What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2025-11-03 compared with 2025-08-11 · 440 added, 389 removed, 2043 unchanged (29% of the section changed)

4 unchanged sentences

(in thousands, except for share data)

September 30,

Cash and due from banks

49 unchanged sentences

Authorized 5,000,000 shares;

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

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

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

110,927 110,927

1 unchanged sentence

Authorized 100,000,000 shares;

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

issued 54,158,637 shares as of September 30, 2025 and 42,255,865 shares as of December 31, 2024;

outstanding 50,273,089 shares as of September 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 June 30, 2025 and December 31, 2024

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

( 76,116 ) ( 76,116 )

8 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF (LOSS) INCOME

CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands, except for per share data)

11 unchanged sentences

Deposit, loan and other income

Defined benefit pension plan curtailment gain

Employee retention tax credit

Income on bank owned life insurance

Net gains on sale of loans held-for-sale

Net gains (losses) on equity securities

Net gains on equity securities

Total noninterest income

6 unchanged sentences

Information technology and communications

Restructuring and exit charges

Merger expenses

3 unchanged sentences

Total noninterest expenses

(Loss) income before income tax expense

Income tax (benefit) expense

Net (loss) income

Income before income tax expense

Income tax expense

Preferred dividends

Net (loss) income available to common stockholders

Net income available to common stockholders

Earnings per common share

2 unchanged sentences

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

Net (loss) income

Other comprehensive (loss) income, net of tax:

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

Net unrealized (losses) gains on cash flow hedges

$ 40,976 $ 17,161 $ 40,925 $ 53,422

Other comprehensive income (loss), net of tax:

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

13,060 18,894 22,418 6,665

Net unrealized losses on cash flow hedges

( 2,765 ) ( 13,433 ) ( 11,682 ) ( 8,401 )

Pension plan adjustments

Total other comprehensive income (loss), net of tax

Total comprehensive (loss) income

10,295 5,491 10,736 ( 1,644 )

Total comprehensive income

$ 51,271 $ 22,652 $ 51,661 $ 51,778

See accompanying notes to unaudited consolidated financial statements.

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Comprehensive

2 unchanged sentences

(Loss) Income

Balance as of March 31, 2025

Balance as of June 30, 2025

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

6 unchanged sentences

- - - ( 9,055 ) - - ( 9,055 )

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

Net forfeitures of restricted stock grants ( 1,221 shares)

- - - - - - -

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

Net shares issued in satisfaction of deferred stock units earned ( 3,938 shares)

- - - - - - -

Stock-based compensation expense

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

- - ( 98 ) - - - ( 98 )

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

Stock-based compensation expense

- - 1,304 - - - 1,304

Balance as of June 30, 2025

Balance as of September 30, 2025

$ 110,927 $ 857,765 $ 37,934 $ 644,944 $ ( 76,116 ) $ ( 37,110 ) $ 1,538,344

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Comprehensive

2 unchanged sentences

(Loss) Income

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

- - - 17,161 - - 17,161

Other comprehensive loss, net of tax

Other comprehensive income, net of tax

- - - - - 5,491 5,491

3 unchanged sentences

- - - ( 6,914 ) - - ( 6,914 )

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

Net shares issued in satisfaction of deferred stock units earned ( 3,938 shares)

- - - - - - -

Forfeitures of restricted stock grants ( 790 shares)

- - - - - - -

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

- - ( 79 ) - - - ( 79 )

Stock-compensation expense

- - 1,119 - - - 1,119

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 110,927 $ 586,946 $ 34,995 $ 619,497 $ ( 76,116 ) $ ( 36,753 ) $ 1,239,496

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Comprehensive

27 unchanged sentences

- 270,819 - - - - 270,819

Balance as of June 30, 2025

Balance as of September 30, 2025

$ 110,927 $ 857,765 $ 37,934 $ 644,944 $ ( 76,116 ) $ ( 37,110 ) $ 1,538,344

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Comprehensive

21 unchanged sentences

- - ( 1,403 ) - - - ( 1,403 )

Stock-compensation expense

Repurchase of common stock ( 282,370 shares)

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

Repurchase of treasury stock ( 282,370 shares)

Stock-compensation expense

- - 3,216 - - - 3,216

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 110,927 $ 586,946 $ 34,995 $ 619,497 $ ( 76,116 ) $ ( 36,753 ) $ 1,239,496

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

Cash flows from operating activities

Net (loss) income

$ 40,925 $ 53,422

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

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

Depreciation and amortization of premises and equipment

Provision for credit losses

44,700 10,300

Loss on bank owned life insurance policy exchange

Amortization of intangibles

Net accretion of loans

Net accretion of loan purchase discounts

( 13,955 ) ( 692 )

Accretion on bank premises

( 24 ) ( 24 )

Amortization (accretion) on deposits

Amortization (accretion) on time deposits

Amortization on borrowings, net

Stock-based compensation

(Gains) losses on equity securities, net

Gains on equity securities, net

( 2,550 ) ( 309 )

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

4 unchanged sentences

23,467 20,328

Net loss on disposition of premises and equipment

Increase in cash surrender value of bank owned life insurance

( 6,602 ) ( 5,486 )

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

Accretion of discounts and amortization of premium on securities available-for-sale

Amortization of subordinated debentures issuance costs

2 unchanged sentences

Net change in operating leases

(Increase) decrease in other assets

Increase in other assets

( 20,981 ) ( 1,617 )

12 unchanged sentences

Net redemptions of restricted investment in bank stocks

Net decrease in loans

Net (increase) decrease in loans

( 102,041 ) 223,922

3 unchanged sentences

Cash acquired, net of cash consideration paid in acquisition

Net cash provided by investing activities

Net cash (used in) provided by investing activities

( 46,178 ) 211,669

Cash flows from financing activities

Net increase in deposits

Net increase (decrease) in deposits

297,154 ( 12,016 )

Proceeds from issuance of subordinated debt

Redemption of subordinated debt

Payment of subordinated debt issuance costs

Advances of FHLB borrowings

Proceeds from FHLB borrowings

790,000 630,587

Repayments of FHLB borrowings

Repayment of FHLB borrowings

( 1,005,043 ) ( 822,049 )

3 unchanged sentences

( 22,900 ) ( 20,368 )

Repurchase of treasury stock

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

Repurchase of common stock

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

( 2,232 ) ( 1,403 )

15 unchanged sentences

Fair value of assets acquired

$ 3,905,094 -

Fair value of liabilities assumed

13 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).

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.

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 ("FNBLI"), 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.

Each borrower’s ability to repay its loans is dependent on the conversion of assets, cash flows generated from the borrowers’ business, real estate rental and consumer wages.

Each borrower’s ability to repay their loans is dependent on the conversion of assets, cash flows generated from the borrowers’ business, real estate rental and consumer wages.

Basis of Presentation and Principles of Consolidation

The consolidated financial statements have been prepared in conformity with U.S.

generally accepted accounting principles.

generally accepted accounting principles ("GAAP").

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.

7 unchanged sentences

The Company provides a range of regional community banking services to commercial and retail clients.

The Company's reportable segment is determined by the Chief Executive Officer, who is designated the Chief Operating Decision Maker ("CODM"), based upon information about the Company's products and services offered, primarily it's banking operations.

The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business (such as branches and the subsidiary bank), which are then aggregated if operating performance, products/services, and customers are similar.

10 unchanged sentences

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.

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

The Bank made contributions to the plan, which together with participant contributions equal to 2 % of their compensation, fund these benefits.

Effective September 30, 2025, the plan was frozen and all retirement benefits that employees earned through that date were preserved.

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

1 unchanged sentence

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.

The Company accounts for its defined benefit pension plans in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("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 s

tatus be reflected in other comprehensive income ("OCI").

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

Use of Estimates

9 unchanged sentences

Adoption of New Accounting Standards in 2025

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 09, Income Taxes (Topic 740 ):

In December 2023, the FASB issued Accounting Standard Update ("ASU") 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures.

2 unchanged sentences

1 ) The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes;

2 ) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received).

and 2 ) The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received).

The amendments also require that all entities disclose the following information:

1 ) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and 2 ) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

1 ) Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign;

and 2 ) Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

The Company adopted ASU 2023 - 09 on January 1, 2025.

Newly Issued, But Not Yet Effective Accounting Standards

In November 2024, the FASB issued Accounting Standards Update 2024 - 03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 )" ("ASU 2024 - 03" ).

In November 2024, the FASB issued ASU 2024 - 03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 )" ("ASU 2024 - 03" ).

ASU 2024 - 03 requires public entities to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement.

5 unchanged sentences

Business Combination

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”).

On June 1, 2025 ( the “Acquisition Date”), the Company completed the acquisition of FLIC, the parent company for the 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”).

12 unchanged sentences

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:

(dollars in thousands, except for per share data)

Purchase Price Consideration

6 unchanged sentences

Total fair value of stock consideration issued

$ 270,818,953

Cash consideration paid

Total purchase price consideration

$ 270,827,680

CONNECTONE BANCORP, INC.

32 unchanged sentences

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.

Acquired loans are classified into two categories:

purchased credit deteriorated (“PCD”) 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.

1 unchanged sentence

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.

For PCD loans, the loans were recorded at their amortized cost, less an allowance for credit losses ("ACL") 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.

The remaining difference between the net of the amortized cost basis and the ACL 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.

2 unchanged sentences

Business Combination – (continued)

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

The following table provides details related to the fair value of PCD loans that were acquired on June 1, 2025.

Gross-up for PCD

6 unchanged sentences

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.

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

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

3 unchanged sentences

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.

As a result of the integration of operations of FLIC, the Company recognized net interest income and net income of $ 35.5 million and $ 25.6 million, respectively, from the Acquisition Date through and including September 30, 2025 and is included in the Company’s Consolidated Statements of Income.

Costs related to the acquisition totaled $ 34.0 million for the nine months ended September 30, 2025 .

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

3 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands)

6 unchanged sentences

Earnings per Common Share

Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) No.

260 - 10 - 45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”).

3 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands, except for per share data)

Net loss income available to common stockholders

Net income available to common stockholders

$ 39,467 $ 15,652 $ 36,398 $ 48,895

1 unchanged sentence

( 88 ) ( 44 ) ( 87 ) ( 133 )

(Loss) income attributable to common stock

Income attributable to common stock

$ 39,379 $ 15,608 $ 36,311 $ 48,762

12 unchanged sentences

0.78 0.41 0.83 1.27

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

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

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities

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 .

Immediately after the merger, the Company sold a significant portion of the available-for-sale investments acquired from FLIC for 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 September 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 June 30, 2025 and December 31, 2024 .

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

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

(dollars in thousands)

June 30, 2025

September 30, 2025

Investment securities available-for-sale:

13 unchanged sentences

Other securities

128 - - 128 -

Total investment securities available-for-sale

23 unchanged sentences

Investment Securities – (continued)

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.

Investment securities having a carrying value of approximately $ 834.7 million and $ 184.0 million as of September 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 FHLB advances and for other purposes required or permitted by law.

As of September 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 June 30, 2025 , based on scheduled maturities.

The following table presents information for investments in securities available-for-sale as of September 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.

June 30, 2025

September 30, 2025

(dollars in thousands)

15 unchanged sentences

$ 1,316,828 $ 1,252,202

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 .

There were no realized gains or losses on investment securities available for sale during the nine months ended September 30, 2025 and September 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 June 30, 2025 and December 31, 2024 .

June 30, 2025

The following tables indicate securities in an unrealized loss position for which an 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 September 30, 2025 and December 31, 2024 .

September 30, 2025

Less than 12 Months

42 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 $ 5.5 million and $ 2.3 million as of June 30, 2025 and December 31, 2024 .

Accrued interest receivable for investment securities available-for-sale totaled $ 5.2 million and $ 2.3 million as of September 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.

3 unchanged sentences

If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an allowance for credit losses is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis.

If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis.

Unrealized losses on asset backed securities and state and municipal securities have not been recognized into income because the issuers are of high credit quality and we do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery.

1 unchanged sentence

The issuers continue to make timely principal and interest payments on the securities.

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 June 30, 2025 .

Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes.

No ACL for available-for-sale securities was recorded as of September 30, 2025 .

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

15 unchanged sentences

1 ) Cash flow hedges:

changes in fair value are recognized as a component in other comprehensive income

changes in fair value are recognized as a component in OCI

2 ) Fair value hedges:

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

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

Cash Flow Hedges

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.

These are designated as cash flow hedges of outstanding FHLB 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”).

1 unchanged sentence

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

Therefore, the aggregate fair value of the swap is recorded in other assets (liabilities) with changes in fair value recorded in other comprehensive income (loss).

The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective.

Therefore, the aggregate fair value of the swap is recorded in other assets (liabilities) with changes in fair value recorded in OCI (loss).

The amount included in accumulated OCI (loss) would be reclassified to current earnings should the hedges no longer be considered effective.

The Company expects the hedges to remain fully effective during the remaining term of the swaps.

4 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 $ 4.5 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.

Interest income recorded on these swap and interest rate cap transactions totaled approximately $ 4.7 million and $ 13.3 million and $ 5.6 million and $ 16.9 million during the three and nine months ended September 30, 2025 and September 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 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

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

Three Months Ended September 30, 2025

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

4 unchanged sentences

$ 863 $ ( 4,709 ) $ -

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

4 unchanged sentences

$ ( 13,061 ) $ ( 5,624 ) $ -

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

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

4 unchanged sentences

$ ( 2,930 ) $ ( 13,319 ) $ -

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

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

8 unchanged sentences

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

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

September 30, 2025

December 31, 2024

5 unchanged sentences

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.

As part of the merger with FLIC, the Bank acquired interest rate swap agreements (each, a “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.

3 unchanged sentences

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

September 30, 2025

(in thousands)

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

Interest rate swap with borrower

Interest rate swaps with borrowers

3 $ 36,071 $ 355 $ -

Interest rate swap with offsetting counterparty

Interest rate swaps with offsetting counterparties

3 36,071 - 355

3 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 June 30, 2025 and December 31, 2024 :

June 30, 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 September 30, 2025 and December 31, 2024 :

September 30, 2025 December 31, 2024

(dollars in thousands)

11 unchanged sentences

$ 11,303,636 $ 8,274,810

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

As of September 30, 2025 and December 31, 2024 , loans totaling approximately $ 7,979.6 million and $ 5,788.2 million, 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 September 30, 2025 and December 31, 2024 .

September 30, 2025

December 31, 2024

1 unchanged sentence

Residential real estate

$ 1,027 $ 743

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 June 30, 2025 and December 31, 2024 :

June 30, 2025

September 30, 2025

Nonaccrual loans with ACL

27 unchanged sentences

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.

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

(dollars in thousands)

June 30, 2025

September 30, 2025

Commercial real estate

2 unchanged sentences

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.

The majority of 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.

2 unchanged sentences

Credit quality is monitored by reviewing certain credit quality indicators.

Assets classified “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention.

Assets classified as “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention.

Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets.

1 unchanged sentence

These conditions, if not corrected, may weaken the credit quality or inadequately protect the Company’s credit position at some future date.

Assets are classified “Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified special mention.

Assets are classified as "Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified as special mention.

Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements.

7 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 six months ended June 30, 2025 (dollars in thousands):

The following table presents loans by origination, risk designation and gross charge-offs as of and during the nine months ended September 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 June 30, 2025 and December 31, 2024 :

June 30, 2025

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

September 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 June 30, 2025 and December 31, 2024 :

June 30, 2025

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

September 30, 2025

30-59 Days Past Due

31 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

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.

June 30, 2025

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 ACL for loans that are allocated to each loan portfolio segment.

September 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 and six months ended June 30, 2025 and 2024 are summarized in the tables below.

Three Months Ended June 30, 2025

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

Three Months Ended September 30, 2025

Commercial real estate

2 unchanged sentences

(dollars in thousands)

Balance as of March 31, 2025

Balance as of June 30, 2025

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

3 unchanged sentences

Initial provision related to acquisition

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

Operating provision for credit losses

1 unchanged sentence

Nonaccretable credit marks on PCD loans

965 42,256 - 115 - 43,336

Balance as of June 30, 2025

Balance as of September 30, 2025

$ 20,142 $ 116,395 $ 5,914 $ 14,017 $ 31 $ 156,499

Six Months Ended June 30, 2025

Nine Months Ended September 30, 2025

Commercial real estate

13 unchanged sentences

965 42,256 - 115 - 43,336

Balance as of June 30, 2025

Balance as of September 30, 2025

$ 20,142 $ 116,394 $ 5,914 $ 14,018 $ 31 $ 156,499

3 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Commercial real estate

2 unchanged sentences

(dollars in thousands)

Balance as of March 31, 2024

Balance as of June 30, 2024

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

3 unchanged sentences

1,698 2,580 ( 307 ) ( 48 ) - 3,923

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 19,817 $ 54,073 $ 4,165 $ 4,436 $ 3 $ 82,494

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Commercial real estate

8 unchanged sentences

1,039 9,880 ( 574 ) 116 ( 2 ) 10,459

Balance as of June 30, 2024

Balance as of September 30, 2024

$ 19,817 $ 54,073 $ 4,165 $ 4,436 $ 3 $ 82,494

4 unchanged sentences

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 .

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

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

Amortized Cost Basis at Time of Modification

1 unchanged sentence

Payment Deferral

Gross Loans at June 30, 2025

Modification % (Modified Loans/

June 30, 2025

Gross Loans at September 30, 2025

Modification % (Modified Loans/Gross Loans)

September 30, 2025

(dollars in thousands)

8 unchanged sentences

$ - $ 18,811 $ 18,811 $ 11,308,131 0.17 %

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 .

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

Weighted Average Term Extension (Months)

Weighted Average Payment Deferral (Months)

June 30, 2025

September 30, 2025

Commercial real estate

5 unchanged sentences

Loans and the Allowance for Credit Losses – (continued)

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

The modification percentage represents the total loans modified during the nine months ended as a percentage of the total gross loan balances as of September 30, 2025 .

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the nine months ended September 30, 2025 .

Amortized Cost Basis at Time of Modification

Term Extension

Payment Deferral

Gross Loans at September 30, 2025

Modification % (Modified Loans/Gross Loans)

September 30, 2025

(dollars in thousands)

$ 6,500 $ 18,811 $ 25,311 $ 1,622,975 1.56 %

Commercial real estate

- - - 7,721,070 -

Commercial construction

8,419 - 8,419 728,615 1.16

Residential real estate

- - - 1,233,305 -

- - - 2,166 -

$ 14,919 $ 18,811 $ 33,730 $ 11,308,131 0.30 %

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the nine months ended September 30, 2025 .

Weighted Average Term Extension (Months)

Weighted Average Payment Deferral (Months)

September 30, 2025

Commercial real estate

Commercial construction

Residential real estate

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 twelve months through June 30, 2025 .

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

30-89 Days Past Due

90 Days or Greater Past Due

June 30, 2025

September 30, 2025

(dollars in thousands)

4 unchanged sentences

$ 97,534 $ - $ 323

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.

There were five and seven modifications to borrowers experiencing financial difficulty during the three and nine months ended September 30, 2025, respectively.

During the three and nine months ended September 30, 2025 and September 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 was one loan to a borrower experiencing financial difficulty that had a payment default during the three and nine months ended September 30, 2025 and which was modified in the twelve months prior to that default.

The one loan was a $ 323 thousand commercial loan modified in October 2024 that went into forbearance, reducing the monthly payment amount by $ 6 thousand.

At this time, the ACL includes a full reserve against this loan.

There were no such loans during the three and nine months ended September 30, 2024.

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

Modified loans in default are individually evaluated for the allowance for credit losses or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the allowance for credit losses is adjusted accordingly.

Modified loans in default are individually evaluated for the ACL or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the ACL is adjusted accordingly.

CONNECTONE BANCORP, INC.

5 unchanged sentences

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

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 :

The following tables present a roll forward of the ACL for unfunded commitments for the three and nine months ended September 30, 2025 and 2024 :

Three Months Ended

September 30,

(dollars in thousands)

4 unchanged sentences

$ 3,392 $ 2,652

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

5 unchanged sentences

Components of Provision for Credit Losses

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

The following tables summarize the provision for (reversal of) credit losses for the three and nine months ended September 30, 2025 and 2024 :

Three Months Ended

September 30,

(dollars in thousands)

2 unchanged sentences

Initial provision related to acquisition - loans

Provision for credit losses - unfunded commitments

Provision (reversal) for credit losses - unfunded commitments

Provision for credit losses

$ 5,500 $ 3,800

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

21 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 June 30, 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 September 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 June 30, 2025 and December 31, 2024 are as follows:

June 30, 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 September 30, 2025 and December 31, 2024 are as follows:

September 30, 2025

Fair Value Measurements at Reporting Date Using

59 unchanged sentences

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

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 .

There were no transfers between Level 1, Level 2 and Level 3 during the nine months ended September 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 June 30, 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 September 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 June 30, 2025 and December 31, 2024 , residential mortgage loans held-for sale were $ 1.0 million and $ 0.7 million, respectively

As of September 30, 2025 and December 31, 2024 , residential mortgage loans held-for sale were $ 0.0 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 June 30, 2025 and December 31, 2024 .

There were no such loans as of September 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 June 30, 2025 and December 31, 2024 are as follows:

For assets measured at fair value on a nonrecurring basis, the fair value measurements as of September 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:

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

September 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 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 .

Collateral dependent loans – Collateral dependent loans as of September 30, 2025 that required a valuation allowance were $ 1.5 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 .

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 six months ended June 30, 2025 and for the year ended December 31, 2024 :

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 nine months ended September 30, 2025 and for the year ended December 31, 2024 :

Obligations of U.S.

4 unchanged sentences

Change in unrealized gain (loss)

Ending balance, June 30, 2025

Ending balance, September 30, 2025

Obligations of U.S.

5 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 June 30, 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 September 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.

June 30, 2025

September 30, 2025

Valuation Techniques

22 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.

June 30, 2025

September 30, 2025

(dollars in thousands)

27 unchanged sentences

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

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 :

As of September 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 September 30, 2025 and December 31, 2024 :

Fair Value Measurements

4 unchanged sentences

(dollars in thousands)

June 30, 2025

September 30, 2025

Financial assets:

63 unchanged sentences

This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values.

Comprehensive (Loss) Income

Total comprehensive income (loss) includes all changes in equity during a period from transactions and other events and circumstances from non-owner sources.

The Company’s other comprehensive income is comprised of unrealized holding gains and losses on securities available-for-sale, unrealized gains (losses) on cash flow hedges, obligations for defined benefit pension plan and an adjustment to reflect the curtailment of the Company’s defined benefit pension plan, each net of taxes.

The following table represents the reclassification out of accumulated other comprehensive (loss) for the periods presented (dollars in thousands):

Comprehensive Income

Total OCI includes all changes in equity during a period from transactions and other events and circumstances from non-owner sources.

The Company’s OCI is comprised of unrealized holding gains and losses on securities available-for-sale, unrealized gains (losses) on cash flow hedges, obligations for defined benefit pension plan and an adjustment to reflect the curtailment of the Company’s defined benefit pension plan, each net of taxes.

The following table represents the reclassification out of accumulated OCI for the periods presented (dollars in thousands):

Details about Accumulated Other Comprehensive Income Components

2 unchanged sentences

Affected Line item in the Consolidated Statements of Income

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Interest income on cash flow hedges

11 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Comprehensive (Loss) Income – (continued)

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

June 30, 2025

Comprehensive Income – (continued)

Accumulated OCI as of September 30, 2025 and December 31, 2024 consisted of the following:

September 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 June 30, 2025 .

The Plan eliminates all remaining issuable shares under previous plans and is the only outstanding plan as of September 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 June 30, 2025 were approximately 168,971 .

Shares available for grant and issuance under the Plan as of September 30, 2025 were approximately 170,192 .

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

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

As of both September 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 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:

Stock-based compensation expense for the three and nine months ended September 30, 2025 and September 30, 2024 was $ 1.3 million and $ 3.8 million and $ 1.1 million and $ 3.2 million, respectively.

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

Nonvested Shares

5 unchanged sentences

( 2,639 ) 19.01

Nonvested as of June 30, 2025

Nonvested as of September 30, 2025

111,584 $ 20.57

3 unchanged sentences

Stock-Based Compensation – (continued)

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

As of September 30, 2025 , there was approximately $ 1.3 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 1.2 years.

8 unchanged sentences

( 3,452 ) 19.01

Unearned as of June 30, 2025

Unearned as of September 30, 2025

235,767 383,079 $ 18.74

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.

As of September 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 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.

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

During the nine months ended September 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 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.

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

As of September 30, 2025 , compensation cost of approximately $ 2.4 million related to non-vested performance units not yet recognized is expected to be recognized over a weighted-average period of 1.9 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

( 91,364 ) 21.35

Unearned as of June 30, 2025

Unearned as of September 30, 2025

170,482 $ 19.15

1 unchanged sentence

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

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

During the nine months ended September 30, 2025 , 91,364 shares vested.

A total of 48,743 shares were netted from the vested shares to satisfy employee tax obligations.

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.

The net shares issued from vesting of deferred stock units during the nine months ended September 30, 2025 were 42,621 shares.

As of September 30, 2025 , compensation cost of approximately $ 1.7 million related to non-vested deferred stock units, not yet recognized, is expected to be recognized over a weighted-average period of 1.5 years.

CONNECTONE BANCORP, INC.

2 unchanged sentences

Components of Net Periodic Pension Cost

The Company maintained a non-contributory defined benefit pension plan for substantially all of its employees until June 30, 2007, at which time the Company froze the plan.

The following table sets forth the net periodic pension cost of the Company’s pension plan for the periods indicated.

The Company maintained two defined benefit pension plans, which were frozen on June 30, 2007 and September 30, 2025, respectively.

The following table sets forth the net periodic pension cost of the Company’s pension plans for the periods indicated.

Three Months Ended

Affected Line Item in the Consolidated

September 30,

Statements of Income

(dollars in thousands)

$ 486 $ - Salaries and employee benefits

Interest cost

6 unchanged sentences

$ 107 $ ( 65 )

Six Months Ended

Nine Months Ended

Affected Line Item in the Consolidated

September 30,

Statements of Income

(dollars in thousands)

$ 486 $ - Salaries and employee benefits

Interest cost

7 unchanged sentences

Contributions

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.

The trust is established to provide retirement and other benefits for eligible employees and their beneficiaries.

The Company did not contribute to the Pension Trust for the frozen Center Bancorp plan during the nine months ended September 30, 2025 .

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

This trust is established to provide retirement and other benefits for eligible employees and their beneficiaries.

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.

Former FLIC 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 has historically made 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).

Employees became 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.

Effective September 30, 2025, the Company froze benefit accruals under this defined benefit pension plan for all participants.

The freeze does not affect retirees or vested benefits.

The projected benefit obligation was remeasured using a discount rate of 5.41 %, increasing the liability by $ 2.0 million.

There were no other changes in assumptions.

The freezing of the plan also resulted in the removal of projected salary increase from the liability determination, resulting in a curtailment gain of $ 3.5 million recognized in other income during the third quarter of 2025.

The plan’s funded status improved to 134 %.

CONNECTONE BANCORP, INC.

3 unchanged sentences

Significant Actuarial Assumptions.

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

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

Weighted average assumptions used to determine the benefit obligation:

34 unchanged sentences

Equity mutual funds

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

20 % - 30 % 25 % 3.9 % - 10.7 %

Fixed income mutual funds

13 unchanged sentences

Time Deposits

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):

As of September 30, 2025 and December 31, 2024 , the Company's total time deposits were $ 3.0 billion and $ 2.6 billion, respectively.

Included in time deposits were nonreciprocal brokered certificates of deposit of $ 939.5 million and $ 907.2 million as of September 30, 2025 and December 31, 2024 , respectively.

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

Time deposits (before net discount)

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.

The amount of time deposits with balances greater than or equal to $250,000 was $ 926.6 million and $ 731.0 million as of September 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:

June 30, 2025

September 30, 2025

December 31, 2024

15 unchanged sentences

Fair value discount

( 19 ) ( 36 )

Total FHLB borrowings

4 unchanged sentences

All FHLB advances bear fixed rates.

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.

The advances as of September 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 September 30, 2025 the Company had a remaining borrowing capacity of approximately $ 2.0 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 June 30, 2025 was 7.39 %.

The rate as of September 30, 2025 was 7.42 %.

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 June 30, 2025 and December 31, 2024 .

As of June 30, 2025

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

As of September 30, 2025

Issuance Date

9 unchanged sentences

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.

The 2020 Notes which were redeemed in full on September 15, 2025, bore interest, since June 15, 2025, 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.

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

12 unchanged sentences

Consolidated Bank

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(dollars in thousands)

37 unchanged sentences

$ 14,013,611 $ 9,630,812 $ 14,013,611 $ 9,630,812

Others assets

9,974 8,791 9,974 8,791

1 unchanged sentence

$ 14,023,585 $ 9,639,603 $ 14,023,585 $ 9,639,603

*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.

*Occupancy and equipment, professional fees, advertising and promotion, data processing, Federal Deposit Insurance Corporation ("FDIC") insurance premium, merger expenses, amortization of core deposit intangible, insurance expense, restructuring and exit charges 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 June 30, 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 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.

As of September 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 (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 income available to common stockholders for the three months ended September 30, 2025 was $39.5 million, as compared to $15.7 million for the comparable three-month period ended September 30, 2024.

The Company’s diluted earnings per share were $0.78 for the three months ended September 30, 2025, as compared with diluted earnings per share of $0.41 for the comparable three-month period ended September 30, 2024.

The $23.8 million increase in net income available to common stockholders and the $0.37 increase in diluted earnings per share were due to a $41.1 million increase in net interest income and a $14.7 million increase in noninterest income, which were partially offset by a $20.0 million increase in noninterest expenses, a $10.3 million increase in income tax expense and a $1.7 million increase in the provision for credit losses on loans.

Net income available to common stockholders for the nine months ended September 30, 2025 was $36.4 million compared to $48.9 million for the comparable nine-month period ended September 30, 2024.

The Company’s diluted earnings per share were $0.83 for the nine months ended September 30, 2025 as compared with diluted earnings per share of $1.27 for the comparable nine-month period ended September 30, 2024.

The $12.5 million decrease in net income available to common stockholders and the $0.44 decrease in diluted earnings per share versus the comparable nine-month period ended September 30, 2024 were due to a $58.3 million increase in noninterest expenses and a $34.4 million increase in provision for credit losses, partially offset by a $64.0 million increase in net interest income and a $16.1 million increase in noninterest income.

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 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.

Fully taxable equivalent net interest income for the third quarter of 2025 increased $41.4 million, or 67.2%, from the third quarter of 2024, due to a 44 basis-point widening of the net interest margin to 3.11% from 2.67%, and a 43.1% increase in average interest earning assets.

The increase in average interest-earning assets was primarily due to the merger with FLIC.

The margin also benefited from a 70 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits, partially offset by an increase in cost of subordinated debt.

Fully taxable equivalent net interest income for the nine months ended September 30, 2025 was $249.5 million, an increase of $64.5 million, or 34.8%, from the nine months ended September 30, 2024.

The increase primarily resulted from a 37 basis-point increase in the net interest margin to 3.04% from 2.67%.

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.

During the nine months ended September 30, 2025, average interest-earning assets increased $1.7 billion, primarily due to the merger with FLIC.

The widening of the net interest margin during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024 was primarily due to a 57 basis-point decrease in the average cost of total deposits, including noninterest-bearing deposits, partially offset by the impact of a $200 million long-term subordinated debt issuance during the third quarter of 2025.

The following tables present for the three and nine months ended September 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 June 30,

Three Months Ended September 30,

(dollars in thousands)

33 unchanged sentences

Rates are annualized.

Six Months Ended June 30,

Nine Months Ended September 30,

(dollars in thousands)

34 unchanged sentences

Noninterest Income

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 income totaled $19.4 million for the three months ended September 30, 2025, compared with $4.7 million for the three months ended September 30, 2024.

During the third quarter of 2025, the Company realized a $6.6 million one-time benefit related to the employee retention tax credit ("ERTC"), a federal program under the CARES Act intended to encourage employee retention during the COVID-19 pandemic.

Additionally, the Company also recognized a $3.5 million defined benefit pension plan curtailment gain.

The gain resulted from freezing the FLIC defined benefit pension plan during the quarter.

Excluding the ERTC and defined pension plan curtailment gain, noninterest income increased by $4.6 million during the third quarter compared to the third quarter of 2024.

The increase was due to a $2.0 million increase in deposit, loan and other income, a $1.2 million increase in net gains on equity securities, a $0.8 million increase in bank owned life insurance ("BOLI") income and a $0.5 million increase in net gains on sale of loans held-for-sale (primarily SBA loans).

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

Noninterest income totaled $29.0 million for the nine months ended September 30, 2025, compared with $13.0 million for the nine months ended September 30, 2024.

Excluding the aforementioned ERTC and defined pension plan curtailment gain, noninterest income increased by $6.0 million during the nine months ended compared to the comparable period of 2024.

The $6.0 million increase in noninterest income during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024 was primarily due to a $3.3 million increase in deposit, loan and other income, a $2.2 million increase in net gains on equity securities and a $1.1 million increase in BOLI income, partially offset by a $0.8 million decrease in net gains on sale of loans held-for-sale.

Noninterest Expenses

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.

Noninterest expenses totaled $58.7 million for the three months ended September 30, 2025, compared with $38.6 million for the three months ended September 30, 2024.

The $20.0 million increase in noninterest expenses for the third quarter of 2025 when compared to the third quarter of 2024 was primarily due to a $9.4 million increase in salaries and employee benefits, a $2.9 million increase in amortization of core deposit intangibles, a $2.2 million increase in occupancy and equipment expenses and a $1.2 million increase in merger expenses.

The variances from the third quarter of 2025 to the third quarter of 2024 were primarily due to the merger with FLIC.

Noninterest expenses totaled $171.6 million for the nine months ended September 30, 2025, compared with $113.3 million for the nine months ended September 30, 2024.

The $58.3 million increase in noninterest expenses during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024 was primarily due to a $33.2 million increase in merger expenses, a $12.4 million increase in salaries and employee benefits, a $3.8 million increase in amortization of core deposit intangibles.

a $2.5 million increase in occupancy and equipment expenses, a $1.9 million increase in professional and consulting expenses, a $1.6 million increase in information technology and communications expenses, a $1.0 million in restructuring and exit charges, a $0.8 million increase in FDIC expense, a $0.3 million BOLI restructuring charge, a $0.5 million increase in other expenses and a $0.3 million increase in marketing and advertising.

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

Income tax expense was $16.3 million for the third quarter of 2025, resulting in an effective tax rate of 28.2%.

This compares to an income tax expense of $6.0 million and an effective tax rate of 26.0% in the third quarter of 2024.

The increase in income tax expense when compared to the third quarter of 2024 was primarily due to higher taxable income, resulting from the merger with FLIC.

Income tax expense was $18.5 million for the nine months ended September 30, 2025, resulting in an effective tax rate of 31.0%.

This compares to an income tax expense of $18.6 million and an effective tax rate of 25.8% in the nine months ended September 30, 2024.

Income tax expense for the nine months ended September 30, 2025 includes a $3.0 million estimated state tax liability resulting from intercompany dividends.

Excluding that charge, the effective tax rate for the nine months ended September 30, 2025 was 26.0%.

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.

June 30, 2025

September 30, 2025

December 31, 2024

6 unchanged sentences

Residential real estate

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.

As of September 30, 2025, gross loans totaled $11.3 billion, an increase of $3.0 billion or 36.6% compared to December 31, 2024.

The increases in the loan segments were primarily 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.

June 30, 2025

September 30, 2025

December 31, 2024

9 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

Total multifamily loans (before fair value adjustment)

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

Total nonowner occupied (before fair value adjustment)

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

Total owner-occupied (before fair value adjustment)

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

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.

June 30, 2025

September 30, 2025

December 31, 2024

5 unchanged sentences

Total nonowner-occupied (before fair value adjustment)

June 30, 2025

September 30, 2025

December 31, 2024

6 unchanged sentences

Allowance for Credit Losses and Related Provision

The allowance for credit losses is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.

The methodology for determining the allowance for credit losses is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded allowance for credit losses.

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

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 ACL is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date.

The methodology for determining the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL.

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

As of September 30, 2025, the Company’s ACL was $156.5 million, an increase of $73.8 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.

The provision for credit losses, which includes a provision for unfunded commitments, for the three and nine months ended September 30, 2025 was $5.5 million and $44.7 million, respectively, compared to $3.8 million and $10.3 million, for the three and nine months ended September 30, 2025 and September 30, 2024, respectively.

Included in the provision for credit losses for the nine months ended September 30, 2025 was $27.4 million in initial provision for credit losses related to the FLIC merger.

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 June 30, 2025 is adequate to cover credit losses inherent in the loan portfolio.

There were $5.1 million and $13.5 million in net charge-offs for the three and nine months ended September 30, 2025 compared with $3.5 million and $9.9 million in net charge-offs for the three and nine months ended September 30, 2024 respectively.

The level of the allowance for the respective periods of 2025 and 2024 reflects the credit quality within the loan portfolio, expected loan maturity dates, 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 September 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.

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Three Months Ended

September 30,

(dollars in thousands)

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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

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ACL excluding nonaccretable credit mark as a percentage of loans receivable

Six Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

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The Company manages asset quality and credit risk by maintaining diversification in its loan portfolio and through review processes that include analysis of credit requests and ongoing examination of outstanding loans, delinquencies, and potential problem loans, with particular attention to portfolio dynamics and mix.

The Company strives to identify loans experiencing difficulty early on, to record charge-offs promptly based on realistic assessments of current collateral values and cash flows, and to maintain an adequate allowance for credit losses at all times.

It is generally the Company’s policy to discontinue interest accruals once a loan is past due as to interest or principal payments for a period of ninety days.

7 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

6 unchanged sentences

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.

As of September 30, 2025, the Company's recorded investment in PCD loans totaled $269.7 million.

PCD loans, or purchased 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.

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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.

Within the PCD loan portfolio as of September 30, 2025, there is a pool of rent-regulated loans amounting to $200.5 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.

A $43.3 million nonaccretable mark and a $34.4 million accretable fair value mark were recorded as of the Acquisition Date.

The accretion associated with the fair value mark added approximately 4 basis points to the net interest margin for the current quarter.

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Investment Securities

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

As of September 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 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.

For the three months ended September 30, 2025, average securities, on an amortized cost basis, increased by $735.5 million to $1.4 billion, or 10.3% of average total interest-earning assets, from $736.9 million, or 8.0% of average interest-earning assets, for the three months ended September 30, 2024.

For the nine months ended September 30, 2025, average securities, on an amortized cost basis increased by $731.3 million to approximately $1.0 billion, or 9.3% of average total interest-earning assets, from approximately $732.3 million, or 7.9% of average interest-earning assets, for the nine months ended September 30, 2024.

As of September 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 $47.2 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.

1 unchanged sentence

The issuers continue to make timely principal and interest payments on the securities.

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 June 30, 2025.

Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes.

The Company did not record an ACL for available-for-sale securities as of September 30, 2025.

Interest Rate Sensitivity Analysis

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

As of September 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 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%.

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

Based on our model, which was run as of September 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 4.05%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.81%.

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 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%.

Based on our model, which was run as of September 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 1.46%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 2.00%.

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%.

An economic value of equity ("EVE") analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis points and down 100 basis points.

An EVE analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis points and down 100 basis points.

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

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 September 30, 2025, would decrease by 4.99% with an instantaneous and parallel rate shock of up 200 basis points, and decrease by 0.89% 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 June 30, 2025.

The following table illustrates the most recent results for EVE and one-year net interest income ("NII") sensitivity as of September 30, 2025.

Interest Rates

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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 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.

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 $1.7 billion as of June 30, 2025.

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.

As of September 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 September 30, 2025, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $974.2 billion, which represented 7.0% of total assets and 8.0% 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 September 30, 2025, not included in the above liquid assets were securities with a market value of $99.1 million which were pledged to the FHLB and securities with a market value of $139.8 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 September 30, 2025 and December 31, 2024.

The Bank is a member of the FHLB of New York and, based on available qualified collateral as of September 30, 2025, had the ability to borrow $3.9 billion.

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

As of September 30, 2025, the Bank had aggregate available and unused credit of approximately $4.4 billion, which represents the aforementioned facilities totaling $6.2 billion net of $1.8 billion in outstanding borrowings and letters of credit.

As of September 30, 2025, outstanding commitments for the Bank to extend credit were approximately $1.5 billion.

Cash an d cash equivalents totaled $542.7 million as of September 30, 2025, increasing by $186.2 million from $356.5 million as of December 31, 2024.

Operating activities provided $58.7 million in net cash.

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.

Investing activities used $46.2 million in net cash, a net increase in loans $102.0 million and a net increase in cash acquired related to FLIC of $54.9 million.

Financing activities provided $173.7 million in net cash, primarily reflecting a net increase in deposits of $297.2 million and proceeds from issuance of subordinated debt of $200.0 million, partially offset by net repayments of FHLB borrowings of $215.0 million.

Deposits are our primary source of funds.

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Our savings accounts offer paper and/or electronic statements.

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.

Time deposits constitute non-retirement and IRA accounts, generally with initial maturities ranging from 31 days to 60 months, and brokered certificate of deposits, 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.

CDARS/ICS reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC ("the Network").

Clients, who are Federal Deposit Insurance Corporation (“FDIC”) insurance sensitive, are able to place large dollar deposits with the Company and the Company utilizes CDARS to place those funds into certificates of deposit issued by other banks in the Network.

Certificate of Deposit Account Registry Service ("CDARS")/Insured Cash Sweep Accounts ("ICS") reciprocal deposits are offered based on the Bank’s participation in the IntraFi Network LLC ("the Network").

Clients, who are FDIC insurance sensitive, are able to place large dollar deposits with the Company and the Company utilizes CDARS to place those funds into certificates of deposit issued by other banks in the Network.

This occurs in increments of less than the FDIC insurance limits so that both the principal and interest are eligible for FDIC insurance coverage in amounts larger than the insured dollar amount.

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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 June 30, 2025

Quarter-to-Date Average June 30, 2024

Quarter-to-Date Average September 30, 2025

Quarter-to-Date Average September 30, 2024

(dollars in thousands)

2 unchanged sentences

Total average deposits

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.

Average total deposits increased by $3.8 billion, or 49.3%, during the three months ended September 30, 2025 when compared to the three months ended September 30, 2024.

The increase in total average deposits was due to a $1.7 billion increase in interest-bearing demand deposits, a $1.3 billion increase in noninterest-bearing deposits, a $0.4 billion increase in savings deposits and a $0.4 billion 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 increase in average time deposits of $0.4 billion during the three months ended September 30, 2025 was primarily due to a $0.3 billion increase in retail time deposits and a $0.1 billion dollar increase in nonreciprocal brokered certificates of deposit.

Average nonreciprocal brokered certificates of deposit included in total time deposits were $1.0 billion and $0.9 billion during the three months ended September 30, 2025 and September 30, 2024, respectively.

Average aggregate demand deposits included $1.1 billion and $1.2 billion in ICS reciprocal deposits during the three months ended September 30, 2025 and September 30, 2024, respectively.

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

Year-to-Date Average September 30, 2025

Year-to-Date Average September 30, 2024

(dollars in thousands)

2 unchanged sentences

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.

Average total deposits increased by $1.7 billion, or 22.9%, during the nine months ended September 30, 2025 when compared to the nine months ended September 30, 2024.

The increase in total average deposits was attributed to a $0.7 billion increase in interest-bearing demand deposits, a $0.6 billion increase in noninterest-bearing deposits, a $0.3 billion increase in savings deposits and a $0.1 billion increase 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 increase in average time deposits of $0.1 billion during the nine months ended September 30, 2025 was primarily due to a $0.1 billion increase in retail time deposits.

Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.9 billion for both the nine months ended September 30, 2025 and September 30, 2024.

Average aggregate demand deposits included $1.1 billion and $1.2 billion in ICS reciprocal deposits during the nine months ended September 30, 2025 and September 30, 2024, respectively.

The beta, which is the measurement of deposit rate sensitivity in response to market rate changes, on nonreciprocal brokered certificates of deposit tends to be higher than that of ICS and CDARS reciprocal deposits, as nonreciprocal brokered certificates of deposit 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.

June 30, 2025

September 30, 2025

December 31, 2024

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

June 30, 2025

September 30, 2025

December 31, 2024

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Total deposits increased by $3.5 billion, or 45.4%, 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 total deposits was primarily due to a $1.6 billion increase in interest-bearing demand deposits, a $1.1 billion increase in noninterest-bearing demand deposits, a $0.4 billion increase in time deposits and a $0.4 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

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

Included in time deposits were nonreciprocal brokered certificates of deposit of $0.9 billion as of both September 30, 2025 and December 31, 2024.

As of September 30, 2025, we held $888.8 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 September 30, 2025:

September 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 June 30, 2025 was 7.39%.

The rate as of September 30, 2025 was 7.42%.

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

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

The 2020 Notes, which were redeemed in full on September 15, 2025, bore interest, since June 15, 2025, 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.

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.

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, 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.

1 unchanged sentence

The Company’s stockholders’ equity increased by $296.6 million when compared to December 31, 2024.

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

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 increase in total stockholders’ equity was primarily due to an increase in common stock of $270.8 million, which represented the fair value stock consideration issued for the FLIC merger, an increase in retained earnings of $13.5 million, and a decrease in the accumulated other comprehensive loss of $10.7 million.

As of September 30, 2025, the Company’s tangible common equity ratio and tangible book value per share were 8.36% and $22.85, respectively, compared to 9.49% and $23.92, respectively, as of December 31, 2024.

Total goodwill and other intangible assets were $278.7 million as of September 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.

June 30, 2025

September 30, 2025

December 31, 2024

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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 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).

The following is a summary of regulatory capital amounts and ratios as of September 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 June 30, 2025

As of September 30, 2025

(dollars in thousands)

6 unchanged sentences

To Be Well-Capitalized Under Prompt Corrective Action Provisions

As of June 30, 2025

As of September 30, 2025

(dollars in thousands)

3 unchanged sentences

Total risk-based capital

* 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.

As of September 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 2.67% above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.88% above the minimum buffer ratio.

3 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