Financial Performance - Net income available to common stockholders for Q3 2025 was $39.5 million, up from $15.7 million in Q3 2024, representing a 151.6% increase[219]. - Diluted earnings per share for Q3 2025 were $0.78, compared to $0.41 for Q3 2024, reflecting a 90.2% increase[219]. - For the nine months ended September 30, 2025, net income available to common stockholders was $36.4 million, down from $48.9 million in the same period in 2024, a decrease of 25.6%[220]. - Noninterest income for the third quarter of 2025 was $19.4 million, significantly higher than $4.7 million in the third quarter of 2024, boosted by a one-time benefit of $6.6 million from the employee retention tax credit[234]. Interest Income and Margin - Fully taxable equivalent net interest income for Q3 2025 increased by $41.4 million, or 67.2%, compared to Q3 2024, driven by a 44 basis-point increase in net interest margin to 3.11%[222]. - The net interest margin for the nine months ended September 30, 2025, was 3.04%, an increase of 37 basis points from 2.67% in the same period in 2024[223]. - Net interest income for the nine months ended September 30, 2025, was $246.7 million, compared to $182.6 million for the same period in 2024, reflecting a net interest margin of 3.04%[234]. Expenses - Noninterest expenses increased by $58.3 million for the nine months ended September 30, 2025, compared to the same period in 2024[220]. - The company reported a $20.0 million increase in noninterest expenses for the third quarter of 2025 compared to the same quarter in 2024, primarily due to increased salaries and employee benefits[236]. - Noninterest expenses for the nine months ended September 30, 2025, totaled $171.6 million, up from $113.3 million in the same period of 2024, with a $33.2 million increase attributed to merger expenses[237]. Loans and Credit Quality - Gross loans reached $11.3 billion as of September 30, 2025, reflecting a $3.0 billion increase or 36.6% compared to December 31, 2024, largely due to the merger with FLIC[241]. - The provision for credit losses on loans increased by $1.7 million in Q3 2025 compared to the same period in 2024[219]. - The provision for credit losses for the three months ended September 30, 2025, was $5.5 million, compared to $3.8 million for the same period in 2024[249]. - Net charge-offs for the three months ended September 30, 2025, were $5.1 million, compared to $3.5 million for the same period in 2024[250]. - Nonaccrual loans decreased to $39.7 million as of September 30, 2025, from $57.3 million as of December 31, 2024[258]. - The ratio of nonaccrual loans to total loans receivable was 0.35% as of September 30, 2025, down from 0.69% as of December 31, 2024[259]. Assets and Deposits - The total assets of the company as of September 30, 2025, were $11.65 billion, up from $9.78 billion at the end of 2024[240]. - Total average deposits increased by $3.8 billion, or 49.3%, to $11.4 billion for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to the merger with FLIC[286]. - Total deposits increased by $3.5 billion, or 45.4%, to $11.4 billion as of September 30, 2025, compared to December 31, 2024, mainly due to a $1.6 billion increase in interest-bearing demand deposits[297]. Capital and Ratios - The Company's stockholders' equity increased by $296.6 million compared to December 31, 2024, primarily due to an increase in common stock of $270.8 million from the FLIC merger[304]. - As of September 30, 2025, the Company reported Tier 1 leverage capital of $1,293,585 with a ratio of 9.35%, exceeding the minimum requirement of 4.00% by 5.35%[311]. - The CET I risk-based ratio for the Company was 10.17%, which is 5.67% above the minimum requirement of 4.50%[311]. - The total risk-based capital for the Company was $1,606,662, representing a ratio of 13.88%, which is 5.88% above the minimum requirement of 8.00%[311]. Market and Economic Conditions - The Company estimated that a 200 basis-point increase in interest rates would decrease net interest income by 4.05% over the next one-year period as of September 30, 2025[270]. - The estimated change in economic value of equity (EVE) would decrease by 4.99% with a 200 basis-point increase in interest rates as of September 30, 2025[272]. - Interest rate risk management is identified as the primary market risk for the Company[313].

Core Viewpoint - ConnectOne (CNOB) shares have underperformed over the past year, with a loss of approximately 4% despite a recent acquisition of FLIC that is viewed positively [1] Company Performance - The stock performance of ConnectOne has been disappointing, primarily influenced by concerns regarding the real estate market in the NYC area [1] Acquisition Impact - The acquisition of FLIC is considered attractive, yet it has not significantly alleviated investor fears related to the broader real estate market dynamics [1]

Financial Data and Key Metrics Changes - The operating return on assets increased by over 30 basis points to 1.05% [7] - Pre-provision net revenue (PPNR) as a percentage of assets rose by approximately 50 basis points over the past year to 1.6% [7] - The net interest margin (NIM) grew to 3.11% from 3.06% in the sequential quarter and from 2.67% a year ago, with expectations for the fourth quarter margin to reach 3.25% or higher [8] - Non-performing assets were just 0.28% at the end of the quarter, with annualized net charge-offs remaining below 0.25% [5][13] - The tangible common equity ratio rose to 8.4%, with a goal to reach 9% [13] Business Line Data and Key Metrics Changes - Loan originations for the quarter were over $465 million, indicating healthy growth [4] - Core deposits continued to grow across both established and newly acquired client relationships [4] - The loan to deposit ratio remained below 100%, with expectations for loan growth to accelerate in the fourth quarter [9] Market Data and Key Metrics Changes - The company experienced robust deposit growth, with client deposit growth approximately 4% annualized, building on a second quarter growth of 17% [9] - The company is well-positioned for growth in various sectors, including commercial real estate and SBA lending, demonstrating the strength of its franchise [5] Company Strategy and Development Direction - The integration of the merger is complete, with a focus on client dedication and operational efficiency [3] - The company aims to leverage its position in attractive markets, particularly Long Island, to drive growth [4] - There is a strong emphasis on maintaining a relationship banking model that focuses on high-quality clients [44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow, citing a healthy and diversified pipeline across various lending sectors [5] - The company anticipates that the end of quantitative tightening will positively impact deposit growth and pricing in the market [20] - Management expects to see loan growth in the 5% range in 2026, depending on economic conditions and loan demand [9] Other Important Information - The company recognized two non-recurring items that boosted pre-tax income by more than $10 million, including a $6.6 million employee retention tax credit and a $3.5 million pension curtailment gain [10][11] - Operating expenses net of merger and restructuring charges were $55.8 million, with guidance for the fourth quarter remaining approximately $55 to $56 million [12] Q&A Session Summary Question: Profitability targets for next year - Management confirmed that profitability targets of 1.2% ROA and 15% ROTCE for 2026 remain in line with previous statements [18][19] Question: Impact of the end of quantitative tightening on deposit growth - Management believes that increased liquidity will lead to deposit growth and reduce competitive pressures in the market [20][21] Question: Capital allocation and share repurchases - Management indicated flexibility in capital deployment for 2026, including potential share repurchases [31][32] Question: Update on BoeFly and SBA growth outlook - Management reported significant growth in the BoeFly platform and expects continued revenue expansion from SBA sales [36][38] Question: Deposit growth and loan matching - Management aims to match deposit growth with loan growth while maintaining a sub-100% loan to deposit ratio [43][44] Question: Fixed rate loan repricing opportunities - Management indicated a large opportunity for repricing, with approximately $1 billion expected to reprice in 2026 [62] Question: Credit quality and charge-offs - Management expects charge-offs to remain steady in the high teens to low 20s range [65]

Financial Performance - Net income available to common stockholders for Q3 2025 was $39.5 million, a significant increase from $(21.8) million in Q2 2025 and $15.7 million in Q3 2024[1] - Diluted earnings per share for Q3 2025 were $0.78, compared to $(0.52) in Q2 2025 and $0.41 in Q3 2024[1] - Operating net income for Q3 2025 was $35.5 million, up from $23.1 million in Q2 2025 and $16.1 million in Q3 2024[2] - Net income available to common stockholders for the three months ended September 30, 2025, was $39,467 thousand, up 152.5% from $15,652 thousand in the same quarter of 2024[25] - Earnings per common share for the three months ended September 30, 2025, were $0.79, up from $0.41 in the same quarter of 2024, representing a growth of 92.7%[25] - Net income for the latest quarter was $40,976,000, a significant increase from a loss of $20,293,000 in the previous quarter[30] - Operating net income available to common stockholders reached $35,509,000, up from $23,097,000 year-over-year, representing a growth of 54.5%[30] Income and Revenue - Net interest income for Q3 2025 increased by $23.3 million, or 29.3%, from Q2 2025, totaling $103.2 million[8] - Noninterest income for Q3 2025 was $19.4 million, up from $5.2 million in Q2 2025 and $4.7 million in Q3 2024[10] - Net interest income for the three months ended September 30, 2025, was $102,017 thousand, a 67.5% increase compared to $60,887 thousand for the same period in 2024[25] - Noninterest income for the three months ended September 30, 2025, was $19,409 thousand, significantly higher than $4,737 thousand in the same quarter of 2024, indicating a growth of approximately 310.5%[25] - Operating revenue for the quarter was $110,781,000, up from $84,648,000, representing a growth of 30.8%[32] Assets and Deposits - Total assets as of September 30, 2025, were $14.0 billion, compared to $9.9 billion as of December 31, 2024[16] - Total assets increased to $14,023,585 thousand as of September 30, 2025, up from $9,639,603 thousand a year earlier, representing a growth of approximately 45.5%[24] - Loans receivable increased to $11,303,636 thousand as of September 30, 2025, compared to $8,111,976 thousand a year earlier, reflecting a growth of approximately 39.5%[24] - Total deposits increased to $11.4 billion as of September 30, 2025, from $7.8 billion as of December 31, 2024[16] - Total deposits rose to $11,369,295 thousand as of September 30, 2025, compared to $7,524,105 thousand in the same period of 2024, marking an increase of about 51.5%[24] Credit Losses and Nonperforming Assets - The provision for credit losses was $5.5 million for Q3 2025, down from $35.7 million in Q2 2025[13] - Nonperforming assets as a percentage of total assets were 0.28% as of September 30, 2025, down from 0.53% as of September 30, 2024[14] - Provision for credit losses for the three months ended September 30, 2025, was $5,500 thousand, compared to $3,800 thousand in the same period of 2024, reflecting an increase of 44.7%[25] - Nonaccrual loans decreased to $39,671,000 from $39,228,000 in the previous quarter, indicating a reduction of 1.1%[35] - Allowance for credit losses (ACL) stood at $156,499,000, slightly up from $156,190,000 in the previous quarter, reflecting a marginal increase of 0.2%[35] Capital and Equity - Total stockholders' equity increased to $1,538,344 thousand from $1,496,431 thousand in the previous quarter, representing a growth of 2.8%[27] - Stockholders' equity reached $1,513,892 thousand, reflecting growth from $1,344,254 thousand in the previous quarter[36] - Common equity ratio (GAAP) improved to 10.18% from 9.96% in the previous quarter, showing a positive trend in capital adequacy[34] - Book value per share (GAAP) increased to $28.39 from $27.56 in the previous quarter, marking a growth of 3.0%[34] Operational Efficiency - Noninterest expenses decreased to $58,673 thousand from $73,649 thousand in the previous quarter, a reduction of 20.3%[29] - The operating efficiency ratio (non-GAAP) improved to 47.5%, down from 49.2% in the previous quarter, indicating enhanced operational efficiency[32] Interest Margin and Yield - The net interest margin (non-GAAP) was reported at 3.11%, slightly up from 3.06% in the previous quarter[32] - Average interest-earning assets rose to $13,172,443 thousand, with total interest income of $188,847 thousand, resulting in an average yield of 5.69%[36] - The net interest spread for the quarter was 2.28%, slightly up from 2.27% in the previous quarter[37]

Core Insights - ConnectOne Bancorp reported a net income of $39.5 million for Q3 2025, a significant recovery from a loss of $21.8 million in Q2 2025 and an increase from $15.7 million in Q3 2024 [2] - The company completed its merger with The First of Long Island Corporation (FLIC) on June 1, 2025, which positively impacted its financial results [2][5] - The net interest margin expanded to 3.11% in Q3 2025, reflecting a 5 basis point increase from the previous quarter [5][7] Financial Performance - Operating net income available to common stockholders was $35.5 million in Q3 2025, up from $23.1 million in Q2 2025 and $16.1 million in Q3 2024 [3] - Diluted earnings per share (EPS) were $0.78 for Q3 2025, compared to $(0.52) in Q2 2025 and $0.41 in Q3 2024 [2] - The return on average assets was 1.16% for Q3 2025, up from 0.73% in Q2 2025 and 0.70% in Q3 2024 [2] Revenue and Expenses - Net interest income for Q3 2025 was $102.0 million, a 29.3% increase from Q2 2025 and a 67.2% increase from Q3 2024 [7][8] - Noninterest income reached $19.4 million in Q3 2025, significantly higher than $5.2 million in Q2 2025 and $4.7 million in Q3 2024 [9] - Noninterest expenses decreased to $58.7 million in Q3 2025 from $73.6 million in Q2 2025, primarily due to a reduction in merger expenses [10] Credit Quality - The provision for credit losses was $5.5 million in Q3 2025, down from $35.7 million in Q2 2025, which included a $27.4 million provision related to the FLIC merger [12] - Nonperforming assets were $39.7 million as of September 30, 2025, representing 0.28% of total assets, a decrease from 0.58% at the end of 2024 [13] Balance Sheet Highlights - Total assets increased to $14.0 billion as of September 30, 2025, compared to $9.9 billion at the end of 2024, largely due to the merger with FLIC [15] - Loans receivable were $11.3 billion as of September 30, 2025, up from $8.3 billion at the end of 2024 [15] - Total deposits reached $11.4 billion as of September 30, 2025, compared to $7.8 billion at the end of 2024 [15] Dividends - The Board of Directors declared a cash dividend of $0.18 per share on common stock, payable on December 1, 2025 [6]

Core Viewpoint - ConnectOne Bancorp, Inc. plans to release its third-quarter financial results on October 30, 2025, before market opening, followed by a conference call to discuss performance and operating results [1]. Group 1: Financial Results Announcement - The third-quarter results for the period ending September 30, 2025, will be announced before the market opens on October 30, 2025 [1]. - A conference call will be hosted by Chairman and CEO Frank Sorrentino III and CFO William S. Burns at 10:00 a.m. ET on the same day [2]. Group 2: Conference Call Details - The conference call can be accessed by dialing 1 (646) 307-1963 with access code 6150571, and participants are advised to call in at least five minutes early [2]. - An audio webcast will be available for public listening via the "Investor Relations" link on the company's website [2]. Group 3: Replay Information - A replay of the conference call will be available starting at approximately 1:00 p.m. ET on October 30, 2025, until November 6, 2025, by calling 1 (609) 800-9909 with the same access code [3]. - An online archive of the webcast will be accessible after the call on the company's website [3]. Group 4: Company Overview - ConnectOne Bancorp, Inc. operates through its subsidiary ConnectOne Bank and its fintech subsidiary BoeFly, Inc., focusing on small to middle-market businesses [4]. - ConnectOne Bank offers a comprehensive range of banking and lending products and services [4]. - The company is publicly traded on the Nasdaq Global Market under the symbol "CNOB" [4].

Technical Analysis - ConnectOne Bancorp, Inc. (CNOB) has reached a significant support level, indicating a potential investment opportunity from a technical perspective [1] - Recently, CNOB's 50-day simple moving average has broken out above its 200-day moving average, forming a "golden cross," which is a bullish signal [1] Golden Cross Event - A successful golden cross event consists of three stages: the stock price bottoms out, the shorter moving average crosses above the longer moving average, and the stock maintains upward momentum [2] - The golden cross is contrasted with a death cross, which signals potential bearish price movement [2] Performance and Outlook - Over the past four weeks, CNOB has gained 10.4%, and it currently holds a 3 (Hold) rating on the Zacks Rank, suggesting the stock may be poised for a breakout [3] - The positive earnings outlook for the current quarter further supports the bullish case, with no earnings estimates declining and one revision higher in the past two months [3] - The Zacks Consensus Estimate has also increased, indicating a favorable trend for CNOB [3][5]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures for the company [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents ConnectOne Bancorp's unaudited consolidated financial statements, reflecting significant asset and liability growth from the FLIC acquisition and a net loss driven by merger expenses and increased credit loss provisions [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) Total assets grew to **$13.92 billion** from **$9.88 billion** due to the FLIC acquisition, significantly increasing net loans, deposits, and stockholders' equity Consolidated Balance Sheet Highlights (Unaudited, in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$13,915,738** | **$9,879,600** | | Cash and cash equivalents | $596,533 | $356,488 | | Net loans receivable | $11,008,287 | $8,192,125 | | Goodwill | $215,611 | $208,372 | | **Total Liabilities** | **$12,419,307** | **$8,637,896** | | Total deposits | $11,278,487 | $7,820,114 | | Borrowings | $783,859 | $688,064 | | **Total Stockholders' Equity** | **$1,496,431** | **$1,241,704** | [Consolidated Statements of (Loss) Income](index=4&type=section&id=Consolidated%20Statements%20of%20%28Loss%29%20Income) The company reported a net loss of **($20.3) million** for Q2 2025, primarily due to **$30.7 million** in merger expenses and a **$35.7 million** provision for credit losses Key Income Statement Data (Unaudited, in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $78,883 | $61,439 | $144,639 | $121,739 | | Provision for credit losses | $35,700 | $2,500 | $39,200 | $6,500 | | Noninterest Expenses | $73,649 | $37,594 | $112,954 | $74,659 | | *including Merger expenses* | *$30,745* | *$ -* | *$32,065* | *$ -* | | Net (Loss) Income | **($20,293)** | **$19,056** | **($51)** | **$36,261** | | Diluted EPS | **($0.52)** | **$0.46** | **($0.08)** | **$0.86** | [Consolidated Statements of Comprehensive (Loss) Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) For Q2 2025, the company reported a total comprehensive loss of **($19.6) million**, primarily due to the net loss, contrasting with prior-year comprehensive income Comprehensive (Loss) Income Summary (Unaudited, in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (Loss) Income | ($20,293) | $19,056 | ($51) | $36,261 | | Total other comprehensive income (loss), net of tax | $685 | ($4,112) | $441 | ($7,135) | | **Total Comprehensive (Loss) Income** | **($19,608)** | **$14,944** | **$390** | **$29,126** | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to **$1.50 billion** from **$1.24 billion** primarily due to **$270.8 million** in common stock issued for the FLIC merger, partially offset by net loss and dividends - The company issued **11,790,116 shares** of common stock valued at **$270.8 million** to complete the FLIC merger during the second quarter of 2025[13](index=13&type=chunk)[15](index=15&type=chunk) - Cash dividends paid on common stock totaled **$13.8 million** (**$0.36 per share**) for the six months ended June 30, 2025[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents increased by **$240.0 million** for the six months ended June 30, 2025, driven by operating, investing (including FLIC cash), and financing activities Six Months Ended June 30 Cash Flow Summary (Unaudited, in thousands) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $21,348 | $42,819 | | Net cash provided by investing activities | $99,048 | $169,165 | | Net cash provided by (used in) financing activities | $119,649 | ($161,185) | | **Net change in cash and cash equivalents** | **$240,045** | **$50,799** | - The company acquired **$54.9 million** in cash, net of cash consideration paid, from the FLIC acquisition[17](index=17&type=chunk) - Financing activities included **$200 million** in proceeds from the issuance of subordinated debt and a net increase in deposits of **$207.0 million**, offset by net repayments of FHLB borrowings of **$264.6 million**[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial components, highlighting the **$270.8 million** FLIC acquisition's impact on the balance sheet and income statement, along with specifics on loan portfolios, credit losses, and regulatory capital - On June 1, 2025, the Company completed its acquisition of The First of Long Island Corporation ("FLIC"), with former FLIC shareholders receiving **0.5175 shares** of the Company's common stock for each share of FLIC common stock[22](index=22&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) FLIC Acquisition Purchase Price Consideration (June 1, 2025, in thousands) | (in thousands) | Value | | :--- | :--- | | Total fair value of stock consideration issued | $270,819 | | Cash consideration paid | $9 | | **Total purchase price consideration** | **$270,828** | | Fair Value of Net Assets Acquired | $263,589 | | **Goodwill recorded in acquisition** | **$7,239** | - For purchased credit deteriorated (PCD) loans from the FLIC merger, an initial allowance for credit losses of **$43.3 million** was established by grossing-up the amortized cost of the loans[51](index=51&type=chunk)[54](index=54&type=chunk) - The allowance for credit losses (ACL) for loans increased to **$156.2 million** at June 30, 2025, from **$82.7 million** at year-end 2024, including a **$43.3 million** nonaccretable credit mark on PCD loans and a **$27.3 million** initial provision related to the acquisition[115](index=115&type=chunk)[118](index=118&type=chunk) - On May 15, 2025, the Company issued **$200 million** in fixed-to-floating rate subordinated notes with an initial interest rate of **8.125%**[200](index=200&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=55&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q2 2025 net loss to merger expenses and increased credit loss provisions, while net interest income and margin improved, and the balance sheet expanded significantly due to the FLIC merger [Operating Results Overview](index=56&type=section&id=Operating%20Results%20Overview) The company reported a net loss of **($21.8) million** for Q2 2025, primarily due to **$30.7 million** in merger costs and a **$33.2 million** increase in credit loss provisions, partially offset by increased net interest income Q2 2025 vs Q2 2024 Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Net (Loss) Income to Common Stockholders | ($21.8M) | $17.5M | ($39.3M) | | Diluted EPS | ($0.52) | $0.46 | ($0.98) | | Merger Expenses | $30.7M | $0 | +$30.7M | | Provision for Credit Losses | $35.7M | $2.5M | +$33.2M | [Net Interest Income and Margin](index=56&type=section&id=Net%20Interest%20Income%20and%20Margin) For Q2 2025, fully taxable equivalent net interest income increased by **28.2%** to **$79.8 million**, with the net interest margin expanding **34 basis points** to **3.06%** Net Interest Margin Analysis (in millions, except percentages) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Interest Income (Tax-Equivalent) | $79.8M | $62.3M | | Net Interest Margin | 3.06% | 2.72% | | Average Yield on Earning Assets | 5.63% | 5.71% | | Average Cost of Interest-Bearing Liabilities | 3.36% | 3.84% | [Financial Condition](index=60&type=section&id=Financial%20Condition) As of June 30, 2025, the FLIC merger significantly altered the company's financial condition, increasing gross loans to **$11.2 billion** and deposits to **$11.3 billion**, while improving asset quality and maintaining strong capital ratios - Gross loans totaled **$11.2 billion** as of June 30, 2025, a **34.9% increase** from December 31, 2024, primarily due to the FLIC merger[229](index=229&type=chunk) - The allowance for credit losses (ACL) increased to **$156.2 million**, or **1.40% of loans receivable**, up from **$82.7 million** (**1.01%**) at year-end, driven by a **$43.3 million** mark for purchased credit-deteriorated (PCD) loans and a **$27.4 million** initial provision related to the FLIC merger[236](index=236&type=chunk)[242](index=242&type=chunk) - Nonperforming assets decreased to **$39.2 million** (**0.28% of total assets**) at June 30, 2025, from **$57.3 million** (**0.58% of total assets**) at December 31, 2024[246](index=246&type=chunk) - Total deposits increased by **$3.5 billion** (**44.2%**) to **$11.3 billion** compared to year-end 2024, also due to the FLIC merger[286](index=286&type=chunk) - The company and the bank both satisfy all capital adequacy requirements to be considered **well-capitalized** as of June 30, 2025[301](index=301&type=chunk)[302](index=302&type=chunk) [Qualitative and Quantitative Disclosures about Market Risks](index=75&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20about%20Market%20Risks) The company manages interest rate risk using NII and EVE models, with a **+200 bps** rate shock estimated to decrease one-year NII by **4.94%** and EVE by **5.89%** Interest Rate Sensitivity Analysis (as of June 30, 2025, in percentages) | Rate Shock (bps) | Estimated Change in EVE (%) | Estimated Change in 1-Year NII (%) | | :--- | :--- | :--- | | +200 | -5.89% | -4.94% | | +100 | -1.22% | -1.91% | | -100 | -0.40% | +1.72% | [Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) The CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures are **effective**[304](index=304&type=chunk) - No material changes to internal controls over financial reporting occurred during the last fiscal quarter[305](index=305&type=chunk) [PART II – OTHER INFORMATION](index=76&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, unregistered sales of equity securities, and a list of exhibits filed with the report [Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company faces an **$11.1 million** lawsuit as FLIC's successor regarding unauthorized wire transfers, which it intends to vigorously defend - A customer filed a lawsuit against the company (as successor to FLIC) for approximately **$11.1 million** in damages related to unauthorized wire transfers[308](index=308&type=chunk) - The company states it will vigorously defend against the claims[308](index=308&type=chunk) [Risk Factors](index=76&type=section&id=Item%201a.%20Risk%20Factors) No material changes to the company's risk factors were reported since the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report on Form 10-K[309](index=309&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q2 2025, with **641,118 shares** remaining available under the authorized repurchase program - No shares were repurchased in Q2 2025[310](index=310&type=chunk) - As of June 30, 2025, **641,118 shares** are remaining for repurchase under the authorized program[310](index=310&type=chunk) [Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the 10-Q report, including the supplemental indenture for subordinated notes and required CEO/CFO certifications - Key exhibits include the Third Supplemental Indenture for the **8.125% Fixed-to-Floating Rate Subordinated Notes due 2035** and required CEO/CFO certifications[312](index=312&type=chunk) [Signatures](index=78&type=section&id=SIGNATURES) This section contains the official signatures of the company's Chairman, Chief Executive Officer, and Chief Financial Officer, certifying the report - The report was signed on **August 11, 2025**, by Frank Sorrentino III, Chairman and Chief Executive Officer, and William S. Burns, Senior Executive Vice President and Chief Financial Officer[316](index=316&type=chunk)

Financial Data and Key Metrics Changes - Total assets reached nearly $14 billion, with loans at $11.2 billion and deposits at $11.3 billion, while market capitalization exceeded $1.2 billion [7] - The loan-to-deposit ratio improved to 99% at the end of the second quarter, down from 106% as of March 31 [7] - Noninterest-bearing demand deposits increased to over 21% of total deposits, up from 18% at year-end [7][14] Business Line Data and Key Metrics Changes - Strong core deposit growth was noted, with a record increase in client deposits [6] - Loan demand remained robust, particularly in commercial and industrial, construction, SBA, and residential lending [6][15] - The merger with First of Long Island Bank is expected to enhance financial metrics and strengthen the balance sheet [13] Market Data and Key Metrics Changes - The Long Island market contributed significantly to deposit growth, with noninterest-bearing demand deposits increasing by over $100 million since March 31, reflecting a 15% annualized growth [14] - Total deposits increased by an annualized 8%, despite a $200 million decline in brokered deposits, indicating strong core balance growth [14] Company Strategy and Development Direction - The merger is viewed as a strategic move to expand geographic footprint and client base, enhancing growth opportunities [13][28] - The company aims to drive organic growth and create long-term shareholder value through a unified culture and client-focused approach [11][29] - Management emphasized the importance of client retention and seamless integration post-merger [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing strong client retention and a solid pipeline for growth [5][28] - The company anticipates modest expense growth while remaining well-positioned for continued growth [9] - Credit quality metrics improved significantly, with a nonperforming asset ratio of 0.28%, down from 0.51% a year ago [24] Other Important Information - The total provision for credit losses for the second quarter was $35.7 million, including a day-one provision of $27.4 million related to the merger [19] - The company recognized $40 million in merger charges, with expectations to record an additional $10 million in the coming quarters [21] - Projected quarterly expenses for 2025 are expected to be in the $55 million range, with a slight increase in 2026 [22] Q&A Session Summary Question: Opportunities to further reduce classified and criticized loans - Management does not foresee major changes in classified credit levels but will monitor the situation closely [34] Question: Dynamic between capital deployment and managing CRE concentration - Management indicated that capital ratios are stronger than anticipated, and they expect CRE concentration to decrease naturally [35][36] Question: Drivers behind the increase in the securities portfolio - The increase was attributed to the acquisition, along with some restructurings to improve interest sensitivity [42] Question: Trends in reserve levels going forward - Management set a conservative reserve level and indicated that future performance could allow for adjustments [44] Question: Growth projections for the loan pipeline - The weighted average loan rate in the pipeline is 6.77%, with expected growth in the low to mid-single digits [52][55]

[Executive Summary](index=1&type=section&id=1.%20Executive%20Summary) The company reported a net loss in Q2 2025 due to significant merger-related expenses, while the strategic acquisition of FLIC expanded its scale and improved key operational metrics [Second Quarter 2025 Financial Highlights](index=1&type=section&id=1.1.%20Second%20Quarter%202025%20Financial%20Highlights) The company reported a net loss driven by merger expenses and credit loss provisions, though operating net income showed underlying strength Key Financial Performance (GAAP) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Loss (Income) Available to Common Stockholders (millions) | $(21.8) | $18.7 | $17.5 | | Diluted EPS | $(0.52) | $0.49 | $0.46 | | Return on Average Assets | (0.73)% | 0.84% | 0.79% | | Return on Average Tangible Common Equity | (8.42)% | 8.25% | 7.98% | Key Financial Performance (Operating, Non-GAAP) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Operating Net Income Available to Common Stockholders (millions) | $23.1 | $19.7 | $17.9 | | Operating Diluted EPS | $0.55 | $0.51 | $0.47 | | Operating Return on Average Assets | 0.89% | 0.88% | 0.80% | | Operating Return on Average Tangible Common Equity | 9.29% | 8.59% | 8.05% | - The decrease in net income and diluted EPS in Q2 2025 compared to Q1 2025 was primarily due to a **$34.3 million increase in noninterest expenses** (including $30.7 million in merger expenses) and a **$32.2 million increase in provision for credit losses** (including $27.4 million initial provision for FLIC merger)[4](index=4&type=chunk) [Strategic Overview: FLIC Merger Impact](index=1&type=section&id=1.2.%20Strategic%20Overview%3A%20FLIC%20Merger%20Impact) The completed FLIC merger transformed the company into a larger regional institution, enhancing its balance sheet and profitability ratios - The merger with FLIC, completed on June 1, 2025, established ConnectOne as a **$14 billion regional financial institution** with 61 locations and over 700 banking professionals[5](index=5&type=chunk) - The merger has operationally improved the loan and deposit mix, net interest margin, credit metrics, and profitability ratios[5](index=5&type=chunk) Key Balance Sheet Metrics Post-Merger (as of June 30, 2025) | Metric | Amount | | :--- | :--- | | Total Loans | $11.2 billion | | Total Deposits | $11.3 billion | | Market Capitalization | >$1.2 billion | | Loan-to-Deposit Ratio | 99% | | Noninterest-Bearing Demand Composition | >21% | [Dividend Declarations](index=3&type=section&id=2.%20Dividend%20Declarations) The Board of Directors declared quarterly cash dividends for both common and preferred stock - The Board of Directors declared a cash dividend of **$0.18 per share on common stock**, payable September 2, 2025, to stockholders of record on August 15, 2025[8](index=8&type=chunk) - A dividend of **$0.328125 per depositary share** (representing 1/40th interest in Series A Preferred Stock) will also be paid on September 2, 2025, to holders of record on August 15, 2025[8](index=8&type=chunk) [Detailed Operating Results](index=3&type=section&id=3.%20Detailed%20Operating%20Results) Operating results were significantly influenced by the FLIC merger, which drove higher net interest income but also substantially increased noninterest expenses [Net Interest Income and Margin](index=3&type=section&id=3.1.%20Net%20Interest%20Income%20and%20Margin) Fully taxable equivalent net interest income and margin increased significantly in Q2 2025, primarily due to the FLIC merger boosting average interest-earning assets Fully Taxable Equivalent Net Interest Income (FTE NII) | Metric | Q2 2025 | Change from Q1 2025 | Change from Q2 2024 | | :--- | :--- | :--- | :--- | | FTE NII (millions) | $79.8 | +$13.2 (19.9%) | +$17.6 (28.2%) | | Net Interest Margin | 3.06% | +13 bps | +34 bps | | Average Interest Earning Assets | +13.5% | +13.7% | | - The increase in average interest-earning assets was primarily due to the merger with FLIC[9](index=9&type=chunk)[10](index=10&type=chunk) - Accretion of purchase accounting adjustments contributed approximately **13 basis points** to the net interest margin in Q2 2025[9](index=9&type=chunk)[10](index=10&type=chunk) - The margin also benefited from an **11 basis-point decrease** in the average costs of deposits (QoQ) and a **56 basis-point decrease** (YoY), partially offset by higher average cash balances and a new subordinated debt issuance[9](index=9&type=chunk)[10](index=10&type=chunk) [Noninterest Income](index=3&type=section&id=3.2.%20Noninterest%20Income) Noninterest income grew in Q2 2025, largely attributable to increased deposit, loan, and BOLI income following the FLIC merger Noninterest Income (millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Noninterest Income | $5.2 | $4.5 | $4.4 | - The **$0.7 million QoQ increase** was primarily due to a $0.6 million increase in deposit, loan and other income and a $0.5 million increase in BOLI income, with the FLIC merger as the main contributor[11](index=11&type=chunk) - The **$0.8 million YoY increase** was primarily due to a $0.9 million increase in deposit, loan and other income, a $0.6 million increase in net gains on equity securities, and a $0.4 million increase in BOLI income[11](index=11&type=chunk) [Noninterest Expenses](index=3&type=section&id=3.3.%20Noninterest%20Expenses) Noninterest expenses rose substantially in Q2 2025, predominantly driven by significant merger-related costs from the FLIC acquisition Noninterest Expenses (millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Total Noninterest Expenses | $73.6 | $39.3 | $37.6 | - The **$34.3 million QoQ increase** was primarily due to a $29.4 million increase in merger expenses, a $2.7 million increase in salaries and employee benefits, and a $1.0 million increase in amortization of core deposit intangibles[12](index=12&type=chunk) - The **$36.1 million YoY increase** was primarily due to a $30.7 million increase in merger expenses, a $2.5 million increase in salaries and employee benefits, and a $0.9 million increase in amortization of core deposit intangibles[12](index=12&type=chunk) - The increases in noninterest expenses from both prior periods were primarily due to the merger with FLIC[13](index=13&type=chunk) [Income Tax (Benefit) Expense](index=4&type=section&id=3.4.%20Income%20Tax%20(Benefit)%20Expense) The company recorded a net income tax benefit in Q2 2025, a direct result of lower taxable income caused by expenses from the FLIC merger Income Tax (Benefit) Expense (millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Income Tax (Benefit) Expense | $(5.0) | $7.2 | $6.7 | - The overall decrease in income tax expense was primarily due to lower taxable income resulting from additional expenses due to the FLIC merger[14](index=14&type=chunk) - Included in Q2 2025 was an estimated **$3.0 million state tax liability** resulting from intercompany dividends[14](index=14&type=chunk) [Asset Quality and Credit Performance](index=4&type=section&id=4.%20Asset%20Quality%20and%20Credit%20Performance) Asset quality improved with lower nonperforming assets, while the allowance for credit losses increased significantly due to the FLIC merger's initial provision [Provision for Credit Losses](index=4&type=section&id=4.1.%20Provision%20for%20Credit%20Losses) The provision for credit losses increased substantially in Q2 2025, mainly due to a large initial provision related to the FLIC merger Provision for Credit Losses (millions) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $35.7 | $3.5 | $2.5 | - Included in the Q2 2025 provision was a **$27.4 million initial provision** for credit losses related to the FLIC merger[15](index=15&type=chunk) [Nonperforming Assets and Loan Quality](index=4&type=section&id=4.2.%20Nonperforming%20Assets%20and%20Loan%20Quality) Nonperforming assets decreased significantly due to the workout of three CRE relationships, leading to improved asset quality ratios Nonperforming Assets and Ratios | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets (millions) | $39.2 | $57.3 | $46.0 | | Nonperforming Assets as % of Total Assets | 0.28% | 0.58% | 0.47% | | Nonaccrual Loans to Loans Receivable | 0.35% | 0.69% | 0.56% | | Annualized Net Loan Charge-offs Ratio | 0.22% | 0.17% | 0.16% | | Loans Delinquent 30-89 Days as % of Loans Receivable | 0.13% | 0.04% | 0.11% | - The decrease in nonaccruals was primarily due to the workout of three CRE relationships totaling **$22.0 million**, partially offset by $4.3 million in loans placed into nonaccrual status[16](index=16&type=chunk) [Allowance for Credit Losses](index=4&type=section&id=4.3.%20Allowance%20for%20Credit%20Losses) The allowance for credit losses increased substantially due to the FLIC merger, significantly strengthening coverage of nonaccrual loans Allowance for Credit Losses (ACL) Metrics | Metric | June 30, 2025 | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | ACL (millions) | $156.2 | $82.7 | $82.1 | | ACL as % of Loans Receivable | 1.40% | 1.00% | 1.01% | | ACL as % of Nonaccrual Loans | 398.2% | 144.3% | 178.3% | - The increase in ACL was primarily due to the FLIC merger: **$43.3 million** of allowance recorded through goodwill related to purchased credit-deteriorated loans and **$27.4 million** reflecting the initial provision for credit losses[17](index=17&type=chunk) - Criticized and classified loans as a percentage of loans receivable was **2.44%** as of June 30, 2025, down from 2.68% as of December 31, 2024[17](index=17&type=chunk) [Balance Sheet Overview](index=4&type=section&id=5.%20Balance%20Sheet%20Overview) The balance sheet expanded substantially following the FLIC merger, with significant growth in total assets, loans, deposits, and stockholders' equity [Key Balance Sheet Items](index=4&type=section&id=5.1.%20Key%20Balance%20Sheet%20Items) The company's balance sheet expanded significantly as of June 30, 2025, with total assets, loans, and deposits all showing substantial increases due to the FLIC merger Key Balance Sheet Items (millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Assets | $13,915,738 | $9,879,600 | | Loans Receivable | $11,164,477 | $8,274,810 | | Total Deposits | $11,278,487 | $7,820,114 | - The increases in total assets, loans receivable, and total deposits were primarily due to the merger with FLIC[18](index=18&type=chunk) [Stockholders' Equity and Capital](index=4&type=section&id=5.2.%20Stockholders'%20Equity%20and%20Capital) Total stockholders' equity increased due to stock issuance for the FLIC merger, though the tangible common equity ratio and tangible book value per share declined Stockholders' Equity and Capital Metrics | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Stockholders' Equity (millions) | $1,496,431 | $1,241,704 | | Tangible Common Equity Ratio | 8.09% | 9.49% | | Tangible Book Value Per Share | $21.95 | $23.92 | | Total Goodwill and Other Intangible Assets (millions) | $281.9 | $213.0 | - The increase in total stockholders' equity was primarily due to an increase in common stock of **$270.8 million**, representing the fair value stock consideration issued for the FLIC merger[19](index=19&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=6.%20Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures to supplement GAAP results, providing investors with additional insight into operating performance - ConnectOne supplements its GAAP results with non-GAAP measures to provide meaningful information to investors regarding operating performance and trends[20](index=20&type=chunk) - These non-GAAP measures have inherent limitations, are not uniformly applied, are not audited, and should not be considered in isolation or as a substitute for GAAP results[20](index=20&type=chunk) [Corporate Information](index=5&type=section&id=7.%20Corporate%20Information) This section provides an overview of the company's business, forward-looking statement disclaimers, investor contacts, and conference call details [About ConnectOne Bancorp, Inc.](index=6&type=section&id=7.1.%20About%20ConnectOne%20Bancorp%2C%20Inc.) ConnectOne Bancorp is a financial services company operating through its commercial bank subsidiary and a fintech marketplace for franchise lending - ConnectOne Bancorp, Inc. operates through ConnectOne Bank, a high-performing commercial bank, and BoeFly, Inc., a fintech marketplace[23](index=23&type=chunk) - ConnectOne Bank offers banking and lending products and services to small to middle-market businesses[23](index=23&type=chunk) - BoeFly, Inc. connects borrowers in the franchise space with funding solutions through a network of partner banks[23](index=23&type=chunk) [Forward-Looking Statements](index=6&type=section&id=7.2.%20Forward-Looking%20Statements) This release contains forward-looking statements that are subject to risks and uncertainties, and the company disclaims any obligation to update them - Forward-looking statements are based on assumptions and describe future plans, strategies, and expectations, identified by words like 'believe,' 'expect,' or similar expressions[24](index=24&type=chunk) - The Company's ability to predict results is inherently uncertain, with material adverse effects possible from factors like interest rates, economic conditions, and regulatory changes[24](index=24&type=chunk) - The Company does not undertake any obligation to publicly release revisions to forward-looking statements to reflect events or circumstances after their date[24](index=24&type=chunk) [Investor and Media Contacts](index=6&type=section&id=7.3.%20Investor%20and%20Media%20Contacts) Contact information is provided for investor relations and media inquiries - Investor Contact: William S. Burns, Senior Executive Vice President & CFO, at 201.816.4474 or bburns@cnob.com[25](index=25&type=chunk) - Media Contact: Shannan Weeks, MikeWorldWide, at 732.299.7890 or sweeks@mww.com[25](index=25&type=chunk) [Conference Call Details](index=5&type=section&id=7.4.%20Conference%20Call%20Details) The company hosted a conference call and webcast on July 29, 2025, to discuss financial performance, with a replay available - A conference call and audio webcast were held on **July 29, 2025, at 10:00 a.m. ET**[21](index=21&type=chunk) - Conference call dial-in number: 1 (646) 307-1963, access code 7519286[21](index=21&type=chunk) - A replay was available from July 29, 2025, to August 5, 2025, by dialing 1 (609) 800-9909, access code 7519286[22](index=22&type=chunk) [Consolidated Financial Statements](index=7&type=section&id=8.%20Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial condition and income, reflecting the significant impact of the FLIC merger [Consolidated Condensed Statements of Financial Condition](index=7&type=section&id=8.1.%20Consolidated%20Condensed%20Statements%20of%20Financial%20Condition) The company's balance sheet expanded significantly as of June 30, 2025, with substantial growth in assets, loans, deposits, and equity due to the FLIC merger Consolidated Condensed Statements of Financial Condition (Selected Items, in thousands) | Item | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | **ASSETS** | | | | | Total assets | $13,915,738 | $9,879,600 | $9,723,731 | | Loans receivable, net | $11,008,287 | $8,192,125 | $8,075,826 | | Goodwill | $215,611 | $208,372 | $208,372 | | Core deposit intangibles | $66,315 | $4,639 | $5,232 | | **LIABILITIES** | | | | | Total deposits | $11,278,487 | $7,820,114 | $7,576,014 | | Subordinated debentures, net | $276,500 | $79,944 | $79,692 | | Total liabilities | $12,419,307 | $8,637,896 | $8,499,504 | | **STOCKHOLDERS' EQUITY** | | | | | Total stockholders' equity | $1,496,431 | $1,241,704 | $1,224,227 | [Consolidated Statements of Income](index=8&type=section&id=8.2.%20Consolidated%20Statements%20of%20Income) The income statement for Q2 2025 shows a net loss driven by increased credit loss provisions and noninterest expenses related to the FLIC merger Consolidated Statements of Income (Selected Items, in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total interest income | $146,030 | $130,007 | | Total interest expense | $67,147 | $68,568 | | Net interest income | $78,883 | $61,439 | | Provision for credit losses | $35,700 | $2,500 | | Total noninterest income | $5,185 | $4,399 | | Total noninterest expenses | $73,649 | $37,594 | | (Loss) income before income tax expense | $(25,281) | $25,744 | | Income tax (benefit) expense | $(4,988) | $6,688 | | Net (loss) income | $(20,293) | $19,056 | | Net (loss) income available to common stockholders | $(21,802) | $17,547 | | Diluted EPS | $(0.52) | $0.46 | [Supplemental Financial Data (GAAP & Non-GAAP)](index=9&type=section&id=9.%20Supplemental%20Financial%20Data%20(GAAP%20%26%20Non-GAAP)) This section offers detailed supplemental data, including balance sheet trends, profitability ratios, and a net interest margin analysis [Selected Financial Data (Balance Sheet)](index=9&type=section&id=9.1.%20Selected%20Financial%20Data%20(Balance%20Sheet)) Supplemental data details the significant balance sheet growth in assets, loans, and deposits resulting from the FLIC merger Selected Financial Data (As of Period End, in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total assets | $13,915,738 | $9,759,255 | $9,879,600 | $9,723,731 | | Loans receivable | $11,164,477 | $8,201,134 | $8,274,810 | $8,157,903 | | Noninterest-bearing demand deposits | $2,424,529 | $1,319,196 | $1,422,044 | $1,268,882 | | Total deposits | $11,278,487 | $7,767,230 | $7,820,114 | $7,576,014 | | Total stockholders' equity | $1,496,431 | $1,252,939 | $1,241,704 | $1,224,227 | Quarterly Average Balances (in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total assets | $11,108,430 | $9,748,605 | $9,563,446 | $9,745,853 | | Loans receivable | $9,121,442 | $8,208,755 | $8,103,126 | $8,212,656 | | Noninterest-bearing demand deposits | $1,680,653 | $1,305,722 | $1,304,699 | $1,256,251 | | Total deposits | $8,806,712 | $7,674,843 | $7,621,437 | $7,565,124 | [Income Statement and Profitability Ratios](index=11&type=section&id=9.2.%20Income%20Statement%20and%20Profitability%20Ratios) This section details income statement items and profitability ratios, reconciling GAAP earnings to operating results to show underlying performance Income Statement (Three Months Ended, in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $78,883 | $65,756 | $64,711 | $61,439 | | Provision for credit losses | $35,700 | $3,500 | $3,500 | $2,500 | | Total noninterest income | $5,185 | $4,451 | $3,744 | $4,399 | | Total noninterest expenses | $73,649 | $39,305 | $38,498 | $37,594 | | Net (loss) income available to common stockholders | $(21,802) | $18,733 | $18,862 | $17,547 | | Diluted EPS | $(0.52) | $0.49 | $0.49 | $0.46 | Reconciliation of GAAP Net Income to Operating Net Income (in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(20,293) | $20,242 | $20,371 | $19,056 | | Merger expenses | $30,745 | $1,320 | $863 | - | | Initial provision for credit losses related to merger | $27,418 | - | - | - | | Operating net income available to common stockholders | $23,097 | $19,710 | $20,220 | $17,928 | | Operating diluted EPS (non-GAAP) | $0.55 | $0.51 | $0.52 | $0.47 | Return on Assets Measures | Metric | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on avg. assets | (0.73)% | 0.84% | 0.84% | 0.79% | | Operating return on avg. assets (non-GAAP) | 0.89% | 0.88% | 0.90% | 0.80% | [Capital and Efficiency Ratios](index=13&type=section&id=9.3.%20Capital%20and%20Efficiency%20Ratios) This section details capital and efficiency ratios, showing improved operating efficiency despite declines in GAAP equity returns due to merger costs Return on Equity Measures | Metric | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Return on avg. common equity (GAAP) | (7.09)% | 6.64% | 6.64% | 6.36% | | Operating return on avg. common equity (non-GAAP) | 7.51% | 6.99% | 7.11% | 6.50% | | Return on avg. tangible common equity (non-GAAP) | (8.42)% | 8.25% | 8.27% | 7.98% | | Operating return on avg. tangible common equity (non-GAAP) | 9.29% | 8.59% | 8.77% | 8.05% | Efficiency Measures | Metric | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating noninterest expense (millions) | $41,653 | $37,379 | $36,862 | $37,273 | | Operating revenue (millions) | $84,648 | $70,502 | $69,644 | $66,863 | | Operating efficiency ratio (non-GAAP) | 49.2% | 53.0% | 52.9% | 55.7% | [Net Interest Margin Analysis](index=16&type=section&id=9.4.%20Net%20Interest%20Margin%20Analysis) The net interest margin analysis confirms the expansion of interest-earning assets and a widening margin, driven by improved asset yields and lower deposit costs Net Interest Margin Analysis (Three Months Ended, in thousands) | Item | Jun. 30, 2025 | Mar. 31, 2025 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | | Average interest-earning assets | $10,468,589 | $9,224,712 | $9,210,050 | | Total interest-earning assets rate | 5.63% | 5.52% | 5.71% | | Total interest-bearing liabilities rate | 3.36% | 3.35% | 3.84% | | Net interest spread (tax equivalent basis) | 2.27% | 2.17% | 1.87% | | Net interest margin (non-GAAP) | 3.06% | 2.93% | 2.72% | - The average balance of loans receivable and loans held-for-sale increased significantly to **$9.12 billion** in Q2 2025 from $8.21 billion in Q1 2025, reflecting the FLIC merger[38](index=38&type=chunk) - The average cost of total interest-bearing deposits decreased to **3.39%** in Q2 2025 from 3.44% in Q1 2025 and 3.96% in Q2 2024[38](index=38&type=chunk) [Asset Quality Metrics](index=14&type=section&id=9.5.%20Asset%20Quality%20Metrics) This section details asset quality metrics, showing improved nonperforming asset ratios and a substantially increased allowance for credit losses post-merger Capital Ratios and Book Value per Share | Metric | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Common equity ratio (GAAP) | 9.96% | 11.70% | 11.45% | 11.45% | | Tangible common equity ratio (non-GAAP) | 8.09% | 9.73% | 9.49% | 9.46% | | Book value per share (GAAP) | $27.56 | $29.69 | $29.47 | $29.02 | | Tangible book value per share (non-GAAP) | $21.95 | $24.16 | $23.92 | $23.45 | Asset Quality Metrics | Metric | Jun. 30, 2025 | Mar. 31, 2025 | Dec. 31, 2024 | Jun. 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Nonaccrual loans (thousands) | $39,228 | $49,860 | $57,310 | $46,026 | | Nonperforming assets (thousands) | $39,228 | $49,860 | $57,310 | $46,026 | | Allowance for credit losses - loans (ACL) (thousands) | $156,190 | $82,403 | $82,685 | $82,077 | | Nonaccrual loans as a % of loans receivable | 0.35% | 0.61% | 0.69% | 0.56% | | Nonperforming assets as a % of total assets | 0.28% | 0.51% | 0.58% | 0.47% | | ACL as a % of loans receivable | 1.40% | 1.00% | 1.00% | 1.01% | | ACL as a % of nonaccrual loans | 398.2% | 165.3% | 144.3% | 178.3% |