ConnectOne Bancorp, Inc. 10-Q

Item 1. Financial Statements CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (dollars in thousands, except for share data) June 30, December 31, 2026 2025 (unaudited) ASSETS Cash and due from banks $ 39,552 $ 92,406 Interest-bearing deposits with banks 322,724 288,489 Cash and cash equivalents 362,276 380,895 Investment securities 1,179,258 1,250,938 Equity securities 19,793 19,287 Loans held-for-sale - 391 Loans receivable 11,869,034 11,453,280 Less: Allowance for credit losses - loans 140,149 154,305 Net loans receivable 11,728,885 11,298,975 Investment in restricted stock, at cost 46,596 54,722 Bank premises and equipment, net 53,779 55,285 Accrued interest receivable 61,561 60,761 Bank owned life insurance 376,681 370,713 Right of use operating lease assets 30,340 29,603 Goodwill 220,235 220,235 Core deposit intangibles 54,233 59,923 Other assets 278,227 200,972 Total assets $ 14,411,864 $ 14,002,700 LIABILITIES Deposits: Noninterest-bearing $ 2,512,964 $ 2,420,397 Interest-bearing 9,227,399 8,820,218 Total deposits 11,740,363 11,240,615 Borrowings 715,416 903,489 Subordinated debentures, net 202,236 201,864 Operating lease liabilities 32,929 32,446 Other liabilities 94,395 50,946 Total liabilities 12,785,339 12,429,360 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY Preferred Stock, no par value: 1,000 per share liquidation preference; Authorized 5,000,000 shares; issued 115,000 shares as of June 30, 2026 and as of December 31, 2025; outstanding 115,000 shares as of June 30, 2026 and as of December 31, 2025 110,927 110,927 Common stock, no par value: Authorized 100,000,000 shares; issued 54,295,380 shares as of June 30, 2026 and 54,157,402 shares as of December 31, 2025; outstanding 50,319,832 shares as of June 30, 2026 and 50,271,854 as of December 31, 2025 857,765 857,765 Additional paid-in capital 39,688 38,763 Retained earnings 731,500 673,897 Treasury stock, at cost: 3,975,548 shares as of June 30, 2026 and 3,885,548 shares as of December 31, 2025 ( 78,507 ) ( 76,116 ) Accumulated other comprehensive loss ( 34,848 ) ( 31,896 ) Total stockholders’ equity 1,626,525 1,573,340 Total liabilities and stockholders’ equity $ 14,411,864 $ 14,002,700 See accompanying notes to unaudited consolidated financial statements. 3 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 (dollars in thousands, except for per share data) Interest income Interest and fees on loans $ 176,250 $ 132,316 $ 344,548 $ 247,667 Interest and dividends on investment securities: Taxable 10,982 7,437 21,781 12,424 Tax-exempt 1,907 1,419 3,885 2,516 Dividends 947 788 1,882 1,677 Interest on federal funds sold and other short-term investments 2,821 4,070 5,208 6,535 Total interest income 192,907 146,030 377,304 270,819 Interest expense Deposits 69,571 60,239 135,253 114,231 Borrowings 9,697 6,908 19,608 11,949 Total interest expense 79,268 67,147 154,861 126,180 Net interest income 113,639 78,883 222,443 144,639 Provision for credit losses 8,300 35,700 13,500 39,200 Net interest income after provision for credit losses 105,339 43,183 208,943 105,439 Noninterest income Deposit, loan and other income 3,324 2,570 6,607 4,576 Income on bank owned life insurance 3,017 2,087 5,968 3,671 Net gains on sale of loans held-for-sale 1,590 181 2,017 513 Net gains (losses) on equity securities ( 4 ) 347 131 876 Total noninterest income 7,927 5,185 14,723 9,636 Noninterest expenses Salaries and employee benefits 31,537 25,233 64,305 47,811 Occupancy and equipment 5,519 3,478 10,864 6,158 FDIC insurance 1,700 2,000 3,700 3,800 Professional and consulting 3,127 2,598 6,235 4,964 Marketing and advertising 1,161 840 2,087 1,435 Information technology and communications 5,394 4,792 10,637 9,396 Merger expenses and restructuring charges 108 30,745 2,233 32,065 Bank owned life insurance restructuring charge - - - 327 Amortization of core deposit intangibles 2,845 1,251 5,690 1,530 Other expenses 4,025 2,712 7,534 5,468 Total noninterest expenses 55,416 73,649 113,285 112,954 Income (loss) before income tax expense 57,850 ( 25,281 ) 110,381 2,121 Income tax expense (benefit) 16,182 ( 4,988 ) 30,891 2,172 Net income (loss) 41,668 ( 20,293 ) 79,490 ( 51 ) Preferred dividends 1,509 1,509 3,018 3,018 Net income (loss) available to common stockholders $ 40,159 $ ( 21,802 ) $ 76,472 $ ( 3,069 ) Earnings (loss) per common share Basic $ 0.80 $ ( 0.52 ) $ 1.52 $ ( 0.08 ) Diluted 0.80 ( 0.52 ) 1.51 ( 0.08 ) See accompanying notes to unaudited consolidated financial statements. 4 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) Three Months Ended Six Months Ended June 30, June 30, (dollars in thousands) 2026 2025 2026 2025 Net income (loss) $ 41,668 $ ( 20,293 ) $ 79,490 $ ( 51 ) Other comprehensive income (loss), net of tax: Net unrealized holding gains (losses) on available-for-sale securities arising during the period 2,077 3,896 ( 5,427 ) 9,358 Net unrealized gains (losses) on cash flow hedges 1,124 ( 3,211 ) 2,475 ( 8,917 ) Total other comprehensive income (loss), net of tax 3,201 685 ( 2,952 ) 441 Total comprehensive income (loss) $ 44,869 $ ( 19,608 ) $ 76,538 $ 390 See accompanying notes to unaudited consolidated financial statements. 5 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (unaudited) Three Months Ended June 30, 2026 Accumulated Additional Other Total Preferred Common Paid-In Retained Treasury Comprehensive Stockholders’ (in thousands, except share data) Stock Stock Capital Earnings Stock (Loss) Income Equity Balance as of March 31, 2026 $ 110,927 $ 857,765 $ 38,257 $ 701,154 $ ( 78,507 ) $ ( 38,049 ) $ 1,591,547 Net income - - - 41,668 - - 41,668 Other comprehensive income, net of tax - - - - - 3,201 3,201 Cash dividends paid on preferred stock ($ 0.328125 per depositary share) - - - ( 1,509 ) - - ( 1,509 ) Cash dividends paid on common stock ($ 0.195 per share) - - - ( 9,813 ) - - ( 9,813 ) Restricted stock grants, net of forfeitures ( 31,338 shares) - - - - - - - Stock-based compensation expense - - 1,431 - - - 1,431 Balance as of June 30, 2026 $ 110,927 $ 857,765 $ 39,688 $ 731,500 $ ( 78,507 ) $ ( 34,848 ) $ 1,626,525 Three Months Ended June 30, 2025 Accumulated Additional Other Total Preferred Common Paid-In Retained Treasury Comprehensive Stockholders’ (in thousands, except share data) Stock Stock Capital Earnings Stock (Loss) Income Equity Balance as of March 31, 2025 $ 110,927 $ 586,946 $ 36,007 $ 643,265 $ ( 76,116 ) $ ( 48,090 ) $ 1,252,939 Net loss - - - ( 20,293 ) - - ( 20,293 ) Other comprehensive income, net of tax - - - - - 685 685 Cash dividends paid on preferred stock ($ 0.328125 per depositary share) - - - ( 1,509 ) - - ( 1,509 ) Cash dividends paid on common stock ($ 0.18 per share) - - - ( 6,931 ) - - ( 6,931 ) Restricted stock grants, net of forfeitures ( 32,709 shares) - - - - - - - Share redemption for tax withholdings on restricted stock units for FLIC ( 22,638 shares) - - ( 507 ) - - - ( 507 ) Stock issued in connection with FLIC merger ( 11,790,116 shares) - 270,819 - - - - 270,819 Stock-based compensation expense - - 1,228 - - - 1,228 Balance as of June 30, 2025 $ 110,927 $ 857,765 $ 36,728 $ 614,532 $ ( 76,116 ) $ ( 47,405 ) $ 1,496,431 6 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS ’ EQUITY (unaudited) Six Months Ended June 30, 2026 Accumulated Additional Other Total Preferred Common Paid-In Retained Treasury Comprehensive Stockholders’ (in thousands, except share data) Stock Stock Capital Earnings Stock (Loss) Income Equity Balance as of December 31, 2025 $ 110,927 $ 857,765 $ 38,763 $ 673,897 $ ( 76,116 ) $ ( 31,896 ) $ 1,573,340 Net income - - - 79,490 - - 79,490 Other comprehensive loss, net of tax - - - - - ( 2,952 ) ( 2,952 ) Cash dividends paid on preferred stock ($ 0.656250 per depositary share) - - - ( 3,018 ) - - ( 3,018 ) Cash dividends paid on common stock ($ 0.375 per share) - - - ( 18,869 ) - - ( 18,869 ) Restricted stock grants, net of forfeitures ( 72,437 shares) - - - - - - - Stock grants ( 1,528 shares) - - - - - - - Net shares issued in satisfaction of deferred stock units earned ( 42,849 shares) - - - - - - - Net shares issued in satisfaction of performance units earned ( 21,164 shares) - - - - - - - Share redemption for tax withholdings on performance units and deferred stock units earned - - ( 1,937 ) - - - ( 1,937 ) Repurchase of stock ( 90,000 shares) - - - - ( 2,391 ) - ( 2,391 ) Stock-based compensation - - 2,862 - - - 2,862 Balance as of June 30, 2026 $ 110,927 $ 857,765 $ 39,688 $ 731,500 $ ( 78,507 ) $ ( 34,848 ) $ 1,626,525 Six Months Ended June 30, 2025 Accumulated Additional Other Total Preferred Common Paid-In Retained Treasury Comprehensive Stockholders’ (in thousands, except share data) Stock Stock Capital Earnings Stock (Loss) Income Equity Balance as of December 31, 2024 $ 110,927 $ 586,946 $ 36,347 $ 631,446 $ ( 76,116 ) $ ( 47,846 ) $ 1,241,704 Net loss - - - ( 51 ) - - ( 51 ) Other comprehensive income, net of tax - - - - - 441 441 Cash dividends paid on preferred stock ($ 0.65625 per depositary share) - - - ( 3,018 ) - - ( 3,018 ) Cash dividends paid on common stock ($ 0.36 per share) - - - ( 13,845 ) - - ( 13,845 ) Restricted stock grants, net of forfeitures ( 72,779 shares) - - - - - - - Stock grants ( 1,328 shares) - - - - - - - Net shares issued in satisfaction of deferred stock units earned ( 38,683 shares) - - - - - - - Net shares issued in satisfaction of performance units earned ( 19,577 shares) - - - - - - - Share redemption for tax withholdings on restricted stock units for FLIC ( 22,638 shares) - - ( 507 ) - - - ( 507 ) Share redemption for tax withholdings on performance units and deferred stock units earned - - ( 1,627 ) - - - ( 1,627 ) Stock issued in connection with FLIC merger ( 11,790,116 shares) - 270,819 - - - - 270,819 Stock-based compensation - - 2,515 - - - 2,515 Balance as of June 30, 2025 $ 110,927 $ 857,765 $ 36,728 $ 614,532 $ ( 76,116 ) $ ( 47,405 ) $ 1,496,431 7 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended June 30, (dollars in thousands) 2026 2025 Cash flows from operating activities Net income (loss) $ 79,490 $ ( 51 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of premises and equipment 3,587 2,423 Provision for credit losses 13,500 39,200 Amortization of intangibles 5,690 1,530 Net accretion of loans ( 19,525 ) ( 3,745 ) Accretion on bank premises - ( 24 ) Amortization on deposits 288 233 Amortization on borrowings, net 12 11 Loss on bank owned life insurance policy exchange - 327 Stock-based compensation expense 2,862 2,515 Gain on equity securities, net ( 131 ) ( 876 ) Gain on sale of loans held-for-sale, net ( 2,017 ) ( 513 ) Loans originated for resale ( 30,750 ) ( 10,798 ) Proceeds from sale of loans held-for-sale 33,158 11,027 Increase in cash surrender value of bank owned life insurance ( 5,968 ) ( 3,671 ) Accretion of discounts and amortization of premium on available-for-sale securities ( 924 ) ( 56 ) Amortization of subordinated debentures issuance costs 372 282 Increase in accrued interest receivable ( 800 ) ( 1,736 ) Net change in operating leases ( 254 ) 1,060 Increase in other assets ( 22,247 ) ( 15,950 ) (Decrease) Increase in other liabilities ( 6,557 ) 160 Net cash provided by operating activities 49,786 21,348 Cash flows from investing activities Available-for-sale securities Purchases ( 101,563 ) ( 330,264 ) Sales - 277,477 Maturities, calls and principal repayments 166,207 48,258 Purchase of equity securities ( 375 ) ( 1,113 ) Proceeds from equity securities sold - 2,374 Net redemptions of restricted investment in bank stocks 8,126 15,477 Net (increase) decrease in loans ( 423,879 ) 32,031 Proceeds from bank owned life insurance - 278 Purchases of premises and equipment ( 2,081 ) ( 331 ) Cash acquired, net of cash consideration paid in acquisition - 54,861 Net cash (used in) provided by investing activities ( 353,565 ) 99,048 Cash flows from financing activities Net increase in deposits 499,460 206,993 Proceeds from issuance of subordinated debt - 200,000 Payment of subordinated debt issuance costs - ( 3,726 ) Proceeds from FHLB borrowings 1,347,003 740,000 Repayment of FHLB borrowings ( 1,535,088 ) ( 1,004,621 ) Cash dividends on preferred stock ( 3,018 ) ( 3,018 ) Cash dividends paid on common stock ( 18,869 ) ( 13,845 ) Repurchase of treasury stock ( 2,391 ) - Share redemption for tax withholdings on performance units, deferred stock units earned and restricted stock units ( 1,937 ) ( 2,134 ) Net cash provided by financing activities 285,160 119,649 Net change in cash and cash equivalents ( 18,619 ) 240,045 Cash and cash equivalents at beginning of period 380,895 356,488 Cash and cash equivalents at end of period $ 362,276 $ 596,533 8 Table of Contents (continued) Supplemental disclosures of cash flow information Cash payments for: Interest paid on deposits and borrowings $ 155,802 $ 119,053 Income taxes 21,421 36,173 Supplemental disclosures of noncash activities Business Combination Fair value of assets acquired $ - $ 3,905,094 Fair value of liabilities assumed - 3,641,505 Stock issued in connection with FLIC merger - 270,819 Renewable Energy Tax Credit Investment in renewable energy tax credit $ 50,000 $ - Renewable energy tax credit commitment 50,000 - See accompanying notes to unaudited consolidated financial statements. 9 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties Nature of Operations ConnectOne Bancorp, Inc. (the “Parent Corporation”) is incorporated under the laws of the State of New Jersey and is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHCA”). The Parent Corporation’s business currently consists of the operation of its wholly-owned subsidiary, ConnectOne Bank (the “Bank” and, collectively with the Parent Corporation and the Parent Corporation’s subsidiaries, the “Company”) and making certain limited investments. The Bank’s direct and indirect subsidiaries include Union Investment Co. (a New Jersey investment company), Twin Bridge Investment Co. (a Delaware investment company), ConnectOne Preferred Funding Corp. (a New Jersey real estate investment trust), Center Financial Group, LLC (a New Jersey financial services company), Center Advertising, Inc. (a New Jersey advertising company), Morris Property Company, LLC, (a New Jersey limited liability company), Volosin Holdings, LLC, (a New Jersey limited liability company), NJCB Spec- 1, LLC (a New Jersey limited liability company), Port Jervis Holdings, LLC (a New Jersey limited liability company), BONJ Special Properties, LLC (a New Jersey limited liability company), The First of Long Island REIT (a New York real estate investment trust), FNY Service Corp (a New York investment company) and BoeFly, Inc. (a New Jersey financial technology company). 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 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. See Note 2. Substantially all loans are secured with various types of collateral, including business assets, consumer assets and commercial/residential real estate. Each borrower’s ability to repay their loans is dependent on the conversion of assets, cash flows generated from the borrowers’ business, real estate rental and consumer wages. Basis of Presentation and Principles of Consolidation The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles ("GAAP"). The consolidated financial statements of the Parent Corporation are prepared on an accrual basis and include the accounts of the Parent Corporation and the Bank. All significant intercompany accounts and transactions have been eliminated from the accompanying consolidated financial statements. 10 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties - (continued) Segment Reporting 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. The segment is also distinguished by the level of information provided to the CODM, who uses such information to review performance of various components of the business (such as branches and the subsidiary bank), which are then aggregated if operating performance, products/services, and customers are similar. The CODM will evaluate the financial performance of the Company's business components such as by evaluating revenue streams, significant expenses, and budget to actual results in assessing the Company's segment and in the determination of allocating resources. The CODM uses revenue streams to evaluate product pricing and significant expenses to assess performance and evaluate return on assets. The CODM uses consolidated net income to benchmark the Company against its competitors. The benchmarking analysis coupled with monitoring of budget to actual results are used in assessment of performance and in establishing compensation. Loans, investments, and deposits provide the revenues in the banking operation. Interest expense, provision for credit losses, and payroll provide the significant expenses in the banking operation. All operations are domestic. See Note 15 for disclosures related to the reportable segment. Employee Benefit Plans The Company has a noncontributory pension plan that covered all eligible employees up until September 30, 2007 , at which time the Company froze its defined benefit pension plan. As such, all future benefit accruals in this pension plan were discontinued and all retirement benefits that employees would have earned as of September 30, 2007 were preserved. In the FLIC merger, the Company acquired a defined benefit pension plan that covered all former eligible FLIC employees. 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. The Company’s policy is to fund at least the minimum contribution required by the Employee Retirement Income Security Act of 1974. Pension expense is the sum of service cost, interest cost, amortization of actuarial gains and losses and plan expenses, net of the expected return on plan assets and participant contributions. The costs associated with the plans are accrued based on actuarial assumptions and included in 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 status be reflected in other comprehensive income (loss) ("OCI"). This standard also requires companies to measure the funded status of the plans as of the date of the company's fiscal year-end. Use of Estimates In preparing the consolidated financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities as of the dates of the consolidated statements of condition and that affect the results of operations for the periods presented. Actual results could differ significantly from those estimates. Reclassifications Certain reclassifications have been made to amounts reported in prior periods to conform to the current period presentation. The reclassifications had no material effect on net income or total stockholders' equity. 11 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1b. Authoritative Accounting Guidance Adoption of New Accounting Standards In July 2025, the FASB issued Accounting Standards Update 2025 - 05, "Financial Instruments – Credit Losses (Topic 326 ): Measurement of Credit Losses for Accounts Receivable and Contract Assets" ("ASU 2025 - 05" ). ASU 2025 - 05 provides an optional practical expedient allowing entities to assume that current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing reasonable and supportable forecasts for expected credit losses. The Company adopted ASU 2025 - 05 on a prospective basis effective January 1, 2026. The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. In December 2023, the FASB issued Accounting Standards Update 2023 - 09, "Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures" ("ASU 2023 - 09" ). ASU 2023 - 09 requires public entities to disclose additional categories of information in their rate reconciliation tables and provide further detail on federal, state, and foreign income taxes paid, among other requirements. The Company adopted ASU 2023 - 09 on a prospective basis effective January 1, 2025. The adoption of this standard did not have a material impact on the Company’s consolidated financial position, results of operations, or cash flows. Newly Issued, But Not Yet Effective Accounting Standards In November 2025, the FASB issued Accounting Standards Update 2025 - 08, "Financial Instruments – Credit Losses (Topic 326 ): Purchased Loans" ("ASU 2025 - 08" ). ASU 2025 - 08 expands the use of the gross-up approach in Accounting Standards Codification Topic 326 to all purchased seasoned loans. ASU 2025 - 08 is effective for the Company for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years ( January 1, 2027 for the Company). The Company is currently evaluating the impact of adopting ASU 2025 - 08 on its consolidated financial position, results of operations, or cash flows. In September 2025, the FASB issued Accounting Standards Update 2025 - 06, "Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software" ("ASU 2025 - 06" ). ASU 2025 - 06 modernizes the accounting for costs related to internal-use software by removing references to project stages and clarifying the capitalization threshold. ASU 2025 - 06 is effective for the Company for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years ( January 1, 2028 for the Company). The Company is currently evaluating the impact of adopting ASU 2025 - 06 on its consolidated financial position, results of operations, or cash flows. In November 2024, the FASB issued Accounting Standards Update 2024 - 03, "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220 - 40 )" ("ASU 2024 - 03" ). ASU 2024 - 03 requires public entities to provide disaggregated footnote disclosures of specified expense categories included in expense line items presented on the face of the income statement. ASU 2024 - 03 is effective for the Company for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027 ( January 1, 2027 for the Company). The Company is currently evaluating the impact of adopting ASU 2024 - 03 on its consolidated financial position, results of operations, or cash flows. 12 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Business Combination On June 1, 2025 ( the “Acquisition Date”), the Company completed the acquisition of FLIC, the parent company for the FNBLI, in accordance with the definitive Agreement and Plan of Merger dated as of September 4, 2024 ( the “Merger Agreement”). Pursuant to the Merger Agreement, on the Acquisition Date, FLIC merged with and into the Company, with the Company continuing as the surviving corporation, and FNBLI merged with and into the Bank, with the Bank as the surviving bank (collectively, the “merger”). As part of this merger, the Company acquired 36 branch offices located in Nassau and Suffolk Counties of Long Island, and the boroughs of New York City. In connection with the completion of the merger, former FLIC shareholders received 0.5175 shares of the Company’s common stock for each share of FLIC common stock they held. The value of the total transaction consideration was approximately $ 270.8 million. The consideration included the issuance of 11,790,116 shares of the Company’s common stock, valued at $ 22.97 per share, which was the closing price of the Company’s common stock on May 30, 2025, the last trading day prior to the consummation of the merger. Also included in the total consideration was cash in lieu of any fractional shares, which was effectively settled upon closing. The acquisition of FLIC was accounted for as a business combination using the acquisition method of accounting. Accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at estimated fair values on the Acquisition Date. During the post-closing 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 $ 7.2 million originally reported as June 30, 2025. This adjustment was primarily related to finalizing the assessment of deferred tax assets and Section 382 valuation allowances. The post-closing measurement period ended on June 1, 2026, and the purchase price allocation is final. As of June 30, 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 were no adjustments to the purchase price allocation during the three and six months ended June 30, 2026. 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: As of June 1, 2025 (dollars in thousands, except for per share data) Purchase Price Consideration FLIC common shares settled for stock 22,783,572 Exchange Ratio 0.5175 ConnectOne shares entitlement 11,790,499 Fractional shares subject to cash in lieu ( 383 ) ConnectOne whole shares issued 11,790,116 Price per share of ConnectOne common stock on June 1, 2025 $ 22.97 Total fair value of stock consideration issued $ 270,819 Cash consideration paid 9 Total purchase price consideration $ 270,828 13 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Business Combination – (continued) As of Measurement As Adjusted June 1, 2025 Period Adjustments June 1, 2025 (dollars in thousands) Total purchase price consideration $ 270,828 $ 270,828 Fair Value of Assets Acquired: Cash and cash equivalents 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 Other assets 107,480 ( 4,624 ) 102,856 Total assets acquired $ 3,905,094 $ ( 4,624 ) $ 3,900,470 Fair Value of Liabilities Assumed: Deposits 3,251,147 - 3,251,147 Borrowings 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 14 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Business Combination – (continued) The following is a description of the valuation methodologies used to estimate the fair values of significant assets and liabilities presented above. Cash and cash equivalents – The carrying amount of these items is a reasonable estimate of their fair value based on the short-term nature of these assets. Investment securities – Fair values for 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. Fair value estimates also reflect an adjustment related to certain securities that were sold shortly after closing and were determined by the current market price. Additional information is included in Note 4 - Investments. Loans – The fair value of the loan portfolio was calculated on a pooled loan basis using discounted cash flow analysis for accruing loans and on an individual basis for nonaccrual loans. This analysis took into consideration the contractual terms of the loans and assumptions related to the credit risk, expected lifetime losses, qualitative factors, collateral values, discount rates, and other liquidity considerations to estimate projected cash flows. The assumptions used in determining the fair value of the loan portfolio were considered reasonable from a market-participant viewpoint. Acquired loans are classified into two categories: purchased credit deteriorated (“PCD”) and non-PCD loans. PCD loans are defined as a loan or group of loans that have experienced more-than-insignificant credit deterioration since origination. The Company considers various factors in connection with the identification of more-than-insignificant deterioration in credit, including but not limited to nonperforming status, delinquency, risk ratings, and other qualitative factors that indicate deterioration in credit quality since origination. Non-PCD loans will have an allowance established subsequent to the Acquisition Date, which is recognized as an expense through the provision for credit losses. For PCD loans, the loans were recorded at their amortized cost, less an allowance for credit losses ("ACL") of $ 43.3 million on the Acquisition Date. There is no provision for credit loss expense recognized on PCD loans because the initial allowance is established by grossing-up the amortized cost of the PCD loans. The remaining difference between the net of the amortized cost basis and the ACL and the fair value allocated to the loans on the date of acquisition is recognized as a non-credit-related discount that will be accreted into interest income over the life of the loans. 15 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. Business Combination – (continued) The following table provides details related to the fair value of loans that were acquired on June 1, 2025. Gross-up for PCD Unpaid Principal Total Discount at Allowance for Credit Fair Value of PCD (dollars in thousands) Balance Acquisition Losses at Acquisition Loans at Acquisition PCD loans $ 271,904 $ ( 34,394 ) $ ( 43,336 ) $ 194,174 Non-PCD loans 2,860,661 ( 171,884 ) - 2,688,777 Total loans $ 3,132,565 $ ( 206,278 ) $ ( 43,336 ) $ 2,882,951 Premises and equipment – The estimated fair value of premises was measured based upon appraisals from independent third parties. The estimated fair value of equipment was determined to approximate the carrying amount of these assets. 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 reflects a $ 4.6 million net decrease in the deferred tax assets from the preliminary $ 51.1 million benefit originally reported as of June 30, 2025. The post-closing measurement period adjustment accounted for the true-up of tax attributes, the application of a 30.9 % blended statutory tax rate, and the recognition of a valuation allowance related to Section 382 limitations. The post-closing measurement period ended on June 1, 2026 and the valuation tax attributes and deferred taxes are final. No adjustments were made to these estimates during the three and six months ended June 30, 2026. Deposits – The fair values used for the demand and savings deposits equal the amount payable on demand at the Acquisition Date. The fair value of time deposits is estimated by discounting the estimated future cash flows using current rates offered for deposits with similar remaining maturities. Borrowings – The fair value of Federal Home Loan Bank ("FHLB") advances were estimated by discounting the estimated future cash flows using rates currently available to the Company for debt with similar remaining maturities. Acquisition and integration costs totaled $ 0.1 million and $ 2.2 million for the three and six months ended June 30, 2026, respectively. Direct merger-related expenses were $ 0.0 and $ 0.1 million, and restructuring charges were $ 0.1 million and $ 2.1 million for the same periods. All such costs were expensed as incurred and are included in "Merger Expenses and Restructuring Charges" in the Consolidated Statements of Income. 16 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 2. 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. Three Months Ended Six Months Ended (dollars in thousands) June 30, 2025 June 30, 2025 Net interest income $ 101,169 $ 195,235 Noninterest income 7,237 14,079 Net income 25,127 54,570 Net income available to common stockholders 23,618 51,552 Basic EPS $ 0.47 $ 1.03 Diluted EPS $ 0.47 $ 1.03 17 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 3. Earnings (loss) per Common Share 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 (loss) per common share have been computed based on the following: Three Months Ended Six Months Ended June 30, June 30, (dollars in thousands, except for per share data) 2026 2025 2026 2025 Net income (loss) available to common stockholders $ 40,159 $ ( 21,802 ) $ 76,472 $ ( 3,069 ) Earnings allocated to participating securities ( 83 ) 53 ( 159 ) 8 Income (loss) attributable to common stock $ 40,076 $ ( 21,749 ) $ 76,313 $ ( 3,061 ) Weighted average common shares outstanding, including participating securities 50,298 42,100 50,275 40,252 Weighted average participating securities ( 103 ) ( 102 ) ( 105 ) ( 102 ) Weighted average common shares outstanding 50,195 41,998 50,170 40,150 Incremental shares from assumed conversions of options, performance units and restricted shares 210 - 227 - Weighted average common and equivalent shares outstanding 50,405 41,998 50,397 40,150 Earnings (loss) per common share: Basic $ 0.80 $ ( 0.52 ) $ 1.52 $ ( 0.08 ) Diluted 0.80 ( 0.52 ) 1.51 ( 0.08 ) For the three and six months ended June 30, 2026, there were no anti-dilutive share equivalents. For the three and six months ended June 30, 2025, incremental shares of 175,000 and 220,000 , respectively, were excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive due to the net loss. 18 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 4. Investment Securities All of the Company’s investment securities were classified as available-for-sale as of June 30, 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 (loss) within stockholders’ equity. Fair value is determined using quoted market prices or, in instances of limited market activity, based on various assumptions. See Note 8 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. Allowance for Gross Gross Investment Amortized Unrealized Unrealized Fair Credit Cost Gains Losses Value Losses (dollars in thousands) June 30, 2026 Available-for-sale securities: Federal agency obligations $ 337,440 $ 1,966 $ ( 10,478 ) $ 328,928 $ - Residential mortgage pass-through securities 640,318 2,888 ( 46,935 ) 596,271 - Commercial mortgage pass-through securities 35,241 - ( 3,291 ) 31,950 - Obligations of U.S. states and political subdivisions 208,614 4,276 ( 13,416 ) 199,474 - Corporate bonds and notes 20,500 5 ( 117 ) 20,388 - Asset-backed securities 489 1 ( 3 ) 487 - Other securities 1,760 - - 1,760 - Total available-for-sale securities $ 1,244,362 $ 9,136 $ ( 74,240 ) $ 1,179,258 $ - December 31, 2025 Available-for-sale securities: Federal agency obligations $ 398,392 $ 2,467 $ ( 9,669 ) $ 391,190 $ - Residential mortgage pass-through securities 644,811 5,391 ( 43,058 ) 607,144 - Commercial mortgage pass-through securities 30,124 - ( 3,155 ) 26,969 - Obligations of U.S. states and political subdivisions 221,545 5,385 ( 14,521 ) 212,409 - Corporate bonds and notes 12,500 22 ( 3 ) 12,519 - Asset-backed securities 528 - ( 3 ) 525 - Other securities 182 - - 182 - 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 June 30, 2026 and December 31, 2025. 19 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 4. Investment Securities – (continued) Investment securities with a carrying value of approximately $ 682.1 million and $ 771.2 million at June 30, 2026 and December 31, 2025 , respectively, were pledged to secure public deposits, borrowings and for other purposes required or permitted by law. As of June 30, 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 the amortized cost and fair value of available-for-sale securities by contractual maturity as of June 30, 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. June 30, 2026 Amortized Fair Cost Value (dollars in thousands) Available-for-sale securities Due in one year or less $ 5,104 $ 5,115 Due after one year through five years 28,602 28,951 Due after five years through ten years 86,020 87,113 Due after ten years 447,317 428,098 Residential mortgage pass-through securities 640,318 596,271 Commercial mortgage pass-through securities 35,241 31,950 Other securities 1,760 1,760 Total available-for-sale securities $ 1,244,362 $ 1,179,258 There were no realized gains or losses on available-for-sale securities during the three and six months ended June 30, 2026 and June 30, 2025 . 20 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 4. Investment Securities – (continued) 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. June 30, 2026 Total Less than 12 Months 12 Months or Longer Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (dollars in thousands) Available-for-sale securities: Federal agency obligations $ 119,218 $ ( 10,478 ) $ 79,714 $ ( 666 ) $ 39,504 $ ( 9,812 ) Residential mortgage pass-through securities 395,721 ( 46,935 ) 101,293 ( 1,745 ) 294,428 ( 45,190 ) Commercial mortgage pass-through securities 31,950 ( 3,291 ) 5,354 ( 108 ) 26,596 ( 3,183 ) Obligations of U.S. states and political subdivisions 90,041 ( 13,416 ) 10,649 ( 182 ) 79,392 ( 13,234 ) Corporate bonds and notes 15,884 ( 117 ) 15,884 ( 117 ) - - Asset-backed securities 259 ( 3 ) - - 259 ( 3 ) Total available-for-sale securities $ 653,073 $ ( 74,240 ) $ 212,894 $ ( 2,818 ) $ 440,179 $ ( 71,422 ) December 31, 2025 Total Less than 12 Months 12 Months or Longer Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (dollars in thousands) Available-for-sale securities: Federal agency obligations $ 135,103 $ ( 9,669 ) $ 101,610 $ ( 246 ) $ 33,493 $ ( 9,423 ) Residential mortgage pass-through securities 331,799 ( 43,058 ) 5,547 ( 45 ) 326,252 ( 43,013 ) Commercial mortgage pass-through securities 26,969 ( 3,155 ) 5,421 ( 96 ) 21,548 ( 3,059 ) Obligations of U.S. states and political subdivisions 103,918 ( 14,521 ) 4,276 ( 20 ) 99,642 ( 14,501 ) Corporate bonds and notes 1,997 ( 3 ) 1,997 ( 3 ) - - Asset-backed securities 525 ( 3 ) 242 - 283 ( 3 ) 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 June 30, 2026 and December 31, 2025 , respectively. There were no sales of available-for-sale securities during the three and six months ended June 30, 2026 . On June 2, 2025, the Company sold a significant portion of the available-for-sale investments acquired from FLIC with proceeds of $277.5 million, with no gross gains or losses realized upon sale. 21 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 4. Investment Securities – (continued) The Company evaluates securities in an unrealized loss position for impairment related to credit losses on at least a quarterly basis. Securities in unrealized loss positions are first assessed as to whether we intend to sell, or if it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If one of the criteria is met, the security’s amortized cost basis is written down to fair value through current earnings. For securities that do not meet these criteria, the Company evaluates whether the decline in fair value resulted from credit losses or other factors. If this assessment indicates that a credit loss exists, we compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis for the security, a credit loss exists and an ACL is recorded, limited to the amount that the fair value of the security is less than its amortized cost basis. Unrealized losses on asset backed securities and state and municipal securities have not been recognized into income because the issuers are of high credit quality and we do not intend to sell and it is likely that we will not be required to sell the securities prior to their anticipated recovery. The decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the securities. Any impairment that has not been recorded through an ACL is recognized in OCI, net of applicable taxes. The Company has not recognized an ACL for available-for-sale securities as of June 30, 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. Government sponsored enterprises. Although a government guarantee exists on these investments, these entities are not legally backed by the full faith and credit of the federal government, and the current support they receive is subject to a cap as part of the agreement entered into in 2008. Nonetheless, at this time we do not foresee any set of circumstances in which the government would not fund its commitments on these investments as the issuers are an integral part of the U.S. housing market in providing liquidity and stability. Therefore, we concluded that a zero -allowance approach for these investment securities is appropriate. 22 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 5. Renewable Energy Investments On June 30, 2026, the Company entered into an agreement to commit up to $ 50.0 million in capital investments to a renewable energy tax equity fund ("Renewable Energy Investment"). The investment was executed to generate economic return as well as Federal Investment Tax Credits ("ITCs") and other tax benefits. The Company accounts for this investment using the Proportional Amortization Method ("PAM") under ASC 323 - 740, Investments – Equity Method and Joint Ventures – Income Taxes . Under PAM, the Company amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits allocated to it in future periods. The net amortization expense and recognized tax credits will be reflected as a component of income tax expense in the Consolidated Statements of Income. As of June 30, 2026, the balance sheet reflects the unfunded status of the commitment prior to capital calls and project completions: ● Unfunded Capital Commitments : The Company recognized an unfunded capital commitment liability of $ 50.0 million, included within Other Liabilities on the Consolidated Statement of Condition, representing its maximum legally binding obligation to fund future capital calls under the agreement. Capital contributions will be paid in tranches pursuant to capital calls issued as underlying project construction milestones and placed-in-service criteria are satisfied. ● Investment Asset : The Company recognized a corresponding equity investment asset of $ 50.0 million, included within Other Assets on the Consolidated Statement of Condition, reflecting the gross commitment prior to capital deployment. For the three and six months ended June 30, 2026, no capital calls were paid, and no tax credits, tax benefits, or proportional amortization expenses were recognized in the Consolidated Statements of Income, as the underlying renewable energy assets were not yet placed in service. In accordance with ASC 740 - 270, Income Taxes — Interim Reporting , the Company calculates its quarterly income tax provision using an estimated annual effective tax rate ("AETR"). The Company incorporated the anticipated full-year tax credits and net benefits from this commitment into its estimated AETR calculation for fiscal year 2026. This expectation supports maintaining the Company’s estimated current full-year effective tax rate at approximately 28 % for 2026. 23 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 6. Derivatives 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 Subsequent changes in fair value for a hedging instrument that has been designated and qualifies as part of a hedging relationship are accounted for in the following manner: 1 ) Cash flow hedges: changes in fair value are recognized as a component in OCI 2 ) Fair value hedges: changes in fair value are recognized concurrently in earnings As long as a hedging instrument is designated and the results of the effectiveness testing support that the instrument qualifies for hedge accounting treatment, 100% of the periodic changes in fair value of the hedging instrument are accounted for as outlined above. This is the case whether or not economic mismatches exist in the hedging relationship. As a result, there is no periodic measurement or recognition of ineffectiveness. Rather, the full impact of hedge gains and losses is recognized in the period in which the hedged transactions impact earnings. The change in fair value of the hedging instrument that is included in the assessment of hedge effectiveness is presented in the same income statement line item that is used to present the earnings effect of the hedged item. As of June 30, 2026 , the Bank was not utilizing fair value hedges. Cash Flow Hedges 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 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. The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps. The Company previously entered into two forward starting interest rate cap spread transactions, one with a total notional amount of $ 150 million, which became effective on October 1, 2022 and which matures in October of 2027 and one interest rate cap spread transaction, with a total notional amount of $ 75 million, which became effective in November 2022 and which matures in November of 2027. These are designated as cash flow hedges of brokered certificates of deposit, and the interest rate cap spread is indexed to a benchmark of fed funds with payment required on a monthly basis. The structure of these instruments is such that the Company entered into a total of $ 225 million in notional amount of sold interest rate cap agreements, in which we are required to pay the counterparty an incremental amount if the index rate exceeds a set cap rate. Simultaneously, the Company purchased a total of $ 225 million in notional amount of interest rate cap agreements in which we receive an incremental amount if the index rate is above a set cap rate. No payments are required if the index rate is at, or below, the cap rate on the sold or purchased interest rate cap agreements. Net interest income recorded on these swap and interest rate cap transactions totaled approximately $ 2.4 million and $ 5.1 million and $ 4.5 million and $ 8.6 million during the three and six months ended June 30, 2026 and June 30, 2025 , respectively, and is recorded as a reduction of interest expense on FHLB advances or on brokered certificates of deposit. 24 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 6. Derivatives – (continued) 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 June 30, 2026 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 $ 4,039 $ ( 2,430 ) $ - Three Months Ended June 30, 2025 Amount of gain (loss) recognized in OCI (Effective Portion) Amount of (gain) loss reclassified from OCI to interest expense Amount of gain recognized in other noninterest income (Ineffective Portion) (dollars in thousands) Interest rate contracts $ - $ ( 4,468 ) $ - Six Months Ended June 30, 2026 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 $ 8,644 $ ( 5,064 ) $ - Six Months Ended June 30, 2025 Amount of gain (loss) recognized in OCI (Effective Portion) Amount of (gain) loss reclassified from OCI to interest expense Amount of gain recognized in other noninterest income (Ineffective Portion) (dollars in thousands) Interest rate contracts $ ( 3,792 ) $ ( 8,610 ) $ - 25 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 6. Derivatives - (continued) The following table reflects the cash flow hedges included in the consolidated statements of condition as of June 30, 2026 and December 31, 2025 : June 30, 2026 December 31, 2025 Notional Amount Fair Value Notional Amount Fair Value (dollars in thousands) Interest rate contracts $ 1,125,000 $ 17,853 $ 1,150,000 $ 15,370 Derivatives Not Designated as Hedges As part of the merger with FLIC, the Bank acquired interest rate swap agreements (each, a “back-to-back swap”) that are not designated as hedging instruments. A back-to-back swap allows a borrower to effectively convert a variable rate loan to a fixed rate. The Bank originates a variable rate loan with a borrower and simultaneously enters into offsetting back-to-back swaps with the borrower and an unaffiliated dealer counterparty to minimize interest rate risk. In connection with each swap transaction, the Bank agrees to pay interest to the borrower on a notional amount at a variable interest rate and receives interest from the borrower on a similar notional amount at a fixed interest rate. Concurrently, the Bank agrees to pay the dealer counterparty the same fixed interest rate on the same notional amount and receives the same variable interest rate on the same notional amount. Because the Bank acts as an intermediary for its borrower, changes in the fair value of the underlying derivative contracts offset each other and do not impact the Bank’s results of operations. The following tables reflect the back-to-back swaps that are not designated as hedging instruments as of June 30, 2026 and December 31, 2025 : June 30, 2026 Notional Fair Value Fair Value (dollars in thousands) Positions Amount Asset Liabilities Derivatives not designated as hedging instruments included in other assets / other liabilities: Interest rate swaps with borrowers 3 $ 35,589 $ - $ 457 Interest rate swaps with offsetting counterparties 3 35,589 457 - December 31, 2025 Notional Fair Value Fair Value (dollars in thousands) Positions Amount Asset Liabilities Derivatives not designated as hedging instruments included in other assets / other liabilities: Interest rate swaps with borrowers 3 $ 35,914 $ 229 $ - Interest rate swaps with offsetting counterparties 3 35,914 - 229 26 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses Loans Receivable – The following table sets forth the composition of the Company’s loan portfolio segments, including net deferred loan fees, as of June 30, 2026 and December 31, 2025 : June 30, 2026 December 31, 2025 (dollars in thousands) Commercial $ 1,603,736 $ 1,565,963 Commercial real estate 8,545,330 8,054,696 Commercial construction 528,103 623,902 Residential real estate 1,192,033 1,210,980 Consumer 3,313 2,017 Gross loans 11,872,515 11,457,558 Net deferred loan fees ( 3,481 ) ( 4,278 ) Total loans receivable $ 11,869,034 $ 11,453,280 As of June 30, 2026 and December 31, 2025 , loans totaling approximately $ 8.8 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 June 30, 2026 and December 31, 2025 . June 30, 2026 December 31, 2025 (dollars in thousands) Residential real estate $ - $ 391 Loans Receivable on Nonaccrual Status - The following tables present the carrying value of nonaccrual loans with an ACL and the carrying value of nonaccrual loans without an ACL as of June 30, 2026 and December 31, 2025 : June 30, 2026 Nonaccrual loans with ACL Nonaccrual loans without ACL Total nonaccrual loans (dollars in thousands) Commercial $ 1,338 $ 12,295 13,633 Commercial real estate 122 61,732 61,854 Residential real estate 347 3,830 4,177 Total $ 1,807 $ 77,857 $ 79,664 27 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) December 31, 2025 Nonaccrual loans with ACL Nonaccrual loans without ACL Total nonaccrual loans (dollars in thousands) Commercial $ 1,987 $ 11,052 $ 13,039 Commercial real estate 207 28,354 28,561 Residential real estate 549 3,766 4,315 Total $ 2,743 $ 43,172 $ 45,915 Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated and loans that are individually evaluated. Purchased Credit-Deteriorated Loans ("PCD") - PCD loans are defined as a loan or group of loans that have experienced more-than-insignificant credit deterioration since origination. The following table presents the recorded investment of those loans as of June 30, 2026 and December 31, 2025: (dollars in thousands) June 30, 2026 December 31, 2025 Commercial $ 4,859 $ 5,398 Commercial real estate 186,718 213,770 Residential real estate 1,870 1,962 Total purchased credit-deteriorated loans $ 193,447 $ 221,130 The loans in the above table are primarily secured by multifamily properties located in the five boroughs of New York City and subject to rent regulation. This specific pool is subject to unique stressors, including the 2019 New York rent laws, which further 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. The New York City Rent Guidelines Board recently approved no increases for one - and two -year lease renewals after October 1. Credit Quality Indicators - The Company continuously monitors the credit quality of its loans receivable. In addition to its internal monitoring, the Company utilizes the services of a third -party loan review firm to periodically validate the credit quality of its loans receivable on a sample basis. Credit quality is monitored by reviewing certain credit quality indicators. Assets classified as “Pass” are deemed to possess average to superior credit quality, requiring no more than normal attention. Assets classified as “Special Mention” have generally acceptable credit quality yet possess higher risk characteristics/circumstances than satisfactory assets. Such conditions include strained liquidity, slow pay, stale financial statements, or other conditions that require more stringent attention from the lending staff. These conditions, if not corrected, may weaken the credit quality or inadequately protect the Company’s credit position at some future date. Assets are classified as "Substandard” if the asset has a well-defined weakness that requires management’s attention to a greater degree than for loans classified as special mention. Such weakness, if left uncorrected, could possibly result in the compromised ability of the loan to perform to contractual requirements. An asset is classified as “Doubtful” if it is inadequately protected by the net worth and/or paying capacity of the obligor or of the collateral, if any, that secures the obligation. Assets classified as doubtful include assets for which there is a “distinct possibility” that a degree of loss will occur if the inadequacies are not corrected. 28 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) We evaluate whether a modification, extension or renewal of a loan is a current period origination in accordance with GAAP. Generally, loans up for renewal are subject to a full credit evaluation before the renewal is granted and such loans are considered current period originations for purposes of the table below. The following table presents loans by origination, risk designation and gross charge-offs as of and during the six months ended June 30, 2026 (dollars in thousands): Term loans amortized cost basis by origination year 2026 2025 2024 2023 2022 Prior Revolving Loans Total Gross Loans Commercial Pass $ 128,849 $ 150,720 $ 187,316 $ 99,606 $ 214,868 $ 314,690 $ 466,944 $ 1,562,993 Special mention - - - 2,491 688 250 43 3,472 Substandard 5,893 146 - 502 3,083 13,178 13,044 35,846 Doubtful - - - - - 1,425 - 1,425 Total commercial $ 134,742 $ 150,866 $ 187,316 $ 102,599 $ 218,639 $ 329,543 $ 480,031 $ 1,603,736 YTD gross charge-offs $ - $ - $ 39 $ - $ - $ 1,975 $ 756 $ 2,770 Commercial real estate Pass $ 713,873 $ 1,147,920 $ 365,927 $ 279,687 $ 1,467,220 $ 2,814,983 $ 1,580,587 $ 8,370,197 Special mention - - - - 28,926 33,106 13,205 75,237 Substandard - - 3,997 - 7,979 72,581 15,339 99,896 Doubtful - - - - - - - - Total commercial real estate $ 713,873 $ 1,147,920 $ 369,924 $ 279,687 $ 1,504,125 $ 2,920,670 $ 1,609,131 $ 8,545,330 YTD gross charge-offs $ - $ - $ - $ - $ 4,615 $ 21,262 $ - $ 25,877 Commercial construction Pass $ 43,031 $ 127,193 $ 124,219 $ 19,646 $ 8,091 $ 22,892 $ 183,031 $ 528,103 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total commercial construction $ 43,031 $ 127,193 $ 124,219 $ 19,646 $ 8,091 $ 22,892 $ 183,031 $ 528,103 YTD gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Residential real estate Pass $ 45,322 $ 27,097 $ 17,655 $ 29,945 $ 197,442 $ 511,914 $ 353,823 $ 1,183,198 Special mention - - - - - - 3,309 3,309 Substandard - - - 547 - 2,759 2,220 5,526 Doubtful - - - - - - - - Total residential real estate $ 45,322 $ 27,097 $ 17,655 $ 30,492 $ 197,442 $ 514,673 $ 359,352 $ 1,192,033 YTD gross charge-offs $ - $ - $ - $ - $ - $ - $ 1 $ 1 Consumer Pass $ 3,123 $ 8 $ 7 $ - $ - $ 82 $ 93 $ 3,313 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total consumer $ 3,123 $ 8 $ 7 $ - $ - $ 82 $ 93 $ 3,313 YTD gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Total Pass $ 934,198 $ 1,452,938 $ 695,124 $ 428,884 $ 1,887,621 $ 3,664,561 $ 2,584,478 $ 11,647,804 Special mention - - - 2,491 29,614 33,356 16,557 82,018 Substandard 5,893 146 3,997 1,049 11,062 88,518 30,603 141,268 Doubtful - - - - - 1,425 - 1,425 Grand total $ 940,091 $ 1,453,084 $ 699,121 $ 432,424 $ 1,928,297 $ 3,787,860 $ 2,631,638 $ 11,872,515 YTD gross charge-offs $ - $ - $ 39 $ - $ 4,615 $ 23,237 $ 757 $ 28,648 29 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) The following table presents loans by origination, risk designation and gross charge-offs as of and for the year ended December 31, 2025 (dollars in thousands): Term loans amortized cost basis by origination year 2025 2024 2023 2022 2021 Prior Revolving Loans Total Gross Loans Commercial Pass $ 165,942 $ 194,070 $ 137,181 $ 217,504 $ 177,715 $ 145,173 $ 479,906 $ 1,517,491 Special mention - - - 694 - 2,927 44 3,665 Substandard 146 539 3,048 3,120 2,599 10,625 24,730 44,807 Doubtful - - - - - - - - Total commercial $ 166,088 $ 194,609 $ 140,229 $ 221,318 $ 180,314 $ 158,725 $ 504,680 $ 1,565,963 YTD gross charge-offs $ - $ - $ 32 $ 1,669 $ - $ 854 $ 1,961 $ 4,516 Commercial real estate Pass $ 1,129,223 $ 416,806 $ 303,121 $ 1,487,034 $ 1,391,743 $ 1,648,135 $ 1,451,710 $ 7,827,772 Special mention - - - 39,271 3,741 71,452 6,998 121,462 Substandard - 4,024 - 22,193 9,066 54,778 15,401 105,462 Doubtful - - - - - - - - Total commercial real estate $ 1,129,223 $ 420,830 $ 303,121 $ 1,548,498 $ 1,404,550 $ 1,774,365 $ 1,474,109 $ 8,054,696 YTD gross charge-offs $ - $ - $ - $ - $ - $ 13,839 $ - $ 13,839 Commercial construction Pass $ 108,660 $ 120,104 $ 36,316 $ 17,912 $ 63,727 $ 44,193 $ 232,990 $ 623,902 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total commercial construction $ 108,660 $ 120,104 $ 36,316 $ 17,912 $ 63,727 $ 44,193 $ 232,990 $ 623,902 YTD gross charge-offs $ - $ - $ - $ - $ - $ - $ - $ - Residential real estate Pass $ 36,615 $ 26,638 $ 33,577 $ 201,351 $ 114,215 $ 416,017 $ 373,244 $ 1,201,657 Special mention - - - - - - 3,343 3,343 Substandard - - - - 798 2,516 2,666 5,980 Doubtful - - - - - - - - Total residential real estate $ 36,615 $ 26,638 $ 33,577 $ 201,351 $ 115,013 $ 418,533 $ 379,253 $ 1,210,980 YTD gross charge-offs $ - $ - $ - $ - $ - $ - $ 1,000 $ 1,000 Consumer Pass $ 1,863 $ - $ - $ - $ - $ 63 $ 91 $ 2,017 Special mention - - - - - - - - Substandard - - - - - - - - Doubtful - - - - - - - - Total consumer $ 1,863 $ - $ - $ - $ - $ 63 $ 91 $ 2,017 YTD gross charge-offs $ 25 $ - $ - $ - $ - $ - $ 1 $ 26 Total Pass $ 1,442,303 $ 757,618 $ 510,195 $ 1,923,801 $ 1,747,400 $ 2,253,581 $ 2,537,941 $ 11,172,839 Special mention - - - 39,965 3,741 74,379 10,385 128,470 Substandard 146 4,563 3,048 25,313 12,463 67,919 42,797 156,249 Doubtful - - - - - - - - Grand total $ 1,442,449 $ 762,181 $ 513,243 $ 1,989,079 $ 1,763,604 $ 2,395,879 $ 2,591,123 $ 11,457,558 YTD gross charge-offs $ 25 $ - $ 32 $ 1,669 $ - $ 14,693 $ 2,962 $ 19,381 30 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Collateral Dependent Loans : The following tables present the amortized cost basis of collateral dependent loans by loan segment as of June 30, 2026 and December 31, 2025 : June 30, 2026 Real Estate Other Total (dollars in thousands) Commercial $ 5,876 $ 8,570 $ 14,446 Commercial real estate 247,912 - 247,912 Residential real estate 5,597 - 5,597 Total $ 259,385 $ 8,570 $ 267,955 December 31, 2025 Real Estate Other Total (dollars in thousands) Commercial $ 6,948 $ 8,783 $ 15,731 Commercial real estate 242,125 - 242,125 Residential real estate 5,637 - 5,637 Total $ 254,710 $ 8,783 $ 263,493 31 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Aging Analysis - The following tables present the aging of the amortized cost in past due loans as of June 30, 2026 and December 31, 2025 : June 30, 2026 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due and Still Accruing Nonaccrual Total Past Due and Nonaccrual Current Gross Loans (dollars in thousands) Commercial $ 192 $ 376 $ 423 $ 13,633 $ 14,624 $ 1,589,112 $ 1,603,736 Commercial real estate - 2,605 - 61,854 64,459 8,480,871 8,545,330 Commercial construction - - - - - 528,103 528,103 Residential real estate 1 491 769 4,177 5,438 1,186,595 1,192,033 Consumer - - - - - 3,313 3,313 Total $ 193 $ 3,472 $ 1,192 $ 79,664 $ 84,521 $ 11,787,994 $ 11,872,515 December 31, 2025 30-59 Days Past Due 60-89 Days Past Due 90 Days or Greater Past Due and Still Accruing Nonaccrual Total Past Due and Nonaccrual Current Gross Loans (dollars in thousands) Commercial $ 875 $ 539 $ 427 $ 13,039 $ 14,880 $ 1,551,083 $ 1,565,963 Commercial real estate 13,602 6,098 16,276 28,561 64,537 7,990,159 8,054,696 Commercial construction - - - - - 623,902 623,902 Residential real estate 7,405 1,372 769 4,315 13,861 1,197,119 1,210,980 Consumer - - - - - 2,017 2,017 Total $ 21,882 $ 8,009 $ 17,472 $ 45,915 $ 93,278 $ 11,364,280 $ 11,457,558 32 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) The following tables detail the amount of gross loans that are individually analyzed, collectively evaluated, and loans acquired with deteriorated quality, and the related portion of the ACL for loans that are allocated to each loan portfolio segment. June 30, 2026 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Allowance for credit losses – loans Individually analyzed $ 314 $ - $ - $ - $ - $ 314 Collectively evaluated 14,805 74,909 4,169 11,903 20 105,806 Acquired with deteriorated credit quality ( 1,217 ) 35,309 - ( 63 ) - 34,029 Total $ 13,902 $ 110,218 $ 4,169 $ 11,840 $ 20 $ 140,149 Gross loans Individually analyzed $ 12,609 $ 61,194 $ - $ 3,728 $ - $ 77,531 Collectively evaluated 1,586,268 8,297,418 528,103 1,186,435 3,313 11,601,537 Acquired with deteriorated credit quality 4,859 186,718 - 1,870 - 193,447 Total $ 1,603,736 $ 8,545,330 $ 528,103 $ 1,192,033 $ 3,313 $ 11,872,515 December 31, 2025 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Allowance for credit losses – loans Individually analyzed $ 314 $ 125 $ - $ - $ - $ 439 Collectively evaluated 15,392 79,046 5,303 12,084 18 111,843 Acquired with deteriorated credit quality ( 348 ) 42,256 - 115 - 42,023 Total $ 15,358 $ 121,427 $ 5,303 $ 12,199 $ 18 $ 154,305 Gross loans Individually analyzed $ 12,184 $ 28,354 $ - $ 3,675 $ - $ 44,213 Collectively evaluated 1,548,381 7,812,572 623,902 1,205,343 2,017 11,192,215 Acquired with deteriorated credit quality 5,398 213,770 - 1,962 - 221,130 Total $ 1,565,963 $ 8,054,696 $ 623,902 $ 1,210,980 $ 2,017 $ 11,457,558 33 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Activity in the Company’s ACL for loans for the three and six months ended June 30, 2026 and June 30, 2025 are summarized in the tables below. Three Months Ended June 30, 2026 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Balance as of March 31, 2026 $ 16,189 $ 119,800 $ 4,680 $ 12,368 $ 19 $ 153,056 Charge-offs: Non-PCD Loans ( 2,295 ) ( 14,726 ) - ( 1 ) - ( 17,022 ) PCD Loans - ( 4,503 ) - - - ( 4,503 ) Recoveries 505 13 - 13 - 531 Provision for (reversal of) credit losses – loans: Operating (reversal of) provision for credit losses ( 2,308 ) 10,181 ( 511 ) ( 362 ) 1 7,001 Provision for (reversal of) PCD allowance 1,811 ( 547 ) - ( 178 ) - 1,086 Balance as of June 30, 2026 $ 13,902 $ 110,218 $ 4,169 $ 11,840 $ 20 $ 140,149 Three Months Ended June 30, 2025 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Balance as of March 31, 2025 $ 18,031 $ 54,586 $ 5,030 $ 4,752 $ 4 $ 82,403 Charge-offs ( 3,011 ) ( 2,027 ) - - ( 1 ) ( 5,039 ) Recoveries 23 90 - 5 - 118 Provision for (reversal of) credit losses – loans: - Initial provision related to acquisition 985 16,017 78 10,217 10 27,307 Operating provision for (reversal of) credit losses 3,968 4,281 314 ( 514 ) 16 8,065 Nonaccretable credit marks on PCD loans 965 42,256 - 115 - 43,336 Balance as of June 30, 2025 $ 20,961 $ 115,203 $ 5,422 $ 14,575 $ 29 $ 156,190 34 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Six Months Ended June 30, 2026 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Balance as of December 31, 2025 $ 15,358 $ 121,427 $ 5,303 $ 12,199 $ 18 $ 154,305 Charge-offs: Non-PCD Loans ( 2,770 ) ( 17,009 ) - ( 1 ) - ( 19,780 ) PCD Loans - ( 8,868 ) - - - ( 8,868 ) Recoveries 935 35 - 28 - 998 Provision for (reversal of) credit losses – loans: Operating (reversal of) provision for credit losses ( 1,549 ) 15,508 ( 1,134 ) ( 207 ) 2 12,620 Provision for (reversal of) PCD allowance 1,928 ( 875 ) - ( 179 ) - 874 Balance as of June 30, 2026 $ 13,902 $ 110,218 $ 4,169 $ 11,840 $ 20 $ 140,149 Six Months Ended June 30, 2025 Commercial Commercial real estate Commercial construction Residential real estate Consumer Total (dollars in thousands) Balance as of December 31, 2024 $ 18,278 $ 54,777 $ 5,064 $ 4,561 $ 5 $ 82,685 Charge-offs ( 3,011 ) ( 5,582 ) - - ( 1 ) ( 8,594 ) Recoveries 178 90 - 5 - 273 Provision for (reversal of) credit losses – loans: Initial provision related to acquisition - loans 985 16,017 78 10,217 10 27,307 Operating provision for (reversal of) credit losses 3,566 7,645 280 ( 323 ) 15 11,183 Nonaccretable credit marks on PCD loans 965 42,256 - 115 - 43,336 Balance as of June 30, 2025 $ 20,961 $ 115,203 $ 5,422 $ 14,575 $ 29 $ 156,190 35 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Loan Modifications to Borrowers Experiencing Financial Difficulty: The following tables present the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2026 . The modification percentage represents the total loans modified during the three and six months ended as a percentage of the total gross loan balances as of June 30, 2026 . Three Months Ended Amortized Cost Basis Term Extension Payment Deferral Interest Rate Reduction Total Gross Loans at June 30, 2026 Modification % (Modified Loans/Gross Loans) (dollars in thousands) June 30, 2026 Commercial $ 1,500 $ 1,425 $ - $ 2,925 $ 1,603,736 0.18 % Commercial real estate 28,926 - - 28,926 8,545,330 0.34 Commercial construction - - - - 528,103 - Residential real estate - - - - 1,192,033 - Consumer - - - - 3,313 - Total $ 30,426 $ 1,425 $ - $ 31,851 $ 11,872,515 0.27 % Six Months Ended Amortized Cost Basis Term Extension Payment Deferral Interest Rate Reduction Total Gross Loans at June 30, 2026 Modification % (Modified Loans/Gross Loans) (dollars in thousands) June 30, 2026 Commercial $ 9,811 $ 1,425 $ 596 $ 11,832 $ 1,603,736 0.74 % Commercial real estate 28,926 - - 28,926 8,545,330 0.34 Commercial construction - - - - 528,103 - Residential real estate - - - - 1,192,033 - Consumer - - - - 3,313 - Total $ 38,737 $ 1,425 $ 596 $ 40,758 $ 11,872,515 0.34 % 36 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2026 . Three Months Ended Weighted Average Term Extension (Months) Weighted Average Payment Deferral (Months) Weighted Average Interest Rate Reduction June 30, 2026 Commercial 6 8 0.0 % Commercial real estate 5 - - Total 11 8 0.0 % Six Months Ended Weighted Average Term Extension (Months) Weighted Average Payment Deferral (Months) Weighted Average Interest Rate Reduction June 30, 2026 Commercial 54 8 2.0 % Commercial real estate 5 - - Total 59 8 2.0 % 37 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) The Company closely monitors the performance of loans that are modified to borrowers experiencing financial difficulty to understand the effectiveness of its modification efforts. The following table presents the performance of such loans that have been modified in the last twelve months through June 30, 2026 . Current 30-89 Days Past Due 90 Days or Greater Past Due June 30, 2026 (dollars in thousands) Commercial $ 17,945 $ - $ - Commercial real estate 28,926 - 2,371 Total $ 46,871 $ - $ 2,371 The following tables present the amortized cost basis of loans to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2025 . The modification percentage represents the total loans modified during the three and six months ended as a percentage of the total gross loan balances as of June 30, 2025 . Three Months Ended Amortized Cost Basis Term Extension Payment Deferral Interest Rate Reduction Total Gross Loans at June 30, 2026 Modification % (Modified Loans/Gross Loans) (dollars in thousands) June 30, 2025 Commercial $ 6,491 $ 19,461 $ - $ 25,952 $ 1,607,528 1.61 % Commercial real estate - - - - 7,624,033 - Commercial construction 8,419 - - 8,419 681,222 1.24 Residential real estate - - - - 1,254,646 - Consumer - - - - 1,709 - Total $ 14,910 $ 19,461 $ - $ 34,371 $ 11,169,138 0.31 % Six Months Ended Amortized Cost Basis Term Extension Payment Deferral Interest Rate Reduction Total Gross Loans at June 30, 2026 Modification % (Modified Loans/Gross Loans) (dollars in thousands) June 30, 2025 Commercial $ 6,491 $ 19,461 $ - $ 25,952 $ 1,607,528 1.61 % Commercial real estate - - - - 7,624,033 - Commercial construction 8,419 - - 8,419 681,222 1.24 Residential real estate - - - - 1,254,646 - Consumer - - - - 1,709 - Total $ 14,910 $ 19,461 $ - $ 34,371 $ 11,169,138 0.31 % 38 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) The following tables present the financial effect of the loan modifications presented above to borrowers experiencing financial difficulty during the three and six months ended June 30, 2025 . Three Months Ended Weighted Average Term Extension (Months) Weighted Average Payment Deferral (Months) Weighted Average Interest Rate Reduction June 30, 2025 Commercial 3 3 0.0 % Commercial construction 6 - - Total 9 3 0.0 % Six Months Ended Weighted Average Term Extension (Months) Weighted Average Payment Deferral (Months) Weighted Average Interest Rate Reduction June 30, 2025 Commercial 3 3 0.0 % Commercial construction 6 - - Total 9 3 0.0 % During the three and six months ended June 30, 2026 and June 30, 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 and six months ended June 30, 2026 and June 30, 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. Modified loans in default are individually evaluated for the ACL or if the modified loan is deemed uncollectible, the loan, or a portion of the loan, is written off and the ACL is adjusted accordingly. 39 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 7. Loans and the Allowance for Credit Losses – (continued) Allowance for Credit Losses for Unfunded Commitments The Company has recorded an ACL for unfunded credit commitments which was recorded in other liabilities. 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 six months ended June 30, 2026 and 2025 : Three Months Ended Three Months Ended June 30, June 30, 2026 2025 (dollars in thousands) Balance at beginning of period $ 2,901 $ 3,009 Provision for credit losses – unfunded commitments 213 328 Balance at end of period $ 3,114 $ 3,337 Six Months Ended Six Months Ended June 30, June 30, 2026 2025 (dollars in thousands) Balance at beginning of period $ 3,108 $ 2,627 Provision for credit losses – unfunded commitments 6 710 Balance at end of period $ 3,114 $ 3,337 Components of Provision for Credit Losses The following tables summarize the provision for (reversal of) credit losses for the three and six months ended June 30, 2026 and 2025 : Three Months Ended Three Months Ended June 30, June 30, 2026 2025 (dollars in thousands) Operating provision for credit losses $ 7,001 $ 8,065 Initial provision related to acquisition – loans - 27,307 Provision for credit losses on PCD loans 1,086 - Provision for credit losses - unfunded commitments 213 328 Provision for credit losses $ 8,300 $ 35,700 Six Months Ended Six Months Ended June 30, June 30, 2026 2025 (dollars in thousands) Operating provision for credit losses $ 12,620 $ 11,183 Initial provision related to acquisition - loans - 27,307 Provision for credit losses on PCD loans 874 - Provision for credit losses - unfunded commitments 6 710 Provision for credit losses $ 13,500 $ 39,200 40 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments 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: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3: 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). 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. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful. 41 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) Assets and Liabilities Measured at Fair Value on a Recurring Basis The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a recurring basis as of June 30, 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. Level 1 inputs include securities that have quoted prices in active markets for identical assets. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. Examples of instruments which would generally be classified within Level 2 of the valuation hierarchy include municipal bonds and certain agency collateralized mortgage obligations. In certain cases where there is limited activity in the market for a particular instrument, assumptions must be made to determine the fair value of the instruments and these are classified as Level 3. When measuring fair value, the valuation techniques available under the market approach, income approach and/or cost approach are used. The Company’s evaluations are based on market data and the Company employs combinations of these approaches for its valuation methods depending on the asset class. Derivatives : The fair value of derivatives is based on valuation models using observable market data as of the measurement date (Level 2 ). Our derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rate, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including brokers, market transactions and third -party pricing services. 42 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. 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 June 30, 2026 and December 31, 2025 are as follows: June 30, 2026 Fair Value Measurements at Reporting Date Using Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) Recurring fair value measurements: Assets Available-for-sale securities: Federal agency obligations $ 328,928 $ - $ 328,928 $ - Residential mortgage pass-through securities 596,271 - 596,271 - Commercial mortgage pass-through securities 31,950 - 31,950 - Obligations of U.S. states and political subdivisions 199,474 - 199,474 - Corporate bonds and notes 20,388 - 20,388 - Asset-backed securities 487 - 487 - Other securities 1,760 1,760 - - Total available-for-sale securities 1,179,258 1,760 1,177,498 - Equity securities 19,793 9,966 9,827 - Derivatives 18,624 - 18,624 - Total assets $ 1,217,675 $ 11,726 $ 1,205,949 $ - Liabilities Derivatives - interest rate contracts 771 - 771 - Total liabilities $ 771 $ - $ 771 $ - 43 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) December 31, 2025 Fair Value Measurements at Reporting Date Using Total Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) Recurring fair value measurements: Assets Available-for-sale securities: Federal agency obligations $ 391,190 $ - $ 391,190 $ - Residential mortgage pass- through securities 607,144 - 607,144 - Commercial mortgage pass-through securities 26,969 - 26,969 - Obligations of U.S. states and political subdivisions 212,409 - 205,897 6,512 Corporate bonds and notes 12,519 - 12,519 - Asset-backed securities 525 - 525 - Other securities 182 182 - - Total available-for-sale securities $ 1,250,938 $ 182 $ 1,244,244 $ 6,512 Equity securities 19,287 10,073 9,214 - Derivatives 16,074 - 16,074 - Total assets $ 1,286,299 $ 10,255 $ 1,269,532 $ 6,512 Liabilities Derivatives - interest rate contracts 704 - 704 - Total liabilities $ 704 $ - $ 704 $ - There were no transfers between Level 1, Level 2 and Level 3 during the six months ended June 30, 2026 and for the year ended December 31, 2025 . Assets Measured at Fair Value on a Nonrecurring Basis The Company may be required periodically to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from the application of lower of cost or fair value accounting or impairment write-downs of individual assets. The following methods and assumptions were used to estimate the fair values of the Company’s assets measured at fair value on a nonrecurring basis as of June 30, 2026 and December 31, 2025 . Loans Held-for-Sale : 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 June 30, 2026, the Company held no loans held-for-sale. As of December 31, 2025 , loans held-for-sale totaled $ 0.4 million, consisting entirely of residential mortgage loans. 44 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) Collateral Dependent Loans : The Company may record adjustments to the carrying value of loans based on fair value measurements, generally as partial charge-offs of the uncollectible portions of these loans. These adjustments also include certain impairment amounts for collateral dependent loans calculated in accordance with GAAP. Impairment amounts are generally based on the fair value of the underlying collateral supporting the loan and, as a result, the carrying value of the loan less the calculated impairment amount applicable to that loan does not necessarily represent the fair value of the loan. Real estate collateral is valued using independent appraisals or other indications of value based on recent comparable sales of similar properties or assumptions generally observable by market participants. However, due to the substantial judgment applied and limited volume of activity as compared to other assets, fair value is based on Level 3 inputs. Estimates of fair value used for collateral supporting commercial loans generally are based on assumptions not observable in the marketplace and are also based on Level 3 inputs. For assets measured at fair value on a nonrecurring basis, the fair value measurements as of June 30, 2026 and December 31, 2025 are as follows: Fair Value Measurements at Reporting Date Using Assets measured at fair value on a nonrecurring basis: June 30, 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: (dollars in thousands) Commercial real estate $ 41,655 $ - $ - $ 41,655 Fair Value Measurements at Reporting Date Using Assets measured at fair value on a nonrecurring basis: December 31, 2025 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Collateral dependent loans: (dollars in thousands) Commercial $ 693 $ - $ - $ 693 Collateral dependent loans – Collateral dependent loans as of June 30, 2026 that required a nonrecurring fair value measurement were $ 41.7 million with no related specific allowance for credit losses compared to $ 0.8 million with a specific allowance for credit losses of $ 0.1 million as of December 31, 2025 . 45 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) Assets Measured with Significant Unobservable Level 3 Inputs Recurring basis The tables below present a reconciliation of all assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3 ) for the six months ended June 30, 2026 and for the year ended December 31, 2025 : (dollars in thousands) Obligations of U.S. states and political subdivisions Beginning balance, January 1, 2026 $ 6,512 Principal paydowns ( 7,364 ) Change in unrealized loss 852 Ending balance, June 30, 2026 $ - (dollars in thousands) Obligations of U.S. states and political subdivisions Beginning balance, January 1, 2025 $ 6,526 Principal paydowns ( 314 ) Changes in unrealized gain 300 Ending balance, December 31, 2025 $ 6,512 The following methods and assumptions were used to estimate the fair values of the Company’s assets measured on a recurring basis. The Company held no Level 3 recurring assets at June 30, 2026. Quantitative information regarding the significant unobservable inputs used in Level 3 fair value measurements as of December 31, 2025, is detailed below: December 31, 2025 Fair Value Valuation Techniques Unobservable Input Rate Available-for-sale securities: (dollars in thousands) Obligations of U.S. states and political subdivisions $ 6,512 Discounted cash flows Discount rate 4.6 % 46 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) Nonrecurring basis : 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 for the periods presented. The tables below provide quantitative information about significant unobservable inputs used in fair value measurements within Level 3 hierarchy of collateral dependent loans. June 30, 2026 (dollars in thousands) Fair Value Valuation Techniques Unobservable Input Range (weighted average) Commercial real estate loans $ 11,721 Appraisals of collateral value Adjustment for comparable sales -1% to +15% (+3.0%) Commercial real estate loans 29,934 Income capitalization approach Capitalization rate 8 % Total commercial real estate loans 41,655 Vacancy & collection loss rate 3 % December 31, 2025 (dollars in thousands) Fair Value Valuation Techniques Unobservable Input Range (weighted average) Commercial loans $ 693 Appraisals of collateral value Adjustment for comparable sales -5% to +15% (+8.1%) 47 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) As of June 30, 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 June 30, 2026 and December 31, 2025 : Fair Value Measurements Carrying Amount Fair Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) (dollars in thousands) June 30, 2026 Financial assets: Cash and due from banks $ 362,276 $ 362,276 $ 362,276 $ - $ - Available-for-sale securities: 1,179,258 1,179,258 1,760 1,177,498 - Restricted investments in bank stocks 46,596 n/a n/a n/a n/a Equity securities 19,793 19,793 9,966 9,827 - Net loans 11,728,885 11,532,302 - - 11,532,302 Derivatives - interest rate contracts 18,624 18,624 - 18,624 - Accrued interest receivable 61,561 61,561 - 4,909 56,652 Financial liabilities: Noninterest-bearing deposits 2,512,964 2,512,964 2,512,964 - - Interest-bearing deposits 9,227,399 9,217,191 6,299,469 2,917,722 - Borrowings 715,416 715,305 - 715,305 - Subordinated debentures 202,236 202,516 - 202,516 - Derivatives - interest rate contracts 771 771 - 771 - Accrued interest payable 11,127 11,127 - 11,127 - December 31, 2025 Financial assets: Cash and due from banks $ 380,895 $ 380,895 $ 380,895 $ - $ - Available-for-sale securities: 1,250,938 1,250,938 182 1,244,244 6,512 Restricted investment in bank stocks 54,722 n/a n/a n/a n/a Equity securities 19,287 19,287 10,073 9,214 - Net loans 11,298,975 11,232,658 - - 11,232,658 Derivatives - interest rate contracts 16,074 16,074 - 16,074 - Accrued interest receivable 60,761 60,761 - 5,172 55,589 Financial liabilities: Noninterest-bearing deposits 2,420,397 2,420,397 2,420,397 - - Interest-bearing deposits 8,820,218 8,816,234 6,023,341 2,792,893 - Borrowings 903,489 902,908 - 902,908 - Subordinated debentures 201,864 204,454 - 204,454 - Derivative - interest rate contracts 704 704 - 704 Accrued interest payable 12,740 12,740 - 12,740 - 48 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 8. Fair Value Measurements and Fair Value of Financial Instruments – (continued) The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair values of letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The fair value of commitments to originate loans is immaterial and not included in the tables above. Changes in assumptions or estimation methodologies may have a material effect on these estimated fair values. The Company’s remaining assets and liabilities, which are not considered financial instruments, have not been valued differently than has been customary with historical cost accounting. No disclosure of the relationship value of the Company’s core deposit base is required by FASB ASC 825 - 10. Fair value estimates are based on existing balance sheet financial instruments, without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, there are certain significant assets and liabilities that are not considered financial assets or liabilities, such as deferred taxes, premises and equipment, and goodwill. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates. Management believes that reasonable comparability between financial institutions may not be likely, due to the wide range of permitted valuation techniques and numerous estimates which must be made, given the absence of active secondary markets for many of the financial instruments. This lack of uniform valuation methodologies also introduces a greater degree of subjectivity to these estimated fair values. Note 9. Comprehensive Income 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 accumulated other comprehensive income (loss) for the periods presented (dollars in thousands): Details about Accumulated Other Comprehensive Income (Loss) Components Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line item in the Consolidated Statements of Income Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Interest income on cash flow hedges $ 2,430 $ 4,468 $ 5,064 $ 8,610 Borrowings and deposits expense ( 748 ) ( 1,256 ) ( 1,563 ) ( 2,420 ) Income tax expense Total reclassification $ 1,682 $ 3,212 $ 3,501 $ 6,190 49 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 9. Comprehensive Income – (continued) Accumulated other comprehensive income (loss) as of June 30, 2026 and December 31, 2025 consisted of the following: June 30, 2026 December 31, 2025 (dollars in thousands) Available-for-sale securities, net of tax $ ( 46,079 ) $ ( 40,652 ) Cash flow hedge, net of tax 10,379 7,904 Defined benefit pension and post-retirement plans, net of tax 852 852 Total $ ( 34,848 ) $ ( 31,896 ) Note 10. Stock-based Compensation On May 19, 2026, the Company’s stockholders approved the 2026 Equity Incentive Plan (the “2026 Plan”). Upon stockholder approval, the 2026 Plan replaced all prior equity incentive plans, and no further awards will be granted under any previous plans. The 2026 Plan initially authorized 1,500,000 shares of common stock for issuance, which may be granted in the form of stock options (qualified or non-qualified), restricted stock, restricted stock units, or performance units. The Company intends to issue all shares under the 2026 Plan from newly issued shares of common stock. As of June 30, 2026, the 2026 Plan was the Company’s only active equity plan, with 1,467,136 shares remaining available for future grant. As of June 30, 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. The Company expenses the cost of the awards, which is determined to be the fair market value of the awards at the date of grant, ratably, over the vesting or measurement period. Forfeiture rates are not estimated but are recorded as incurred. Stock-based compensation expense for the six months ended June 30, 2026 and June 30, 2025 was $ 2.9 million and $ 2.5 million, respectively. Activity in the Company’s restricted stock for the six months ended June 30, 2026 was as follows: Nonvested Shares Weighted Average Grant Date Fair Value Nonvested as of December 31, 2025 110,349 $ 20.25 Granted 81,291 27.64 Vested ( 70,873 ) 21.71 Forfeited/cancelled/expired ( 7,326 ) 21.63 Nonvested as of June 30, 2026 113,441 $ 24.55 50 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 10. Stock-Based Compensation – (continued) As of June 30, 2026 , there was approximately $ 2.1 million of total unrecognized compensation cost related to nonvested restricted stock granted. The cost is expected to be recognized over a weighted average period of 1.3 years. A summary of the status of unearned performance unit awards and the change during the period is presented in the table below: Units (expected) Units (maximum) Weighted Average Grant Date Fair Value Unearned as of December 31, 2025 216,151 $ 20.87 Awarded 85,482 26.27 Change in estimate 6,513 17.93 Vested shares ( 45,746 ) 17.93 Forfeited/cancelled/expired ( 12,954 ) 21.30 Unearned as of June 30, 2026 249,446 382,501 $ 23.16 As of June 30, 2026 , the specific number of shares related to performance units that were expected to vest was 249,446 , determined by actual performance in consideration of the established range of the performance targets, which is consistent with the level of expense currently being recognized over the vesting period. Should this expectation change, additional compensation expense could be recorded in future periods or previously recognized expense could be reversed. As of June 30, 2026 , the maximum number of performance units that ultimately could vest if performance targets were exceeded is 382,501 . During the six months ended June 30, 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 six months ended June 30, 2026 were 21,164 shares. As of June 30, 2026 , compensation cost of approximately $ 3.2 million related to non-vested performance units not yet recognized is expected to be recognized over a weighted average period of 2.3 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: Units (expected) Weighted Average Grant Date Fair Value Unearned as of December 31, 2025 170,482 $ 21.50 Awarded 111,561 26.15 Vested shares ( 92,170 ) 20.07 Forfeited/cancelled/expired ( 3,218 ) 22.21 Unearned as of June 30, 2026 186,655 $ 24.98 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 six months ended June 30, 2026 , 92,170 shares vested. A total of 49,321 shares were netted from the vested shares to satisfy employee tax obligations. The net shares issued from vesting of deferred stock units during the six months ended June 30, 2026 were 42,849 shares. As of June 30, 2026 , compensation cost of approximately $ 2.9 million related to non-vested deferred stock units, not yet recognized, is expected to be recognized over a weighted average period of 1.7 years. 51 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 11. Components of Net Periodic Pension Cost 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 June 30, Statements of Income 2026 2025 Legacy CNOB Plan (dollars in thousands) Interest cost $ 90 $ 105 Deposit, loan and other income/Salaries and employee benefits Expected return on plan assets ( 238 ) ( 230 ) Deposit, loan and other income/Salaries and employee benefits Total periodic pension income $ ( 148 ) $ ( 125 ) Three Months Ended Affected Line Item in the Consolidated June 30, Statements of Income 2026 2025 Legacy FLIC Plan (dollars in thousands) Interest cost $ 626 $ - Deposit, loan and other income Expected return on plan assets ( 892 ) - Deposit, loan and other income Total periodic pension income $ ( 266 ) $ - Six Months Ended Affected Line Item in the Consolidated June 30, Statements of Income 2026 2025 Legacy CNOB Plan (dollars in thousands) Interest cost $ 180 $ 211 Deposit, loan and other income/Salaries and employee benefits Expected return on plan assets ( 476 ) ( 460 ) Deposit, loan and other income/Salaries and employee benefits Total periodic pension income $ ( 296 ) $ ( 249 ) Six Months Ended Affected Line Item in the Consolidated June 30, Statements of Income 2026 2025 Legacy FLIC Plan (dollars in thousands) Interest cost $ 1,252 $ - Deposit, loan and other income Expected return on plan assets ( 1,783 ) - Deposit, loan and other income Total periodic pension income $ ( 531 ) $ - 52 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 11. Components of Net Periodic Pension Cost - (continued) Contributions The Company did not contribute to the pension plans during the six months ended June 30, 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. FLIC Merger In the FLIC merger, the Company acquired a defined benefit pension plan with a net funded status of $ 11.2 million as of the Acquisition Date. Former FLIC employees were eligible to participate in the Pension Plan after attaining 21 years of age and completing 12 full months of service. Pension benefits are generally based on a percentage of average annual compensation during the period of creditable service. The Bank has historically made contributions to the Pension Plan which, when taken together with participant contributions equal to 2 % of their compensation, will be sufficient to fund these benefits. The Bank’s funding method, the unit credit actuarial cost method, is consistent with the funding requirements of applicable federal laws and regulations which set forth both minimum required and maximum tax-deductible contributions. Employees became fully vested after four years of participation in the Pension Plan ( no vesting occurs during the four -year period). An internal management committee oversees the affairs of the pension plan and acts as named fiduciary. Effective September 30, 2025, the Company froze benefit accruals under this defined benefit pension plan for all participants. The freeze does not affect retirees or vested benefits. The projected benefit obligation was remeasured using a discount rate of 5.41 %, increasing the liability by $ 2.0 million. There were no other changes in assumptions. The freezing of the plan also resulted in the removal of projected salary increase from the liability determination, resulting in a curtailment gain of $ 3.5 million recognized in other income during the third quarter of 2025. The plan’s funded status improved to 134 %. 53 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 12. Deposits Time Deposits As of June 30, 2026 and December 31, 2025 , the Company's total time deposits were $ 2.9 billion and $ 2.8 billion, respectively. Included in time deposits were nonreciprocal brokered certificates of approximately $ 0.8 billion and $ 0.7 billion as of June 30, 2026 and December 31, 2025 , respectively. As of June 30, 2026 , the contractual maturities of these time deposits were as follows (dollars in thousands): 2026 $ 2,101,061 2027 764,164 2028 49,703 2029 9,662 2030 2,527 thereafter 1,398 Time deposits (before net discount) 2,928,515 Fair value discount ( 585 ) Time deposits (after net discount) $ 2,927,930 The amount of time deposits with balances greater than or equal to $250,000 was $ 1.1 billion and $ 1.0 billion as of June 30, 2026 and December 31, 2025, respectively. 54 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 13. FHLB Borrowings The Company’s FHLB borrowings and weighted average interest rates are summarized below: June 30, 2026 December 31, 2025 Amount Rate Amount Rate (dollars in thousands) By remaining period to maturity: Less than 1 year $ 715,000 3.84 % $ 878,050 3.96 % 1 year through less than 2 years 209 2.85 226 2.85 2 years through less than 3 years - - 25,000 4.18 3 years through less than 4 years - - - - 4 years through 5 years - - - - After 5 years 209 2.96 227 2.96 FHLB borrowings – gross 715,418 3.84 % 903,503 3.97 % Fair value discount ( 2 ) ( 14 ) Total FHLB borrowings $ 715,416 $ 903,489 The FHLB borrowings are secured by pledges of certain collateral including, but not limited to, U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgages and commercial real estate loans. Advances are payable at stated maturity, with a prepayment penalty for fixed rate advances. All FHLB advances bear fixed rates. The advances as of June 30, 2026 were primarily collateralized by approximately $ 3.9 billion of commercial mortgage loans and securities, net of required over collateralization amounts, under a blanket lien arrangement. As of June 30, 2026, the Company had a remaining borrowing capacity of approximately $ 2.0 billion at FHLB. 55 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 14. Subordinated Debentures During 2003, the Company formed a statutory business trust, which exists for the exclusive purpose of (i) issuing Trust Securities representing undivided beneficial interests in the assets of the Trust; (ii) investing the gross proceeds of the Trust securities in junior subordinated deferrable interest debentures (subordinated debentures) of the Company; and (iii) engaging in only those activities necessary or incidental thereto. On December 19, 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly-owned subsidiary of the Parent Corporation issued $ 5.0 million of MMCapS capital securities to investors due on January 23, 2034. The capital securities presently qualify as Tier I capital. The trust loaned the proceeds of this offering to the Company and received in exchange $ 5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or in part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted effective June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Therefore, effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures’ floating rate will be three -month CME Term SOFR plus 2.85 % plus a tenor spread adjustment of 0.26161 %. The rate as of June 30, 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 June 30, 2026 and December 31, 2025 . Issuance Date Securities Issued Liquidation Value Coupon Rate Maturity Redeemable by Issuer Beginning 12/19/2003 $ 5,000,000 $1,000 per Capital Security Floating 3-month CME Term SOFR + 285 Basis Points + 26.161 Basis Points 1/23/2034 1/23/2009 On May 15, 2025, the Parent Corporation issued $ 200 million in aggregate principal amount of fixed-to-floating rate subordinated notes (the "2025 Notes"). The 2025 Notes bear interest at 8.125 % annually from, and including, the date of initial issuance up to but excluding June 1, 2030 or the date of earlier redemption, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2025. From and including June 1, 2030 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is Three-Month Term SOFR, 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. 56 Table of Contents CONNECTONE BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 15. Segment Reporting Accounting policies for segments are the same as those described in Note 1a. Segment performance is evaluated using Consolidated Bank net income. Information reported internally for performance assessment by the CODM follows, inclusive of reconciliations of significant segment totals to the financial statements: Consolidated Bank Consolidated Bank Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (dollars in thousands) Interest income $ 192,907 $ 146,030 $ 377,304 $ 270,819 Noninterest income 7,914 4,865 14,575 8,614 Total segment income $ 200,821 $ 150,895 $ 391,879 $ 279,433 Less: Interest expense 74,985 63,786 146,193 121,521 Segment net interest income and noninterest income 125,836 87,109 245,686 157,912 Less: Provision for credit losses 8,300 35,700 13,500 39,200 Salaries and employee benefits 31,537 25,233 64,305 47,811 Other segment items* 23,795 48,042 48,946 64,374 Income tax expense (benefit) 16,183 ( 4,988 ) 30,891 2,172 Segment consolidated net income (loss) $ 46,021 $ ( 16,878 ) $ 88,044 $ 4,355 Other segment disclosures Interest income $ 192,907 $ 146,030 $ 377,304 $ 270,819 Interest expense 74,985 63,786 146,193 121,521 Depreciation 1,781 1,325 3,587 2,423 Amortization of core deposit intangibles 2,845 1,251 5,690 1,530 Other significant noncash items: Provision for credit losses 8,300 35,700 13,500 39,200 Segment assets 14,402,382 13,906,221 14,402,382 13,906,221 Total expenses for segment assets 154,800 167,773 303,835 275,078 Reconciliation of assets Total assets for segment $ 14,402,382 $ 13,906,221 $ 14,402,382 $ 13,906,221 Other assets 9,482 9,517 9,482 9,517 Total consolidated assets $ 14,411,864 $ 13,915,738 $ 14,411,864 $ 13,915,738 *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. 57 Table of Contents Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations The purpose of this analysis is to provide the reader with information relevant to understanding and assessing the Company’s results of operations for the periods presented herein and financial condition as of June 30, 2026 and December 31, 2025. 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. Cautionary Statement Concerning Forward-Looking Statements This report includes forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that involve inherent risks and uncertainties. This report contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of ConnectOne Bancorp Inc. and its subsidiaries, including statements preceded by, followed by, or that include words or phrases such as “believes,” “expects,” “anticipates,” “plans,” “trend,” “objective,” “continue,” “remain,” “pattern” or similar expressions or future or conditional verbs such as “will,” “would,” “should,” “could,” “might,” “can,” “may” or similar expressions. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) competitive pressures among depository institutions may increase significantly; (2) changes in the interest rate environment may reduce interest margins; (3) prepayment speeds, loan origination and sale volumes, charge-offs and credit loss provisions may vary substantially from period to period; (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 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 rent stabilized multi-family buildings in New York City; (7) changes and trends in the securities markets may adversely impact ConnectOne Bancorp; (8) a delayed or incomplete resolution of regulatory issues could adversely impact planning by ConnectOne Bancorp; (9) the impact on reputation risk created by the developments discussed above on such matters as business generation and retention, funding and liquidity could be significant; (10) the outcome of regulatory and legal investigations and proceedings may not be anticipated, and (11) the impact of health emergencies or natural disasters on our employees and operations, and those of our customers. Further information on other factors that could affect the financial results of ConnectOne Bancorp is included in Item 1a. of ConnectOne Bancorp’s Annual Report on Form 10-K as amended and updated in ConnectOne Bancorp’s other filings with the Securities and Exchange Commission. These documents are available free of charge at the Commission’s website at http://www.sec.gov and/or from ConnectOne Bancorp, Inc. Critical Accounting Policies and Estimates Our accounting policies are integral to understanding the results reported. We consider accounting policies that require management to exercise significant judgment or discretion or to make significant assumptions that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. As of June 30, 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. 58 Table of Contents Operating Results Overview Net income (loss) available to common stockholders for the three months ended June 30, 2026 was $40.2 million, as compared to ($21.8) million for the prior-year period. The Company’s diluted earnings (loss) per share was $0.80 for the three months ended June 30, 2026 compared with ($0.52) for the prior-year period. The $62.0 million increase in net income available to common stockholders and the $1.32 increase in diluted earnings per share were due to a $34.8 million increase in net interest income, a $27.4 million decrease in provision for credit losses, a $2.7 million increase in noninterest income and a $18.2 million decrease in noninterest expenses, which was partially offset by a $21.2 million increase in income tax expense. The reduction in provision for credit losses primarily reflects the initial $27.4 million provision recognized in the prior-year period upon closing the acquisition of The First of Long Island Corporation ("FLIC"). Similarly, the $18.2 million decrease in noninterest expenses was driven by $30.7 million in merger and restructuring charges recognized in the prior-year period, partially offset by the inclusion of ongoing FLIC operating expenses in the current period. Overall, year-over-year variances across all income statement line items were heavily impacted by the merger with FLIC. Net income (loss) available to common stockholders for the six months ended June 30, 2026 was $76.5 million, as compared to ($3.1) million for the prior-year period. The Company’s diluted earnings (loss) per share were $1.51 for the six months ended June 30, 2026 compared with ($0.08) for the prior-year period. The $79.5 million increase in net income available to common stockholders and the $1.59 increase in diluted earnings per share were due to a $77.8 million increase in net interest income, a $25.7 million decrease in provision for credit losses and a $5.1 million increase in noninterest income, which was partially offset by a $28.7 million increase in income tax expense and a $0.3 million increase in noninterest expenses. The reduction in provision for credit losses primarily reflects the initial $27.4 million provision recognized in the prior-year period upon closing the acquisition of FLIC. Noninterest expenses were essentially flat year-over-year, as the prior-year period included $32.1 million in merger and restructuring charges associated with the transaction; excluding these prior-year charges, core noninterest expenses increased due to operating the larger combined franchise for the full six-month period in 2026. Overall, performance variances across both periods reflect the significant expansion of the franchise following the FLIC merger. Net Interest Income and Margin Net interest income is the difference between the interest earned on the portfolio of earning assets (principally loans and investments) and the interest paid on deposits and borrowings, which support these assets. Net interest income is presented on a tax-equivalent basis by adjusting tax-exempt income (including interest earned on tax-free loans and on obligations of state and local political subdivisions) by the amount of income tax which would have been paid had the assets been invested in taxable assets. 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 second quarter of 2026 increased $35.0 million, or 43.9%, from the prior-year period, due to a 36 basis-point widening of the net interest margin to 3.42% from 3.06%, and a 28.5% increase in average interest earning assets. The margin also benefited from a 16 basis-point increase in the yield on interest-earning assets and a 32 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. The year-over-year expansion in both net interest margin and average earning assets was primarily driven by the inclusion of a full quarter of FLIC's operating results in the second quarter of 2026, compared to only one month of activity in the prior-year period following the mid-quarter closing of the merger. Fully taxable equivalent net interest income for the six months ended June 30, 2026 increased $78.4 million, or 53.6%, from prior-year period, due to a 41 basis-point widening of the net interest margin to 3.41% from 3.00%, and a 35.1% increase in average interest-earning assets. The margin also benefited from a 17 basis-point increase in the yield on interest-earning assets and a 40 basis-point decrease in the average costs of deposits, including noninterest-bearing deposits. Similarly, performance for the six-month period reflects six full months of the combined balance sheet in 2026 compared to just one month of FLIC activity in the prior-year period, significantly benefiting both average earning asset volumes and net interest margin. 59 Table of Contents The following tables present for the three and six months ended June 30, 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 June 30, 2026 2025 Interest Interest Average Income/ Average Average Income/ Average Balance Expense Rate (7) Balance Expense Rate (7) (dollars in thousands) Interest-earning assets: Investment securities (1) (2) $ 1,275,125 $ 13,397 4.21 % $ 935,996 $ 9,234 3.96 % Total loans (2) (3) (4) 11,815,868 176,944 6.01 9,121,794 132,865 5.84 Federal funds sold and interest-bearing deposits with banks 309,872 2,821 3.65 367,309 4,070 4.44 Restricted investment in bank stocks 50,939 947 7.54 43,490 788 7.27 Total interest-earning assets 13,451,804 194,109 5.79 10,468,589 146,957 5.63 Noninterest-earning assets: Allowance for credit losses (155,399 ) (98,030 ) Other noninterest-earning assets 957,875 737,871 Total assets $ 14,254,280 $ 11,108,430 Interest-bearing liabilities: Interest-bearing deposits: Time deposits $ 2,992,440 27,776 3.72 $ 2,662,411 26,636 4.01 Other interest-bearing deposits 6,122,264 41,795 2.74 4,463,648 33,603 3.02 Total interest-bearing deposits 9,114,704 69,571 3.06 7,126,059 60,239 3.39 Borrowings 812,384 5,402 2.67 723,303 3,530 1.96 Subordinated debentures, net 202,114 4,283 8.50 170,802 3,361 7.89 Finance lease 845 12 5.66 1,139 17 5.99 Total interest-bearing liabilities 10,130,047 79,268 3.14 8,021,303 67,147 3.36 Noninterest-bearing demand deposits 2,424,773 1,680,653 Other liabilities 86,932 62,220 Total noninterest-bearing liabilities 2,511,705 1,742,873 Stockholders’ equity 1,612,528 1,344,254 Total liabilities and stockholders’ equity $ 14,254,280 $ 11,108,430 Net interest income (tax-equivalent basis) 114,841 79,810 Net interest spread (5) 2.65 % 2.27 % Net interest margin (6) 3.42 % 3.06 % Tax-equivalent adjustment (1,202 ) (927 ) Net interest income $ 113,639 $ 78,883 (1) Average balances are based on amortized cost and include equity securities. (2) Interest income is presented on a tax-equivalent basis using a 21% assumed tax rate. (3) Includes loan fee income and accretion of purchase accounting adjustments. (4) Total loans include loans held-for-sale and nonaccrual loans. (5) 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. (6) Represents net interest income on a tax-equivalent basis divided by average total interest-earning assets. (7) Rates are annualized. 60 Table of Contents Six Months Ended June 30, 2026 2025 Interest Interest Average Income/ Average Average Income/ Average Balance Expense Rate (7) Balance Expense Rate (7) (dollars in thousands) Interest-earning assets: Securities (1) (2) $ 1,291,066 $ 26,699 4.17 % $ 841,460 $ 15,609 3.74 % Total loans (2) (3) (4) 11,677,587 345,889 5.97 8,667,925 248,748 5.79 Federal funds sold and interest-bearing with banks 287,178 5,208 3.66 298,781 6,535 4.41 Restricted investment in bank stocks 51,272 1,882 7.40 41,921 1,677 8.07 Total interest-earning assets 13,307,103 379,678 5.75 9,850,087 272,569 5.58 Noninterest-earning assets: Allowance for credit losses (154,943 ) (91,067 ) Other noninterest-earning assets 975,474 673,254 Total assets $ 14,127,634 $ 10,432,274 Interest-bearing liabilities: Interest-bearing deposits: Time deposits $ 2,947,135 54,490 3.73 $ 2,572,201 51,790 4.06 Other interest-bearing deposits 6,059,723 80,763 2.69 4,177,479 62,441 3.01 Total interest-bearing deposits 9,006,858 135,253 3.03 6,749,680 114,231 3.41 Borrowings 822,909 10,915 2.67 704,949 7,256 2.08 Subordinated debentures 202,021 8,668 8.65 125,646 4,659 7.48 Finance lease 883 25 5.71 1,175 34 5.84 Total interest-bearing liabilities 10,032,671 154,861 3.11 7,581,450 126,180 3.36 Demand deposits 2,404,938 1,494,223 Other liabilities 86,362 57,039 Total noninterest-bearing liabilities 2,491,300 1,551,262 Stockholders’ equity 1,603,663 1,299,562 Total liabilities and stockholders’ equity $ 14,127,634 $ 10,432,274 Net interest income (tax-equivalent basis) 224,817 146,389 Net interest spread (5) 2.64 % 2.22 % Net interest margin (6) 3.41 % 3.00 % Tax-equivalent adjustment (2,374 ) (1,750 ) Net interest income $ 222,443 $ 144,639 (1) Average balances are based on amortized cost and include equity securities. (2) Interest income is presented on a tax-equivalent basis using a 21% assumed tax rate. (3) Includes loan fee income and accretion of purchase accounting adjustments. (4) Total loans include loans held-for-sale and nonaccrual loans. (5) 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. (6) Represents net interest income on a tax-equivalent basis divided by average total interest-earning assets. (7) Rates are annualized. 61 Table of Contents Noninterest Income Noninterest income totaled $7.9 million for the three months ended June 30, 2026, compared with $5.2 million for the prior-year-period. The increase was primarily due to a $1.4 million increase in net gains on sale of loans held-for-sale, primarily SBA loans, a $0.9 million increase in BOLI income and a $0.8 million increase in deposit, loan and other income, which was partially offset by a $0.4 million decrease in net gains on equity securities. The increase across these fee-based lines and BOLI income was primarily driven by the inclusion of a full quarter of FLIC operations in 2026, compared to only one month of activity in the prior-year period. Noninterest income totaled $14.7 million for the six months ended June 30, 2026, compared with $9.6 million for prior-year-period. The increase was primarily due to a $2.3 million increase in BOLI income, a $2.0 million increase in deposit, loan and other income and a $1.5 million increase in net gains on sale of loans held-for-sale, primarily SBA loans, which was partially offset by a $0.7 million decrease in net gains on equity securities. Similarly, growth across these noninterest income categories was primarily attributable to operating the expanded franchise for the full six-month period in 2026 compared to just one month of FLIC activity in the prior-year period. Noninterest Expenses Noninterest expenses totaled $55.4 million for the three months ended June 30, 2026, compared with $73.6 million for the prior-year period. Noninterest expenses for the second quarter of 2026 included $0.1 million in merger and restructuring charges, compared to $30.7 million in the prior-year period. Excluding merger-related charges, adjusted noninterest expenses were $55.3 million for the second quarter of 2026, up $12.4 million from $42.9 million in the prior-year period. The increase was primarily driven by a full quarter of combined FLIC operations compared to just one month in the 2025 period. Key drivers of the increase included a $6.3 million increase in salaries and employee benefits, a $2.0 million increase in occupancy and equipment expenses, a $1.6 million increase in amortization of core deposit intangibles, a $1.3 million increase in other expenses, a $0.6 million increase in information technology and communication expenses, and a $0.5 million increase in professional and consulting fees. Noninterest expenses totaled $113.3 million for the six months ended June 30, 2026, compared with $113.0 million for the prior-year period. Noninterest expenses for the six months ended June 30, 2026 included $2.2 million in merger and restructuring charges, compared to $32.4 million in merger and restructuring charges in the prior-year period. Excluding merger-related charges, adjusted noninterest expenses were $111.1 million for the first six months of 2026, up $30.5 million from $80.6 million in the prior-year period. This increase was primarily driven by six full months of combined FLIC operations in 2026, compared to just one month in the 2025 period. Key drivers of the increase included a $16.5 million increase in salaries and employee benefits, a $4.7 million increase in occupancy and equipment expenses, a $4.2 million increase in amortization of core deposit intangibles, a $2.1 million increase in other expenses, a $1.3 million increase in professional and consulting fees, a $1.2 million increase in information technology and communication expenses, and a $0.7 million increase in marketing and advertising expenses, partially offset by a $0.1 million decrease in FDIC insurance expense. 62 Table of Contents Income Taxes Income tax expense was $16.2 million for the second quarter of 2026, resulting in an effective tax rate of 28.0% compared to income tax benefit of ($5.0) million for the prior-year period. The increase in income tax expense was primarily driven by the return to pre-tax profitability in 2026, compared to a pre-tax loss in the prior-year period that was largely due to initial credit loss provisions and merger-related charges associated with the FLIC acquisition. Additionally, the effective tax rate was impacted by higher state and local tax apportionment factors resulting from our expanded presence in New York following the merger. Income tax expense was $30.9 million for the six months ended June 30, 2026, resulting in an effective tax rate of 28.0%, compared to income tax expense of $2.2 million for the prior-year period. Income tax expense increased primarily due to a return to pre-tax profitability in 2026. By comparison, the prior-year period reflected a pre-tax loss driven by initial credit loss provisions and FLIC merger-related charges. The effective tax rate also reflects higher state and local tax apportionment factors resulting from our expanded presence in New York following the FLIC merger. On June 30, 2026, the Company executed an agreement committing up to $50.0 million to a renewable energy tax equity fund. The investment was structured to generate economic returns as well as Federal Investment Tax Credits ("ITCs") and other favorable tax attributes, which are accounted for under the Proportional Amortization Method ("PAM") pursuant to ASC 323-740. While no capital calls were funded and no direct tax credits or proportional amortization expenses were recognized in the consolidated income statement during the second quarter of 2026, the anticipated full-year tax benefits of the transaction were incorporated into our estimated annual effective tax rate calculation for fiscal 2026. This expectation supports maintaining our estimated full-year effective tax rate at approximately 28%. We expect the underlying renewable energy projects to achieve placed-in-service status in tranches during the second half of 2026, at which point the corresponding capital calls, direct tax credits, and proportional asset amortization will be recognized in our consolidated financial statements. 63 Table of Contents Financial Condition Loan Portfolio The following table sets forth the composition of our loan portfolio, excluding loans held-for-sale and net deferred loan fees, by loan segment at the periods indicated. June 30, 2026 December 31, 2025 Amount Increase/ Amount Percent of Total Amount Percent of Total (Decrease) (dollars in thousands) Commercial $ 1,603,736 13.5 % $ 1,565,963 13.7 % $ 37,773 Commercial real estate 8,545,330 72.0 8,054,696 70.3 490,634 Commercial construction 528,103 4.5 623,902 5.4 (95,799 ) Residential real estate 1,192,033 10.0 1,210,980 10.6 (18,947 ) Consumer 3,313 0.0 2,017 0.0 1,296 Gross loans $ 11,872,515 100.0 % $ 11,457,558 100.0 % $ 414,957 As of June 30, 2026, gross loans totaled $11.9 billion, an increase of $0.4 billion or 3.6% compared to December 31, 2025. The increase in gross loans as of June 30, 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. June 30, 2026 December 31, 2025 Balance Loan-to-Value Balance Loan-to-Value (dollars in thousands) Commercial real estate loans Multifamily $ 3,716,160 57 % $ 3,477,302 58 % Nonowner-occupied 2,933,552 52 2,761,920 52 Owner-occupied 1,659,660 49 1,572,158 51 Land loans 327,801 38 349,125 42 Total commercial real estate loans (before fair value adjustment) $ 8,637,173 53 % $ 8,160,505 54 % Fair value adjustment discount (91,843 ) (105,809 ) Total commercial real estate loans $ 8,545,330 $ 8,054,696 64 Table of Contents The table above is further broken down in the following tables by geography: June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Multifamily loans New Jersey $ 1,817,149 48.9 % $ 1,643,765 47.3 % New York 1,484,695 40.0 1,497,916 43.1 Florida 51,303 1.4 44,403 1.3 Connecticut 42,249 1.1 39,628 1.1 All Other States 320,764 8.6 251,590 7.2 Total multifamily loans (before fair value adjustment) $ 3,716,160 100.0 % $ 3,477,302 100.0 % June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied New Jersey $ 603,398 36.4 % $ 559,404 35.6 % New York 617,675 37.2 607,679 38.6 Florida 116,475 7.0 94,682 6.0 Connecticut 58,105 3.5 59,008 3.8 All Other States 264,007 15.9 251,385 16.0 Total owner-occupied (before fair value adjustment) $ 1,659,660 100.0 % $ 1,572,158 100.0 % June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied New Jersey $ 824,517 28.1 % $ 780,321 28.2 % New York 1,697,134 57.9 1,625,546 58.9 Florida 274,941 9.4 178,830 6.5 Connecticut 32,935 1.1 37,234 1.3 All Other States 104,025 3.5 139,989 5.1 Total nonowner occupied (before fair value adjustment) $ 2,933,552 100.0 % $ 2,761,920 100.0 % 65 Table of Contents June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Land loans New Jersey $ 145,860 44.5 % $ 123,541 35.4 % New York 60,025 18.3 43,263 12.4 Florida 67,751 20.7 128,547 36.8 Connecticut - - - - All Other States 54,165 16.5 53,774 15.4 Total land (before fair value adjustment) $ 327,801 100.0 % $ 349,125 100.0 % In addition, the following tables present further details with respect to our nonowner-occupied and owner-occupied borrower concentrations included in the commercial real estate segment. June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Owner-occupied Retail $ 231,704 14.0 % $ 216,500 13.8 % Office 126,803 7.6 130,646 8.3 Warehouse/Industrial 432,826 26.1 395,830 25.2 Mixed Use 152,881 9.2 134,113 8.5 Other 715,446 43.1 695,069 44.2 Total owner-occupied (before fair value adjustment) $ 1,659,660 100.0 % $ 1,572,158 100.0 % June 30, 2026 December 31, 2025 Balance Percent of Total Balance Percent of Total (dollars in thousands) Nonowner-occupied Retail $ 867,936 29.6 % $ 848,400 30.7 % Office 663,074 22.6 672,744 24.4 Warehouse/Industrial 279,123 9.5 273,866 9.9 Mixed Use 295,793 10.1 250,588 9.1 Other 827,626 28.2 716,322 25.9 Total nonowner-occupied (before fair value adjustment) $ 2,933,552 100.0 % $ 2,761,920 100.0 % 66 Table of Contents Allowance for Credit Losses and Related Provision The ACL is an estimate of current expected credit losses considering available information relevant to assessing collectability of cash flows over the contractual term of the financial assets necessary to cover lifetime expected credit losses inherent in financial assets at the balance sheet date. The methodology for determining the ACL is considered a critical accounting policy by management because of the high degree of judgment involved, the subjectivity of the assumptions used, and the potential for changes in the forecasted economic environment that could result in changes to the amount of the recorded ACL. The loan portfolio also represents the largest asset type on the Company’s Consolidated Statement of Financial Condition. As of June 30, 2026, the Company’s ACL was $140.1 million, a decrease of $14.2 million from $154.3 million as of December 31, 2025. The $14.2 million decrease was primarily driven by recent charge-off activity—which reduced specific reserves previously established—alongside improvements in macroeconomic forecasts and continued favorable asset quality metrics, including historically low levels of delinquencies and criticized loans. For the three and six months ended June 30, 2026, the provision for credit losses (including unfunded commitments) was $8.3 million and $13.5 million, respectively, down from $35.7 million and $39.2 million in the comparable 2025 periods. The provision in the prior-year periods was significantly elevated due to an initial $27.4 million provision recognized upon closing the FLIC merger in June 2025. Excluding the initial merger provision from the prior-year base, the provision for credit losses in both 2026 periods reflected net loan portfolio growth, charge-offs and specific reserves on individually evaluated loans, and updates to macroeconomic forecasts and qualitative factors. Net charge-offs were $21.0 million and $27.7 million for the three and six months ended June 30, 2026, respectively, compared with $4.9 million and $8.3 million for the prior-year periods. The elevated net charge-off activity during the three and six months ended June 30, 2026 was primarily driven by a $13.8 million charge-off associated with a group of New York City multi-family loans secured by rent-stabilized properties. 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 June 30, 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. 67 Table of Contents Changes in the ACL on loans are presented in the following tables for the periods indicated. Three Months Ended June 30, 2026 PCD Non-PCD Total (dollars in thousands) Balance as of March 31, 2026, $ 37,447 $ 115,609 $ 153,056 Charge-offs: Commercial - (2,295 ) (2,295 ) Commercial real estate (4,503 ) (14,726 ) (19,229 ) Residential real estate - (1 ) (1 ) Total charge-offs (4,503 ) (17,022 ) (21,525 ) Recoveries: Commercial - 505 505 Commercial real estate - 13 13 Residential real estate - 13 13 Total recoveries - 531 531 Net charge-offs (4,503 ) (16,491 ) (20,994 ) Provision for credit losses for loans 1,085 7,002 8,087 Balance as of June 30, 2026 $ 34,029 $ 106,120 $ 140,149 Ratio of net charge-offs during the year to average loans receivable outstanding during the year 0.15 % 0.56 % 0.71 % Loans receivable $ 11,869,034 ACL as a percentage of loans receivable 1.18 % Six Months Ended June 30, 2026 PCD Non-PCD Total (dollars in thousands) Balance as of December 31, 2025, $ 42,022 $ 112,283 $ 154,305 Charge-offs: Commercial - (2,770 ) (2,770 ) Commercial real estate (8,868 ) (17,009 ) (25,877 ) Residential real estate - (1 ) (1 ) Total charge-offs (8,868 ) (19,780 ) (28,648 ) Recoveries: Commercial - 935 935 Commercial real estate - 35 35 Residential real estate - 28 28 Total recoveries - 998 998 Net charge-offs (8,868 ) (18,782 ) (27,650 ) Provision for credit losses for loans 875 12,619 13,494 Balance as of June 30, 2026 $ 34,029 $ 106,120 $ 140,149 Ratio of net charge-offs during the year to average loans receivable outstanding during the year 0.15 % 0.32 % 0.47 % Loans receivable $ 11,869,034 ACL as a percentage of loans receivable 1.18 % 68 Table of Contents Three Months Ended June 30, 2025 (dollars in thousands) Average loans receivable $ 9,121,442 Analysis of the ACL: Balance - beginning of period $ 82,403 Charge-offs: Commercial (3,011 ) Commercial real estate (2,027 ) Consumer (1 ) Total charge-offs (5,039 ) Recoveries: Commercial 23 Commercial real estate 90 Residential real estate 5 Total recoveries 118 Net recoveries (charge-offs) (4,921 ) Provision for credit losses – loans Initial provision related to acquisition 27,307 Operating provision for credit losses 8,065 Nonaccretable credit marks 43,336 Balance - end of period $ 156,190 Ratio of annualized net charge-offs during the period to average loans receivable during the period 0.22 % Loans receivable $ 11,164,477 ACL as a percentage of loans receivable 1.40 % 69 Table of Contents Six Months Ended June 30, 2025 (dollars in thousands) Average loans receivable $ 8,667,619 Analysis of the ACL: Balance - beginning of period $ 82,685 Charge-offs: Commercial (3,011 ) Commercial real estate (5,582 ) Consumer (1 ) Total charge-offs (8,594 ) Recoveries: Commercial 178 Commercial real estate 90 Residential real estate 5 Total recoveries 273 Net charge-offs (8,321 ) Provision for credit losses – loans: Initial provision related to acquisition 27,307 Operating provision for credit losses 11,183 Nonaccretable credit marks on PCD loans 43,336 Balance - end of period $ 156,190 Ratio of annualized net charge-offs during the period to average loans receivable during the period 0.19 % Loans receivable $ 11,164,477 ACL as a percentage of loans receivable 1.40 % 70 Table of Contents Asset Quality The Company actively manages credit risk and portfolio quality through stringent underwriting standards, routine credit reviews, and ongoing monitoring of delinquencies, risk ratings, and portfolio dynamics. Management prioritizes early identification of deteriorating credits, ensuring timely charge-offs based on realistic appraisals of cash flows and underlying collateral, while maintaining an adequate ACL. As a matter of policy, loans are placed on nonaccrual status when principal or interest payments become 90 days past due, or earlier if full collection is deemed doubtful. Upon transfer to nonaccrual status, interest recognition ceases, and all previously accrued but uncollected interest is reversed against current-period interest income. Cash payments received on nonaccrual loans are generally applied to reduce principal. Loans may be restored to accrual status only when all delinquent amounts are brought current and future payments are reasonably assured. Well-secured loans in the process of collection may continue to accrue interest beyond 90 days past due, subject to management review. 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. In general, it is the policy of management to consider the charge-off of uncollectible amounts of loans at the point they become past due 90 days. The following table sets forth, as of the dates indicated, the amount of the Company’s nonperforming assets: June 30, 2026 December 31, 2025 (dollars in thousands) Nonaccrual loans $ 79,664 $ 45,915 OREO - - Total nonperforming assets (1) $ 79,664 $ 45,915 Loans 90 days or greater past due and still accruing $ 1,192 $ 17,472 (1) Nonperforming assets are defined as nonaccrual loans and OREO. Nonaccrual loans to total loans receivable 0.67 % 0.40 % Nonperforming assets to total assets 0.55 0.33 The increase in nonaccrual loans was primarily driven by a group of New York City multi-family loans secured by rent-stabilized properties, which added $29.9 million (net of charge-offs) to nonaccruals during the three months ended June 30, 2026. Purchased Credit-Deteriorated Loans As of June 30, 2026, the Company's recorded investment in PCD loans totaled $193.4 million. PCD loans, or purchased credit deteriorated loans, are defined by the CECL standard as acquired financial loans that, at the time of acquisition, have experienced a more-than-insignificant deterioration in credit quality since their origination. The Company, with the assistance of independent third-party loan review experts, identified such deterioration by considering various factors. These factors included, but were not limited to, nonperforming status, payment history and delinquency, risk rating, debt service coverage ability, and rate repricing risk. The resulting PCD designated loans include multifamily loans, commercial real estate, commercial loans, and residential real estate. Within the PCD loan portfolio as of June 30, 2026, there is a pool of rent-regulated loans amounting to $146.3 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, and certain proposed policies of the new mayoral administration of New York City, including a proposed rent freeze which has been adopted by the New York City Rent Guidelines Board. Our determination of PCD classification and initial allowance involved significant judgment. Key assumptions included expected remaining life, default rates, recoveries, and economic scenarios. We continue to monitor roll‑off and performance of the PCD portfolio in our quarterly review process. 71 Table of Contents Investment Securities As of June 30, 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 June 30, 2026, average securities, on an amortized cost basis, increased by $339.1 million to $1.3 billion, or 9.5% of average total interest-earning assets, from $936.0 million, or 8.9% of average interest-earning assets, for the prior-year period. For the six months ended June 30, 2026, average securities, on an amortized cost basis increased by $449.6 million to approximately $1.3 billion, or 9.7% of average total interest-earning assets, from approximately $841.5 million, or 8.5% of average interest-earning assets, for the six months ended June 30, 2025. As of June 30, 2026, net unrealized losses on available-for-sale securities, which are carried as a component of accumulated other comprehensive loss and included in stockholders’ equity, net of tax, amounted to $46.1 million as compared with net unrealized losses of $40.7 million as of December 31, 2025. The increase in net 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. The issuers continue to make timely principal and interest payments on the securities. 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 June 30, 2026. Interest Rate Sensitivity Analysis The principal objective of our asset and liability management function is to evaluate the interest-rate risk included in certain balance sheet accounts; determine the level of risk appropriate given our business focus, operating environment, and capital and liquidity requirements; establish prudent asset concentration guidelines; and manage the risk consistent with Board approved guidelines. We seek to reduce the vulnerability of our operations to changes in interest rates, and actions in this regard are taken under the guidance of the Bank’s Asset Liability Committee (the “ALCO”). The ALCO generally reviews our liquidity, cash flow needs, maturities of investments, deposits and borrowings, and current market conditions and interest rates. The Company utilizes a number of strategies to manage interest rate risk including, but not limited to: (i) balancing the types and structures of interest-earning assets and interest-bearing liabilities by diversifying mix, coupons, maturities and/or repricing characteristics, (ii) reducing the overall interest rate sensitivity of liabilities by emphasizing core and/or longer-term deposits and utilizing FHLB advances and wholesale deposits for our interest rate risk profile, (iii) managing the investment portfolio for liquidity and interest rate risk profile, and (iv) entering into interest rate swap and cap agreements. We currently utilize net interest income simulation and economic value of equity (“EVE”) models to measure the potential impact to the Bank of future changes in interest rates. As of June 30, 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 June 30, 2026. Based on our model, which was run as of June 30, 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 5.63%, while a 100 basis-point instantaneous and parallel decrease in interest rates would increase net interest income by 3.27%. 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 June 30, 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 0.87%, while a 100 basis-point instantaneous and parallel decrease in interest rates would decrease net interest income by 0.46%. 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%. 72 Table of Contents An EVE analysis is also used to dynamically model the present value of asset and liability cash flows with instantaneous and parallel rate shocks of up 200 basis-points and down 100 basis-points. The EVE is likely to be different as interest rates change. Our EVE as of June 30, 2026, would decrease by 8.38% with an instantaneous and parallel rate shock of up 200 basis-points, and increase by 1.32% 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 noninterest-bearing deposits from listing and brokered certificates of deposit. The following table illustrates the most recent results for EVE and one-year net interest income ("NII") sensitivity as of June 30, 2026. Interest Rates Estimated Estimated Change in EVE Interest Rates Estimated Estimated Change in NII (basis points) EVE Amount % (basis points) NII Amount % +300 $ 1,675,785 $ (278,595 ) (14.25 ) 300 $ 438,328 $ (44,551 ) (9.23 ) +200 1,790,535 (163,845 ) (8.38 ) 200 455,701 (27,178 ) (5.63 ) +100 1,903,894 (50,486 ) (2.58 ) 100 471,749 (11,130 ) (2.30 ) 0 1,954,380 - - 0 482,879 - - -100 1,980,192 25,812 1.32 -100 498,657 15,778 3.27 -200 1,960,421 6,041 0.31 -200 516,339 33,460 6.93 -300 1,880,659 (73,721 ) (3.77 ) -300 531,250 48,371 10.02 Certain model limitations are inherent in the methodology used in the EVE and net interest income measurements. The models require the making of certain assumptions which may tend to oversimplify the way actual yields and costs respond to changes in market interest rates. The models assume that the composition of the Company’s interest sensitive assets and liabilities existing at the beginning of a period remain constant over the period being measured, thus they do not consider the Company’s strategic plans, or any other steps it may take to respond to changes in rates over the forecasted period of time. Additionally, the models assume immediate changes in interest rates, based on yield curves as of a point-in-time, which are reflected in a parallel, instantaneous and uniform manner across all yield curves, when in reality changes may rarely be of this nature. The models also utilize data derived from historical performance and as interest rates change the actual performance of loan prepayments, rate sensitivities, and average life assumptions may deviate from assumptions utilized in the models and can impact the results. Accordingly, although the above measurements provide an indication of the Company’s interest rate risk exposure at a particular point in time, such measurements are not intended to provide a precise forecast of the effect of changes in market interest rates. Given the nature and speed with which interest rates change, the projections noted above on the Company’s EVE and net interest income can be expected to differ from actual results. 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 available-for-sale securities. These are all recorded at either fair value or the lower of cost or fair value. Fair values are volatile and may be influenced by a number of factors. Circumstances that could cause estimates of the fair value of certain assets and liabilities to change include a change in prepayment speeds, discount rates, or market interest rates. Fair values for most available-for-sale securities are based on quoted market prices. If quoted market prices are not available, fair values are based on judgments regarding future expected loss experience, current economic condition risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. 73 Table of Contents Impact of Inflation and Changing Prices The consolidated financial statements and notes thereto presented elsewhere herein have been prepared in accordance with GAAP, which requires the measurement of financial position and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations; unlike most industrial companies, nearly all of the Company’s assets and liabilities are monetary. As a result, interest rates have a greater impact on performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. Liquidity Management actively monitors and manages its liquidity position to determine any current or potential future liquidity needs. Liquidity is a measure of a bank’s ability to fund loans, withdrawals or maturities of deposits, and other cash outflows in a cost-effective manner. Our principal sources of funds are deposits, scheduled amortization and prepayments of loan principal, maturities of investment securities, and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit flow and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Liquidity and funding needs are managed through the Bank's Treasury functions and the Asset Liability Committee. An internal policy addresses liquidity and funds management and management monitors the adherence to policy limits to satisfy current and potential future cash flow needs. The policy includes internal limits, deposit concentrations, liquidity sources and availability, stress testing, collateral management, contingency funding plan and other qualitative and quantitative metrics. As of June 30, 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 June 30, 2026, liquid assets (cash and due from banks, interest-bearing deposits with banks and unencumbered investment securities) were $870.9 million, which represented 6.0% of total assets and 7.0% 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 June 30, 2026, not included in the above liquid assets were securities with a market value of $92.3 million which were pledged to the FHLB and securities with a market value of $128.5 million which were pledged to the Federal Reserve Bank of New York, which supported aggregate unutilized borrowing capacity of $210.5 million and $223.3 million, respectively as of June 30, 2026 and December 31, 2025. The Bank is a member of the FHLB of New York and, based on available qualified collateral as of June 30, 2026, 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 $2.4 billion as of June 30, 2026. In addition, as of June 30, 2026, the Bank had in place borrowing capacity of $280.0 million through correspondent banks and other unsecured borrowing lines. As of June 30, 2026, the Bank had aggregate available and unused credit of approximately $4.7 billion, which represents the aforementioned facilities totaling $6.6 billion net of $1.9 billion in outstanding borrowings and letters of credit. As of June 30, 2026, outstanding commitments for the Bank to extend credit were approximately $1.6 billion. Cash an d cash equivalents totaled $362.3 million as of June 30, 2026, decreasing by $18.6 million from $380.9 million as of December 31, 2025. Operating activities provided $49.8 million in net cash. Investing activities used $353.6 million in net cash, a net increase in loans of $423.9 million and investment purchases of $101.6 million and were partially offset by investment maturities, calls and principal repayments of $166.2 million. Financing activities provided $285.2 million in net cash, primarily reflecting a net increase in deposits of $499.5 million and which was partially offset by net repayments of FHLB borrowings of $188.1 million. 74 Table of Contents Deposits 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 includes the IntraFi Network LLC for the placement of Certificate of Deposit Account Registry Service ("CDARS") and Insured Cash Sweep ("ICS") accounts, as well as the recently launched partnership with the National Bank InterDeposit Company (“NBID”) network, operated by ModernFi. 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. The following table sets forth the average balances and weighted average rates of our deposits for the periods indicated. Quarter-to-Date Average June 30, 2026 Quarter-to-Date Average June 30, 2025 Balance Rate Balance Rate (dollars in thousands) Demand, noninterest-bearing $ 2,424,773 - % $ 1,680,653 - % Demand, interest-bearing & NOW 5,143,303 2.77 3,685,697 2.99 Savings 978,961 2.60 777,951 3.18 Time 2,992,440 3.72 2,662,411 4.01 Total average deposits $ 11,539,477 2.42 % $ 8,806,712 2.74 % Average total deposits increased by $2.7 billion, or 31.0%, during the three months ended June 30, 2026 when compared to the prior-year period. The increase in total average deposits was due to a $1.5 billion increase in demand, interest-bearing and NOW deposits, a $0.7 billion increase in noninterest-bearing deposits, a $0.3 billion increase in time deposits and a $0.2 billion increase in savings deposits. Growth across all deposit categories was primarily driven by the merger with FLIC, which reflected a full quarter of combined operations in 2026 compared to only one month of activity in the prior-year period. The increase in average time deposits of $0.3 billion during the three months ended June 30, 2026 was primarily due to a $0.4 billion increase in retail time deposits, partially offset by a $0.1 billion decrease in nonreciprocal brokered certificates of deposit. Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.9 billion for both the three months ended June 30, 2026 and the prior-year period. Average aggregate demand deposits included $1.2 billion and $1.1 billion in ICS and ModernFi reciprocal deposits in the aggregate during the three months ended June 30, 2026 and June 30, 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, ModernFi 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. 75 Table of Contents Year-to-Date Average June 30, 2026 Year-to-Date Average June 30, 2025 Balance Rate Balance Rate (dollars in thousands) Demand, noninterest-bearing $ 2,404,938 - % $ 1,494,223 - % Demand, interest-bearing & NOW 5,063,057 2.71 3,459,775 2.98 Savings 996,666 2.56 717,704 3.20 Time 2,947,135 3.73 2,572,201 4.06 Total average deposits $ 11,411,796 2.39 % $ 8,243,903 2.79 % Average total deposits increased by $3.2 billion, or 38.4%, during the six months ended June 30, 2026 when compared to the prior-year period. The increase in total average deposits was due to a $1.6 billion increase in demand, interest-bearing and NOW deposits, a $0.9 billion increase in noninterest-bearing deposits, a $0.4 billion increase in time deposits, and a $0.3 billion increase in savings deposits. Growth across all deposit categories was primarily attributable to operating the expanded branch network resulting from the FLIC merger for six full months in 2026 compared to only one month of FLIC activity in the prior-year period. The increase in average time deposits of $0.4 billion during the three months ended June 30, 2026 was primarily due to a $0.4 billion increase in retail time deposits. Average nonreciprocal brokered certificates of deposit included in total time deposits were $0.8 billion for the six months ended June 30, 2026, compared to $0.9 billion for the prior-year period. Average aggregate demand deposits included $1.2 billion and $1.0 billion in ICS and ModernFi reciprocal deposits during the six months ended June 30, 2026 and June 30, 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, ModernFi 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. 76 Table of Contents The following table sets forth information related to the uninsured deposit balances of the Bank. June 30, 2026 December 31, 2025 Balance Balance (dollars in thousands) As stated in FFIEC 041-Consolidated Report of Condition, schedule RC-O: Total Bank unconsolidated deposits (including affiliate and subsidiary accounts) $ 11,952,689 $ 11,423,825 Estimated uninsured deposits 5,509,086 5,150,662 The Company, on a consolidated basis: Total deposits $ 11,740,363 $ 11,240,615 Estimated uninsured deposits (excluding affiliate and subsidiary accounts) 5,157,723 4,860,186 The following table sets forth the distribution of total actual deposit accounts, by account types for the periods indicated. June 30, 2026 December 31, 2025 Amount Percent of total Amount Percent of total (dollars in thousands) Demand, noninterest-bearing $ 2,512,964 21.4 % $ 2,420,397 21.5 % Demand, interest-bearing & NOW 5,350,032 45.6 4,992,696 44.4 Savings 949,437 8.1 1,030,645 9.2 Time 2,927,930 24.9 2,796,877 24.9 Total deposits $ 11,740,363 100.0 % $ 11,240,615 100.0 % Total deposits increased by $0.5 billion, or 4.4%, when compared to December 31, 2025. The increase in total deposits was primarily due to a $0.4 billion increase in demand, interest-bearing and NOW deposits, a $0.1 billion increase in time deposits and a $0.1 billion increase in noninterest bearing deposits, partially offset by a $0.1 billion decrease in savings deposits. Aggregate demand deposits included $1.3 billion in ICS and ModernFi reciprocal deposits as of June 30, 2026 and $1.2 billion as of December 31, 2025. Included in time deposits were nonreciprocal brokered certificates of deposit of $0.8 billion as of June 30, 2026 and $0.7 billion as of December 31, 2025. As of June 30, 2026, we held $1.1 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 June 30, 2026: June 30, 2026 (dollars in thousands) 3 months or less $ 376,486 Over 3 to 6 months 380,635 Over 6 to 12 months 254,768 Over 12 months 43,811 Total $ 1,055,700 77 Table of Contents Subordinated Debentures During December 2003, Center Bancorp Statutory Trust II, a statutory business trust and wholly owned subsidiary of the Parent Corporation issued $5.0 million of MMCapS capital securities to investors due on January 23, 2034. The trust loaned the proceeds of this offering to the Parent Corporation and received in exchange $5.2 million of the Parent Corporation’s subordinated debentures. The subordinated debentures are redeemable in whole or part prior to maturity. Upon the cessation of publication of LIBOR rates and pursuant to the Federal LIBOR Act and Federal Reserve regulations implementing the Act, the MMCapS capital securities converted as of June 30, 2023 to a new index based on CME Term SOFR, as defined in the LIBOR Act, plus a tenor spread adjustment, which is referred to as the Benchmark Replacement. Effective for quarterly interest rate resets after July 3, 2023 the subordinated debentures' floating rate will be three-month CME Term SOFR plus 2.85% plus a tenor spread adjustment of 0.26161%. The rate as of June 30, 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"). The 2025 Notes bear interest at 8.125% annually from, and including, the date of initial issuance up to but excluding June 1, 2030 or the date of earlier redemption, payable semi-annually in arrears on June 1 and December 1 of each year, commencing December 1, 2025. From and including June 1, 2030 through maturity or earlier redemption, the interest rate shall reset quarterly to an interest rate per annum equal to a benchmark rate, which is Three-Month Term SOFR, 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. 78 Table of Contents Stockholders ’ Equity The Company’s stockholders’ equity increased by $53.2 million when compared to December 31, 2025. The increase in total stockholders’ equity was primarily due to an increase in retained earnings of $57.6 million, partially offset by an increase in accumulated other comprehensive loss of $3.0 million. As of June 30, 2026, the Company’s tangible common equity ratio and tangible book value per share were 8.78% and $24.66, respectively, compared to 8.62% and $23.52, respectively, as of December 31, 2025. Total goodwill and other intangible assets were $274.5 million as of June 30, 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. June 30, 2026 December 31, 2025 (dollars in thousands, except for per share data) Stockholders' equity $ 1,626,525 $ 1,573,340 Less: preferred stock (110,927 ) (110,927 ) Common equity $ 1,515,598 $ 1,462,413 Less: intangible assets (274,468 ) (280,158 ) Tangible common stockholders’ equity $ 1,241,130 $ 1,182,255 Total assets $ 14,411,864 $ 14,002,700 Less: intangible assets (274,468 ) (280,158 ) Tangible assets $ 14,137,396 $ 13,722,542 Common stock outstanding at period end 50,319,832 50,271,854 Tangible common equity ratio (1) 8.78 % 8.62 % Book value per common share $ 30.12 $ 29.09 Less: intangible assets 5.45 5.57 Tangible book value per common share $ 24.66 $ 23.52 (1) Tangible common equity ratio is tangible common equity divided by tangible assets and is a non-GAAP measure. 79 Table of Contents Regulatory Capital and Capital Adequacy The maintenance of a solid capital foundation is a primary goal for the Company. Accordingly, capital plans, stock repurchases and dividend policies are monitored on an ongoing basis. The Company’s objective with respect to the capital planning process is to effectively balance the retention of capital to support future growth with the goal of providing stockholders with an attractive long-term return on their investment. The Company and the Bank are subject to regulatory guidelines establishing minimum capital standards that involve quantitative measures of assets, and certain off-balance sheet items, as risk-adjusted assets under regulatory accounting practices. The following is a summary of regulatory capital amounts and ratios as of June 30, 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 The Company Amount Ratio Amount Ratio Amount Ratio As of June 30, 2026 (dollars in thousands) Tier 1 leverage capital $1,381,013 9.85% $561,002 4.00% N/A N/A CET I risk-based ratio 1,264,931 10.28 553,717 4.50 N/A N/A Tier 1 risk-based capital 1,381,013 11.22 738,289 6.00 N/A N/A Total risk-based capital 1,687,329 13.71 984,385 8.00 N/A N/A N/A - not applicable For Capital Adequacy Purposes To Be Well-Capitalized Under Prompt Corrective Action Provisions The Bank Amount Ratio Amount Ratio Amount Ratio As of June 30, 2026 (dollars in thousands) Tier 1 leverage capital $1,514,576 10.81% $560,626 4.00% $700,783 5.00% CET I risk-based ratio 1,514,576 12.31 553,654 4.50 799,722 6.50 Tier 1 risk-based capital 1,514,576 12.31 738,205 6.00 984,274 8.00 Total risk-based capital 1,623,811 13.20 984,274 8.00 1,230,342 10.00 As of June 30, 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 2.72 percentage points above the minimum buffer ratio and, at the Bank, the lowest ratio was the Total Risk Based Capital Ratio which was 2.70 percentage points above the minimum buffer ratio. 80 Table of Contents Item 3. Qualitative and Quantitative Disclosures about Market Risks Market Risk Interest rate risk management is our primary market risk. See “Item 2- Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Sensitivity Analysis” herein for a discussion of our management of our interest rate risk.