What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-05 compared with 2025-11-03 · 454 added, 788 removed, 1695 unchanged (42% of the section changed)

4 unchanged sentences

(in thousands, except for share data)

September 30,

Cash and due from banks

29 unchanged sentences

208,883 200,972

$ 14,209,561 $ 14,002,700

Noninterest-bearing

18 unchanged sentences

Authorized 5,000,000 shares;

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

issued 115,000 shares as of March 31, 2026 and as of December 31, 2025;

outstanding 115,000 shares as of March 31, 2026 and as of December 31, 2025

110,927 110,927

1 unchanged sentence

Authorized 100,000,000 shares;

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

issued 54,264,042 shares as of March 31, 2026 and 54,157,402 shares as of December 31, 2025;

outstanding 50,288,494 shares as of March 31, 2026 and 50,271,854 as of December 31, 2025

857,765 857,765

4 unchanged sentences

Treasury stock, at cost:

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

3,975,548 shares as of March 31, 2026 and 3,885,548 shares as of December 31, 2025

( 78,507 ) ( 76,116 )

10 unchanged sentences

Three 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

9 unchanged sentences

Information technology and communications

Restructuring and exit charges

Merger expenses

Merger expenses and restructuring charges

Bank owned life insurance restructuring charge

12 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands)

$ 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

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

Other comprehensive (loss) income, net of tax:

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

Net unrealized gains (losses) on cash flow hedges

Total other comprehensive (loss) income, net of tax

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 September 30, 2025

Comprehensive

Stockholders’

(in thousands, except share data)

(Loss) Income

Balance as of June 30, 2025

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

- - - 40,976 - - 40,976

Other comprehensive income, net of tax

- - - - - 10,295 10,295

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

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

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

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

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

- - - - - - -

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

- - - - - - -

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

- - ( 98 ) - - - ( 98 )

Stock-based compensation expense

- - 1,304 - - - 1,304

Balance as of September 30, 2025

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

Three Months Ended September 30, 2024

Comprehensive

Stockholders’

(in thousands, except share data)

(Loss) Income

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 income, net of tax

- - - - - 5,491 5,491

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

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

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

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

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 September 30, 2024

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

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

Comprehensive

1 unchanged sentence

(in thousands, except share data)

(Loss) Income

Balance as of December 31, 2025

1 unchanged sentence

- - - 37,822 - - 37,822

Other comprehensive income, net of tax

Other comprehensive loss, net of tax

- - - - - ( 6,153 ) ( 6,153 )

3 unchanged sentences

- - - ( 9,056 ) - - ( 9,056 )

Restricted stock grants, net of forfeitures ( 71,768 shares)

Net forfeitures of restricted stock grants ( 41,099 shares)

- - - - - - -

5 unchanged sentences

- - - - - - -

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

- - ( 507 ) - - - ( 507 )

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

- - ( 1,937 ) - - - ( 1,937 )

Stock-based compensation

Repurchase of stock ( 90,000 shares)

- - - - ( 2,391 ) - ( 2,391 )

Stock issued in connection with FLIC merger ( 11,790,11 6 shares)

Stock-based compensation expense

- - 1,431 - - - 1,431

Balance as of September 30, 2025

Balance as of March 31, 2026

$ 110,927 $ 857,765 $ 38,257 $ 701,154 $ ( 78,507 ) $ ( 38,049 ) $ 1,591,547

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Comprehensive

1 unchanged sentence

(in thousands, except share data)

(Loss) Income

Balance as of December 31, 2024

17 unchanged sentences

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

Repurchase of common stock ( 282,370 shares)

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

Stock-compensation expense

Stock-based compensation expense

- - 1,287 - - - 1,287

Balance as of September 30, 2024

Balance as of March 31, 2025

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

See accompanying notes to unaudited consolidated financial statements.

CONNECTONE BANCORP, INC.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(dollars in thousands)

Cash flows from operating activities

$ 40,925 $ 53,422

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

1 unchanged sentence

Provision for credit losses

44,700 10,300

Loss on bank owned life insurance policy exchange

Amortization of intangibles

Net accretion of loan purchase discounts

( 13,955 ) ( 692 )

Net accretion of loans

Accretion on bank premises

Amortization (accretion) on time deposits

Amortization on deposits

Amortization on borrowings, net

Stock-based compensation

Loss on bank owned life insurance policy exchange

Stock-based compensation expense

Gains on equity securities, net

( 2,550 ) ( 309 )

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

( 1,372 ) ( 2,126 )

Loans originated for resale

( 21,352 ) ( 18,202 )

Proceeds from sale of loans held-for-sale

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 )

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

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

Amortization of subordinated debentures issuance costs

(Increase) decrease in accrued interest receivable

( 1,196 ) 2,157

Increase in accrued interest receivable

Net change in operating leases

Increase in other assets

( 20,981 ) ( 1,617 )

Increase (decrease) in other liabilities

2,606 ( 37,505 )

Decrease in other liabilities

Net cash provided by operating activities

58,698 28,461

Cash flows from investing activities

Investment securities available-for-sale:

( 391,666 ) ( 66,743 )

Available-for-sale securities

Maturities, calls and principal repayments

102,982 47,753

Purchase of equity securities

( 1,825 ) ( 1,526 )

Proceeds from equity securities sold

1 unchanged sentence

Net (increase) decrease in loans

( 102,041 ) 223,922

Proceeds from bank owned life insurance

Purchases of premises and equipment

( 3,787 ) ( 1,536 )

Cash acquired, net of cash consideration paid in acquisition

Net cash (used in) provided by investing activities

( 46,178 ) 211,669

Cash flows from financing activities

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

Proceeds from FHLB borrowings

790,000 630,587

Repayment of FHLB borrowings

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

Cash dividends on preferred stock

( 4,527 ) ( 4,527 )

Cash dividends paid on common stock

( 22,900 ) ( 20,368 )

Repurchase of common stock

Repurchase of treasury stock

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

( 2,232 ) ( 1,403 )

Net cash provided by (used in) financing activities

173,726 ( 235,596 )

Net change in cash and cash equivalents

186,246 4,534

Cash and cash equivalents at beginning of period

356,488 242,714

Cash and cash equivalents at end of period

$ 542,734 $ 247,248

Supplemental disclosures of cash flow information

1 unchanged sentence

Interest paid on deposits and borrowings

$ 201,801 $ 205,762

36,173 21,084

Supplemental disclosures of noncash activities

Business Combination

Fair value of assets acquired

$ 3,905,094 -

Fair value of liabilities assumed

Stock issued in connection with FLIC merger

See accompanying notes to unaudited consolidated financial statements.

14 unchanged sentences

The Bank is a community-based, full-service New Jersey-chartered commercial bank that was founded in 2005.

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.

The Bank operates from its headquarters located at 301 Sylvan Avenue in the Borough of Englewood Cliffs, Bergen County, New Jersey and through its 55 other banking offices located in New Jersey, New York and Florida.

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.

11 unchanged sentences

Segment Reporting

The Company’s operations are solely in the financial services industry.

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

The Company’s operations are solely in the financial services industry, providing 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 its banking operations.

12 unchanged sentences

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.

Prior to the freezing of the Plan 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.

1 unchanged sentence

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

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

The costs associated with the plans are accrued based on actuarial assumptions and included in deposit, loan and other income.

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 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 ("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.

9 unchanged sentences

Authoritative Accounting Guidance

Adoption of New Accounting Standards in 2025

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

Improvements to Income Tax Disclosures.

These amendments require that public business entities on an annual basis ( 1 ) disclose specific categories in the rate reconciliation and ( 2 ) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate).

The amendments require that all entities disclose on an annual basis the following information about income taxes paid:

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

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.

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

Newly Issued, But Not Yet Effective Accounting Standards

14 unchanged sentences

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

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

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

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

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

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

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

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

The acquisition of FLIC was accounted for as a business combination using the acquisition method of accounting.

Accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair values on the Acquisition Date.

During the measurement period, the Company updated its assessment of the fair value of net assets acquired, resulting in a net increase of $ 4.6 million to goodwill from the amount originally reported as June 30, 2025.

This adjustment was primarily related to finalizing the assessment of deferred tax assets and Section 382 valuation allowances.

As of March 31, 2026, total goodwill recorded from the merger is $ 11.9 million.

This goodwill is not amortizable or deductible for tax purposes and represents the future economic benefits and synergies expected from the combined operations.

There have been no adjustments to the preliminary purchase price allocation during the three months ended March 31, 2026.

While the measurement period remains open until June 1, 2026, the Company’s valuation and assessment are substantially complete.

The Company does not anticipate any further material adjustments to the preliminary valuations before the expiration of the measurement period.

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:

14 unchanged sentences

Business Combination – (continued)

(in thousands)

Period Adjustments

(dollars in thousands)

Total purchase price consideration

$ 270,828 $ 270,828

Fair Value of Assets Acquired:

Cash and cash equivalents

Securities available-for-sale

54,869 - 54,869

Available-for-sale Securities

596,702 - 596,702

Loans receivables, net

2,882,951 - 2,882,951

Restricted stock, at cost

24,276 - 24,276

Premises and equipment, net

45,895 - 45,895

Bank-owned life insurance

118,098 - 118,098

Pension plan assets

11,617 - 11,617

Core deposit intangible

63,206 - 63,206

107,480 ( 4,624 ) 102,856

Total assets acquired

$ 3,905,094 $ ( 4,624 ) $ 3,900,470

Fair Value of Liabilities Assumed:

3,251,147 - 3,251,147

360,405 - 360,405

Other liabilities

29,953 - 29,953

Total liabilities assumed

$ 3,641,505 $ - $ 3,641,505

Net assets acquired

$ 263,589 $ ( 4,624 ) $ 258,965

Goodwill recorded in acquisition

$ 7,239 $ 4,624 $ 11,863

CONNECTONE BANCORP, INC.

4 unchanged sentences

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

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

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

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

25 unchanged sentences

Loans at Acquisition

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

Non-PCD Loans

2,860,661 ( 171,884 ) - 2,688,777

Total PCD Loans

2 unchanged sentences

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

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

Deferred Tax Benefit – The Company recorded a net deferred income tax benefit of $ 46.5 million related to the tax attributes of FLIC, along with the effects of fair value adjustments resulting from applying the purchase method of accounting.

This amount represents a measurement period adjustment from the preliminary $ 51.1 million benefit previously reported.

The current estimate reflects the $ 4.6 million net decrease in deferred tax assets described above, which accounts for the true-up of tax attributes, the application of the finalized 30.9 % blended statutory tax rate, and the recognition of a valuation allowance related to Section 382 limitations.

No changes were made to these estimates during the three months ended March 31, 2026.

While the measurement period remains open until June 1, 2026, the Company’s assessment of the combined statutory tax rates and the differences between the book and tax bases of acquired assets and assumed liabilities is substantially complete.

Although these amounts remain preliminary until the expiration of the measurement period, the Company believes the current values reflect the final fair value of these attributes in all material respects and does not anticipate further adjustments.

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

1 unchanged sentence

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 $ 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.

Costs related to the acquisition and subsequent integration totaled $ 2.1 million for the three months ended March 31, 2026.

These costs consisted of $ 0.1 million in direct merger-related expenses and $ 2.0 million in restructuring charges.

These amounts were expensed as incurred and are recorded within "Merger Expenses and Restructuring Charges" in the Company’s Consolidated Statements of Income.

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Business Combination – (continued)

The following table presents unaudited supplemental pro forma information as if the merger had occurred on January 1, 2025.

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

Material non-recurring adjustments directly attributable to the merger, including the "Day 1" provision for credit losses and direct merger-related expenses, have been excluded from the 2025 pro forma results.

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

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

Nine Months Ended September 30,

(in thousands)

Three Months Ended

(dollars in thousands)

March 31, 2025

Net interest income

$ 300,771 $ 262,608

$ 104,766 $ 58,690

Noninterest income

Net income available to common stockholders

CONNECTONE BANCORP, INC.

2 unchanged sentences

Earnings per Common Share

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”).

The restricted stock awards granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities.

The two -class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

The Company calculates earnings per share (“EPS”) in accordance with FASB ASC 260 - 10 - 45.

The restricted stock awards granted by the Company contain non-forfeitable rights to dividends and are therefore considered participating securities.

Under the two -class method, basic EPS is calculated by excluding dividends paid to participating securities and any undistributed earnings attributable to those securities.

Earnings per common share have been computed based on the following:

Three Months Ended

Nine Months Ended

September 30,

(dollars in thousands, except for per share data)

12 unchanged sentences

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

302 206 223 185

Weighted average common and equivalent shares outstanding

2 unchanged sentences

$ 0.72 $ 0.49

0.78 0.41 0.83 1.27

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

There were no antidilutive share equivalents during the three months ended March 31, 2026 and March 31, 2025 .

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 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 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 September 30, 2025 and December 31, 2024 .

All of the Company’s investment securities were classified as available-for-sale as of March 31, 2026 and December 31, 2025.

Available-for-sale securities are reported at fair value, with unrealized gains and losses, net of tax, included in accumulated other comprehensive income within stockholders’ equity.

Fair value is determined using quoted market prices or, in instances of limited market activity, based on various assumptions.

See Note 7 of the Notes to Consolidated Financial Statements for further discussion regarding the valuation of the Company’s investment securities.

The following tables present the amortized cost and estimated fair value of the Company’s portfolio of available-for-sale securities as of the dates indicated.

(dollars in thousands)

September 30, 2025

Investment securities available-for-sale:

March 31, 2026

Available-for-sale securities:

Federal agency obligations

12 unchanged sentences

Other securities

Total investment securities available-for-sale

260 - - 260 -

Total available-for-sale securities

$ 1,264,090 $ 8,677 $ ( 76,383 ) $ 1,196,384 $ -

December 31, 2025

Investment securities available-for-sale:

Available-for-sale securities:

Federal agency obligations

13 unchanged sentences

182 - - 182 -

Total investment securities available-for-sale

Total available-for-sale securities

$ 1,308,082 $ 13,265 $ ( 70,409 ) $ 1,250,938 $ -

The Company did not have any securities classified as held-to-maturity at March 31, 2026 and December 31, 2025.

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities – (continued)

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.

Investment securities with a carrying value of approximately $ 782.7 million and $ 771.2 million at March 31, 2026 and December 31, 2025 , respectively, were pledged to secure public deposits, borrowings and for other purposes required or permitted by law.

As of March 31, 2026 and December 31, 2025 , there were no holdings 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 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.

September 30, 2025

The following table presents the amortized cost and fair value of available-for-sale securities by contractual maturity as of March 31, 2026.

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

Securities not due at a single maturity date, such as mortgage-backed securities, are shown separately.

March 31, 2026

(dollars in thousands)

Investment securities available-for-sale:

Available-for-sale securities

Due in one year or less

11 unchanged sentences

Other securities

Total investment securities available-for-sale

Total available-for-sale securities

$ 1,264,090 $ 1,196,384

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 .

There were no realized gains or losses on available-for-sale securities during the three months ended March 31, 2026 and March 31, 2025 .

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities – (continued)

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

The following tables set forth securities with unrealized losses at the dates indicated presented by the length of time the securities have been in a continuous unrealized loss position.

March 31, 2026

Less than 12 Months

1 unchanged sentence

(dollars in thousands)

Investment securities available-for-sale:

Available-for-sale securities:

Federal agency obligations

11 unchanged sentences

270 ( 3 ) - - 270 ( 3 )

Total investment securities available for sale

Total available-for-sale securities

$ 598,125 $ ( 76,383 ) $ 156,419 $ ( 2,269 ) $ 441,706 $ ( 74,114 )

3 unchanged sentences

(dollars in thousands)

Investment securities available-for-sale:

Available-for-sale securities:

Federal agency obligations

11 unchanged sentences

525 ( 3 ) 242 - 283 ( 3 )

Total investment securities available for sale

Total available-for-sale securities

$ 600,311 $ ( 70,409 ) $ 119,093 $ ( 410 ) $ 481,218 $ ( 69,999 )

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

Accrued interest receivable for available-for-sale securities totaled $ 4.9 million and $ 5.2 million as of March 31, 2026 and December 31, 2025 .

There were no sales of available-for-sale securities during the three months ended March 31, 2026 and 2025.

CONNECTONE BANCORP, INC.

2 unchanged sentences

Investment Securities – (continued)

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 $ 5.2 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.

8 unchanged sentences

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.

The Company has not recognized an ACL for available-for-sale securities as of March 31, 2026 and December 31, 2025.

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

Government agencies and U.S.

7 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The notional amount does not represent amounts exchanged by the parties.

The amount exchanged is determined by reference to the notional amount and the other terms of the individual agreements.

Derivative instruments are recognized on the balance sheet at their fair value and are not reported on a net basis.

As part of our overall asset liability management strategy, the Company utilizes interest rate swaps to help manage its interest rate risk position.

The notional amount of an interest rate swap does not represent amounts exchanged by the parties.

The exchange of cash flow is determined by reference to the notional amount and the other terms of the interest rate swap agreements.

Derivative instruments are recognized on the balance sheet at their fair value.

The Company’s cash flow hedges are reported on a gross basis as they are not subject to master netting arrangements.

Conversely, interest rate caps are reported on a net basis in the balance sheet, as these instruments are subject to enforceable master netting agreements that allow for the offsetting of assets and liabilities with the same counterparty.

Derivatives Designated as Hedges

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

As of March 31, 2026 , 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.

The Company has entered into twelve pay fixed-rate interest rate swaps, with a total notional amount of $ 675 million.

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”).

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

The swaps carry expiration dates ranging from August 2026 to November 2028.

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

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.

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) ("OCI").

The amount included in accumulated other comprehensive income (loss) ("AOCI") 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 $ 4.7 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.

Interest income recorded on these swap and interest rate cap transactions totaled approximately $ 2.6 million and $ 4.1 million during the three months ended March 31, 2026 and March 31, 2025 , respectively, and is recorded as a component of either interest expense on FHLB advances or on brokered certificates of deposit.

CONNECTONE BANCORP, INC.

3 unchanged sentences

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)

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

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

(dollars in thousands)

Interest rate contracts

$ 863 $ ( 4,709 ) $ -

Three Months Ended September 30, 2024

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

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

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

(dollars in thousands)

Interest rate contracts

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

Nine Months Ended September 30, 2025

Three Months Ended March 31, 2026

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

4 unchanged sentences

$ 4,605 $ ( 2,634 ) $ -

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

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 September 30, 2025 and December 31, 2024 :

September 30, 2025

The following table reflects the cash flow hedges included in the consolidated statements of condition as of March 31, 2026 and December 31, 2025 :

March 31, 2026

December 31, 2025

11 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.

September 30, 2025

(in thousands)

The following table reflects the back-to-back swaps that are not designated as hedging instruments as of March 31, 2026:

March 31, 2026

(dollars in thousands)

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

7 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 September 30, 2025 and December 31, 2024 :

September 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 March 31, 2026 and December 31, 2025 :

March 31, 2026 December 31, 2025

(dollars in thousands)

11 unchanged sentences

$ 11,735,596 $ 11,453,280

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

As of March 31, 2026 and December 31, 2025 , loans totaling approximately $ 8.5 billion and $ 8.2 billion, respectively, were pledged to secure borrowings from the FHLB of New York and the Federal Reserve Bank of New York.

Loans held-for-sale – The following table sets forth the composition of the Company's loans held-for-sale portfolio as of March 31, 2026 and December 31, 2025 .

March 31, 2026

December 31, 2025

(dollars in thousands)

Residential real estate

Loans Receivable on Nonaccrual Status - The following tables present the carrying value of nonaccrual loans with an ACL and the carrying value of nonaccrual loans without an ACL as of September 30, 2025 and December 31, 2024 :

September 30, 2025

$ 10,222 $ 391

March 31, 2026

Nonaccrual loans with ACL

5 unchanged sentences

9,411 15,524 24,935

Commercial construction

- 2,204 2,204

Residential real estate

11 unchanged sentences

207 28,354 28,561

Commercial construction

- 2,204 2,204

Residential real estate

3 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 September 30, 2025.

The following table presents the recorded investment of those loans as of March 31, 2026 and December 31, 2025:

(dollars in thousands)

September 30, 2025

March 31, 2026

December 31, 2025

$ 4,617 $ 5,398

Commercial real estate

Commercial construction

201,147 213,770

Residential real estate

Total purchased credit-deteriorated loans

$ 207,621 $ 221,130

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.

In addition, the current city administration has supported a rent freeze on rent stabilized apartments, while proposing other policy initiatives which could have an adverse impact on rent stabilized properties.

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

15 unchanged sentences

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

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

The following table presents loans by origination, risk designation and gross charge-offs as of and during the three months ended March 31, 2026 (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 September 30, 2025 and December 31, 2024 :

September 30, 2025

The following tables present the amortized cost basis of collateral dependent loans by loan segment as of March 31, 2026 and December 31, 2025 :

March 31, 2026

Real Estate Other

3 unchanged sentences

225,669 - 225,669

Commercial construction

2,204 - 2,204

Residential real estate

7 unchanged sentences

242,125 - 242,125

Commercial construction

2,204 - 2,204

Residential real estate

5 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 September 30, 2025 and December 31, 2024 :

September 30, 2025

Aging Analysis - The following tables present the aging of the amortized cost in past due loans as of March 31, 2026 and December 31, 2025 :

March 31, 2026

30-59 Days Past Due

32 unchanged sentences

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

September 30, 2025

March 31, 2026

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

Three Months Ended September 30, 2025

Commercial real estate

Commercial construction

Residential real estate

(dollars in thousands)

Balance as of June 30, 2025

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

( 473 ) ( 4,700 ) - - - ( 5,173 )

22 - - 15 - 37

Provision for credit losses - loans:

Initial provision related to acquisition

Operating provision for credit losses

( 368 ) 5,892 492 ( 573 ) 2 5,445

Nonaccretable credit marks on PCD loans

Balance as of September 30, 2025

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

Nine Months Ended September 30, 2025

Activity in the Company’s ACL for loans for the three months ended March 31, 2026 and March 31, 2025 are summarized in the tables below.

Three Months Ended March 31, 2026

Commercial real estate

4 unchanged sentences

$ 15,358 $ 121,427 $ 5,303 $ 12,199 $ 18 $ 154,305

Non-PCD Loans

( 476 ) ( 2,282 ) - - - ( 2,758 )

- ( 4,365 ) - - - ( 4,365 )

Provision for credit losses - loans:

Initial provision related to acquisition - loans

430 21 - 16 - 467

Provision for credit losses - loans:

Operating provision for credit losses

2 unchanged sentences

118 ( 328 ) - - - ( 210 )

Balance as of September 30, 2025

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

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Loans and the Allowance for Credit Losses – (continued)

Three Months Ended September 30, 2024

Commercial real estate

Commercial construction

Residential real estate

(dollars in thousands)

Balance as of June 30, 2024

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

( 1,923 ) ( 1,636 ) - - - ( 3,559 )

22 31 - - - 53

(Reversal of) provision for credit losses – loans

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

Balance as of September 30, 2024

Balance as of March 31, 2026

$ 16,189 $ 119,800 $ 4,680 $ 12,368 $ 19 $ 153,056

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Commercial real estate

8 unchanged sentences

( 402 ) 3,364 ( 34 ) 191 ( 1 ) 3,118

Balance as of September 30, 2024

Balance as of March 31, 2025

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

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 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

The following table presents the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three months ended March 31, 2026 .

The modification percentage represents the total loans modified during the three months ended as a percentage of the total gross loan balances as of March 31, 2026 .

Amortized Cost Basis

Term Extension

Payment Deferral

Gross Loans at September 30, 2025

Interest Rate Reduction

Gross Loans at March 31, 2026

Modification % (Modified Loans/Gross Loans)

September 30, 2025

March 31, 2026

(dollars in thousands)

8 unchanged sentences

$ 38,005 $ 2,849 $ 599 $ 41,453 $ 11,739,093 0.35 %

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 .

The following table presents the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three months ended March 31, 2026 .

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 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

Weighted Average Interest Rate Reduction

Weighted Average Payment Reduction

March 31, 2026

(dollars in thousands)

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

Commercial real estate

124 2 2.0 % -

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.

3 unchanged sentences

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 September 30, 2025 .

The following table presents the performance of such loans that have been modified in the last twelve months through March 31, 2026 .

30-89 Days Past Due

90 Days or Greater Past Due

September 30, 2025

March 31, 2026

(dollars in thousands)

1 unchanged sentence

Commercial real estate

29,694 3,687 -

Commercial construction

Residential real estate

$ 56,310 $ 3,687 $ -

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.

There were eight modifications to borrowers experiencing financial difficulty during the three months ended March 31, 2026.

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

During the three months ended March 31, 2026 and March 31, 2025 , the Company had no commitments to lend additional funds to borrowers experiencing financial difficulty for which the Company modified the terms of the loans in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, or a term extension during the current period.

There were no loans to borrowers experiencing financial difficulty that had a payment default during the three months ended March 31, 2026 and March 31, 2025, which were modified in the twelve months prior to that default.

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

7 unchanged sentences

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

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

The following table presents a roll forward of the ACL for unfunded commitments for the three months ended March 31, 2026 and 2025 :

Three Months Ended

September 30,

(dollars in thousands)

1 unchanged sentence

$ 3,108 $ 2,627

Provision for credit losses – unfunded commitments

Balance at end of period

$ 3,392 $ 2,652

Nine Months Ended

September 30,

(dollars in thousands)

Balance at beginning of period

$ 2,627 $ 2,811

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

(Reversal of) provision for credit losses – unfunded commitments

Balance at end of period

1 unchanged sentence

Components of Provision for Credit Losses

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

The following table summarizes the provision for (reversal of) credit losses for the three months ended March 31, 2026 and 2025 :

Three Months Ended

September 30,

(dollars in thousands)

1 unchanged sentence

$ 5,617 $ 3,118

Initial provision related to acquisition - loans

Provision (reversal) for credit losses - unfunded commitments

Provision for credit losses

$ 5,500 $ 3,800

Nine Months Ended

September 30,

(dollars in thousands)

Provision for credit losses – loans

$ 16,628 $ 10,459

Initial provision related to acquisition - loans

Provision for (reversal of) credit losses - unfunded commitments

Release of nonaccretable marks due to improvements in expected cash flows

(Reversal of) provision for credit losses - unfunded commitments

Provision for credit losses

5 unchanged sentences

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

FASB ASC 820 - 10, “Fair Value Measurements and Disclosures”, is the standard used to govern disclosures related to fair value measurements.

FASB ASC 820 - 10 - 05 defines fair value, establishes a framework for measuring fair value, establishes a three -level valuation hierarchy for disclosure of fair value measurements and enhances disclosure requirements for fair value measurements.

The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date.

FASB ASC 820 - 10 - 65 provides additional guidance for estimating fair value in accordance with FASB ASC 820 - 10 - 05 when the volume and level of activity for the asset or liability have significantly decreased.

This ASC also includes guidance on identifying circumstances that indicate a transaction is not orderly.

FASB ASC 820 - 10 - 05 establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under FASB ASC 820 - 10 - 05 are as follows:

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

1 unchanged sentence

Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (for example, supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The level of an asset or liability within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.

5 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 September 30, 2025 and December 31, 2024 :

Investment Securities Available-for-Sale and Equity Securities :

The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 :

Available-for-Sale Securities and Equity Securities :

Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy.

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

September 30, 2025

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

For financial assets and liabilities measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used as of March 31, 2026 and December 31, 2025 are as follows:

March 31, 2026

Fair Value Measurements at Reporting Date Using

5 unchanged sentences

Recurring fair value measurements:

Investment securities:

Available-for-sale:

Available-for-sale securities:

Federal agency obligations

11 unchanged sentences

Other securities

Total available-for-sale

Total available-for-sale securities

1,196,384 260 1,189,746 6,378

3 unchanged sentences

$ 1,232,971 $ 10,270 $ 1,216,323 $ 6,378

Derivatives - interest rate contracts

Total liabilities

$ 372 $ - $ 372 $ -

CONNECTONE BANCORP, INC.

10 unchanged sentences

Recurring fair value measurements:

Investment securities:

Available-for-sale:

Available-for-sale securities:

Federal agency obligations

11 unchanged sentences

Other securities

Total available-for-sale

Total available-for-sale securities

$ 1,250,938 $ 182 $ 1,244,244 $ 6,512

3 unchanged sentences

$ 1,286,299 $ 10,255 $ 1,269,532 $ 6,512

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 .

Derivatives - interest rate contracts

Total liabilities

$ 704 $ - $ 704 $ -

There were no transfers between Level 1, Level 2 and Level 3 during the three months ended March 31, 2026 and for the year ended December 31, 2025 .

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 September 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 March 31, 2026 and December 31, 2025 .

Loans Held-for-Sale :

Residential mortgage loans, originated and intended for sale in the secondary market, are carried at the lower of aggregate cost or estimated fair value as determined by outstanding commitments from investors.

Residential mortgage and SBA loans, originated and intended for sale in the secondary market, are carried at the lower of aggregate cost or estimated fair value as determined by outstanding commitments from investors.

For these loans originated and intended for sale, gains and losses on loan sales (sale proceeds minus carrying value) are recorded in other income and direct loan origination costs and fees are deferred at origination of the loan and are recognized in other income upon sale of the loan.

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

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 September 30, 2025 and December 31, 2024 .

As of March 31, 2026 loans held-for-sale totaled $ 10.2 consisting entirely of SBA loans.

As of December 31, 2025 , loans held-for-sale totaled $ 0.4 million, consisting entirely of residential mortgage loans.

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 September 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 March 31, 2026 and December 31, 2025 are as follows:

Fair Value Measurements at Reporting Date Using

Assets measured at fair value on a nonrecurring basis:

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

March 31, 2026 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

Collateral dependent loans:

2 unchanged sentences

Commercial real estate

9,100 - - 9,100

Fair Value Measurements at Reporting Date Using

4 unchanged sentences

$ 693 $ - $ - $ 693

Commercial real estate

2,913 - - 2,913

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 .

Collateral dependent loans – Collateral dependent loans as of March 31, 2026 that required a valuation allowance were $ 10.0 million with a related valuation allowance of $ 0.2 million compared to $ 0.8 million with a related valuation allowance of $ 0.1 million as of December 31, 2025 .

CONNECTONE BANCORP, INC.

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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 nine months ended September 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 three months ended March 31, 2026 and for the year ended December 31, 2025 :

Obligations of U.S.

3 unchanged sentences

Principal paydowns

Change in unrealized gain (loss)

Ending balance, September 30, 2025

Change in unrealized loss

Ending balance, March 31, 2026

Obligations of U.S.

3 unchanged sentences

Principal paydowns

Changes in unrealized loss

Changes in unrealized gain

Ending balance, December 31, 2025

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 following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025 .

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

September 30, 2025

March 31, 2026

Valuation Techniques

Unobservable Input

Securities available-for-sale:

Available-for-sale securities:

(dollars in thousands)

6 unchanged sentences

Unobservable Input

Securities available-for-sale:

Available-for-sale securities:

(dollars in thousands)

10 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.

September 30, 2025

March 31, 2026

(dollars in thousands)

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-5% to +15% (+8.1%)

Commercial real estate loans

2,913 Appraisals of collateral value

Adjustment for comparable sales

-40% to +0% (-14.3%)

CONNECTONE BANCORP, INC.

2 unchanged sentences

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

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 :

As of March 31, 2026, the fair value measurements presented are consistent with Topic 820, Fair Value Measurement , in which fair value represents exit price.

The following presents the carrying amount, fair value, and placement in the fair value hierarchy of the Company’s financial instruments as of March 31, 2026 and December 31, 2025 :

Fair Value Measurements

4 unchanged sentences

(dollars in thousands)

September 30, 2025

March 31, 2026

Financial assets:

1 unchanged sentence

$ 344,471 $ 344,471 $ 344,471 $ - $ -

Securities available-for-sale

Available-for-sale securities:

1,196,384 1,196,384 260 1,189,746 6,378

4 unchanged sentences

11,582,540 11,469,582 - - 11,469,582

Loans held-for-sale

10,222 10,222 - 10,222 -

Derivatives - interest rate contracts

10 unchanged sentences

202,050 202,411 - 202,411 -

Derivatives - interest rate contracts

372 372 - 372 -

Accrued interest payable

4 unchanged sentences

$ 380,895 $ 380,895 $ 380,895 $ - $ -

Investment securities available-for-sale

Available-for-sale securities:

1,250,938 1,250,938 182 1,244,244 6,512

16 unchanged sentences

201,864 204,454 - 204,454 -

Derivative - interest rate contracts

704 704 - 704

Accrued interest payable

17 unchanged sentences

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):

Total comprehensive income 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 available-for-sale securities, unrealized gains and 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 AOCI for the periods presented (dollars in thousands):

Details about Accumulated Other Comprehensive Income Components

Amounts Reclassified from Accumulated Other Comprehensive Income

Affected Line item in the Consolidated Statements of Income

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Interest income on cash flow hedges

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( 815 ) ( 1,164 ) Income tax expense

$ 3,385 $ 4,044 $ 9,575 $ 12,176

Amortization of pension plan net actuarial losses

$ - $ ( 43 ) $ - $ ( 129 ) Salaries and employee benefits

- 13 - 37 Income tax benefit

$ - $ ( 30 ) $ - $ ( 92 )

Total reclassification

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Comprehensive Income – (continued)

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

September 30, 2025

AOCI as of March 31, 2026 and December 31, 2025 consisted of the following:

March 31, 2026

December 31, 2025

(dollars in thousands)

Investment securities available-for-sale, net of tax

Available-for-sale securities, net of tax

$ ( 48,156 ) $ ( 40,652 )

Cash flow hedge, net of tax

10,799 22,481

Defined benefit pension and post-retirement plans, net of tax

$ ( 38,049 ) $ ( 31,896 )

$ ( 37,110 ) $ ( 47,846 )

Stock-based Compensation

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 September 30, 2025 .

The Plan eliminates all remaining issuable shares under previous plans and is the only outstanding plan as of March 31, 2026 .

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 September 30, 2025 were approximately 170,192 .

Shares available for grant and issuance under the Plan as of March 31, 2026 were approximately 64,787 .

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

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.

Restricted stock and deferred stock units granted to new employees and board members may be granted with shorter vesting periods.

Grants of performance units typically have a cliff vesting after three years or upon a change of control.

All issuances are subject to forfeiture if the recipient is no longer employed prior to the award's vesting.

Any forfeitures would result in previously recognized expense being reversed.

Restricted stock grants have the same dividend and voting rights as common stock, while options, performance units and deferred stock units do not.

As of March 31, 2026 and December 31, 2025, the Company had no outstanding stock options.

Restricted stock and deferred stock units generally vest over a three -year period, with one - third vesting annually beginning one year after the grant date.

These awards also provide for accelerated vesting upon a change in control.

Grants to new employees and board members may feature shorter vesting schedules.

Performance units typically feature a three -year cliff vesting or accelerate upon a change of control.

The Company accounts for forfeitures as they occur by reversing previously recognized compensation expense.

Restricted stock grants carry the same dividend and voting rights as common stock, while options, performance units, and deferred stock units do not.

All awards are issued at the fair value of the underlying shares on the grant date.

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Forfeiture rates are not estimated but are recorded as incurred.

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:

Stock-based compensation expense for the three months ended March 31, 2026 and March 31, 2025 was $ 1.4 million and $ 1.3 million, respectively.

Activity in the Company’s restricted stock for the three months ended March 31, 2026 was as follows:

Nonvested Shares

5 unchanged sentences

( 5,800 ) 21.62

Nonvested as of September 30, 2025

Nonvested as of March 31, 2026

115,979 $ 22.60

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Stock-Based Compensation – (continued)

As of September 30, 2025 , there was approximately $ 1.3 million of total unrecognized compensation cost related to nonvested restricted stock granted.

As of March 31, 2026 , there was approximately $ 1.6 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 1.8 years.

8 unchanged sentences

( 6,567 ) 21.36

Unearned as of September 30, 2025

Unearned as of March 31, 2026

255,833 382,501 $ 23.11

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.

As of March 31, 2026 , the specific number of shares related to performance units that were expected to vest was 255,833 , 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 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.

As of March 31, 2026 , the maximum number of performance units that ultimately could vest if performance targets were exceeded is 382,501 .

During the three months ended March 31, 2026 , 45,746 shares vested.

A total of 24,582 shares were netted from the vested shares to satisfy employee tax obligations.

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.

The net shares issued from vesting of performance units during the three months ended March 31, 2026 were 21,164 shares.

As of March 31, 2026 , compensation cost of approximately $ 3.0 million related to non-vested performance units not yet recognized is expected to be recognized over a weighted average period of 2.1 years.

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

3 unchanged sentences

170,482 $ 21.50

111,561 26.15

Vested shares

( 92,170 ) 20.07

Unearned as of September 30, 2025

Forfeited/cancelled/expired

( 3,218 ) 22.21

Any forfeitures would result in previously recognized expense being reversed.

Unearned as of March 31, 2026

186,655 $ 24.97

Forfeitures are recognized as they occur as a reversal of previously recognized compensation expense.

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

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

During the three months ended March 31, 2026 , 92,170 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 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.

The net shares issued from vesting of deferred stock units during the three months ended March 31, 2026 were 42,849 shares.

As of March 31, 2026 , compensation cost of approximately $ 3.6 million related to non-vested deferred stock units, not yet recognized, is expected to be recognized over a weighted average period of 1.9 years.

CONNECTONE BANCORP, INC.

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Components of Net Periodic Pension Cost

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.

The Company maintains two frozen defined benefit pension plans;

the Legacy CNOB Plan and the Legacy FLIC Plan, which were frozen on June 30, 2007 and September 30, 2025, respectively.

The following tables set 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

Legacy CNOB Plan

(dollars in thousands)

$ 486 $ - Salaries and employee benefits

Interest cost

1,004 106 Salaries and employee benefits

$ 90 $ 105 Deposit, loan and other income/Salaries and employee benefits

Expected return on plan assets

( 1,383 ) ( 214 ) Salaries and employee benefits

Net amortization

- 43 Salaries and employee benefits

( 238 ) ( 230 ) Deposit, loan and other income/Salaries and employee benefits

Total periodic pension income

$ ( 148 ) $ ( 125 )

Nine Months Ended

Three Months Ended

Affected Line Item in the Consolidated

September 30,

Statements of Income

Legacy FLIC Plan

(dollars in thousands)

$ 486 $ - Salaries and employee benefits

Interest cost

1,215 318 Salaries and employee benefits

$ 626 $ - Deposit, loan and other income

Expected return on plan assets

( 1,843 ) ( 642 ) Salaries and employee benefits

Net amortization

- 129 Salaries and employee benefits

( 891 ) - Deposit, loan and other income

Total periodic pension income

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Contributions

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.

The Company did not contribute to the pension plans during the three months ended March 31, 2026 .

The Company does not plan on contributing amounts to either Pension Trust for the remainder of 2026.

Each trust is established to provide retirement and other benefits for eligible employees and their beneficiaries under each plan.

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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Net Periodic Pension Cost - (continued)

Significant Actuarial Assumptions.

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

Weighted average assumptions used to determine the benefit obligation:

Discount rate

Rate of increase in compensation levels

Weighted average assumptions used to determine net pension cost:

Discount rate

Rate of increase in compensation levels

Expected long-term rate of return on plan assets

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

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

( 1 ) equity, both domestic and international;

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

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

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

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

For fixed income investments:

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

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

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

Specifically, the following guidelines are in place:

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

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

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

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

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

Purchasing securities on margin;

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

Purchasing or selling derivative securities for speculation or leverage;

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

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Net Periodic Pension Cost - (continued)

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

Cash equivalents

0 % - 1 % 0 % N/A

Equity mutual funds

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

Fixed income mutual funds

70 % - 80 % 75 % 2.5 % - 6.8 %

100 % 2.8 % - 7.8 %

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

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

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

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

Estimated Future Benefit Payments.

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

Year (dollars in thousands)

2031 - 2035 19,505

CONNECTONE BANCORP, INC.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Time Deposits

As of 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):

As of March 31, 2026 and December 31, 2025 , the Company's total time deposits were $ 3.0 billion and $ 2.8 billion, respectively.

Included in time deposits were nonreciprocal brokered certificates of approximately $ 0.9 billion as of both March 31, 2026 and December 31, 2025 .

As of March 31, 2026 , 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 $ 926.6 million and $ 731.0 million as of September 30, 2025 and December 31, 2024 , respectively.

Fair value discount

Time deposits (after net discount)

The amount of time deposits with balances greater than or equal to $250,000 was $ 1.0 billion as of both March 31, 2026 and December 31, 2025 .

CONNECTONE BANCORP, INC.

3 unchanged sentences

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

September 30, 2025

March 31, 2026

December 31, 2025

7 unchanged sentences

25,000 4.18 25,000 4.18

3 years through less than 4 years

- - 25,000 4.18

4 years through 5 years

After 5 years

3 unchanged sentences

Fair value discount

( 19 ) ( 36 )

Total FHLB borrowings

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All FHLB advances bear fixed rates.

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.

The advances as of March 31, 2026 were primarily collateralized by approximately $ 3.8 billion of commercial mortgage loans and securities, net of required over collateralization amounts, under a blanket lien arrangement.

As of March 31, 2026, the Company had a remaining borrowing capacity of approximately $ 1.8 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 September 30, 2025 was 7.42 %.

The rate as of March 31, 2026 was 6.78 %.

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 September 30, 2025 and December 31, 2024 .

As of September 30, 2025

The following table summarizes the mandatory redeemable trust preferred securities of the Company’s Statutory Trust II as of March 31, 2026 and December 31, 2025 .

As of March 31, 2026

Issuance Date

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

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 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").

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.

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Consolidated Bank

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(dollars in thousands)

2 unchanged sentences

Noninterest income

17,880 4,681 26,494 12,843

Total segment income

5 unchanged sentences

Provision for credit losses

5,500 3,800 44,700 10,300

Salaries and employee benefits

3 unchanged sentences

Income tax (benefit) expense

16,277 6,022 18,449 18,588

Segment consolidated net (loss) income

5 unchanged sentences

71,208 57,735

1,841 1,100 4,264 3,284

Amortization of core deposit intangibles

3,196 297 4,726 939

Other significant noncash items:

Provision for credit losses

5,500 3,800 44,700 10,300

Segment assets

5 unchanged sentences

$ 14,200,455 $ 9,751,832

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

Total consolidated assets

$ 14,209,561 $ 9,759,255

*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.

*Occupancy and equipment, Federal Deposit Insurance Corporation ("FDIC") insurance premium, professional and consulting fees, marketing and advertising, information technology and communications, merger expenses and restructuring charges, and other expenses.

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 September 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.

9 unchanged sentences

(4) general economic conditions may be less favorable than expected or may be adversely effected by policy uncertainties, including regarding the impact of tariffs;

(5) political developments, sovereign debt problems, wars or other hostilities such as the ongoing conflict between Ukraine and Russia and instability in the Middle East, may disrupt or increase volatility in securities markets or other economic conditions;

(6) legislative or regulatory changes or actions may adversely affect the businesses in which ConnectOne Bancorp is engaged;

(5) political developments, sovereign debt problems, wars or other hostilities such as the ongoing conflict between Ukraine and Russia and the United States and Iran, and instability in the Middle East, may disrupt or increase volatility in securities markets or other economic conditions;

(6) legislative or regulatory changes or actions may adversely affect the businesses in which ConnectOne Bancorp is engaged or the business of our clients, such as changes affecting the owners of rest stabilized multi-family buildings in New York City;

(7) changes and trends in the securities markets may adversely impact ConnectOne Bancorp;

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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 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.

As of March 31, 2026, 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, 2025.

Operating Results Overview

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 income available to common stockholders for the three months ended March 31, 2026 was $36.3 million, as compared to $18.7 million for the prior-year period.

The Company’s diluted earnings per share were $0.72 for the three months ended March 31, 2026, as compared with diluted earnings per share of $0.49 for the prior-year period.

The $17.6 million increase in net income available to common stockholders and the $0.23 increase in diluted earnings per share were due to a $43.0 million increase in net interest income and a $2.3 million increase in noninterest income, which was partially offset by an $18.6 million increase in noninterest expenses, a $7.5 million increase in income tax expense and a $1.7 million increase in provision for credit losses.

The increases in net interest income and noninterest expenses were primarily driven by a full three-month impact of the FLIC acquisition in 2026, compared to the pre-merger period in 2025.

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 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 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.

Fully taxable equivalent net interest income for the first quarter of 2026 increased $43.4 million, or 65.2%, from prior-year period, due to a 46 basis-point widening of the net interest margin to 3.39% from 2.93%, and a 42.7% increase in average interest earning assets.

The increase in average interest-earning assets was primarily due to the full-period impact of assets acquired in the FLIC merger.

The margin also benefited from a 20 basis-point increase in the yield on interest-earning assets and a 49 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits.

The following table presents for the three months ended March 31, 2026 and 2025, 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 September 30,

Three Months Ended March 31,

(dollars in thousands)

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Rates are annualized.

Nine Months Ended September 30,

(dollars in thousands)

Interest-earning assets:

Securities (1) (2)

Total loans (2) (3) (4)

Federal funds sold and interest-bearing with banks

Restricted investment in bank stocks

Total interest-earning assets

Noninterest-earning assets:

Allowance for credit losses

Other noninterest-earning assets

Interest-bearing liabilities:

Interest-bearing deposits:

Time deposits

Other interest-bearing deposits

Total interest-bearing deposits

Subordinated debentures

Finance lease

Total interest-bearing liabilities

Demand deposits

Other liabilities

Total noninterest-bearing liabilities

Stockholders’ equity

Total liabilities and stockholders’ equity

Net interest income (tax-equivalent basis)

Net interest spread (5)

Net interest margin (6)

Tax-equivalent adjustment

Net interest income

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

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

Includes loan fee income and accretion of purchase accounting adjustments.

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

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

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

Rates are annualized.

Noninterest Income

Noninterest income totaled $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 income totaled $6.8 million for the three months ended March 31, 2026, compared with $4.5 million for prior-year-period.

The increase was primarily due to a $1.4 million increase in BOLI income and a $1.3 million increase in deposit, loan and other income, which was partially offset by a $0.4 million decrease in net gains (losses) on equity securities.

The growth in deposit, loan and other income was primarily attributable to the expanded scale of operations following the merger with FLIC.

Noninterest Expenses

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%.

Noninterest expenses totaled $57.9 million for the three months ended March 31, 2026, compared with $39.3 million for prior-year period.

The increase was primarily due to a $10.2 million increase in salaries and employee benefits, a $2.7 million increase in occupancy and equipment expenses and a $2.6 million increase in amortization of core deposit intangibles.

Other contributing factors included a $0.7 million increase in other expenses, a $0.7 million increase in professional and consulting expenses and a $0.6 million increase in information technology and communication expenses.

Additionally, noninterest expenses for the first quarter of 2026 included $2.1 million in merger expenses and restructuring charges, compared to $1.3 million in the prior-year period.

Excluding these merger-related items, noninterest expenses would have been $55.7 million and $38.0 million for the 2026 and 2025 periods, respectively.

The variances in nearly all noninterest expense categories were primarily attributable to the expanded operations following the merger with FLIC.

Income tax expense was $14.7 million for the first quarter of 2026, resulting in an effective tax rate of 28.0%, compared to income tax expense of $7.2 million and an effective tax rate of 26.1% for the prior-year period.

The increase in income tax expense and the effective tax rate was primarily due to higher pre-tax income and changes in state and local tax apportionment factors resulting from our expanded presence in New York following the FLIC merger.

Financial Condition

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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.

September 30, 2025

March 31, 2026

December 31, 2025

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Residential real estate

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.

September 30, 2025

As of March 31, 2026, gross loans totaled $11.7 billion, an increase of $0.3 billion or 2.5% compared to December 31, 2025.

The increase in gross loans as of March 31, 2026, compared to December 31, 2025, was primarily driven by organic growth in the commercial real estate portfolio, reflecting continued lending activity within our expanded market footprint.

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

March 31, 2026

December 31, 2025

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Total commercial real estate loans (before fair value adjustment)

Fair value adjustment (discount)/premium

Fair value adjustment discount

Total commercial real estate loans

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

September 30, 2025

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

March 31, 2026

December 31, 2025

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Total multifamily loans (before fair value adjustment)

September 30, 2025

March 31, 2026

December 31, 2025

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(dollars in thousands)

Nonowner-occupied

Owner-occupied

All Other States

Total nonowner occupied (before fair value adjustment)

September 30, 2025

Total owner-occupied (before fair value adjustment)

March 31, 2026

December 31, 2025

2 unchanged sentences

(dollars in thousands)

Owner-occupied

Nonowner-occupied

All Other States

Total owner-occupied (before fair value adjustment)

September 30, 2025

Total nonowner occupied (before fair value adjustment)

March 31, 2026

December 31, 2025

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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.

September 30, 2025

March 31, 2026

December 31, 2025

2 unchanged sentences

(dollars in thousands)

Nonowner-occupied

Owner-occupied

Warehouse/Industrial

Total nonowner-occupied (before fair value adjustment)

September 30, 2025

Total owner-occupied (before fair value adjustment)

March 31, 2026

December 31, 2025

2 unchanged sentences

(dollars in thousands)

Owner-occupied

Nonowner-occupied

Warehouse/Industrial

Total owner-occupied (before fair value adjustment)

Total nonowner-occupied (before fair value adjustment)

Allowance for Credit Losses and Related Provision

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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 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 $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.

As of March 31, 2026, the Company’s ACL was $153.1 million, a decrease of $1.2 million from $154.3 million as of December 31, 2025.

The provision for credit losses, which includes a provision for unfunded commitments, for the three months ended March 31, 2026 and March 31, 2025 was $5.2 million and $3.5 million, respectively.

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

Net charge-offs for the first quarter of 2026 totaled $6.7 million, or 0.23% of average loans on an annualized basis, compared to $3.4 million, or 0.17% of average loans, for the prior-year period.

The current period activity was primarily driven by the resolution of PCD loans acquired in the FLIC merger, which represented 0.15% of the total annualized net charge-off ratio.

These PCD loans were successfully resolved against previously established nonaccretable credit marks and resulted in a $0.2 million release of provision for credit losses upon settlement.

Excluding these acquisition-related resolutions, the annualized net charge-off ratio for the originating portfolio was 0.08% for the three months ended March 31, 2026, a decrease from the 0.17% reported in the prior-year period.

The level of the allowance for the respective periods of 2026 and 2025 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.

In management’s view, the level of the ACL as of March 31, 2026 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.

Actual results could differ materially from management’s analysis, based principally upon the factors considered by management in establishing the allowance.

Changes in the ACL on loans are presented in the following table for the periods indicated.

Three Months Ended

September 30,

(dollars in thousands)

Average loans receivable

Analysis of the ACL:

Balance - beginning of period

Changes in the ACL on loans are presented in the following tables for the periods indicated (dollars in thousands).

March 31, 2026

Balance as of December 31, 2025,

Commercial real estate

Residential real estate

Total charge-offs

3 unchanged sentences

Net charge-offs

Provision for credit losses – loans:

Operating provision for credit losses

Balance - end of period

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

Provision for credit losses for loans

Balance as of March 31, 2026

Ratio of net charge-offs during the year to average loans receivable outstanding during the year

Loans receivable

ACL as a percentage of loans receivable

ACL excluding nonaccretable credit mark as a percentage of loans receivable

Nine Months Ended

September 30,

Three Months Ended

(dollars in thousands)

4 unchanged sentences

Total charge-offs

Commercial real estate

Residential real estate

Total recoveries

Net charge-offs

Net recoveries (charge-offs)

Provision for credit losses – loans

Initial provision related to acquisition

Operating provision for credit losses

Nonaccretable credit marks on PCD loans

Balance - end of period

2 unchanged sentences

ACL as a percentage of loans receivable

ACL excluding nonaccretable credit mark as a percentage of loans receivable

Asset Quality

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 manages asset quality and credit risk by maintaining diversification in its loan portfolio and through its review processes that includes 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 ACL at all times.

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Loans past due 90 days or more, which are both well-secured and in the process of collection, may remain on an accrual basis.

Nonperforming assets include nonaccrual loans and other real estate owned ("OREO").

As of March 31, 2026, loans 30-59 days past due were 0.81% of loans receivable, compared to 0.19% as of December 31, 2025.

This rise is predominantly due to an interrelated series of credits totaling $63.8 million secured by 19 multifamily NYC rent-regulated properties.

We are working with our client to resolve these credits;

however, the resulting financial impact cannot be determined at this time.

Nonperforming assets include nonaccrual loans and other real estate owned ("OREO") (the Company had no OREO at the periods presented).

Nonaccrual loans represent loans on which interest accruals have been suspended.

1 unchanged sentence

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

September 30, 2025

March 31, 2026

December 31, 2025

2 unchanged sentences

Total nonperforming assets (1)

Loans 90 days or greater past due and still accruing

Nonperforming assets are defined as nonaccrual loans and OREO.

2 unchanged sentences

Purchased Credit-Deteriorated Loans

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

As of March 31, 2026, the Company's recorded investment in PCD loans totaled $207.6 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.

2 unchanged sentences

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

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

Within the PCD loan portfolio as of March 31, 2026, there is a pool of rent-regulated loans amounting to $158.0 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 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.

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, and certain proposed policies of the new mayoral administration of New York City, including a proposed rent freeze.

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

1 unchanged sentence

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

Rent-regulated Portfolio

The Bank maintains a solid reserve position, particularly within its rent-regulated multifamily portfolio which includes significant credit and fair value marks applicable to the portfolio acquired from FLIC, in addition to qualitative ACL allocations applicable to its legacy portfolio.

The following table provides additional information on the Bank's New York City ("NYC") rent-regulated portfolio as of March 31, 2026:

Portfolio Composition

% of Total Loans

Unpaid Principal Balance

Acquired Portfolio (1)

Legacy ConnectOne (2)

Total Rent-Regulated

Rent-regulated includes loans secured by multifamily properties with 50% or greater units subject to NYC rent-stabilization guidelines.

1) Portfolio acquired in merger with FLIC on June 1, 2025.

2) Loans originated by the Bank.

3) Offsets include (i) general reserves plus (ii) for the Acquired Portfolio, the applicable nonaccretable and accretable purchase accounting loan marks and (iii) for Legacy ConnectOne, an additional qualitative reserve applicable to rent-regulated multifamily.

Investment Securities

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

As of March 31, 2026, 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 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.

For the three months ended March 31, 2026, average securities, on an amortized cost basis, increased by $561.3 million to $1.3 billion, or 9.9% of average total interest-earning assets, from $745.9 billion, or 8.1% of average interest-earning assets, for the prior-year period.

As of March 31, 2026, net unrealized losses on available-for-sale securities, which are carried as a component of AOCI and included in stockholders’ equity, net of tax, amounted to $48.2 million as compared with net unrealized losses of $40.7 million as of December 31, 2025.

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

Unrealized losses have not been recognized into income because the issuers are of high credit quality, 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

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.

The Company did not record an ACL for available-for-sale securities as of March 31, 2026.

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

As of March 31, 2026 and December 31, 2025, 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 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%.

The model also utilizes immediate and parallel shifts in market interest rates as of March 31, 2026.

Based on our model, which was run as of March 31, 2026, 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 4.71%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 2.73%.

As of December 31, 2025, we estimated that over the next one-year period a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 4.95% while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.06%.

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%.

Based on our model, which was run as of March 31, 2026, 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 increase our net interest income by 0.10%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.87%.

As of December 31, 2025, we estimated that over the next three years, on a cumulative basis, a 200 basis-point instantaneous and parallel increase in the general level of interest rates would decrease our net interest income by 0.32%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 1.04%.

1 unchanged sentence

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

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 March 31, 2026, would decrease by 7.41% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 0.84% with an instantaneous and parallel rate shock of down 100 basis points.

Our EVE as of December 31, 2025, would decrease by 7.12% with an instantaneous and parallel rate shock of up 200 basis points, and increase by 0.28% 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 net interest income ("NII") sensitivity as of September 30, 2025.

The following table illustrates the most recent results for EVE and one-year net interest income ("NII") sensitivity as of March 31, 2026.

Interest Rates

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Estimates of Fair Value

The estimation of fair value is significant to a number of the Company’s assets, including loans held-for-sale and securities available-for-sale.

The estimation of fair value is significant to a number of the Company’s assets, including loans held-for-sale and available-for-sale securities.

These are all recorded at either fair value or the lower of cost or fair value.

18 unchanged sentences

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

As of 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.

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 $2.1 billion as of September 30, 2025.

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.

As of March 31, 2026, the amount of liquid assets remained at a level management deemed adequate to ensure that, on a short and long-term basis, contractual liabilities, depositors’ withdrawal requirements, and other operational and client credit needs could be satisfied.

As of March 31, 2026, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $772.0 million, which represented 5.4% of total assets and 6.3% of total deposits and borrowings, compared to $874.4 million as of December 31, 2025, which represented 6.2% of total assets and 7.2% of total deposits and borrowings.

As of March 31, 2026, not included in the above liquid assets were securities with a market value of $95.0 million which were pledged to the FHLB and securities with a market value of $133.9 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $215.8 million and $223.3 million, respectively as of March 31, 2026 and December 31, 2025.

The Bank is a member of the FHLB of New York and, based on available qualified collateral as of March 31, 2026, had the ability to borrow $3.8 billion.

In addition, as of March 31, 2026, the Bank had in place borrowing capacity of $280.0 million through correspondent banks and other unsecured borrowing lines.

As of March 31, 2026, the Bank had aggregate available and unused credit of approximately $4.4 billion, which represents the aforementioned facilities totaling $6.3 billion net of $1.9 billion in outstanding borrowings and letters of credit.

As of March 31, 2026, outstanding commitments for the Bank to extend credit were approximately $1.4 billion.

Cash an d cash equivalents totaled $344.5 million as of March 31, 2026, decreasing by $36.4 million from $380.9 million as of December 31, 2025.

Operating activities provided $15.3 million in net cash.

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.

Noninterest bearing demand deposit products include “Totally Free Checking” and “Simply Better Checking” for consumer clients and “Small Business Checking” and “Analysis Checking” for commercial clients.

Interest-bearing checking accounts require minimum balances for both consumer and commercial clients and include “Consumer Interest Checking” and “Business Interest Checking”.

Money market accounts consist of products that provide a market rate of interest to depositors.

Our savings accounts offer paper and/or electronic statements.

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.

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.

Unless certain conditions are satisfied, the FDIC considers these funds as brokered deposits for certain reporting requirements.

The Bank also utilizes internet listing services deposits which are obtained through the use of websites such as Rateline or QwickRate.

Investing activities used $233.1 million in net cash, a net increase in loans $273.3 million and investment purchases of $45.3 million and were partially offset by investment maturities, calls and principal repayments of $89.6 million .Financing activities provided $181.3 million in net cash, primarily reflecting a net increase in deposits of $272.3 million and were partially offset by net repayments of FHLB borrowings of $76.0 million.

Deposits serve as our primary source of funding.

The Company offers a comprehensive suite of products including noninterest-bearing demand, interest-bearing checking, money market, and savings accounts, as well as time deposits with maturities generally ranging from 31 days to 60 months.

We supplement core funding with brokered certificates of deposit and internet listing service deposits for asset-liability management purposes.

To support clients with balances exceeding standard FDIC insurance limits, we utilize reciprocal deposit networks.

This primarily includes the IntraFi Network LLC for the placement of Certificate of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") accounts.

Through these networks, large-dollar deposits are placed into accounts at other participating banks in increments below the FDIC insurance limit to ensure full principal and interest coverage.

During the first quarter of 2026, the Company expanded these capabilities by launching a partnership with the National Bank InterDeposit Company (“NBID”) network, operated by ModernFi.

We are currently in the initial stages of transitioning select client funds to this network to further diversify our reciprocal deposit options.

While the financial impact of this transition was not material to our results of operations or liquidity position for the three months ended March 31, 2026, we anticipate utilizing this platform to complement our existing reciprocal programs in future periods.

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

Quarter-to-Date Average September 30, 2025

Quarter-to-Date Average September 30, 2024

Quarter-to-Date Average March 31, 2026

Quarter-to-Date Average March 31, 2025

(dollars in thousands)

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Total average 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.

Average total deposits increased by $3.6 billion, or 47.0%, during the three months ended March 31, 2026 when compared to the prior-year period.

The increase in total average deposits was due to a $1.8 billion increase in demand, interest-bearing and NOW deposits, a $1.1 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 $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 September 30, 2025

Year-to-Date Average September 30, 2024

(dollars in thousands)

Demand, noninterest-bearing

Demand, interest-bearing & NOW

Total average 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 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 increase in average time deposits of $0.4 billion during the three months ended March 31, 2026 was primarily due to a $0.5 billion increase in retail time deposits, partially offset by a $0.1 billion dollar decrease in nonreciprocal brokered certificates of deposit.

Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.8 billion for the three months ended March 31, 2026, compared to $0.9 billion for the prior-year period.

Average aggregate demand deposits included $1.2 billion and $1.1 billion in ICS reciprocal deposits during the three months ended March 31, 2026 and March 31, 2025, respectively.

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

This is because nonreciprocal brokered funds are more directly correlated to prevailing market rates, whereas reciprocal deposits reflect deeper client relationships and a primary focus on FDIC insurance coverage rather than market-leading yields.

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

September 30, 2025

March 31, 2026

December 31, 2025

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

September 30, 2025

March 31, 2026

December 31, 2025

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Total deposits increased by $0.3 billion, or 2.4%, when compared to December 31, 2025.

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 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

The increase in total deposits was primarily due to a $0.2 billion increase in time deposits and a $0.1 billion increase in demand, interest-bearing and NOW deposits.

Aggregate demand deposits included $1.2 billion in ICS reciprocal deposits as of both March 31, 2026 and December 31, 2025.

Included in time deposits were nonreciprocal brokered certificates of deposit of $0.9 billion as of March 31, 2026 and $0.7 billion as of December 31, 2025.

As of March 31, 2026, we held $1.0 billion 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 March 31, 2026:

March 31, 2026

(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 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”).

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.

The rate as of March 31, 2026 was 6.78%.

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

4 unchanged sentences

The Company’s stockholders’ equity increased by $18.2 million when compared to December 31, 2025.

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 increase in total stockholders’ equity was primarily due to an increase in retained earnings of $27.3 million, partially offset by an increase in the AOCI of $6.2 million.

As of March 31, 2026, the Company’s tangible common equity ratio and tangible book value per share were 8.64% and $23.93, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025.

Total goodwill and other intangible assets were $277.3 million as of March 31, 2026, and $280.2 million as of December 31, 2025.

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

September 30, 2025

March 31, 2026

December 31, 2025

18 unchanged sentences

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

The following is a summary of regulatory capital amounts and ratios as of 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).

The following is a summary of regulatory capital amounts and ratios as of March 31, 2026 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 September 30, 2025

As of March 31, 2026

(dollars in thousands)

6 unchanged sentences

To Be Well-Capitalized Under Prompt Corrective Action Provisions

As of September 30, 2025

As of March 31, 2026

(dollars in thousands)

3 unchanged sentences

Total risk-based capital

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.

As of March 31, 2026, 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 2.69 percentage points above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.84 percentage points above the minimum buffer ratio.

Qualitative and Quantitative Disclosures about Market Risks

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements