1, LLC (a New Jersey limited liability company), Port Jervis Holdings, LLC (a New Jersey limited liability company), BONJ Special Properties, LLC (a New Jersey limited liability company) and BoeFly, Inc.

The First of Long Island REIT (a New York real estate investment trust), FNY Service Corp (a New York investment company) and BoeFly, Inc.

(a New Jersey financial technology company).

1 unchanged sentence

The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey and through its 59 other banking offices.

On June 1, 2025, the Company completed its acquisition of The First of Long Island Corporation (“FLIC”), and The First National Bank of Long Island, FLIC’s wholly owned subsidiary depository institution, was merged into the Bank.

Substantially all loans are secured with various types of collateral, including business assets, consumer assets and commercial/residential real estate.

3 unchanged sentences

generally accepted accounting principles.

The consolidated financial statements of the Parent Corporation are prepared on an accrual basis and include the accounts of the Parent Corporation and the Company.

The consolidated financial statements of the Parent Corporation are prepared on an accrual basis and include the accounts of the Parent Corporation and the Bank.

All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nature of Operations, Principles of Consolidation and Risk and Uncertainties - (continued)

Segment Reporting

11 unchanged sentences

See Note 14 for disclosures related to the reportable segment.

Employee Benefit Plans

The Company has a noncontributory pension plan that covered all eligible employees up until September 30, 2007 , at which time the Company froze its defined benefit pension plan.

As such, all future benefit accruals in this pension plan were discontinued and all retirement benefits that employees would have earned as of September 30, 2007 were preserved.

In the FLIC merger, the company acquired a defined benefit pension plan that covered all eligible employees.

The Bank makes contributions to the plan, which when taken together with participant contributions equal to 2 % of their compensation, will be sufficient to fund these benefits.

Effective for June 30, 2025, the Board of Directors approved that no new participants will be permitted in the pension plan, and existing participants could no longer contribute.

In addition, the Board of Directors approved to freeze the plan effective September 30, 2025.

Once frozen, participants will no longer accrue benefits.

The Company’s policy is to fund at least the minimum contribution required by the Employee Retirement Income Security Act of 1974.

Pension expense is the sum of service cost, interest cost, amortization of actuarial gains and losses and plan expenses, net of the expected return on plan assets and participant contributions.

The costs associated with the plans are accrued based on actuarial assumptions and included in salaries and employee benefits expense.

The Company accounts for its defined benefit pension plans in accordance with FASB ASC 715 - 30.

This standard requires that the funded status of defined benefit postretirement plans be recognized on the Company’s statement of financial condition and changes in the funded status be reflected in other comprehensive income.

This standard also requires companies to measure the funded status of the plans as of the date of its fiscal year-end.

Use of Estimates

27 unchanged sentences

Business Combination

On September 4, 2024 , the Parent Corporation and The First of Long Island Corporation (Nasdaq:

FLIC) (“First of Long Island”), parent company of The First National Bank of Long Island entered into a definitive agreement pursuant to which First of Long Island will merge with and into the Parent Corporation, which will be the surviving entity in the transaction.

The combined company will operate under the ConnectOne brand, and will have approximately $ 14 billion in total assets, $ 11 billion in total deposits, and $ 11 billion in total loans.

Under the terms of the agreement, First of Long Island shareholders will receive 0.5175 shares of Parent Corporation common stock for each share of First of Long Island common stock.

The transaction is valued at approximately $ 288 million in aggregate based upon the closing common stock price of $ 24.31 for ConnectOne as of March 31, 2025.

The final transaction value is subject to change based on the fluctuations in the market price of ConnectOne common stock prior to the closing of the acquisition.

On February 14, 2025 , at separate special meetings, the shareholders of both companies approved proposals relating to the pending merger of the Parent Corporation and First of Long Island.

On June 1, 2025 ( the “Acquisition Date”), the Company completed the acquisition of The First of Long Island Corporation (“FLIC"), the parent company for the First National Bank of Long Island (“FNBLI”), in accordance with the definitive Agreement and Plan of Merger dated as of September 4, 2024 ( the “Merger Agreement”).

Pursuant to the Merger Agreement, on the Acquisition Date, FLIC merged with and into the Company, with the Company continuing as the surviving corporation, and FNBLI merged with and into the Bank, with the Bank as the surviving bank (collectively, the “merger”).

As part of this merger, the Company acquired 36 branch offices located in Nassau and Suffolk Counties of Long Island, and the boroughs of New York City.

In connection with the completion of the merger, former FLIC shareholders received 0.5175 shares of the Company’s common stock for each share of FLIC common stock they held.

The value of the total transaction consideration was approximately $ 270.8 million.

The consideration included the issuance of 11,790,116 shares of the Company’s common stock, valued at $ 22.97 per share, which was the closing price of the Company’s common stock on May 30, 2025, the last trading day prior to the consummation of the merger.

Also included in the total consideration was cash in lieu of any fractional shares, which was effectively settled upon closing.

The acquisition of FLIC was accounted for as a business combination using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair values on the Acquisition Date.

The excess consideration paid over the estimated fair value of the net assets acquired has been reported as goodwill in the Company’s consolidated statements of financial condition.

The $ 7.2 million of goodwill created from the merger is not amortizable or deductible for tax purposes.

The amount of goodwill represents an asset attributed to the future economic benefits arising from other assets acquired in a business combination.

Future economic benefits consist largely of the synergies and economies of scale expected from combining the operations of FLIC and the Company.

The Company considers its valuations of acquired loans and other assets to be preliminary, as management continues to identify and assess information regarding the nature of these assets acquired and liabilities assumed, including extended information gathering, management review procedures, and any new information that may arise as a result of integration activities.

Accordingly, the amounts recorded for current and deferred taxes are also considered preliminary, as the Company continues to evaluate the Federal, state and local combined statutory tax rate for the merged entity and the nature and extent of permanent and temporary differences between the book and tax bases of these other assets acquired and other liabilities assumed.

In connection with the acquisition, the consideration paid, and the fair value of identifiable assets acquired and liabilities assumed as of the Acquisition Date are summarized in the following tables:

Purchase Price Consideration

FLIC common shares settled for stock

Exchange Ratio

ConnectOne shares entitlement

Fractional shares subject to cash in lieu

ConnectOne whole shares issued

Price per share of ConnectOne common stock on June 1, 2025

Total fair value of stock consideration issued

$ 270,818,953

Cash consideration paid

Total purchase price consideration

$ 270,827,680

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combination – (continued)

(in thousands)

Total purchase price consideration

Fair Value of Assets Acquired:

Cash and cash equivalents

Securities available-for-sale

Loans receivables, net

Restricted stock, at cost

Premises and equipment, net

Bank-owned life insurance

Pension plan assets

Core deposit intangible

Total assets acquired

Fair Value of Liabilities Assumed:

Other liabilities

Total liabilities assumed

Net assets acquired

Goodwill recorded in acquisition

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combination – (continued)

The following is a description of the valuation methodologies used to estimate the fair values of significant assets and liabilities presented above.

Cash and cash equivalents – The carrying amount of these items is a reasonable estimate of their fair value based on the short-term nature of these assets.

Investment securities – Fair values for investment securities available-for-sale were based on quoted market prices, where available.

If quoted market prices were not available, fair value estimates are based on observable inputs, including quoted market prices for similar instruments.

Fair value estimates also reflect an adjustment related to certain securities that were sold shortly after closing and were determined by the current market price.

Additional information is included in Note 4 - Investments.

Loans – The fair value of the loan portfolio was calculated on a pooled loan basis using discounted cash flow analysis for accruing loans and on an individual basis for nonaccrual loans.

This analysis took into consideration the contractual terms of the loans and assumptions related to the credit risk, expected lifetime losses, qualitative factors, collateral values, discount rates, and other liquidity considerations to estimate projected cash flows.

The assumptions used in determining the fair value of the loan portfolio were considered reasonable from a market-participant viewpoint.

Acquired loans are classified into three categories:

purchased credit deteriorated (“PCD”) accruing loans (“PCD Accruing loans”), purchased credit deteriorated nonaccrual loans (“PCD Nonaccrual loans”) and non-PCD loans.

PCD loans are defined as a loan or group of loans that have experienced more-than-insignificant credit deterioration since origination.

The Company considers various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, and other qualitative factors that indicate deterioration in credit quality since origination.

Non-PCD loans will have an allowance established subsequent to the Acquisition Date, which is recognized as an expense through the provision for credit losses.

For PCD loans, the loans were recorded at their amortized cost, less an allowance for credit losses of $ 43.3 million on the Acquisition Date.

There is no provision for credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loans.

The remaining difference between the net of the amortized cost basis and the allowance for credit losses and the fair value allocated to the loans on the date of acquisition is recognized as a non-credit-related discount that will be accreted into interest income over the life of the loans.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combination – (continued)

The following table provides details related to the fair value of acquired PCD loans.

Gross-up for PCD

Unpaid Principal

Total Discount at

Allowance for Credit

Fair Value of PCD

(dollars in thousands)

Losses at Acquisition

Loans at Acquisition

$ 255,152 $ ( 32,570 ) $ ( 38,231 ) $ 184,351

PCD Nonaccrual

16,752 ( 1,824 ) ( 5,105 ) 9,823

Total PCD Loans

$ 271,904 $ ( 34,394 ) $ ( 43,336 ) $ 194,174

Premises and equipment – The estimated fair value of premises were measured based upon appraisals from independent third parties.

The estimated fair value of equipment was determined to approximate the carrying amount of these assets.

Deferred Tax Benefit – The Company recorded a net deferred income tax benefit of $ 51.1 million related to tax attributes of FLIC, along with the effects of fair value adjustments resulting from applying the purchase method of accounting.

Deposits – The fair values used for the demand and savings deposits equal the amount payable on demand at the Acquisition Date.

The fair value of time deposits is estimated by discounting the estimated future cash flows using current rates offered for deposits with similar remaining maturities.

Borrowings – The fair value of Federal Home Loan Bank ("FHLB") advances were estimated by discounting the estimated future cash flows using rates currently available to the Company for debt with similar remaining maturities.

As a result of the integration of operations of FLIC, the Company recognized net interest income and net income of $ 8.5 million and $ 3.9 million, respectively, from the Acquisition Date through and including June 30, 2025 and is included in the Company’s Consolidated Statements of Income.

Costs related to the acquisition totaled $ 32.1 million for the six months ended June 30, 2025.

These amounts were expensed as incurred and are recorded as merger expenses in the Company’s Consolidated Statements of Income.

The following table presents unaudited supplemental pro forma information as if the merger had occurred on January 1, 2024.

The unaudited pro forma information includes adjustments for (i) accreting and amortizing the discounts and premiums associated with the estimated fair value adjustments to acquired loans, investment securities, deposits, and borrowings, (ii) the amortization of recognized intangible assets arising from the merger, (iii) depreciation expense on premises and equipment, and (iv) the related estimated income tax effects.

The pro forma amounts below do not reflect the Company's expectations as of the date of the pro forma information of further operating cost savings and other business synergies expected to be achieved, including revenue growth as a result of the merger.

As a result, actual amounts differed from the unaudited pro forma information presented.

Six Months Ended June 30,

(in thousands)

Net interest income

$ 191,544 $ 175,060

$ 60,686 $ 33,666

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings per Common Share

5 unchanged sentences

Three Months Ended

Six Months Ended

(dollars in thousands, except for per share data)

Net income available to common stockholders

Net loss income available to common stockholders

$ ( 21,802 ) $ 17,547 $ ( 3,069 ) $ 33,243

1 unchanged sentence

53 ( 46 ) 8 ( 89 )

Income attributable to common stock

(Loss) income attributable to common stock

$ ( 21,749 ) $ 17,501 $ ( 3,061 ) $ 33,154

6 unchanged sentences

Incremental shares from assumed conversions of options, performance units and restricted shares

175 129 220 173

Weighted average common and equivalent shares outstanding

2 unchanged sentences

$ ( 0.52 ) $ 0.46 $ ( 0.08 ) $ 0.87

There were no antidilutive share equivalents during the three months ended March 31, 2025 and March 31, 2024 .

( 0.52 ) 0.46 ( 0.08 ) 0.86

There were no antidilutive share equivalents during the six months ended June 30, 2025 and June 30, 2024 .

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities

All of the Company’s investment securities are classified as available-for-sale as of March 31, 2025 and December 31, 2024 .

Immediately after the merger, the Company sold a significant portion of the available-for-sale investments acquired from FLIC with proceeds of $ 277.5 million, with no gross gains or losses realized upon sale.

All of the Company’s investment securities are classified as available-for-sale as of June 30, 2025 and December 31, 2024 .

Investment securities available-for-sale are reported at fair value with unrealized gains or losses included in stockholders’ equity, net of tax.

Accordingly, the carrying value of such securities reflects their fair value as of March 31, 2025 and December 31, 2024 .

Accordingly, the carrying value of such securities reflects their fair value as of June 30, 2025 and December 31, 2024 .

Fair value is based upon either quoted market prices, or in certain cases where there is limited activity in the market for a particular instrument, assumptions are made to determine their fair value.

See Note 7 of the Notes to Consolidated Financial Statements for further discussion.

The following tables present information related to the Company’s portfolio of securities available-for-sale as of March 31, 2025 and December 31, 2024 .

The following tables present information related to the Company’s portfolio of securities available-for-sale as of June 30, 2025 and December 31, 2024 .

(dollars in thousands)

March 31, 2025

June 30, 2025

Investment securities available-for-sale:

39 unchanged sentences

Investment Securities – (continued)

Investment securities having a carrying value of approximately $ 368.8 million and $ 184.0 million as of March 31, 2025 and December 31, 2024 , respectively, were pledged to secure public deposits, borrowings, repurchase agreements, access to unutilized Federal Reserve Discount Window borrowings and Federal Home Loan Bank advances and for other purposes required or permitted by law.

As of March 31, 2025 and December 31, 2024 , there were no holdings of securities of any one issuer, other than the U.S.

Investment securities having a carrying value of approximately $ 792.7 million and $ 184.0 million as of June 30, 2025 and December 31, 2024 , respectively, were pledged to secure public deposits, borrowings, repurchase agreements, access to unutilized Federal Reserve Discount Window borrowings and Federal Home Loan Bank advances and for other purposes required or permitted by law.

As of June 30, 2025 and December 31, 2024 , there were no holdings of securities of any one issuer, other than the U.S.

Government and its agencies, in an amount greater than 10% of stockholders’ equity.

The following table presents information for investments in securities available-for-sale as of March 31, 2025 , based on scheduled maturities.

The following table presents information for investments in securities available-for-sale as of June 30, 2025 , based on scheduled maturities.

Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

Securities not due at a single maturity date are shown separately.

March 31, 2025

June 30, 2025

(dollars in thousands)

3 unchanged sentences

Due after one year through five years

24,943 25,155

Due after five years through ten years

61,846 61,209

Due after ten years

7 unchanged sentences

$ 1,309,724 $ 1,227,200

There were no realized gains or losses on investment securities available for sale during the three months ended March 31, 2025 and March 31, 2024 .

There were no realized gains or losses on investment securities available for sale during the six months ended June 30, 2025 and June 30, 2024 .

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities – (continued)

The following tables indicate securities in an unrealized loss position for which an allowance for credit losses (“ACL”) has not been recorded, aggregated by investment category and by the length of continuous time individual securities have been in an unrealized loss position as of March 31, 2025 and December 31, 2024 .

March 31, 2025

June 30, 2025

Less than 12 Months

12 unchanged sentences

Corporate bonds and notes

1,994 ( 6 ) 1,994 ( 6 ) - -

Asset-backed securities

27 unchanged sentences

The Company has elected to exclude accrued interest from the amortized cost of its investment securities available-for-sale.

Accrued interest receivable for investment securities available-for-sale totaled $ 2.3 million as of both March 31, 2025 and December 31, 2024 .

Accrued interest receivable for investment securities available-for-sale totaled $ 5.5 million and $ 2.3 million as of June 30, 2025 and December 31, 2024 .

The Company evaluates securities in an unrealized loss position for impairment related to credit losses on at least a quarterly basis.

8 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

No allowance for credit losses for available-for-sale securities was recorded as of March 31, 2025 .

No allowance for credit losses for available-for-sale securities was recorded as of June 30, 2025 .

Federal agency obligations, residential mortgage-backed pass-through securities and commercial mortgage-backed pass-through securities are issued by U.S.

5 unchanged sentences

Therefore, we concluded that a zero -allowance approach for these investment securities is appropriate.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As part of our overall asset liability management strategy the Company uses derivative instruments, which can include interest rate swaps, collars, caps, and floors.

13 unchanged sentences

The change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness is presented in the same income statement line item that is used to present the earnings effect of the hedged item.

As of March 31, 2025 , the Bank was not utilizing fair value hedges.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives – (continued)

As of June 30, 2025 , the Bank was not utilizing fair value hedges.

Cash Flow Hedges

The Company during 2021, 2022 and 2024 entered into twelve pay fixed-rate interest rate swaps, with a total notional amount of $ 550 million.

The Company during 2021, 2022, 2024 and 2025 entered into fourteen pay fixed-rate interest rate swaps, with a total notional amount of $ 750 million.

These are designated as cash flow hedges of outstanding Federal Home Loan Bank advances.

We are required to pay fixed rates of interest ranging from 0.63 % to 3.72 % and receive variable rates of interest that reset quarterly based on the daily compounding secured overnight financing rate (“SOFR”).

The twelve swaps carry expiration dates ranging from December 2025 to March 2028.

The fourteen swaps carry expiration dates ranging from December 2025 to May 2028.

The swaps are determined to be fully effective during the period presented and therefore no amount of ineffectiveness has been included in net income.

7 unchanged sentences

No payments are required if the index rate is at, or below, the cap rate on the sold or purchased interest rate cap agreements.

Interest income recorded on these swap and interest rate cap transactions totaled approximately $ 4.1 million and $ 5.6 million during the three months ended March 31, 2025 and March 31, 2024 , respectively, and is recorded as a component of either interest expense on FHLB Advances or on brokered certificates of deposit.

Interest income recorded on these swap and interest rate cap transactions totaled approximately $ 4.5 million and $ 8.6 million and $ 5.7 million and $ 11.3 million during the three and six months ended June 30, 2025 and June 30, 2024 , respectively, and is recorded as a component of either interest expense on FHLB Advances or on brokered certificates of deposit.

CONNECTONE BANCORP, INC.

2 unchanged sentences

Derivatives – (continued)

The following table presents the net gains (losses) recorded in other comprehensive income and the Consolidated Statements of Income relating to the cash flow hedge derivative instruments for the periods indicated:

Three Months Ended March 31, 2025

The following table presents the gross gains (losses) recorded in other comprehensive income and the Consolidated Statements of Income relating to the cash flow hedge derivative instruments for the periods indicated:

Three Months Ended June 30, 2025

Amount of gain (loss) recognized in OCI (Effective Portion)

4 unchanged sentences

$ - $ ( 4,468 ) $ -

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Amount of gain (loss) recognized in OCI (Effective Portion)

4 unchanged sentences

$ 4,457 $ ( 5,683 ) $ -

The following table reflects the cash flow hedges included in the consolidated statements of condition as of March 31, 2025 and December 31, 2024 :

March 31, 2025

Six Months Ended June 30, 2025

Amount of gain (loss) recognized in OCI (Effective Portion)

Amount of (gain) loss reclassified from OCI to interest expense

Amount of gain recognized in other Noninterest income (Ineffective Portion)

(dollars in thousands)

Interest rate contracts

$ ( 3,792 ) $ ( 8,610 ) $ -

Six Months Ended June 30, 2024

Amount of gain (loss) recognized in OCI (Effective Portion)

Amount of (gain) loss reclassified from OCI to interest expense

Amount of gain recognized in other Noninterest income (Ineffective Portion)

(dollars in thousands)

Interest rate contracts

$ 17,337 $ ( 11,312 ) $ -

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Derivatives - (continued)

The following table reflects the cash flow hedges included in the consolidated statements of condition as of June 30, 2025 and December 31, 2024 :

June 30, 2025

December 31, 2024

4 unchanged sentences

$ 1,200,000 $ 23,900 $ 1,000,000 $ 37,398

Derivatives Not Designated as Hedges

As part of the merger with FLIC, the Bank acquired interest rate swap agreements (“back-to-back swap”) that are not designated as hedging instruments.

A back-to-back swap allows a borrower to effectively convert a variable rate loan to a fixed rate.

The Bank originates a variable rate loan with a borrower and simultaneously enters into offsetting back-to-back swaps with the borrower and an unaffiliated dealer counterparty to minimize interest rate risk.

In connection with each swap transaction, the Bank agrees to pay interest to the borrower on a notional amount at a variable interest rate and receives interest from the borrower on a similar notional amount at a fixed interest rate.

Concurrently, the Bank agrees to pay the dealer counterparty the same fixed interest rate on the same notional amount and receives the same variable interest rate on the same notional amount.

Because the Bank acts as an intermediary for its borrower, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Bank’s results of operations.

June 30, 2025

(in thousands)

Derivatives not designated as hedging instruments included in other assets / other liabilities:

Interest rate swap with borrower

3 $ 36,222 $ 290 $ -

Interest rate swap with offsetting counterparty

3 36,222 - 290

CONNECTONE BANCORP, INC.

2 unchanged sentences

Loans and the Allowance for Credit Losses

Loans Receivable – The following table sets forth the composition of the Company’s loan portfolio segments, including net deferred loan fees, as of March 31, 2025 and December 31, 2024 :

March 31, 2025 December 31, 2024

Loans Receivable – The following table sets forth the composition of the Company’s loan portfolio segments, including net deferred loan fees, as of June 30, 2025 and December 31, 2024 :

June 30, 2025 December 31, 2024

(dollars in thousands)

11 unchanged sentences

$ 11,164,477 $ 8,274,810

As of March 31, 2025 and December 31, 2024 , loans totaling approximately $ 5.6 billion and $ 5.8 billion, respectively, were pledged to secure borrowings from the FHLB of New York and the Federal Reserve Bank of New York.

Loans held-for-sale – The following table sets forth the composition of the Company's loans held-for-sale portfolio as of March 31, 2025 and December 31, 2024 .

March 31, 2025

As of June 30, 2025 and December 31, 2024 , loans totaling approximately $ 7.8 billion and $ 5.8 billion, respectively, were pledged to secure borrowings from the FHLB of New York and the Federal Reserve Bank of New York.

Loans held-for-sale – The following table sets forth the composition of the Company's loans held-for-sale portfolio as of June 30, 2025 and December 31, 2024 .

June 30, 2025

December 31, 2024

1 unchanged sentence

Residential real estate

Loans Receivable on Nonaccrual Status - The following tables present the carrying value of nonaccrual loans with an ACL and the carrying value of nonaccrual loans without an ACL as of March 31, 2025 and December 31, 2024 :

March 31, 2025

$ 1,027 $ 743

June 30, 2025

Nonaccrual loans with ACL

26 unchanged sentences

Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated and loans that are individually evaluated.

Purchased Credit-Deteriorated Loans ("PCD") - PCD loans are defined as a loan or group of loans that have experienced more-than-insignificant credit deterioration since origination.

The following table presents the recorded investment of those loans as of June 30, 2025.

(dollars in thousands)

June 30, 2025

Commercial real estate

Commercial construction

Residential real estate

Total purchased credit-deteriorated loans

Within the PCD loan portfolio as of June 30, 2025, there is a pool of rent-regulated loans amounting to $ 208.2 million.

These loans are associated with multifamily properties located in the five boroughs of New York City, most of which are entirely or predominantly rent-regulated.

This specific pool is subject to unique stressors, primarily due to the 2019 New York rent laws, which restricted rent increases while operating in an environment of escalating expenses.

Credit Quality Indicators - The Company continuously monitors the credit quality of its loans receivable.

15 unchanged sentences

Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purposes of the table below.

The following table presents loans by origination, risk designation and gross charge-offs as of and during the three months ended March 31, 2025 (dollars in thousands):

The following table presents loans by origination, risk designation and gross charge-offs as of and during the six months ended June 30, 2025 (dollars in thousands):

Term loans amortized cost basis by origination year

126 unchanged sentences

Collateral Dependent Loans :

The following tables present the amortized cost basis of collateral-dependent loans by loan segment as of March 31, 2025 and December 31, 2024 :

March 31, 2025

The following tables present the amortized cost basis of collateral-dependent loans by loan segment as of June 30, 2025 and December 31, 2024 :

June 30, 2025

Real Estate Other

23 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

Aging Analysis - The following tables present the aging of the amortized cost in past-due loans as of March 31, 2025 and December 31, 2024 :

March 31, 2025

Aging Analysis - The following tables present the aging of the amortized cost in past-due loans as of June 30, 2025 and December 31, 2024 :

June 30, 2025

30-59 Days Past Due

32 unchanged sentences

The following tables detail the amount of gross loans that are individually analyzed, collectively evaluated, and loans acquired with deteriorated quality, and the related portion of the allowance for credit losses for loans that are allocated to each loan portfolio segment.

March 31, 2025

June 30, 2025

Commercial real estate Commercial construction

40 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

Activity in the Company’s ACL for loans for the three months ended March 31, 2025 and 2024 are summarized in the tables below.

Three Months Ended March 31, 2025

Activity in the Company’s ACL for loans for the three and six months ended June 30, 2025 and 2024 are summarized in the tables below.

Three Months Ended June 30, 2025

Commercial real estate

2 unchanged sentences

(dollars in thousands)

Balance as of December 31, 2024

Balance as of March 31, 2025

$ 18,031 $ 54,586 $ 5,030 $ 4,752 $ 4 $ 82,403

1 unchanged sentence

23 90 - 5 - 118

(Reversal of) provision for credit losses - loans

Provision for credit losses - loans:

Initial provision related to acquisition

985 16,017 78 10,217 10 27,307

Balance as of March 31, 2025

Operating provision for credit losses

3,968 4,281 314 ( 514 ) 16 8,065

Three Months Ended March 31, 2024

Nonaccretable credit marks on PCD loans

965 42,256 - 115 - 43,336

Balance as of June 30, 2025

$ 20,961 $ 115,203 $ 5,422 $ 14,575 $ 29 $ 156,190

Six Months Ended June 30, 2025

Commercial real estate

6 unchanged sentences

178 90 - 5 - 273

Provision for (reversal of) credit losses - loans

Provision for credit losses - loans:

Initial provision related to acquisition - loans

985 16,017 78 10,217 10 27,307

Balance as of March 31, 2024

Operating provision for credit losses

3,566 7,645 280 ( 323 ) 15 11,183

Nonaccretable credit marks on PCD loans

965 42,256 - 115 - 43,336

Balance as of June 30, 2025

$ 20,961 $ 115,203 $ 5,422 $ 14,575 $ 29 $ 156,190

CONNECTONE BANCORP, INC.

2 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the last 12 months through March 31, 2025.

The modification percentage represents the total modified loans as compared to the total gross loan balances as of March 31, 2025 .

Amortized Cost Basis at Time of Modification

Term Extension

Payment Deferral

Interest Rate Reduction

Payment Reduction

Gross Loans at March 31, 2025

Modification % (Modified Loans/Gross Loans)

March 31, 2025

Three Months Ended June 30, 2024

Commercial real estate

Commercial construction

Residential real estate

(dollars in thousands)

Balance as of March 31, 2024

$ 20,735 $ 52,794 $ 5,011 $ 4,326 $ 3 $ 82,869

Commercial real estate

- ( 3,595 ) - - - ( 3,595 )

Residential real estate

324 - - - - 324

(Reversal of) provision for credit losses – loans

( 1,039 ) 3,899 ( 539 ) 158 - 2,479

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the last 12 months through March 31, 2025.

Weighted Average Term Extension (Months)

Weighted Average Payment Deferral (Months)

Weighted Average Interest Rate Reduction

Weighted Average Payment Reduction

March 31, 2025

(dollars in thousands)

Balance as of June 30, 2024

$ 20,020 $ 53,098 $ 4,472 $ 4,484 $ 3 $ 82,077

Six Months Ended June 30, 2024

Commercial real estate

Commercial construction

Residential real estate

(dollars in thousands)

Balance as of December 31, 2023

$ 20,632 $ 52,278 $ 4,739 $ 4,320 $ 5 $ 81,974

( 300 ) ( 6,480 ) - - - ( 6,780 )

347 - - - - 347

(Reversal of) provision for credit losses – loans

( 659 ) 7,300 ( 267 ) 164 ( 2 ) 6,536

Balance as of June 30, 2024

$ 20,020 $ 53,098 $ 4,472 $ 4,484 $ 3 $ 82,077

CONNECTONE BANCORP, INC.

2 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified in the last 12 months through March 31, 2025.

30-89 Days Past Due

90 Days or Greater Past Due

March 31, 2025

(dollars in thousands)

$ 17,974 $ - $ -

Commercial real estate

Residential real estate

$ 83,190 $ - $ -

There were no modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2024.

The modification percentage represents the total modified loans as compared to the total gross loan balances as of March 31, 2024 .

Loan Modifications to Borrowers Experiencing Financial Difficulty:

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2025 .

The modification percentage represents the total loans modified during the three and six months ended as a percentage of the total gross loan balances as of June 30, 2025 .

Amortized Cost Basis at Time of Modification

1 unchanged sentence

Payment Deferral

Interest Rate Reduction

Payment Reduction

Gross Loans at March 31, 2024

Modification % (Modified Loans/Gross Loans)

March 31, 2024

Gross Loans at June 30, 2025

Modification % (Modified Loans/

June 30, 2025

(dollars in thousands)

2 unchanged sentences

- - - 7,624,033 -

Commercial construction

8,419 - 8,419 681,222 1.24

Residential real estate

1 unchanged sentence

- - - 1,709 -

$ 14,910 $ 19,461 $ 34,371 $ 11,169,138 0.31 %

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 .

Weighted Average Term Extension (Months)

Weighted Average Payment Deferral (Months)

June 30, 2025

Commercial real estate

Commercial construction

Residential real estate

CONNECTONE BANCORP, INC.

2 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three months ended March 31, 2024.

Weighted Average Term Extension (Months)

Weighted Average Payment Deferral (Months)

Weighted Average Interest Rate Reduction

Weighted Average Payment Reduction

March 31, 2024

(dollars in thousands)

The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts.

The following table presents the performance of such loans that have been modified in the three months ended March 31, 2024.

The following table presents the performance of such loans that have been modified in the last twelve months through June 30, 2025 .

30-89 Days Past Due

90 Days or Greater Past Due

March 31, 2024

June 30, 2025

(dollars in thousands)

$ 26,285 $ - $ -

During the three months ended March 31, 2025 and March 31, 2024 , the Company had no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current period.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2025 and 2024 and were modified in the twelve months prior to that default.

Commercial real estate

Commercial construction

Residential real estate

$ 98,508 $ - $ -

There were no modification to borrowers experiencing financial difficulty during the three months ended March 31, 2025.

During the three and six months ended June 30, 2025 and June 30, 2024 , the Company had no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current period.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three and six months ended June 30, 2025 and 2024 and were modified in the twelve months prior to that default.

Default is determined at 90 or more days past due, upon charge-off, or upon foreclosure.

7 unchanged sentences

The provision is recorded within the provision for credit losses on the Company’s income statement.

The following table presents a roll forward of the allowance for credit losses for unfunded commitments for the three months ended March 31, 2025 and 2024 :

The following tables presents a roll forward of the allowance for credit losses for unfunded commitments for the three and six months ended June 30, 2025 and 2024 :

Three Months Ended

3 unchanged sentences

$ 3,009 $ 2,754

Provision for (reversal of) credit losses - unfunded commitments

Provision for credit losses – unfunded commitments

Balance at end of period

$ 3,337 $ 2,775

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans and the Allowance for Credit Losses – (continued)

Six Months Ended

(dollars in thousands)

Balance at beginning of period

$ 2,627 $ 2,811

Provision for (reversal of) allowance for credit losses – unfunded commitments

Balance at end of period

$ 3,337 $ 2,775

Components of Provision for Credit Losses

The following table summarizes the provision for (reversal of) credit losses for the three months ended March 31, 2025 and 2024 :

The following tables summarizes the provision for (reversal of) credit losses for the three and six months ended June 30, 2025 and 2024 :

Three Months Ended

3 unchanged sentences

$ 8,065 $ 2,479

Initial provision related to acquisition - loans

Provision for credit losses - unfunded commitments

Provision for credit losses

$ 35,700 $ 2,500

Six Months Ended

(dollars in thousands)

Provision for credit losses – loans

$ 11,183 $ 6,536

Initial provision related to acquisition - loans

Provision for (reversal of) credit losses - unfunded commitments

17 unchanged sentences

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 :

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 :

Investment Securities Available-for-Sale and Equity Securities :

12 unchanged sentences

The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third -party pricing services.

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used as of March 31, 2025 and December 31, 2024 are as follows:

March 31, 2025

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used as of June 30, 2025 and December 31, 2024 are as follows:

June 30, 2025

Fair Value Measurements at Reporting Date Using

14 unchanged sentences

Obligations of U.S.

states and political subdivision

states and political subdivisions

207,126 - 200,547 6,579

30 unchanged sentences

Obligations of U.S.

states and political subdivision

states and political subdivisions

122,404 - 115,878 6,526

9 unchanged sentences

$ 670,337 $ 9,910 $ 653,901 $ 6,526

There were no transfers between Level 1, Level 2 and Level 3 during the three months ended March 31, 2025 and for the year ended December 31, 2024 .

There were no transfers between Level 1, Level 2 and Level 3 during the six months ended June 30, 2025 and for the year ended December 31, 2024 .

Assets Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

These adjustments to fair value usually result from the application of lower of cost or fair value accounting or impairment write-downs of individual assets.

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a nonrecurring basis as of March 31, 2025 and December 31, 2024 .

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a nonrecurring basis as of June 30, 2025 and December 31, 2024 .

Loans Held-for-Sale :

2 unchanged sentences

Management obtains quotes or bids on all or parts of these loans directly from the purchasing financial institutions (Level 2 ).

As of March 31, 2025 and December 31, 2024, residential mortgage loans held-for sale were $ 0.2 million and $ 0.7 million, respectively

As of June 30, 2025 and December 31, 2024 , residential mortgage loans held-for sale were $ 1.0 million and $ 0.7 million, respectively

Other loans held-for-sale are carried at the lower of aggregate cost or estimated fair value.

Fair value of these loans is determined based on the terms of the loan, such as interest rate, maturity date, reset term, as well as sales of similar assets (Level 3 ).

There were no such loans as of March 31, 2025 and December 31, 2024.

There were no such loans as of June 30, 2025 and December 31, 2024 .

CONNECTONE BANCORP, INC.

9 unchanged sentences

Estimates of fair value used for collateral supporting commercial loans generally are based on assumptions not observable in the marketplace and are also based on Level 3 inputs.

For assets measured at fair value on a nonrecurring basis, the fair value measurements as of March 31, 2025 and December 31, 2024 are as follows:

For assets measured at fair value on a nonrecurring basis, the fair value measurements as of June 30, 2025 and December 31, 2024 are as follows:

Fair Value Measurements at Reporting Date Using

Assets measured at fair value on a nonrecurring basis:

March 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

June 30, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Collateral dependent loans:

10 unchanged sentences

2,913 - - 2,913

Collateral dependent loans – Collateral dependent loans as of March 31, 2025 that required a valuation allowance were $ 1.6 million with a related valuation allowance of $ 0.2 million compared to $ 4.7 million with a related valuation allowance of $ 1.1 million as of December 31, 2024 .

Collateral dependent loans – Collateral dependent loans as of June 30, 2025 that required a valuation allowance were $ 1.2 million with a related valuation allowance of $ 0.3 million compared to $ 4.7 million with a related valuation allowance of $ 1.1 million as of December 31, 2024 .

CONNECTONE BANCORP, INC.

4 unchanged sentences

Recurring basis

The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 ) for the three months ended March 31, 2025 and for the year ended December 31, 2024 :

Municipal Securities

The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 ) for the six months ended June 30, 2025 and for the year ended December 31, 2024 :

Obligations of U.S.

states and political subdivisions

(dollars in thousands)

2 unchanged sentences

Change in unrealized gain (loss)

Ending balance, March 31, 2025

Municipal Securities

Ending balance, June 30, 2025

Obligations of U.S.

states and political subdivisions

(dollars in thousands)

3 unchanged sentences

Ending balance, December 31, 2024

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024 .

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024 .

The table below provides quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy.

March 31, 2025

June 30, 2025

Valuation Techniques

2 unchanged sentences

(dollars in thousands)

Municipal securities

Obligations of U.S.

states and political subdivisions

$ 6,579 Discounted cash flows

5 unchanged sentences

(dollars in thousands)

Municipal securities

Obligations of U.S.

states and political subdivisions

$ 6,526 Discounted cash flows

7 unchanged sentences

The tables below provide quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy of collateral dependent loans.

March 31, 2025

June 30, 2025

(dollars in thousands)

27 unchanged sentences

Fair Value Measurements and Fair Value of Financial Instruments – (continued)

As of March 31, 2025 the fair value measurements presented are consistent with Topic 820, Fair Value Measurement , in which fair value represents exit price.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2025 and December 31, 2024 :

As of June 30, 2025 the fair value measurements presented are consistent with Topic 820, Fair Value Measurement , in which fair value represents exit price.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of June 30, 2025 and December 31, 2024 :

Fair Value Measurements

4 unchanged sentences

(dollars in thousands)

March 31, 2025

June 30, 2025

Financial assets:

69 unchanged sentences

Amounts Reclassified from Accumulated Other Comprehensive Income

Affected Line item in the Consolidated Statements of Income

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Interest income on cash flow hedges

5 unchanged sentences

- 11 - 24 Income tax benefit

$ - $ ( 32 ) $ - $ ( 62 )

Total reclassification

4 unchanged sentences

Comprehensive (Loss) Income – (continued)

Accumulated other comprehensive loss as of March 31, 2025 and December 31, 2024 consisted of the following:

March 31, 2025

Accumulated other comprehensive loss as of June 30, 2025 and December 31, 2024 consisted of the following:

June 30, 2025

December 31, 2024

9 unchanged sentences

The Company’s stockholders approved the 2017 Equity Compensation Plan (“the Plan”) on May 23, 2017.

The Plan eliminates all remaining issuable shares under previous plans and is the only outstanding plan as of March 31, 2025 .

The Plan eliminates all remaining issuable shares under previous plans and is the only outstanding plan as of June 30, 2025 .

On May 30, 2023, the Company's stockholders approved an amendment to the Plan that increased the maximum number of shares issuable to 1,200,000 .

Grants under the Plan can be in the form of stock options (qualified or non-qualified), restricted shares, deferred stock units or performance units.

Shares available for grant and issuance under the Plan as of March 31, 2025 were approximately 236,926 .

Shares available for grant and issuance under the Plan as of June 30, 2025 were approximately 168,971 .

The Company intends to issue all shares under the Plan in the form of newly issued shares.

As of both March 31, 2025 and December 31, 2024 , the Company did not have any outstanding stock options.

As of both June 30, 2025 and December 31, 2024 , the Company did not have any outstanding stock options.

Restricted stock and deferred stock units typically have a three -year vesting period starting one year after the date of grant with one - third vesting each year, with accelerated vesting upon a change in control.

7 unchanged sentences

Forfeiture rates are not estimated but are recorded as incurred.

Stock-based compensation expense for the three months ended March 31, 2025 and March 31, 2024 was $ 1.3 million and $ 1.0 million, respectively.

Activity in the Company’s restricted stock for the three months ended March 31, 2025 was as follows:

Stock-based compensation expense for the three and six months ended June 30, 2025 and June 30, 2024 was $ 1.2 million and $ 2.5 and $ 1.1 million and $ 2.1 million, respectively.

Activity in the Company’s restricted stock for the six months ended June 30, 2025 was as follows:

Nonvested Shares

5 unchanged sentences

( 1,418 ) 19.01

Nonvested as of March 31, 2025

Nonvested as of June 30, 2025

113,505 $ 19.57

3 unchanged sentences

Stock-Based Compensation – (continued)

As of March 31, 2025 , there was approximately $ 1.4 million of total unrecognized compensation cost related to nonvested restricted stock granted.

As of June 30, 2025 , there was approximately $ 1.7 million of total unrecognized compensation cost related to nonvested restricted stock granted.

The cost is expected to be recognized over a weighted average period of 1.3 years.

8 unchanged sentences

( 3,452 ) 19.01

Unearned as of March 31, 2025

Unearned as of June 30, 2025

235,767 383,079 $ 18.74

As of March 31, 2025 , the specific number of shares related to performance units that were expected to vest was 235,767 , determined by actual performance in consideration of the established range of the performance targets, which is consistent with the level of expense currently being recognized over the vesting period.

As of June 30, 2025 , the specific number of shares related to performance units that were expected to vest was 235,767 , determined by actual performance in consideration of the established range of the performance targets, which is consistent with the level of expense currently being recognized over the vesting period.

Should this expectation change, additional compensation expense could be recorded in future periods or previously recognized expense could be reversed.

As of March 31, 2025 , the maximum amount of performance units that ultimately could vest if performance targets were exceeded is 383,079 .

During the three months ended March 31, 2025 , 43,331 shares vested.

As of June 30, 2025 , the maximum amount of performance units that ultimately could vest if performance targets were exceeded is 383,079 .

During the six months ended June 30, 2025 , 43,331 shares vested.

A total of 23,754 shares were netted from the vested shares to satisfy employee tax obligations.

The net shares issued from vesting of performance units during the three months ended March 31, 2025 were 19,577 shares.

As of March 31, 2025 , compensation cost of approximately $ 3.4 million related to non-vested performance units not yet recognized is expected to be recognized over a weighted-average period of 2.3 years.

The net shares issued from vesting of performance units during the six months ended June 30, 2025 were 19,577 shares.

As of June 30, 2025 , compensation cost of approximately $ 2.9 million related to non-vested performance units not yet recognized is expected to be recognized over a weighted-average period of 2.1 years.

A summary of the status of unearned deferred stock units and the changes in deferred stock units during the period is presented in the table below:

5 unchanged sentences

( 83,489 ) 23.05

Unearned as of March 31, 2025

Unearned as of June 30, 2025

178,357 $ 18.45

1 unchanged sentence

A portion of the shares that vest will be netted out to satisfy the tax obligations of the recipient.

During the three months ended March 31, 2025 , 83,489 shares vested.

During the six months ended June 30, 2025 , 83,489 shares vested.

A total of 44,806 shares were netted from the vested shares to satisfy employee tax obligations.

The net shares issued from vesting of deferred stock units during the three months ended March 31, 2025 were 38,683 shares.

As of March 31, 2025 , compensation cost of approximately $ 2.6 million related to non-vested deferred stock units, not yet recognized, is expected to be recognized over a weighted-average period of 1.8 years.

The net shares issued from vesting of deferred stock units during the six months ended June 30, 2025 were 38,683 shares.

As of June 30, 2025 , compensation cost of approximately $ 2.1 million related to non-vested deferred stock units, not yet recognized, is expected to be recognized over a weighted-average period of 1.7 years.

CONNECTONE BANCORP, INC.

16 unchanged sentences

$ ( 125 ) $ ( 65 )

Six Months Ended

Affected Line Item in the Consolidated

Statements of Income

(dollars in thousands)

Interest cost

211 212 Salaries and employee benefits

Expected return on plan assets

( 460 ) ( 428 ) Salaries and employee benefits

Net amortization

- 86 Salaries and employee benefits

Total periodic pension income

$ ( 249 ) $ ( 130 )

Contributions

The Company did not contribute to the Pension Trust during the three months ended March 31, 2025 .

The Company did not contribute to the Pension Trust during the six months ended June 30, 2025 .

The Company does not plan on contributing amounts to the Pension Trust for the remainder of 2025.

1 unchanged sentence

No part of the trust assets may be applied to any purpose other than providing benefits under the plan and for defraying expenses of administering the plan and the trust.

In the FLIC merger, the company acquired a defined benefit pension plan with a net funded status of $ 11.2 million as of the acquisition date.

Employees were eligible to participate in the Pension Plan after attaining 21 years of age and completing 12 full months of service.

Pension benefits are generally based on a percentage of average annual compensation during the period of creditable service.

The Bank makes contributions to the Pension Plan which, when taken together with participant contributions equal to 2 % of their compensation, will be sufficient to fund these benefits.

The Bank’s funding method, the unit credit actuarial cost method, is consistent with the funding requirements of applicable federal laws and regulations which set forth both minimum required and maximum tax deductible contributions.

Employees become fully vested after four years of participation in the Pension Plan ( no vesting occurs during the four year period).

An internal management committee oversees the affairs of the pension plan and acts as named fiduciary.

Effective for June 30, 2025, the Board of Directors approved that no new participants will be permitted in the pension plan, and existing participants could no longer contribute.

In addition, the Board of Directors approved to freeze the plan effective September 30, 2025.

Once frozen, participants will no longer accrue benefits.

CONNECTONE BANCORP, INC.

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Net Periodic Pension Cost - (continued)

Significant Actuarial Assumptions.

The following table sets forth the significant actuarial assumptions used to determine the benefit obligation at acquisition date:

Weighted average assumptions used to determine the benefit obligation:

Discount rate

Rate of increase in compensation levels

Weighted average assumptions used to determine net pension cost:

Discount rate

Rate of increase in compensation levels

Expected long-term rate of return on plan assets

The objective for the Plan’s assets is to generate long-term investment returns from both income and capital appreciation which outpaces the rate of inflation, while maintaining sufficient liquidity to ensure the Plan’s ability to pay all anticipated benefit and expense obligations when due.

The Plan may maintain a de minimis amount of cash equivalents, with the remaining assets allocated across two broadly-defined financial asset categories:

( 1 ) equity, both domestic and international;

and ( 2 ) fixed income of various durations and issuer type.

The goal of the equity allocation is to supplement the Bank’s contributions to the Plan when the Plan is underfunded and increase surplus when the Plan is overfunded.

The fixed income component will include longer-duration bonds designed to match and hedge the characteristics of the Plan’s liabilities.

Cash equivalents, under normal circumstances, will be temporary holdings for the purpose of paying expenses and monthly benefits.

For fixed income investments:

( 1 ) the minimum average credit quality shall be investment grade (Standard & Poor’s BBB or Moody’s Baa) or higher;

and ( 2 ) no more than 5 % of the portfolio may be invested in securities with ratings below investment grade, and none may be rated below investment grade at the time of purchase.

Reasonable precautions are taken to avoid excessive concentrations to protect the portfolio against unfavorable outcomes within an asset class.

Specifically, the following guidelines are in place:

With the exception of fixed income investments explicitly guaranteed by the U.S.

government, no single investment security shall represent more than 5 % of total Plan assets;

With the exception of passively managed investment vehicles seeking to match the returns of broadly diversified market indices or diversified investment vehicles chosen specifically to hedge the interest rate risk embedded in Plan liabilities, no single investment pool or investment company (mutual fund) shall comprise more than 10 % of total plan assets.

The portfolio will be rebalanced to the target asset allocation, if needed, no less often than quarterly.

Unless expressly authorized in writing by the Committee, the following investing activities are prohibited:

Purchasing securities on margin;

Pledging or hypothecating securities, except for loans of securities that are fully collateralized;

Purchasing or selling derivative securities for speculation or leverage;

Engaging in investment strategies that have the potential to amplify or distort the risk of loss beyond a level that is reasonably expected given the objectives of the portfolio.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Net Periodic Pension Cost - (continued)

The Plan’s actual asset allocations, target allocations and expected long-term rates of return by asset category at acquisition date are set forth in the following tables.

Cash equivalents

0 % - 1 % — % N/A

Equity mutual funds

20 % - 30 % 25.0 % 3.9 % to 10.7 %

Fixed income mutual funds

70 % - 80 % 75.0 % 2.5 % - 6.8 %

100 % 2.8 % - 7.8 %

The ranges for the weighted average expected long-term rates of return for equity funds, bond funds and total plan assets set forth in the preceding table represent an average of all expected allocation percentile returns.

For these purposes the trustee utilizes a third party capital markets model (the “model”), which forecasts distributions of future returns for a wide array of broad asset classes.

The theoretical and empirical foundation of the model is that the returns of various asset classes reflect the compensation investors require for bearing different types of systematic risk.

At the core of the model are estimates of the dynamic statistical relationship between risk factors and asset returns, obtained from statistical analysis based on available historical monthly financial and economic data.

Estimated Future Benefit Payments.

The following benefit payments, which reflect expected future service as appropriate, are expected to be made by the Plan.

Year (dollars in thousands)

2031 - 2035 19,505

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Time Deposits

As of each of March 31, 2025 and December 31, 2024 , the Company's total time deposits were $ 2.6 billion.

Included in time deposits were nonreciprocal brokered time deposits of $ 981.6 million and $ 907.2 million as of March 31, 2025 and December 31, 2024 , respectively.

As of March 31, 2025 , the contractual maturities of these time deposits were as follows (dollars in thousands):

As of June 30, 2025 and December 31, 2024 , the Company's total time deposits were $ 3.1 billion and $ 2.6 billion, respectively.

Included in time deposits were nonreciprocal brokered time deposits of $ 1.0 billion and $ 907.2 million as of June 30, 2025 and December 31, 2024 , respectively.

As of June 30, 2025 , the contractual maturities of these time deposits were as follows (dollars in thousands):

Time deposits (before net discount)

Fair value net discount

Total time deposits (after net discount)

The amount of time deposits with balances greater than or equal to $250,000 was $ 707.8 million and $ 731.0 million as of March 31, 2025 and December 31, 2024 , respectively.

The amount of time deposits with balances greater than or equal to $250,000 was $ 944.5 million and $ 731.0 million as of June 30, 2025 and December 31, 2024 , respectively.

CONNECTONE BANCORP, INC.

3 unchanged sentences

The Company’s FHLB borrowings and weighted average interest rates are summarized below:

March 31, 2025

June 30, 2025

December 31, 2024

15 unchanged sentences

Fair value discount

( 31 ) ( 36 )

Total FHLB borrowings

4 unchanged sentences

All FHLB advances bear fixed rates.

The advances as of March 31, 2025 were primarily collateralized by approximately $ 3.8 billion of commercial mortgage loans and securities, net of required over collateralization amounts, under a blanket lien arrangement.

As of March 31, 2025 the Company had a remaining borrowing capacity of approximately $ 1.2 billion at FHLB.

The advances as of June 30, 2025 were primarily collateralized by approximately $ 3.9 billion of commercial mortgage loans and securities, net of required over collateralization amounts, under a blanket lien arrangement.

As of June 30, 2025 the Company had a remaining borrowing capacity of approximately $ 2.2 billion at FHLB.

CONNECTONE BANCORP, INC.

11 unchanged sentences

Therefore, effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures’ floating rate will be three -month CME Term SOFR plus 2.85 % plus a tenor spread adjustment of 0.26161 %.

The rate as of March 31, 2025 was 7.40 %.

The rate as of June 30, 2025 was 7.39 %.

These subordinated debentures and the related income effects are not eliminated in the consolidated financial statements, as the statutory business trust is not consolidated in accordance with FASB ASC 810 - 10.

Distributions on the subordinated debentures owned by the subsidiary trust have been classified as interest expense in the Consolidated Statements of Income.

The following table summarizes the mandatory redeemable trust preferred securities of the Company’s Statutory Trust II as of March 31, 2025 and December 31, 2024 .

As of March 31, 2025

The following table summarizes the mandatory redeemable trust preferred securities of the Company’s Statutory Trust II as of June 30, 2025 and December 31, 2024 .

As of June 30, 2025

Issuance Date

8 unchanged sentences

Floating 3-month CME Term SOFR + 285 Basis Points+26.161 Basis Points

On June 10, 2020, the Parent Corporation issued $ 75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2020 Notes”).

During June 2020, the Parent Corporation issued $ 75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2020 Notes”).

The 2020 Notes may now be redeemed by the Company and have a stated maturity of July 1, 2030, and bear interest until the maturity date or early redemption date at a variable rate equal to the then benchmark rate, which is Three-Month Term SOFR (as defined in the Second Supplemental Indenture), plus 560.5 basis points.

As of June 30, 2025, the variable interest rate was 9.92 % and all costs related to the 2020 issuance have been amortized.

On May 15, 2025, the Parent Corporation issued $ 200 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the "2025 Notes").

The 2025 Notes bear interest at 8.125 % annually from, and including, the date of initial issuance up to but excluding June 1, 2030 or the date of earlier redemption, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2025.

From and including June 1, 2030 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is Three-Month Term SOFR:

(as defined in the Second Supplemental Indenture), plus 560.5 basis points, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2025.

(as defined in the Prospectus Supplement), plus 441.5 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2030.

Notwithstanding the foregoing, if the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Segment Reporting

3 unchanged sentences

Consolidated Bank

Three Months Ended June 30,

Six Months Ended June 30,

(dollars in thousands)

2 unchanged sentences

Noninterest income

4,865 4,563 8,614 8,162

Total segment income

5 unchanged sentences

Provision for credit losses

35,700 2,500 39,200 6,500

Salaries and employee benefits

2 unchanged sentences

48,042 14,823 64,374 29,742

Income tax expense

Segment consolidated net income

Income tax (benefit) expense

( 4,988 ) 6,688 2,172 12,566

Segment consolidated net (loss) income

$ ( 16,878 ) $ 20,582 $ 4,355 $ 38,864

Other segment disclosures

3 unchanged sentences

63,786 67,256 121,521 135,252

1,325 1,083 2,423 2,185

Amortization of core deposit intangibles

1,251 321 1,530 642

Other significant noncash items:

Provision for credit losses

35,700 2,500 39,200 6,500

Segment assets

5 unchanged sentences

$ 13,906,221 $ 9,715,227 $ 13,906,221 $ 9,715,227

Others assets

9,517 8,504 9,517 8,504

Total consolidated assets

$ 13,915,738 $ 9,723,731 $ 13,915,738 $ 9,723,731

*Other segment items for consolidated bank include expenses for occupancy and equipment, FDIC insurance, professional and consulting, marketing and advertising, merger expenses and other expenses.

*Occupancy and equipment, professional fees, advertising and promotion, data processing, FDIC insurance premium, merger expenses, amortization of core deposit intangible, insurance expense and stationery and supplies.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this analysis is to provide the reader with information relevant to understanding and assessing the Company’s results of operations for the periods presented herein and financial condition as of March 31, 2025 and December 31, 2024.

In order to fully understand this analysis, the reader is encouraged to review the consolidated financial statements and accompanying notes thereto appearing elsewhere in this report.

21 unchanged sentences

We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies.

As of March 31, 2025, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed in our most recent Annual Report on Form 10-K.

As of June 30, 2025, there have been no material changes to our critical accounting policies as compared to the critical accounting policies disclosed in our most recent Annual Report on Form 10-K.

Reference is made to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Operating Results Overview

Net income available to common stockholders for the three months ended March 31, 2025 was $18.7 million compared to $15.7 million for the comparable three-month period ended March 31, 2024.

The Company’s diluted earnings per share were $0.49 for the three months ended March 31, 2025 as compared with diluted earnings per share of $0.41 for the comparable three-month period ended March 31, 2024.

The $3.0 million increase in net income available to common stockholders and the $0.08 increase in diluted earnings per share were due to a $5.5 million increase in net interest income, $0.5 million decrease in provision for credit losses and $0.6 million increase in noninterest income, partially offset by an increase of $2.2 million in noninterest expenses and a $1.3 million increase in income tax expense.

Included in noninterest expenses for the three months ended March 31, 2025 were $1.3 million in merger expenses related to the previously announced merger with The First of Long Island Corporation.

There were no such charges for the three months ended March 31, 2024.

Net (loss) income available to common stockholders for the three months ended June 30, 2025 was ($21.8) million, as compared to $17.5 million for the comparable three-month period ended June 30, 2024.

The Company’s diluted earnings per share were ($0.52) for the three months ended June 30, 2025, as compared with diluted earnings per share of $0.46 for the comparable three-month period ended June 30, 2024.

The $39.3 million decrease in net income available to common stockholders and the $0.98 decrease in diluted earnings per share were due to a $36.1 million increase in noninterest expenses and a $33.2 million increase in provision for credit losses, partially offset by a $17.4 million increase in net interest income, a $11.7 million decrease in income tax expense and a $0.8 million increase in noninterest income.

Included in noninterest expenses for the three months ended June 30, 2025 were $30.7 million in merger expenses related to the merger with FLIC.

The increase in the provision for credit losses during the quarter was primarily due to an initial provision for credit losses of $27.4 million that was recorded as part of the merger with FLIC.

The increase in net interest income, the decrease in income tax expense and the increase in noninterest income were all primarily due to the merger with FLIC.

Net (loss) income available to common stockholders for the six months ended June 30, 2025 was ($3.1) million compared to $33.2 million for the comparable six-month period ended June 30, 2024.

The Company’s diluted earnings per share were ($0.08) for the six months ended June 30, 2025 as compared with diluted earnings per share of $0.86 for the comparable six-month period ended June 30, 2024.

The $36.3 million decrease in net income available to common stockholders and the $0.94 decrease in diluted earnings per share versus the comparable six-month period ended June 30, 2024 were due to a $38.3 million increase in noninterest expenses and a $32.7 million increase in provision for credit losses, partially offset by a $22.9 million increase in net interest income, a $10.4 million decrease in income tax expense and a $1.4 million increase in noninterest income.

Included in noninterest expenses for the six months ended June 30, 2025 were $32.1 million in merger expenses related to the merger with FLIC.

The increase in the provision for credit losses during the six month period was primarily due to an initial provision for credit losses of $27.4 million that was recorded as part of the merger with FLIC.

The increase in net interest income, the decrease in income tax expense and the increase in noninterest income were all primarily due to the merger with FLIC.

Net Interest Income and Margin

2 unchanged sentences

Net interest margin is defined as net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

Fully taxable equivalent net interest income for the three months ended March 31, 2025 was $66.6 million, an increase of $5.5 million, or 9.0%, from the three months ended March 31, 2024.The increase primarily resulted from a 29 basis-point increase in the net interest margin to 2.93% from 2.64%.

During the three months ended March 31, 2025, average total loans decreased by $123.8 million, or 1.5% when compared to the three months ended March 31, 2024.

The widening of the net interest margin during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024 was primarily due to a 42 basis-point decrease in the average cost of total funds, including noninterest-bearing deposits, partially offset by a nine basis-point decrease in the loan portfolio yield.

The following table presents for the three months ended March 31, 2025 and 2024, the Company’s average assets, liabilities and stockholders’ equity.

Fully taxable equivalent net interest income for the three months ended June 30, 2025 was $79.8 million, an increase of $17.6 million, or 28.2%, from the three months ended June 30, 2024.

The increase primarily resulted from a 34 basis-point increase in the net interest margin to 3.06% from 2.72%.

During the three months ended June 30, 2025, average interest-earning assets increased by $1.3 billion, primarily due to the merger with FLIC .

The widening of the net interest margin during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024 was primarily due to a 56 basis-point decrease in the average cost of total funds, including noninterest-bearing deposits, partially offset by higher average cash balances and the impact of a $200 million long-term subordinated debt issuance, with a rate of 8.125%, that was consummated on May 15, 2025.

Fully taxable equivalent net interest income for the six months ended June 30, 2025 was $146.4 million, an increase of $23.0 million, or 18.7%, from the six months ended June 30, 2024.

The increase primarily resulted from a 32 basis-point increase in the net interest margin to 3.00% from 2.68%.

During the six months ended June 30, 2025, average interest-earning assets increased $0.6 million, primarily due to the merger with FLIC.

The widening of the net interest margin during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024 was primarily due to a 48 basis-point decrease in the average cost of total deposits, including noninterest-bearing deposits, partially offset by higher average cash balances and the impact of the $200 million long-term subordinated debt issuance discussed above.

The following tables presents for the three and six months ended June 30, 2025 and 2024, the Company’s average assets, liabilities and stockholders’ equity.

The Company’s net interest income, net interest spread and net interest margin are also reflected.

Average Statements of Condition with Interest and Average Rates

Three Months Ended March 31,

Three Months Ended June 30,

(dollars in thousands)

33 unchanged sentences

Rates are annualized.

Six Months Ended June 30,

(dollars in thousands)

Interest-earning assets:

Securities (1) (2)

Total loans (2) (3) (4)

Federal funds sold and interest-bearing with banks

Restricted investment in bank stocks

Total interest-earning assets

Noninterest-earning assets:

Allowance for credit losses

Other noninterest-earning assets

Interest-bearing liabilities:

Interest-bearing deposits:

Time deposits

Other interest-bearing deposits

Total interest-bearing deposits

Subordinated debentures

Finance lease

Total interest-bearing liabilities

Demand deposits

Other liabilities

Total noninterest-bearing liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Net interest income (tax-equivalent basis)

Net interest spread (5)

Net interest margin (6)

Tax-equivalent adjustment

Net interest income

Average balances are based on amortized cost and include equity securities.

Interest income is presented on a tax-equivalent basis using a 21% assumed tax rate.

Includes loan fee income and accretion of purchase accounting adjustments.

Total loans include loans held-for-sale and nonaccrual loans.

Represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities and is presented on a tax- equivalent basis.

Represents net interest income on a tax-equivalent basis divided by average total interest-earning assets.

Rates are annualized.

Noninterest Income

Noninterest income totaled $4.5 million for the three months ended March 31, 2025, compared with $3.8 million for the three months ended March 31, 2024.

The $0.6 million increase in noninterest income during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024 was primarily due to a $0.4 million increase in deposit, loan and other income and a $0.4 million increase in het gains on equity securities, partially offset by a $0.2 million decrease in net gains on sale of loans held-for-sale.

Noninterest income totaled $5.2 million for the three months ended June 30, 2025, compared with $4.4 million for the three months ended June 30, 2024.

The $0.8 million increase in noninterest income during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024 was primarily due to a $0.9 million increase in deposit, loan and other income, a $0.6 million increase in net gains on equity securities and a $0.4 million increase in BOLI income, partially offset by a $1.1 million decrease in net gains on sale of loans held-for-sale.

The increases in deposit, loan and other income were primarily due to the merger with FLIC.

The increase in BOLI income was primarily due to the merger with FLIC and 1035 exchanges.

Noninterest income totaled $9.6 million for the six months ended June 30, 2025, compared with $8.2 million for the six months ended June 30, 2024.

The $1.4 million increase in noninterest income during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024 was primarily due to a $1.3 million increase in deposit, loan and other income, a $1.0 million increase in net gains on equity securities and a $0.3 million increase in BOLI income, partially offset by a $1.3 million decrease in net gains on sale of loans held-for-sale.

Noninterest Expenses

Noninterest expenses totaled $39.3 million for the three months ended March 31, 2025, compared with $37.1 million for the three months ended March 31, 2024.

The $2.2 million increase in noninterest expenses during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024 was primarily due to a $1.3 million increase in merger expenses, a $0.5 million increase in salaries and employee benefits and a $0.3 million BOLI restructuring charge that took place during the three months ended March 31, 2025.

The increases in merger expenses are due to the planned merger with The First of Long Island Corporation.

Income tax expense was $7.2 million for the three months ended March 31, 2025, compared to $5.9 million for the three months ended March 31, 2024.

The increase in income tax expense was the result of higher income before income tax expense and a decrease in tax-free adjustments.

The effective tax rate for the three months ended March 31, 2025 and March 31, 2024 was 26.1% and 25.5%, respectively.

Noninterest expenses totaled $73.6 million for the three months ended June 30, 2025, compared with $37.6 million for the three months ended June 30, 2024.

The $36.1 million increase in noninterest expenses during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024

was primarily due to a $30.7 million increase in merger expenses, a $2.5 million increase in salaries and employee benefits, a $0.9 million increase in amortization of core deposit intangibles, a $0.7 million increase in professional and consulting expenses, a $0.6 million increase in occupancy and equipment expenses and a $0.6 million increase in information technology and communications expenses, partially offset by a $0.4 million decrease in other expenses.

The increases when compared to the three months ended June 30, 2024 were primarily due to the merger with FLIC .

Noninterest expenses totaled $113.0 million for the six months ended June 30, 2025, compared with $74.7 million for the six months ended June 30, 2024.

The $38.3 million increase in noninterest expenses during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024 was primarily due to a $32.1 million increase in merger expenses, a $3.0 million increase in salaries and employee benefits, a $1.1 million increase in professional and consulting expenses, a $0.9 million increase in amortization of core deposit intangibles, a $0.8 million increase in information technology and communications expenses, a $0.3 million BOLI restructuring charge, a $0.3 million increase in occupancy and equipment expenses and a $0.2 million increase in FDIC expense, partially offset by a $0.5 million decrease in other expenses.

The increases when compared to the six months ended June 30, 2024 were primarily due to the merger with FLIC .

There was a net income tax benefit of ($5.0) million for the three months ended June 30, 2025, compared to an income tax expense of $6.7 million for the three months ended June 30, 2024.

The decrease in income tax expense was the result of lower taxable income that resulted from the additional expenses due to the FLIC merger.

Income tax expense was $2.2 million for the six months ended June 30, 2025, compared to $12.6 million for the six months ended June 30, 2024.

The decrease in income tax expense was the result of lower taxable income before income tax expense that resulted from the additional expenses due to the FLIC merger.

Financial Condition

1 unchanged sentence

The following table sets forth the composition of our loan portfolio, excluding loans held-for-sale and net deferred loan fees, by loan segment at the periods indicated.

March 31, 2025

June 30, 2025

December 31, 2024

6 unchanged sentences

Residential real estate

As of March 31, 2025, gross loans totaled $8.2 billion, a decrease of $74.1 million or 0.9% compared to December 31, 2024.

As of June 30, 2025, gross loans totaled $11.2 billion, an increase of $2.9 billion or 34.9% compared to December 31, 2024.

The increases in the loan segments were due to the merger with FLIC.

While the previous table reflects the classification of our loans by loan portfolio segment, the following tables present further disaggregation of our commercial real estate portfolio along with applicable weighted average loan-to-value ratios, typically determined at loan origination.

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

Owner-occupied

Total commercial real estate loans (before premium)

Fair value premium

Total commercial real estate loans (before fair value adjustment)

Fair value adjustment (discount)/premium

Total commercial real estate loans

The tables above are further broken down in the following tables by geography:

March 31, 2025

June 30, 2025

December 31, 2024

4 unchanged sentences

All Other States

Total multifamily loans

March 31, 2025

Total multifamily loans (before fair value adjustment)

June 30, 2025

December 31, 2024

4 unchanged sentences

All Other States

Total nonowner occupied

March 31, 2025

Total nonowner occupied (before fair value adjustment)

June 30, 2025

December 31, 2024

4 unchanged sentences

All Other States

Total owner-occupied

March 31, 2025

Total owner-occupied (before fair value adjustment)

June 30, 2025

December 31, 2024

3 unchanged sentences

All Other States

Total land (before fair value adjustment)

In addition, the following tables present further details with respect to our nonowner-occupied and owner-occupied borrower concentrations included in the commercial real estate segment.

March 31, 2025

June 30, 2025

December 31, 2024

4 unchanged sentences

Warehouse/Industrial

Total nonowner-occupied

March 31, 2025

Total nonowner-occupied (before fair value adjustment)

June 30, 2025

December 31, 2024

4 unchanged sentences

Warehouse/Industrial

Total owner-occupied

Total owner-occupied (before fair value adjustment)

Allowance for Credit Losses and Related Provision

2 unchanged sentences

The loan portfolio also represents the largest asset type on the Company’s Consolidated Statements of Financial Condition.

As of March 31, 2025, the Company’s allowance for credit losses for loans was $82.4 million, a decrease of $0.3 million from $82.7 million as of December 31, 2024.

The provision for credit losses, which includes a provision for unfunded commitments, for the three months ended March 31, 2025 and March 31, 2024, was $3.5 million and $4.0 million, respectively.

The provision for credit losses for the periods presented reflected net portfolio loan growth, charges related to individually evaluated loans, and changing economic forecasts and conditions.

There were $3.4 million of net charge-offs for the three months ended March 31, 2025 compared with $3.2 million of net charge-offs for the three months ended March 31, 2024.

Net loan charge-offs as a percentage of average loans receivable for the three months ended March 31, 2025 and 2024 were 0.17% and 0.15%, respectively.

As of June 30, 2025, the Company’s allowance for credit losses was $156.2 million, an increase of $73.5 million from $82.7 million as of December 31, 2024.

The increase was primarily due to the FLIC merger with $43.3 million of allowance being recorded through goodwill related to the purchased credit-deteriorated loans and $27.4 million reflecting the initial provision for credit losses.

The provision for credit losses, which includes a provision for unfunded commitments, for the three and six months ended June 30, 2025 was $35.7 million and $39.2 million, respectively, compared to $2.5 million and $6.5 million, for the three and six months ended June 30, 2025 and June 30, 2024 respectively.

Included in the provision for credit losses for the three and six months ended June 30, 2025 was $27.4 million in initial provision for credit losses related the FLIC merger which primarily caused the increase for both periods.

In each of the periods presented, the provision for credit losses also reflected net, organic, loan growth, charges related to individually evaluated loans and changing macroeconomic forecasts and conditions.

There were $4.9 million and $8.3 million in net charge-offs for the three and six months ended June 30, 2025 compared with $3.3 million and $6.4 million in net charge-offs for the three and six months ended June 30, 2024 respectively.

The level of the allowance for the respective periods of 2025 and 2024 reflects the credit quality within the loan portfolio, loan growth, the changing composition of the commercial and residential real estate loan portfolios and other related factors.

In management’s view, the level of the ACL as of March 31, 2025 is adequate to cover credit losses inherent in the loan portfolio.

In management’s view, the level of the ACL as of June 30, 2025 is adequate to cover credit losses inherent in the loan portfolio.

Management’s judgment regarding the adequacy of the allowance constitutes a “Forward-Looking Statement” under the Private Securities Litigation Reform Act of 1995.

5 unchanged sentences

Analysis of the ACL:

Balance - beginning of quarter

Balance - beginning of period

Commercial real estate

Total charge-offs

Commercial real estate

Residential real estate

Total recoveries

1 unchanged sentence

Provision for credit losses – loans:

Initial provision related to acquisition

Operating provision for credit losses

Nonaccretable credit marks on PCD loans

Balance - end of period

2 unchanged sentences

ACL as a percentage of loans receivable

ACL excluding nonaccretable credit mark as a percentage of loans receivable

Six Months Ended

(dollars in thousands)

Average loans receivable

Analysis of the ACL:

Balance - beginning of period

Commercial real estate

Total charge-offs

Commercial real estate

Residential real estate

Total recoveries

Net charge-offs

Provision for credit losses – loans:

Initial provision related to acquisition

Operating provision for credit losses

Nonaccretable credit marks on PCD loans

Balance - end of period

Ratio of annualized net charge-offs during the period to average loans receivable during the period

Loans receivable

ACL as a percentage of loans receivable

ACL excluding nonaccretable credit mark as a percentage of loans receivable

Asset Quality

10 unchanged sentences

The following table sets forth, as of the dates indicated, the amount of the Company’s nonperforming assets:

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

Nonperforming assets to total assets

Purchased Credit-Deteriorated Loans

As of June 30, 2025, the Company's recorded investment in PCD loans totaled $237.8 million.

PCD loans, or purchase credit deteriorated loans, are defined by the CECL standard as acquired financial loans that, at the time of acquisition, have experienced a more-than-insignificant deterioration in credit quality since their origination.

The Company, with the assistance of independent third-party loan review experts, identified such deterioration by considering various factors.

These factors included, but were not limited to, nonperforming status, payment history and delinquency, risk rating, debt service coverage ability, and rate repricing risk.

The resulting PCD designated loans include multifamily loans, commercial real estate, commercial loans, and residential real estate.

Within the PCD loan portfolio as of June 30, 2025, there is a pool of rent-regulated loans amounting to $208.2 million.

These loans are associated with multifamily properties located in the five boroughs of New York City, most of which are entirely or predominantly rent-regulated.

This specific pool is subject to unique stressors, primarily due to the 2019 New York rent laws, which restricted rent increases while operating in an environment of escalating expenses.

A $43.3 million non-accretable mark and a $34.4 million accretable fair value mark were recorded as of the acquisition date, June 1, 2025.

The accretion associated with the fair value mark added approximately 2 basis points to the net interest margin for the current quarter.

Our determination of PCD classification and initial allowance involved significant judgment.

Key assumptions included expected remaining life, default rates, recoveries, and economic scenarios.

We continue to monitor roll‑off and performance of the PCD portfolio in our quarterly review process.

Investment Securities

As of March 31, 2025, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S.

As of June 30, 2025, the principal components of the securities portfolio were federal agency obligations, mortgage-backed securities, obligations of U.S.

states and political subdivisions, corporate bonds and notes, asset-backed securities and equity securities.

For the three months ended March 31, 2025, average securities, on an amortized cost basis, increased by $25.6 million to $745.9 million, or 8.1% of average total interest-earning assets, from $720.3 million, or 7.7% of average interest-earning assets, for the three months ended March 31, 2024.

As of March 31, 2025, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $64.2 million as compared with net unrealized losses of $69.6 million as of December 31, 2024.

For the three months ended June 30, 2025, average securities, on an amortized cost basis, increased by $196.4 million to $936.0 million, or 8.9% of average total interest-earning assets, from $739.6 million, or 8.0% of average interest-earning assets, for the three months ended June 30, 2024.

For the six months ended June 30, 2025, average securities, on an amortized cost basis increased by $111.5 million to approximately $841.5 million, or 8.5% of average total interest-earning assets, from approximately $729.9 million, or 7.9% of average interest-earning assets, for the six months ended June 30, 2024.

As of June 30, 2025, net unrealized losses on securities available-for-sale, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $60.3 million as compared with net unrealized losses of $69.6 million as of December 31, 2024.

The decrease in unrealized losses is predominantly attributable to changes in market conditions and interest rates.

2 unchanged sentences

Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income, net of applicable taxes.

The Company did not record an allowance for credit losses for available-for-sale securities as of March 31, 2025.

The Company did not record an allowance for credit losses for available-for-sale securities as of June 30, 2025.

Interest Rate Sensitivity Analysis

8 unchanged sentences

We currently utilize net interest income simulation and economic value of equity (“EVE”) models to measure the potential impact to the Bank of future changes in interest rates.

As of March 31, 2025 and December 31, 2024, the results of the models were within guidelines prescribed by our Board of Directors.

As of June 30, 2025 and December 31, 2024, the results of the models were within guidelines prescribed by our Board of Directors.

If model results were to fall outside prescribed ranges, action, including additional monitoring and reporting to the Board, would be required by the ALCO and the Bank’s management.

The net interest income simulation model attempts to measure the change in net interest income over the next one-year period, and over the next three-year period on a cumulative basis, assuming certain changes in the general level of interest rates.

The model also utilizes immediate and parallel shifts in market interest rates as of March 31, 2025.

Based on our model, which was run as of March 31, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 5.30%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 2.27%.

The model also utilizes immediate and parallel shifts in market interest rates as of June 30, 2025.

Based on our model, which was run as of June 30, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 4.94%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.72%.

As of December 31, 2024, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 8.02% while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.56%.

Based on our model, which was run as of March 31, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 0.04%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.90%.

Based on our model, which was run as of June 30, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 0.62%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 1.70%.

As of December 31, 2024, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 2.08%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 0.37%.

1 unchanged sentence

The EVE is likely to be different as interest rates change.

Our EVE as of March 31, 2025, would decrease by 5.11% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 0.40% with an instantaneous and parallel rate shock of down 100 basis points.

Our EVE as of June 30, 2025, would decrease by 5.89% with an instantaneous and parallel rate shock of up 200 basis points, and decrease by 0.40% with an instantaneous and parallel rate shock of down 100 basis points.

Our EVE as of December 31, 2024, would decrease by 7.87% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 1.67% with an instantaneous and parallel rate shock of down 100 basis-points.

The change in interest rate sensitivity was impacted by changes in overall market interest rates, updates to certain model assumptions, changes in short and intermediate-term fixed rate funding and by the deposit mix shift into certificates of deposit, from both noninterest-bearing and interest-bearing non-maturity deposits.

The following table illustrates the most recent results for EVE and one-year NII sensitivity as of March 31, 2025.

The following table illustrates the most recent results for EVE and one-year NII sensitivity as of June 30, 2025.

Interest Rates

33 unchanged sentences

The policy includes internal limits, deposit concentrations, liquidity sources and availability, stress testing, collateral management, contingency funding plan and other qualitative and quantitative metrics.

As of March 31, 2025, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied.

As of March 31, 2025, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $574.7 million, which represented 5.9% of total assets and 6.9% of total deposits and borrowings, compared to $799.7 million as of December 31, 2024, which represented 8.1% of total assets and 9.4% of total deposits and borrowings.

As of March 31, 2025, not included in the above liquid assets were securities with a market value of $102.5 million which were pledged to the Federal Home Loan Bank and securities with a market value of $143.2 which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $102.2 million and $137.5 million, respectively as of March 31, 2025.

As of December 31, 2024, not included in the above liquid assets were securities with a market value of $102.5 million which were pledged to the Federal Home Loan Bank, which support aggregate unutilized borrowing capacity of $95.2 million as of December 31, 2024.

The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of March 31, 2025, had the ability to borrow $2.4 billion.

The Bank also has a credit facility established with the Federal Reserve Bank of New York for direct discount window borrowings based on pledged collateral and had the ability to borrow $1.6 billion as of March 31, 2025.

In addition, as of March 31, 2025, the Bank had in place borrowing capacity of $280 million through correspondent banks and other unsecured borrowing lines.

As of March 31, 2025, the Bank had aggregate available and unused credit of approximately $3.1 billion, which represents the aforementioned facilities totaling $4.3 billion net of $1.3 billion in outstanding borrowings and letters of credit.

As of March 31, 2025, outstanding commitments for the Bank to extend credit were approximately $1.2 billion.

Cash an d cash equivalents totaled $292.6 million as of March 31, 2025, decreasing by $63.9 million from $356.5 million as of December 31, 2024.

As of June 30, 2025, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied.

As of June 30, 2025, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $1.0 billion, which represented 7.5% of total assets and 8.7% of total deposits and borrowings, compared to $799.7 million as of December 31, 2024, which represented 8.1% of total assets and 9.4% of total deposits and borrowings.

As of June 30, 2025, not included in the above liquid assets were securities with a market value of $100.0 million which were pledged to the Federal Home Loan Bank and securities with a market value of $140.1 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $227.0 million and $95.2 million, respectively as of June 30, 2025 and December 31, 2024.

The Bank is a member of the Federal Home Loan Bank of New York and, based on available qualified collateral as of June 30, 2025, had the ability to borrow $4.0 billion.

In addition, as of June 30, 2025, the Bank had in place borrowing capacity of $280 million through correspondent banks and other unsecured borrowing lines.

As of June 30, 2025, the Bank had aggregate available and unused credit of approximately $4.2 billion, which represents the aforementioned facilities totaling $6.0 billion net of $1.8 billion in outstanding borrowings and letters of credit.

As of June 30, 2025, outstanding commitments for the Bank to extend credit were approximately $1.4 billion.

Cash an d cash equivalents totaled $596.5 million as of June 30, 2025, increasing by $240.0 million from $356.5 million as of December 31, 2024.

Operating activities provided $21.3 million in net cash.

Investing activities provided $59.2 million in net cash, primarily reflecting a decrease in loans.

Financing activities used $138.0 million in net cash, primarily reflecting $75.0 million in net repayments of FHLB borrowings and a $52.9 million decrease in deposits.

Investing activities provided $99.0 million in net cash, primarily reflecting a net increase in cash acquired related to FLIC of $54.9 million and a net decrease in loans of $32.0 million.

Financing activities provided $119.6 million in net cash, primarily reflecting a net increase in deposits of $207.0 million, proceeds from issuance of subordinated debt of $200.0 million, partially offset by net repayments of FHLB borrowings of $264.6 million.

Deposits are our primary source of funds.

3 unchanged sentences

Our savings accounts offer paper and/or electronic statements.

Time deposits ("TD") are for non-retirement and IRA accounts, generally with initial maturities ranging from 31 days to 60 months, and brokered TDs, which we use for asset liability management purposes and to supplement other sources of funding.

Time deposits ("TD") constitute non-retirement and IRA accounts, generally with initial maturities ranging from 31 days to 60 months, and brokered TDs, which we use for asset liability management purposes and to supplement other sources of funding.

Many of our deposit products can be accessed through both our branches and online to provide ease of access to our clients and communities.

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The following table sets forth the average balances and weighted average rates of our deposits for the periods indicated.

Quarter-to-Date Average March 31, 2025

Quarter-to-Date Average March 31, 2024

Quarter-to-Date Average June 30, 2025

Quarter-to-Date Average June 30, 2024

(dollars in thousands)

2 unchanged sentences

Total average deposits

Average total deposits increased by $156.5 million, or 2.1%, during the three months ended March 31, 2025 when compared to the three months ended March 31, 2024.

The increase in total average deposits was attributed to increases in savings deposits of $215.2 million and noninterest-bearing deposits of $51.5 million, partially offset by decreases in time deposits of $86.7 million and interest-bearing demand deposits of $23.5 million.

The decrease in average time deposits of $86.7 million during the three months ended March 31, 2025 was attributed to decreases in nonreciprocal brokered time deposits of $49.6 million, CDARs of $33.2 million and internet listing services of $19.1 million, partially offset by increases in retail time deposits of $15.2 million.

Average aggregate demand deposits included $1.1 billion in ICS reciprocal deposits, during both the three months ended March 31, 2025 and March 31, 2024.

Average time deposits during the three months ended March 31, 2025 included $58.5 million in CDARS, compared to $91.7 million during the three months ended March 31, 2024.

Average total deposits increased by $1.3 billion, or 16.4%, during the three months ended June 30, 2025 when compared to the three months ended June 30, 2024.

The increase in total average deposits was due to a $446 million increase in interest-bearing demand deposits, a $424 million increase in noninterest-bearing deposits, a $297 million increase in savings deposits and a $75 million increase in time deposits.

The increase in all quarter-to-date average deposit categories was primarily due to the merger with FLIC.

The increase in average time deposits of $75 million during the three months ended June 30, 2025 was due to a $48 million increase in retail time deposits, a $29 million dollar increase in nonreciprocal brokered time deposits and a $14 million increase in internet listing services, partially offset by a decrease of $16 million in CDARs.

Average aggregate demand deposits included $1.0 billion and $1.2 billion in ICS reciprocal deposits during the three months ended June 30, 2025 and June 30, 2024, respectively.

Average time deposits during the three months June 30, 2025 included $45 million in CDARS, compared to $61 million during the three months ended June 30, 2024.

The decrease in CDARS was attributed to maturities that did not renew.

The following table sets forth the average balances and weighted average rates of our deposits for the periods indicated.

Year-to-Date Average June 30, 2025

Year-to-Date Average June 30, 2024

(dollars in thousands)

Demand, noninterest-bearing

Demand, interest-bearing & NOW

Total average deposits

Average total deposits increased by $702 million, or 9.3%, during the six months ended June 30, 2025 when compared to the six months ended June 30, 2024.

The increase in total average deposits was attributed to a $256 million increase in savings deposits, a $238 million increase in noninterest-bearing deposits and a $213 million increase in interest-bearing demand deposits, partially offset by a $6 million decrease in time deposits.

The increase in all the year-to-date average deposit categories was primarily due to the merger with FLIC.

The decrease in average time deposits of $6 million during the three months ended June 30, 2025 was attributed to a $25 million decrease in CDARs, a $10 million decrease in nonreciprocal brokered time deposits and a $2 million decrease in internet listing services, partially offset by a $32 million increase in retail time deposits.

Average aggregate demand deposits included $1.0 billion and $1.1 billion in ICS reciprocal deposits, during the six months ended June 30, 2025 and June 30, 2024, respectively.

Average time deposits during the six months ended June 30, 2025 included $52 million in CDARS, compared to $76 million during the six months ended June 30, 2024.

The decrease in CDARS was attributed to maturities that did not renew.

The beta, which is the measurement of deposit rate sensitivity in response to market rate changes, on nonreciprocal brokered deposits tends to be higher than that of ICS and CDARS reciprocal deposits, as nonreciprocal brokered time deposits are more directly correlated to prevailing market rates of interest, while ICS and CDARs reciprocal deposits reflect the Bank’s relationship with reciprocal deposit clients and are more driven by a desire for FDIC insurance coverage than market leading rates.

The following table sets forth information related to the uninsured deposit balances of the Bank.

March 31, 2025

June 30, 2025

December 31, 2024

7 unchanged sentences

The following table sets forth the distribution of total actual deposit accounts, by account types for the periods indicated.

March 31, 2025

June 30, 2025

December 31, 2024

5 unchanged sentences

Total deposits

Total deposits decreased by $52.9 million, or 0.7%, when compared to December 31, 2024.

The decrease in total deposits was primarily attributed to decreases in noninterest-bearing demand deposits of $102.8 million, interest-bearing demand deposits of $51.5 million, and time deposits of $7.0 million, partially offset by increases in savings deposits of $108.4 million.

Aggregate demand deposits included $1.0 billion and $1.1 billion in ICS reciprocal deposits as of March 31, 2025 and December 31, 2024, respectively.

Total time deposits as of March 31, 2025 include $47.8 million in CDARS, compared to $60.3 million as of December 31, 2024.

Included in time deposits were nonreciprocal brokered deposits of $981.6 million as of March 31, 2025, which increased from $907.2 million as of December 31, 2024.

As of March 31, 2025, we held $674.3 million of time deposits balances greater than $250,000.

The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of March 31, 2025:

March 31, 2025

Total deposits increased by $3.5 billion, or 44.2%, when compared to December 31, 2024.

The increase in total deposits was primarily attributed to a $1.6 billion increase in interest-bearing demand deposits, a $1.0 billion increase in noninterest-bearing demand deposits, a $0.5 billion increase in time deposits and a $0.3 billion increase in savings deposits.

The increase in all deposit categories was primarily due to the merger with FLIC.

Aggregate demand deposits included $1.1 billion in ICS reciprocal deposits as of both June 30, 2025 and December 31, 2024.

Total time deposits as of June 30, 2025 include $45 million in CDARS, compared to $60 million as of December 31, 2024.

Included in time deposits were nonreciprocal brokered deposits of $1.0 billion as of June 30, 2025, which increased from $907 million as of December 31, 2024.

As of June 30, 2025, we held $907 million of time deposits with balances greater than $250,000.

The following table provides information on the maturity distribution of the time deposits with balances greater than $250,000 as of June 30, 2025:

June 30, 2025

(dollars in thousands)

9 unchanged sentences

Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%.

The rate as of March 31, 2025 was 7.40%.

The rate as of June 30, 2025 was 7.39%.

During June 2020, the Parent Corporation issued $75 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the “2020 Notes”).

The 2020 Notes bear interest at 5.75% annually from, and including, the date of initial issuance up to, but excluding, September 15, 2025 or the date of earlier redemption, payable semi-annually in arrears on September 15 and December 15 of each year, commencing December 15, 2020.

From and including September 15, 2025 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is Three-Month Term SOFR (as defined in the Second Supplemental Indenture), plus 560.5 basis points, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on June 15, 2025.

As of June 30, 2025, the variable interest rate was 9.92% and all costs related to the 2020 issuance have been amortized.

During May 2025, the Parent Corporation issued $200 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the "2025 Notes").

The 2025 Notes bear interest at 8.125% annually from, and including, the date of initial issuance up to but excluding June 1, 2030 or the date of earlier redemption, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2025.

(as defined in the Prospectus Supplement), plus 441.5 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, commencing on September 1, 2030.

Notwithstanding the foregoing, if the benchmark rate is less than zero, then the benchmark rate shall be deemed to be zero.

2 unchanged sentences

The increase was primarily due to an increase in retained earnings of $16.9 million.

As of March 31, 2025, the Company’s tangible common equity ratio and tangible book value per share were 9.73% and $24.16, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024.

Total goodwill and other intangible assets were $212.7 million as of March 31, 2025, and $213.0 million as of December 31, 2024.

As of June 30, 2025, the Company’s tangible common equity ratio and tangible book value per share were 8.09% and $21.95, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024.

Total goodwill and other intangible assets were $281.9 million as of June 30, 2025, and $213.0 million as of December 31, 2024.

The following table reconciles common equity to tangible common equity and the tangible common equity ratio.

March 31, 2025

June 30, 2025

December 31, 2024

18 unchanged sentences

The Company and the Bank are subject to regulatory guidelines establishing minimum capital standards that involve quantitative measures of assets, and certain off-balance sheet items, as risk-adjusted assets under regulatory accounting practices.

The following is a summary of regulatory capital amounts and ratios as of March 31, 2025 for the Company and the Bank, compared with minimum capital adequacy requirements and the regulatory requirements for classification as a well-capitalized depository institution (for the Bank).

The following is a summary of regulatory capital amounts and ratios as of June 30, 2025 for the Company and the Bank, compared with minimum capital adequacy requirements and the regulatory requirements for classification as a well-capitalized depository institution (for the Bank).

For Capital Adequacy Purposes

To Be Well-Capitalized Under Prompt Corrective Action Provisions

As of March 31, 2025

As of June 30, 2025

(dollars in thousands)

6 unchanged sentences

To Be Well-Capitalized Under Prompt Corrective Action Provisions

As of March 31, 2025

As of June 30, 2025

(dollars in thousands)

3 unchanged sentences

Total risk-based capital

As of March 31, 2025, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them.

The lowest ratio at the Company is the Total Risk Based Capital Ratio which was 3.79% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 3.29% above the minimum buffer ratio.

* Average assets, the denominator for Tier 1 leverage capital ratio, assumes the merger with FLIC was effected on April 1, 2025.

As of June 30, 2025, both the Company and Bank satisfy the capital conservation buffer requirements applicable to them.

The lowest ratio at the Company is the Tier 1 Risk Based Capital Ratio which was 2.56% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.74% above the minimum buffer ratio.

Qualitative and Quantitative Disclosures about Market Risks

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements