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 of 2024, a decrease of 25.6%[220] - The company reported a net interest income of $102.017 million for Q3 2025, compared to $60.887 million for Q3 2024[227] - Net interest income for the three months ended September 30, 2025, was $246.7 million, an increase from $182.6 million for the same period in 2024[234] - For the nine months ended September 30, 2025, noninterest income totaled $29.0 million, a 123.1% increase from $13.0 million for the same period in 2024[235] 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 widening of the 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 of 2024[223] - The net interest margin for the three months ended September 30, 2025, was 3.04%, compared to 2.67% for the same period in 2024[234] Expenses and Provisions - Noninterest expenses for the nine months ended September 30, 2025, increased by $58.3 million compared to the same period in 2024[220] - Noninterest expenses for the nine months ended September 30, 2025, totaled $171.6 million, up $58.3 million or 51.5% from $113.3 million for the same period in 2024[237] - The provision for credit losses increased by $34.4 million for the nine months ended September 30, 2025, compared to the same period in 2024[220] - 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] - 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 merger-related costs[236] Loans and Assets - Gross loans reached $11.3 billion as of September 30, 2025, reflecting a $3.0 billion or 36.6% increase compared to December 31, 2024[241] - The commercial real estate loan segment increased by $1.84 billion or 31.2% from December 31, 2024, totaling $7.72 billion as of September 30, 2025[241] - Total multifamily loans as of September 30, 2025, were $3.46 billion, up from $2.50 billion as of December 31, 2024[244] - The total nonowner-occupied loans reached $2.66 billion as of September 30, 2025, compared to $1.97 billion as of December 31, 2024[246] - Owner-occupied loans totaled $1.41 billion as of September 30, 2025, an increase from $1.10 billion as of December 31, 2024[246] - The average loans receivable for the three months ended September 30, 2025, was $11.16 billion, compared to $8.12 billion for the same period in 2024[254] Deposits and Equity - Total average deposits increased by $3.8 billion, or 49.3%, during the three months ended September 30, 2025, compared to the same period in 2024, primarily due to the merger with FLIC[286] - Average total deposits for the nine months ended September 30, 2025, increased by $1.7 billion, or 22.9%, compared to the same period in 2024, attributed to the merger with FLIC[290] - Total deposits increased by $3.5 billion, or 45.4%, compared to December 31, 2024, driven by a $1.6 billion increase in interest-bearing demand deposits[297] - The Company's stockholders' equity increased by $296.6 million compared to December 31, 2024, mainly due to an increase in common stock from the FLIC merger[304] - As of September 30, 2025, the tangible common equity ratio was 8.36%, down from 9.49% as of December 31, 2024[306] Credit Quality - As of September 30, 2025, the Company's Allowance for Credit Losses (ACL) was $156.5 million, an increase of $73.8 million from $82.7 million as of December 31, 2024[248] - Total nonperforming assets as of September 30, 2025, were $39.7 million, down from $57.3 million as of December 31, 2024[258] - Nonaccrual loans represented 0.35% of total loans receivable as of September 30, 2025, compared to 0.69% as of December 31, 2024[259] - The ratio of annualized net charge-offs during the three months ended September 30, 2025, was 0.18%, slightly up from 0.17% in the same period of 2024[254] Capital Ratios - As of September 30, 2025, the Company's Tier 1 leverage capital is $1,293,585 with a ratio of 9.35%, exceeding the minimum requirement of 4.00% by 5.35%[311] - The Company's CET I risk-based ratio stands at 10.17%, which is 5.67% above the minimum requirement of 4.50%[311] - The Company's total risk-based capital is $1,606,662, representing a ratio of 13.88%, exceeding the minimum requirement of 8.00% by 5.88%[311] - The Bank's Tier 1 leverage capital is $1,430,511 with a ratio of 10.35%, surpassing the minimum requirement of 4.00% by 6.35%[312] - The Bank's CET I risk-based ratio is 12.37%, which is 7.87% above the minimum requirement of 4.50%[312] - The Bank's total risk-based capital is $1,547,066, with a ratio of 13.38%, exceeding the minimum requirement of 8.00% by 5.38%[312] Market Risk - Interest rate risk management is identified as the primary market risk for the Company[313] - A 200 basis-point increase in interest rates is estimated to 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]

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 for the three months ended September 30, 2025, was $40,976 thousand, compared to $17,161 thousand for the same period in 2024, reflecting an increase of 138.7%[25] - Earnings per common share for the three months ended September 30, 2025, were $0.79, up from $0.41 for the same period in 2024, an increase 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[30] Asset and Equity Growth - Total assets reached $14.0 billion as of September 30, 2025, up from $9.9 billion as of December 31, 2024, primarily due to the merger with FLIC[16] - Total stockholders' equity increased to $1.5 billion as of September 30, 2025, from $1.2 billion as of December 31, 2024[17] - 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] - Average assets increased to $14,050,585,000, reflecting a growth from $11,108,430,000 in the previous quarter[30] - Stockholders' equity increased to $1,538,344,000 as of September 30, 2025, up from $1,496,431,000 in the previous quarter, representing a growth of 2.4%[34] Interest Income and Margin - Net interest income for Q3 2025 increased by $23.3 million, or 29.3%, from Q2 2025, totaling $103.2 million[8] - The net interest margin expanded to 3.11% in Q3 2025, a 5 basis point increase from Q2 2025 and a 44 basis point increase from Q3 2024[9] - 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] - Net interest income for the quarter was $102,017 thousand, up from $78,883 thousand in the previous quarter, representing a significant increase of 29.4%[29] - Net interest income (tax equivalent basis) rose to $103,155,000, compared to $79,810,000 in the previous quarter[32] - The net interest margin improved to 3.11% for the three months ended September 30, 2025, compared to 3.06% in the previous quarter[37] Loan and Deposit Growth - Loans receivable rose to $11,303,636 thousand as of September 30, 2025, compared to $8,111,976 thousand a year earlier, marking a growth of 39.5%[24] - Total deposits increased to $11,369,295 thousand as of September 30, 2025, up from $7,524,105 thousand a year earlier, indicating a growth of 51.5%[24] - Gross loans reached $11,308,131 thousand, reflecting an increase from $11,169,138 thousand in the prior quarter[27] - Total deposits rose to $11,369,295 thousand, compared to $11,278,487 thousand in the previous quarter, marking a growth of 0.8%[27] Noninterest Income and Expenses - Noninterest income for the three months ended September 30, 2025, was $19,409 thousand, significantly higher than $4,737 thousand for the same period in 2024, representing an increase of 309.5%[25] - Noninterest expenses decreased to $58,673 thousand from $73,649 thousand in the previous quarter, indicating a reduction of 20.3%[29] - Total noninterest expenses decreased to $58,673,000 from $73,649,000 in the previous quarter[32] Credit Quality and Allowance - Nonperforming assets were 0.28% of total assets as of September 30, 2025, down from 0.53% in Q3 2024[14] - The allowance for credit losses increased to $156.5 million as of September 30, 2025, representing 1.38% of loans receivable[15] - Provision for credit losses for the three months ended September 30, 2025, was $5,500 thousand, compared to $3,800 thousand for the same period in 2024, reflecting a 44.7% increase[25] - The company reported a provision for credit losses of $5,500 thousand, compared to $35,700 thousand in the previous quarter, showing a decrease of 84.6%[29] - Nonaccrual loans amounted to $39,671,000, slightly up from $39,228,000 in the previous quarter, indicating a marginal increase of 1.1%[35] - Allowance for credit losses (ACL) stood at $156,499,000, a slight increase from $156,190,000 in the previous quarter, showing a growth of 0.2%[35] Strategic Focus - ConnectOne Bancorp, Inc. operates through its subsidiary ConnectOne Bank and focuses on small to middle-market businesses, enhancing its market position through fintech solutions[21] - The company plans to continue expanding its commercial real estate and multifamily loan portfolios, which have shown strong growth trends[27]

[FORM 10-Q](index=1&type=section&id=FORM%2010-Q) This filing details ConnectOne Bancorp, Inc.'s quarterly financial performance and condition for the period ended June 30, 2025 - ConnectOne Bancorp, Inc. filed its Quarterly Report on Form 10-Q for the period ended June 30, 2025[2](index=2&type=chunk) - The registrant is classified as a Large accelerated filer[3](index=3&type=chunk) Securities Registered | Title of each class | Trading symbol | Name of each exchange on which registered | |---|---|---| | Common stock | CNOB | NASDAQ | | Depositary Shares (each representing a 1/40th interest in a share of 5.25% Series A Non-Cumulative, perpetual preferred stock) | CNOBP | NASDAQ | - As of August 11, 2025, **50,270,162 shares** of Common Stock, no par value, were outstanding[4](index=4&type=chunk) [Table of Contents](index=2&type=section&id=Table%20of%20Contents) This section provides an organized listing of all chapters and sub-sections within the quarterly report for easy navigation [PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's discussion and analysis of ConnectOne Bancorp's financial condition and results of operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for ConnectOne Bancorp, Inc. and its subsidiaries, covering the statements of condition, income, comprehensive income, changes in stockholders' equity, and cash flows for the periods ended June 30, 2025, and December 31, 2024 (for condition) or June 30, 2025 and 2024 (for income, comprehensive income, equity changes, and cash flows) [Consolidated Statements of Condition](index=3&type=section&id=Consolidated%20Statements%20of%20Condition) The Consolidated Statements of Condition show a significant increase in total assets and liabilities for ConnectOne Bancorp, Inc. as of June 30, 2025, compared to December 31, 2024, primarily driven by the FLIC merger. Total assets grew by over $4 billion, with substantial increases in loans receivable and deposits Consolidated Statements of Condition (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | |---|---|---| | **ASSETS** | | | | Cash and cash equivalents | $596,533 | $356,488 | | Investment securities | $1,227,200 | $612,847 | | Loans receivable, net | $11,008,287 | $8,192,125 | | Total assets | $13,915,738 | $9,879,600 | | **LIABILITIES** | | | | Total deposits | $11,278,487 | $7,820,114 | | Total liabilities | $12,419,307 | $8,637,896 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | $1,496,431 | $1,241,704 | | Total liabilities and stockholders' equity | $13,915,738 | $9,879,600 | - Total assets increased by **$4.04 billion (40.85%)** from December 31, 2024, to June 30, 2025[8](index=8&type=chunk) - Net loans receivable increased by **$2.82 billion (34.38%)** from December 31, 2024, to June 30, 2025[8](index=8&type=chunk) [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) ConnectOne Bancorp, Inc. reported a net loss for the three and six months ended June 30, 2025, primarily due to a significant increase in provision for credit losses and merger expenses related to the FLIC acquisition. Despite an increase in total interest income, these expenses led to a negative net income available to common stockholders Consolidated Statements of Income (in thousands, except per share data) | (dollars in thousands, except for 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 | |---|---|---|---|---| | Total interest income | $146,030 | $130,007 | $270,819 | $259,614 | | Total interest expense | $67,147 | $68,568 | $126,180 | $137,875 | | Net interest income | $78,883 | $61,439 | $144,639 | $121,739 | | Provision for credit losses | $35,700 | $2,500 | $39,200 | $6,500 | | Total noninterest income | $5,185 | $4,399 | $9,636 | $8,247 | | Total noninterest expenses | $73,649 | $37,594 | $112,954 | $74,659 | | Net (loss) income | $(20,293) | $19,056 | $(51) | $36,261 | | Net (loss) income available to common stockholders | $(21,802) | $17,547 | $(3,069) | $33,243 | | Basic EPS | $(0.52) | $0.46 | $(0.08) | $0.87 | | Diluted EPS | $(0.52) | $0.46 | $(0.08) | $0.86 | - Net loss available to common stockholders for the three months ended June 30, 2025, was **$(21.8) million**, a decrease from **$17.5 million** in the prior year, primarily due to increased provision for credit losses and merger expenses[11](index=11&type=chunk) - Provision for credit losses significantly increased to **$35.7 million** for Q2 2025 from **$2.5 million** for Q2 2024, and to **$39.2 million** for H1 2025 from **$6.5 million** for H1 2024[11](index=11&type=chunk) [Consolidated Statements of Comprehensive Income](index=5&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The Consolidated Statements of Comprehensive Income show a total comprehensive loss of $(19.6) million for the three months ended June 30, 2025, a significant decline from a positive comprehensive income in the prior year, mainly influenced by the net loss and unrealized losses on cash flow hedges, partially offset by unrealized gains on available-for-sale securities Consolidated Statements of Comprehensive (Loss) Income (in thousands) | (dollars 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 | | Net unrealized holding gains (losses) on available-for-sale securities arising during the period | $3,896 | $(3,263) | $9,358 | $(12,229) | | Net unrealized (losses) gains on cash flow hedges | $(3,211) | $(881) | $(8,917) | $5,032 | | Pension plan adjustments | $- | $32 | $- | $62 | | Total other comprehensive income (loss), net of tax | $685 | $(4,112) | $441 | $(7,135) | | Total comprehensive (loss) income | $(19,608) | $14,944 | $390 | $29,126 | - Total comprehensive (loss) income for the three months ended June 30, 2025, was **$(19.6) million**, compared to **$14.9 million** for the same period in 2024[12](index=12&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $1,496.4 million as of June 30, 2025, from $1,241.7 million at December 31, 2024. This increase was primarily driven by the issuance of 11,790,116 common shares in connection with the FLIC merger, valued at $270.8 million, despite a net loss for the period and cash dividends paid Consolidated Statements of Changes in Stockholders' Equity (in thousands) | (in thousands) | Balance as of Dec 31, 2024 | Net loss | Other comprehensive income | Cash dividends paid (preferred) | Cash dividends paid (common) | Stock issued (FLIC merger) | Balance as of Jun 30, 2025 | |---|---|---|---|---|---|---|---| | Preferred Stock | $110,927 | - | - | - | - | - | $110,927 | | Common Stock | $586,946 | - | - | - | - | $270,819 | $857,765 | | Additional Paid-In Capital | $36,347 | - | - | - | $(2,134) (tax withholdings) | $2,515 (stock-based comp) | $36,728 | | Retained Earnings | $631,446 | $(51) | - | $(3,018) | $(13,845) | - | $614,532 | | Treasury Stock | $(76,116) | - | - | - | - | - | $(76,116) | | Accumulated Other Comprehensive (Loss) Income | $(47,846) | - | $441 | - | - | - | $(47,405) | | Total Stockholders' Equity | $1,241,704 | $(51) | $441 | $(3,018) | $(13,845) | $270,819 | $1,496,431 | - Stockholders' equity increased by **$254.7 million** from December 31, 2024, to June 30, 2025, primarily due to the issuance of **11,790,116 shares** of common stock in connection with the FLIC merger, valued at **$270.8 million**[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly for the six months ended June 30, 2025, compared to the prior year, despite a net loss. Investing activities provided cash, largely due to the FLIC acquisition, while financing activities shifted from a net use of cash to a net provision of cash, driven by increased deposits and subordinated debt issuance Consolidated Statements of Cash Flows (in thousands) | (dollars in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 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 | | Cash and cash equivalents at beginning of period | $356,488 | $242,714 | | Cash and cash equivalents at end of period | $596,533 | $293,513 | - Cash and cash equivalents increased by **$240.0 million** to **$596.5 million** as of June 30, 2025, from **$356.5 million** at December 31, 2024[17](index=17&type=chunk) - Investing activities included **$54.9 million** in cash acquired, net of cash consideration paid, in the FLIC acquisition[17](index=17&type=chunk)[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the Company's accounting policies, significant events like the FLIC merger, earnings per share calculations, investment securities, derivatives, loan portfolio and credit losses, fair value measurements, comprehensive income, stock-based compensation, pension plans, deposits, FHLB borrowings, subordinated debentures, and segment reporting, offering crucial context to the financial statements [Note 1a. Nature of Operations, Principles of Consolidation and Risk and Uncertainties](index=11&type=section&id=Note%201a.%20Nature%20of%20Operations%2C%20Principles%20of%20Consolidation%20and%20Risk%20and%20Uncertainties) ConnectOne Bancorp, Inc. operates as a registered bank holding company, with its primary business being ConnectOne Bank, a community-based commercial bank. The Company completed the acquisition of The First of Long Island Corporation (FLIC) on June 1, 2025, merging its subsidiary bank into ConnectOne Bank, expanding its branch network to 59 offices. The financial statements are prepared in conformity with U.S. GAAP, and the Company's sole reportable segment is financial services - ConnectOne Bancorp, Inc. is a registered bank holding company operating its wholly-owned subsidiary, ConnectOne Bank, a community-based, full-service New Jersey-chartered commercial bank[21](index=21&type=chunk)[22](index=22&type=chunk) - On June 1, 2025, the Company completed the acquisition of The First of Long Island Corporation (FLIC), merging its subsidiary bank into ConnectOne Bank, expanding its operations to **59 banking offices**[22](index=22&type=chunk) - The Company's operations are solely in the financial services industry, providing a range of regional community banking services to commercial and retail clients[27](index=27&type=chunk) [Note 1b. Authoritative Accounting Guidance](index=13&type=section&id=Note%201b.%20Authoritative%20Accounting%20Guidance) ConnectOne Bancorp adopted ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' on January 1, 2025, which requires enhanced annual disclosures for income tax rate reconciliation and taxes paid. The Company is also preparing for ASU 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40),' effective January 1, 2027, which is not expected to have a material effect - The Company adopted ASU 2023-09, 'Income Taxes (Topic 740): Improvements to Income Tax Disclosures,' on January 1, 2025, requiring specific categories in rate reconciliation and additional information for significant reconciling items[36](index=36&type=chunk) - ASU 2024-03, 'Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40),' effective January 1, 2027, will require disaggregated disclosures of certain expense categories, but is not expected to materially affect the consolidated financial statements[37](index=37&type=chunk) [Note 2. Business Combination](index=14&type=section&id=Note%202.%20Business%20Combination) On June 1, 2025, ConnectOne Bancorp completed the acquisition of The First of Long Island Corporation (FLIC) for approximately $270.8 million, primarily through the issuance of 11,790,116 common shares. The acquisition was accounted for using the acquisition method, resulting in $7.2 million of goodwill and the recognition of acquired assets and assumed liabilities at fair value. The merger contributed $8.5 million in net interest income and $3.9 million in net income from the acquisition date to June 30, 2025, but incurred $32.1 million in merger expenses - ConnectOne Bancorp completed the acquisition of The First of Long Island Corporation (FLIC) on June 1, 2025, with FLIC merging into the Company and FNBLI merging into ConnectOne Bank[40](index=40&type=chunk) - The total transaction consideration was approximately **$270.8 million**, primarily through the issuance of **11,790,116 shares** of the Company's common stock[41](index=41&type=chunk) Fair Value of Assets Acquired and Liabilities Assumed (in thousands) as of June 1, 2025 | (in thousands) | As of June 1, 2025 | |---|---| | Total purchase price consideration | $270,828 | | Total assets acquired | $3,905,094 | | Total liabilities assumed | $3,641,505 | | Net assets acquired | $263,589 | | Goodwill recorded in acquisition | $7,239 | - The merger resulted in **$7.2 million of goodwill** and contributed **$8.5 million in net interest income** and **$3.9 million in net income** from June 1 to June 30, 2025, while incurring **$32.1 million in merger expenses**[42](index=42&type=chunk)[58](index=58&type=chunk) [Note 3. Earnings per Common Share](index=18&type=section&id=Note%203.%20Earnings%20per%20Common%20Share) ConnectOne Bancorp reported basic and diluted earnings per common share of $(0.52) for the three months ended June 30, 2025, and $(0.08) for the six months ended June 30, 2025, a significant decrease from the prior year periods, reflecting the net loss available to common stockholders Earnings per Common Share (in thousands, except per share data) | (dollars in thousands, except for 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 (loss) income available to common stockholders | $(21,802) | $17,547 | $(3,069) | $33,243 | | Earnings allocated to participating securities | $53 | $(46) | $8 | $(89) | | (Loss) income attributable to common stock | $(21,749) | $17,501 | $(3,061) | $33,154 | | Weighted average common shares outstanding, including participating securities | 42,100 | 38,421 | 40,252 | 38,383 | | Weighted average participating securities | (102) | (101) | (102) | (103) | | Weighted average common shares outstanding | 41,998 | 38,320 | 40,150 | 38,280 | | Incremental shares from assumed conversions of options, performance units and restricted shares | 175 | 129 | 220 | 173 | | Weighted average common and equivalent shares outstanding | 42,173 | 38,449 | 40,370 | 38,453 | | Basic EPS | $(0.52) | $0.46 | $(0.08) | $0.87 | | Diluted EPS | $(0.52) | $0.46 | $(0.08) | $0.86 | - Restricted stock awards are considered participating securities due to non-forfeitable dividend rights, impacting EPS calculation using the two-class method[62](index=62&type=chunk) [Note 4. Investment Securities](index=19&type=section&id=Note%204.%20Investment%20Securities) ConnectOne Bancorp's investment securities available-for-sale increased significantly to $1,227.2 million as of June 30, 2025, from $612.8 million at December 31, 2024, largely due to the FLIC merger. The portfolio primarily consists of federal agency obligations and residential mortgage pass-through securities. Net unrealized losses decreased, and no allowance for credit losses was recorded for available-for-sale securities, as declines in fair value were attributed to interest rate changes rather than credit impairment - Immediately after the FLIC merger, the Company sold a significant portion of acquired available-for-sale investments, generating **$277.5 million in proceeds** with no realized gains or losses[66](index=66&type=chunk) Investment Securities Available-for-Sale (in thousands) | (in thousands) | June 30, 2025 Fair Value | December 31, 2024 Fair Value | |---|---|---| | Federal agency obligations | $359,417 | $84,670 | | Residential mortgage pass-through securities | $628,139 | $378,838 | | Commercial mortgage pass-through securities | $26,572 | $20,892 | | Obligations of U.S. states and political subdivisions | $207,126 | $122,404 | | Corporate bonds and notes | $4,995 | $4,987 | | Asset-backed securities | $823 | $885 | | Other securities | $128 | $171 | | Total investment securities available-for-sale | $1,227,200 | $612,847 | - As of June 30, 2025, investment securities with a carrying value of approximately **$792.7 million** were pledged to secure public deposits, borrowings, and other purposes, an increase from **$184.0 million** at December 31, 2024[71](index=71&type=chunk) - No allowance for credit losses for available-for-sale securities was recorded as of June 30, 2025, as unrealized losses were primarily due to interest rate changes, and issuers continue timely payments[80](index=80&type=chunk) [Note 5. Derivatives](index=23&type=section&id=Note%205.%20Derivatives) ConnectOne Bancorp uses derivative instruments, primarily interest rate swaps, as cash flow hedges for FHLB advances and interest rate cap spread transactions for brokered certificates of deposit. As of June 30, 2025, the notional amount of cash flow hedges was $1.2 billion, with a fair value of $23.9 million. The Company also acquired non-designated back-to-back interest rate swaps through the FLIC merger, which offset each other's fair value changes - The Company uses fourteen pay fixed-rate interest rate swaps, with a total notional amount of **$750 million**, designated as cash flow hedges of outstanding Federal Home Loan Bank advances, expiring between December 2025 and May 2028[86](index=86&type=chunk) - Two forward starting interest rate cap spread transactions, totaling **$225 million notional amount**, are designated as cash flow hedges of brokered certificates of deposit, effective October and November 2022, maturing in October and November 2027[87](index=87&type=chunk) Cash Flow Hedges in Consolidated Statements of Condition (in thousands) | (in thousands) | June 30, 2025 Notional Amount | June 30, 2025 Fair Value | December 31, 2024 Notional Amount | December 31, 2024 Fair Value | |---|---|---|---|---| | Interest rate contracts | $1,200,000 | $23,900 | $1,000,000 | $37,398 | - Acquired non-designated back-to-back interest rate swaps from the FLIC merger, with a notional amount of **$36.2 million**, offset each other's fair value changes and do not impact the Bank's results of operations[94](index=94&type=chunk)[95](index=95&type=chunk) [Note 6. Loans and the Allowance for Credit Losses](index=26&type=section&id=Note%206.%20Loans%20and%20the%20Allowance%20for%20Credit%20Losses) ConnectOne Bancorp's total loans receivable significantly increased to $11.16 billion as of June 30, 2025, from $8.27 billion at December 31, 2024, primarily due to the FLIC merger. The allowance for credit losses (ACL) also rose substantially to $156.2 million, largely driven by an initial provision of $27.3 million and nonaccretable credit marks of $43.3 million related to acquired purchased credit-deteriorated (PCD) loans from the merger. Nonaccrual loans decreased, and the Company actively monitors credit quality and loan modifications Composition of Loan Portfolio Segments (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | |---|---|---| | Commercial | $1,607,528 | $1,532,730 | | Commercial real estate | $7,624,033 | $5,880,679 | | Commercial construction | $681,222 | $616,246 | | Residential real estate | $1,254,646 | $249,691 | | Consumer | $1,709 | $1,136 | | Total loans receivable | $11,164,477 | $8,274,810 | Nonaccrual Loans (in thousands) | (in thousands) | June 30, 2025 Total Nonaccrual Loans | December 31, 2024 Total Nonaccrual Loans | |---|---|---| | Commercial | $13,470 | $16,231 | | Commercial real estate | $21,319 | $36,486 | | Commercial construction | $2,204 | $2,204 | | Residential real estate | $2,235 | $2,389 | | Total | $39,228 | $57,310 | - The allowance for credit losses (ACL) increased to **$156.2 million** as of June 30, 2025, from **$82.7 million** at December 31, 2024, primarily due to **$27.3 million initial provision** and **$43.3 million nonaccretable credit marks** related to the FLIC merger[118](index=118&type=chunk) - As of June 30, 2025, the Company had **$237.8 million** in Purchased Credit-Deteriorated (PCD) loans, including a **$208.2 million pool of rent-regulated multifamily loans** in New York City, subject to unique stressors from 2019 rent laws[103](index=103&type=chunk) [Note 7. Fair Value Measurements and Fair Value of Financial Instruments](index=38&type=section&id=Note%207.%20Fair%20Value%20Measurements%20and%20Fair%20Value%20of%20Financial%20Instruments) ConnectOne Bancorp measures financial instruments at fair value using a three-level hierarchy. Investment securities available-for-sale and derivatives are primarily classified as Level 2, based on observable market data. Collateral-dependent loans are measured on a nonrecurring basis using Level 3 inputs, relying on appraisals and unobservable adjustments. The fair value of total assets measured on a recurring basis increased to $1,270.8 million as of June 30, 2025, from $670.3 million at December 31, 2024 - Fair value measurements are categorized into Level 1 (quoted prices in active markets for identical assets), Level 2 (observable inputs for similar assets), and Level 3 (significant unobservable inputs)[137](index=137&type=chunk) Recurring Fair Value Measurements: Assets (in thousands) | (dollars in thousands) | June 30, 2025 Total Fair Value | December 31, 2024 Total Fair Value | |---|---|---| | Investment securities available-for-sale | $1,227,200 | $612,847 | | Equity securities | $19,707 | $20,092 | | Derivatives | $23,900 | $37,398 | | Total assets measured at fair value on a recurring basis | $1,270,807 | $670,337 | - Collateral-dependent loans are measured at fair value on a nonrecurring basis, primarily using Level 3 inputs based on appraisals of collateral value with unobservable adjustments for comparable sales[147](index=147&type=chunk)[155](index=155&type=chunk) [Note 8. Comprehensive (Loss) Income](index=45&type=section&id=Note%208.%20Comprehensive%20%28Loss%29%20Income) ConnectOne Bancorp's total comprehensive income (loss) includes unrealized gains/losses on available-for-sale securities, cash flow hedges, and defined benefit pension plans. Accumulated other comprehensive loss as of June 30, 2025, was $(47.4) million, slightly improved from $(47.8) million at December 31, 2024, primarily due to changes in cash flow hedge valuations - Total comprehensive income (loss) includes unrealized holding gains and losses on available-for-sale securities, unrealized gains (losses) on cash flow hedges, and defined benefit pension plan adjustments, all net of taxes[163](index=163&type=chunk) Accumulated Other Comprehensive Loss (in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | |---|---|---| | Investment securities available-for-sale, net of tax | $(60,274) | $(69,632) | | Cash flow hedge, net of tax | $13,564 | $22,481 | | Defined benefit pension and post-retirement plans, net of tax | $(695) | $(695) | | Total accumulated other comprehensive loss | $(47,405) | $(47,846) | [Note 9. Stock-based Compensation](index=46&type=section&id=Note%209.%20Stock-based%20Compensation) ConnectOne Bancorp's 2017 Equity Compensation Plan had approximately 168,971 shares available for grant as of June 30, 2025. Stock-based compensation expense for the six months ended June 30, 2025, was $2.5 million. The Company had nonvested restricted stock, unearned performance units, and deferred stock units with unrecognized compensation costs of $1.7 million, $2.9 million, and $2.1 million, respectively, expected to be recognized over weighted-average periods of 1.3 to 2.1 years - As of June 30, 2025, approximately **168,971 shares** were available for grant and issuance under the 2017 Equity Compensation Plan[167](index=167&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2025, was **$2.5 million**, compared to **$2.1 million** for the same period in 2024[169](index=169&type=chunk) Unrecognized Stock-based Compensation Cost (in thousands) | Award Type | Unrecognized Compensation Cost (as of Jun 30, 2025) | Weighted Average Period (Years) | |---|---|---| | Nonvested restricted stock | $1,700 | 1.3 | | Unearned performance units | $2,900 | 2.1 | | Unearned deferred stock units | $2,100 | 1.7 | [Note 10. Components of Net Periodic Pension Cost](index=48&type=section&id=Note%2010.%20Components%20of%20Net%20Periodic%20Pension%20Cost) ConnectOne Bancorp reported net periodic pension income of $(249) thousand for the six months ended June 30, 2025. Following the FLIC merger, the Company acquired a defined benefit pension plan with a net funded status of $11.2 million. The Board of Directors approved freezing the plan effective September 30, 2025, preventing new participants and future benefit accruals Net Periodic Pension Cost (Income) (in thousands) | (dollars 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 | |---|---|---|---|---| | Service cost | $- | $- | $- | $- | | Interest cost | $105 | $106 | $211 | $212 | | Expected return on plan assets | $(230) | $(214) | $(460) | $(428) | | Net amortization | $- | $43 | $- | $86 | | Total periodic pension income | $(125) | $(65) | $(249) | $(130) | - 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[178](index=178&type=chunk) - The Board of Directors approved freezing the acquired pension plan effective September 30, 2025, disallowing new participants and future benefit accruals[179](index=179&type=chunk) [Note 11. Deposits](index=51&type=section&id=Note%2011.%20Deposits) ConnectOne Bancorp's total time deposits increased to $3.1 billion as of June 30, 2025, from $2.6 billion at December 31, 2024. Nonreciprocal brokered time deposits constituted $1.0 billion of this total. The majority of time deposits mature within one year - Total time deposits increased to **$3.1 billion** as of June 30, 2025, from **$2.6 billion** at December 31, 2024[190](index=190&type=chunk) - Nonreciprocal brokered time deposits amounted to **$1.0 billion** as of June 30, 2025, up from **$907.2 million** at December 31, 2024[190](index=190&type=chunk) Contractual Maturities of Time Deposits (in thousands) as of June 30, 2025 | Year | Amount (dollars in thousands) | |---|---| | 2025 | $1,749,473 | | 2026 | $1,149,831 | | 2027 | $76,951 | | 2028 | $85,375 | | 2029 | $3,761 | | thereafter | $1,983 | | Time deposits (before net discount) | $3,067,374 | [Note 12. FHLB Borrowings](index=52&type=section&id=Note%2012.%20FHLB%20Borrowings) ConnectOne Bancorp's FHLB borrowings increased to $783.9 million as of June 30, 2025, from $688.1 million at December 31, 2024, with a weighted average interest rate of 4.43%. The majority of these borrowings mature in less than one year and are primarily collateralized by commercial mortgage loans and securities. The Company had a remaining borrowing capacity of approximately $2.2 billion at FHLB FHLB Borrowings by Remaining Period to Maturity (in thousands) | (dollars in thousands) | June 30, 2025 Amount | June 30, 2025 Rate | December 31, 2024 Amount | December 31, 2024 Rate | |---|---|---|---|---| | Less than 1 year | $757,992 | 4.44% | $660,529 | 4.51% | | 1 year through less than 2 years | $- | - | $2,050 | 2.23% | | 2 years through less than 3 years | $25,243 | 4.17% | $260 | 2.85% | | 3 years through less than 4 years | $- | - | $25,000 | 4.18% | | 4 years through 5 years | $- | - | $- | - | | After 5 years | $244 | 2.96% | $261 | 2.96% | | Total FHLB borrowings – gross | $783,479 | 4.43% | $688,100 | 4.49% | - FHLB borrowings are primarily collateralized by approximately **$3.9 billion** of commercial mortgage loans and securities[194](index=194&type=chunk) - As of June 30, 2025, the Company had a remaining borrowing capacity of approximately **$2.2 billion** at FHLB[194](index=194&type=chunk) [Note 13. Subordinated Debentures](index=53&type=section&id=Note%2013.%20Subordinated%20Debentures) ConnectOne Bancorp's subordinated debentures totaled $276.5 million as of June 30, 2025, a significant increase from $79.9 million at December 31, 2024. This increase is primarily due to the issuance of $200 million in fixed-to-floating rate subordinated notes in May 2025, bearing an initial interest rate of 8.125% annually until June 2030 - The Company issued **$200 million** in aggregate principal amount of fixed-to-floating rate subordinated notes (the '2025 Notes') on May 15, 2025[200](index=200&type=chunk) - The 2025 Notes bear interest at **8.125% annually** until June 1, 2030, after which the rate resets quarterly to Three-Month Term SOFR plus 441.5 basis points[200](index=200&type=chunk) - The 2020 Notes, issued in June 2020 for **$75 million**, have a stated maturity of July 1, 2030, and bear a variable rate (Three-Month Term SOFR + 560.5 basis points), which was **9.92%** as of June 30, 2025[199](index=199&type=chunk) [Note 14. Segment Reporting](index=54&type=section&id=Note%2014.%20Segment%20Reporting) ConnectOne Bancorp operates as a single reportable segment in the financial services industry, with performance evaluated using Consolidated Bank net income. For the six months ended June 30, 2025, segment consolidated net income was $4.4 million, a decrease from $38.9 million in the prior year, primarily due to increased provision for credit losses and other operating expenses - The Company's sole reportable segment is the financial services industry, providing regional community banking services[27](index=27&type=chunk)[28](index=28&type=chunk) Segment Consolidated Net (Loss) Income (in thousands) | (dollars 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 | |---|---|---|---|---| | Total segment income | $150,895 | $134,570 | $279,433 | $267,776 | | Segment consolidated net (loss) income | $(16,878) | $20,582 | $4,355 | $38,864 | | Segment assets | $13,906,221 | $9,715,227 | $13,906,221 | $9,715,227 | - Segment consolidated net (loss) income for the three months ended June 30, 2025, was **$(16.9) million**, down from **$20.6 million** in the prior year, and for the six months, it was **$4.4 million**, down from **$38.9 million**[202](index=202&type=chunk) [Item 2. 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) This section provides management's perspective on ConnectOne Bancorp's financial performance and condition, highlighting the impact of the FLIC merger on operating results, net interest income, noninterest income and expenses, and income taxes. It also details changes in the loan portfolio, allowance for credit losses, asset quality, investment securities, interest rate sensitivity, liquidity, deposits, subordinated debentures, stockholders' equity, and regulatory capital, emphasizing the significant shifts due to the acquisition [Operating Results Overview](index=56&type=section&id=Operating%20Results%20Overview) ConnectOne Bancorp reported a net loss available to common stockholders of $(21.8) million for the three months and $(3.1) million for the six months ended June 30, 2025, resulting in diluted EPS of $(0.52) and $(0.08), respectively. This decline was primarily driven by a $36.1 million increase in noninterest expenses (including $30.7 million in merger expenses) and a $33.2 million increase in provision for credit losses, largely attributable to the FLIC merger Net (Loss) Income Available to Common Stockholders and Diluted EPS | Period | Net (Loss) Income Available to Common Stockholders (in millions) | Diluted EPS | |---|---|---| | Three months ended June 30, 2025 | $(21.8) | $(0.52) | | Three months ended June 30, 2024 | $17.5 | $0.46 | | Six months ended June 30, 2025 | $(3.1) | $(0.08) | | Six months ended June 30, 2024 | $33.2 | $0.86 | - The decrease in net income was primarily due to a **$36.1 million increase in noninterest expenses** (including **$30.7 million in merger expenses**) and a **$33.2 million increase in provision for credit losses**, largely due to the FLIC merger[208](index=208&type=chunk)[209](index=209&type=chunk) [Net Interest Income and Margin](index=56&type=section&id=Net%20Interest%20Income%20and%20Margin) Fully taxable equivalent net interest income increased by 28.2% to $79.8 million for the three months ended June 30, 2025, and by 18.7% to $146.4 million for the six months ended June 30, 2025, primarily due to the FLIC merger. The net interest margin widened to 3.06% for the three months and 3.00% for the six months, driven by a decrease in the average cost of total funds, despite higher average cash balances and the impact of a $200 million subordinated debt issuance Fully Taxable Equivalent Net Interest Income and Margin | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |---|---|---|---|---| | Fully taxable equivalent net interest income | $79.8 million | $62.2 million | $146.4 million | $123.4 million | | Net interest margin | 3.06% | 2.72% | 3.00% | 2.68% | | Average interest-earning assets | $10,468,589 | $9,210,050 | $9,850,087 | $9,266,670 | - The increase in net interest income and margin was primarily due to the FLIC merger, which increased average interest-earning assets, and a decrease in the average cost of total funds[211](index=211&type=chunk)[212](index=212&type=chunk) [Noninterest Income](index=59&type=section&id=Noninterest%20Income) Noninterest income increased to $5.2 million for the three months and $9.6 million for the six months ended June 30, 2025, compared to $4.4 million and $8.2 million in the prior year periods, respectively. This growth was mainly driven by increases in deposit, loan, and other income, and BOLI income, largely attributable to the FLIC merger, partially offset by a decrease in net gains on sale of loans held-for-sale Noninterest Income (in thousands) | (dollars 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 | |---|---|---|---|---| | Total noninterest income | $5,185 | $4,399 | $9,636 | $8,247 | | Deposit, loan and other income | $2,570 | $1,654 | $4,576 | $3,246 | | Income on bank owned life insurance | $2,087 | $1,677 | $3,671 | $3,341 | | Net gains on sale of loans held-for-sale | $181 | $1,277 | $513 | $1,783 | - The increases in deposit, loan, and other income, and BOLI income were primarily due to the merger with FLIC[222](index=222&type=chunk)[223](index=223&type=chunk) [Noninterest Expenses](index=59&type=section&id=Noninterest%20Expenses) Noninterest expenses significantly increased to $73.6 million for the three months and $113.0 million for the six months ended June 30, 2025, compared to $37.6 million and $74.7 million in the prior year periods, respectively. This substantial rise was primarily due to $30.7 million in merger expenses for the three months ($32.1 million for six months) related to the FLIC acquisition, along with increases in salaries, amortization of core deposit intangibles, professional fees, and IT costs Noninterest Expenses (in thousands) | (dollars 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 | |---|---|---|---|---| | Total noninterest expenses | $73,649 | $37,594 | $112,954 | $74,659 | | Merger expenses | $30,745 | $- | $32,065 | $- | | Salaries and employee benefits | $25,233 | $22,721 | $47,811 | $44,852 | | Amortization of core deposit intangibles | $1,251 | $321 | $1,530 | $642 | - The significant increase in noninterest expenses was primarily due to **merger expenses** related to the FLIC acquisition (**$30.7 million** for Q2 2025, **$32.1 million** for H1 2025)[224](index=224&type=chunk)[225](index=225&type=chunk) [Income Taxes](index=59&type=section&id=Income%20Taxes) ConnectOne Bancorp reported a net income tax benefit of $(5.0) million for the three months ended June 30, 2025, compared to an expense of $6.7 million in the prior year. For the six months, income tax expense decreased to $2.2 million from $12.6 million. This reduction in tax expense was a direct result of lower taxable income due to the additional expenses incurred from the FLIC merger Income Tax (Benefit) Expense (in thousands) | (dollars 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 | |---|---|---|---|---| | Income tax (benefit) expense | $(4,988) | $6,688 | $2,172 | $12,566 | - The decrease in income tax expense (or shift to benefit) was a result of lower taxable income before income tax expense, primarily due to additional expenses from the FLIC merger[226](index=226&type=chunk)[227](index=227&type=chunk) [Financial Condition](index=60&type=section&id=Financial%20Condition) ConnectOne Bancorp's financial condition as of June 30, 2025, was significantly impacted by the FLIC merger, leading to substantial growth in the loan portfolio, allowance for credit losses, and deposits. The Company maintained adequate liquidity and strong regulatory capital ratios, despite a decrease in the tangible common equity ratio post-merger [Loan Portfolio](index=60&type=section&id=Loan%20Portfolio) ConnectOne Bancorp's gross loans increased by $2.9 billion (34.9%) to $11.2 billion as of June 30, 2025, compared to December 31, 2024, primarily due to the FLIC merger. Commercial real estate remains the largest segment, growing by $1.7 billion, with significant increases in residential real estate loans. The portfolio maintains a weighted average loan-to-value ratio of 54% for commercial real estate loans Composition of Loan Portfolio (in thousands) | Loan Segment | June 30, 2025 Amount | December 31, 2024 Amount | Increase/ (Decrease) | |---|---|---|---| | Commercial | $1,607,528 | $1,532,730 | $74,798 | | Commercial real estate | $7,624,033 | $5,880,679 | $1,743,354 | | Commercial construction | $681,222 | $616,246 | $64,976 | | Residential real estate | $1,254,646 | $249,691 | $1,004,955 | | Consumer | $1,709 | $1,136 | $573 | | Gross loans | $11,169,138 | $8,280,482 | $2,888,656 | - Gross loans increased by **$2.9 billion or 34.9%** from December 31, 2024, to June 30, 2025, primarily due to the FLIC merger[229](index=229&type=chunk) - Commercial real estate loans had a weighted average loan-to-value of **54%** as of June 30, 2025[231](index=231&type=chunk) [Allowance for Credit Losses and Related Provision](index=63&type=section&id=Allowance%20for%20Credit%20Losses%20and%20Related%20Provision) The allowance for credit losses (ACL) increased by $73.5 million to $156.2 million as of June 30, 2025, from $82.7 million at December 31, 2024. This significant increase was primarily due to the FLIC merger, which included a $43.3 million allowance recorded through goodwill for purchased credit-deteriorated loans and a $27.4 million initial provision for credit losses. The provision for credit losses for the six months ended June 30, 2025, was $39.2 million, up from $6.5 million in the prior year - The allowance for credit losses (ACL) increased by **$73.5 million** to **$156.2 million** as of June 30, 2025, from **$82.7 million** at December 31, 2024[236](index=236&type=chunk) - The increase in ACL was primarily due to the FLIC merger, with **$43.3 million** recorded through goodwill for purchased credit-deteriorated loans and **$27.4 million** as an initial provision for credit losses[236](index=236&type=chunk) Provision for Credit Losses (in thousands) | Period | Provision for Credit Losses (in thousands) | |---|---| | Three months ended June 30, 2025 | $35,700 | | Three months ended June 30, 2024 | $2,500 | | Six months ended June 30, 2025 | $39,200 | | Six months ended June 30, 2024 | $6,500 | - Net charge-offs for the six months ended June 30, 2025, were **$8.3 million**, compared to **$6.4 million** in the prior year[238](index=238&type=chunk)[242](index=242&type=chunk) [Asset Quality](index=65&type=section&id=Asset%20Quality) ConnectOne Bancorp manages asset quality through diversification, credit reviews, and prompt charge-offs. Nonperforming assets, defined as nonaccrual loans and OREO, decreased to $39.2 million as of June 30, 2025, from $57.3 million at December 31, 2024. The ratio of nonaccrual loans to total loans receivable improved to 0.35% from 0.69% - The Company's policy is to discontinue interest accruals on loans past due for 90 days or more, unless well-secured and in the process of collection[244](index=244&type=chunk) Nonperforming Assets (in thousands) | (dollars in thousands) | June 30, 2025 | December 31, 2024 | |---|---|---| | Nonaccrual loans | $39,228 | $57,310 | | OREO | $- | $- | | Total nonperforming assets | $39,228 | $57,310 | | Nonaccrual loans to total loans receivable | 0.35% | 0.69% | | Nonperforming assets to total assets | 0.28% | 0.58% | [Purchased Credit-Deteriorated Loans](index=65&type=section&id=Purchased%20Credit-Deteriorated%20Loans) As of June 30, 2025, ConnectOne Bancorp's recorded investment in Purchased Credit-Deteriorated (PCD) loans totaled $237.8 million, including $208.2 million in rent-regulated multifamily loans in New York City. These loans were acquired as part of the FLIC merger and had experienced more-than-insignificant credit deterioration since origination. A $43.3 million non-accretable mark and a $34.4 million accretable fair value mark were recorded at acquisition, with the accretion adding approximately 2 basis points to the net interest margin for the quarter - As of June 30, 2025, the Company's recorded investment in PCD loans totaled **$237.8 million**[247](index=247&type=chunk) - Within the PCD loan portfolio, **$208.2 million** are rent-regulated multifamily loans in New York City, subject to unique stressors from 2019 New York rent laws[248](index=248&type=chunk) - A **$43.3 million non-accretable mark** and a **$34.4 million accretable fair value mark** were recorded for PCD loans at the acquisition date (June 1, 2025), with accretion adding approximately **2 basis points** to the net interest margin for the quarter[249](index=249&type=chunk) [Investment Securities](index=66&type=section&id=Investment%20Securities) Average investment securities, on an amortized cost basis, increased to $936.0 million for the three months and $841.5 million for the six months ended June 30, 2025, primarily due to the FLIC merger. Net unrealized losses on available-for-sale securities decreased to $60.3 million as of June 30, 2025, from $69.6 million at December 31, 2024, mainly due to changes in market conditions and interest rates. No allowance for credit losses was recorded for these securities - Average securities, on an amortized cost basis, increased by **$196.4 million** to **$936.0 million** for the three months ended June 30, 2025, and by **$111.5 million** to **$841.5 million** for the six months ended June 30, 2025, primarily due to the FLIC merger[251](index=251&type=chunk) - Net unrealized losses on available-for-sale securities decreased to **$60.3 million** as of June 30, 2025, from **$69.6 million** at December 31, 2024, mainly due to changes in market conditions and interest rates[252](index=252&type=chunk) - No allowance for credit losses was recorded for available-for-sale securities as of June 30, 2025, as unrealized losses are attributed to interest rate changes and issuers maintain high credit quality[252](index=252&type=chunk) [Interest Rate Sensitivity Analysis](index=66&type=section&id=Interest%20Rate%20Sensitivity%20Analysis) ConnectOne Bancorp actively manages interest rate risk using net interest income (NII) simulation and economic value of equity (EVE) models. As of June 30, 2025, a 200 basis-point instantaneous increase in interest rates was estimated to decrease NII by 4.94% over one year and EVE by 5.89%. Conversely, a 100 basis-point decrease was estimated to increase NII by 1.72% and decrease EVE by 0.40% - The Company uses net interest income (NII) simulation and economic value of equity (EVE) models to measure potential impacts of future interest rate changes, with results within Board-approved guidelines[255](index=255&type=chunk) Interest Rate Sensitivity as of June 30, 2025 | Interest Rates (basis points) | Estimated Change in EVE (%) | Estimated Change in NII (%) | |---|---|---| | +300 | (10.35) | (7.98) | | +200 | (5.89) | (4.94) | | +100 | (1.22) | (1.91) | | 0 | - | - | | -100 | (0.40) | 1.72 | | -200 | (3.30) | 4.57 | | -300 | (8.94) | 6.39 | - Changes in interest rate sensitivity were impacted by overall market interest rates, model assumption updates, shifts in fixed-rate funding, and a deposit mix shift towards certificates of deposit[260](index=260&type=chunk) [Estimates of Fair Value](index=67&type=section&id=Estimates%20of%20Fair%20Value) The estimation of fair value is critical for ConnectOne Bancorp's assets like loans held-for-sale and available-for-sale securities, which are recorded at fair value or the lower of cost or fair value. These estimates are inherently subjective and influenced by factors such as prepayment speeds, discount rates, and market interest rates. While most available-for-sale securities use quoted market prices, other valuations rely on judgments and models, leading to potential variability - Fair value estimation is significant for assets like loans held-for-sale and securities available-for-sale, which are recorded at fair value or the lower of cost or fair value[263](index=263&type=chunk) - Fair values are volatile and influenced by factors such as prepayment speeds, discount rates, and market interest rates[263](index=263&type=chunk) - Estimates are subjective, involve significant judgment, and changes in assumptions could materially affect them, making comparability between financial institutions challenging due to varied valuation techniques[162](index=162&type=chunk)[263](index=263&type=chunk) [Impact of Inflation and Changing Prices](index=68&type=section&id=Impact%20of%20Inflation%20and%20Changing%20Prices) ConnectOne Bancorp's financial statements are prepared using historical dollars, not accounting for inflation's impact on purchasing power. As a financial institution, interest rates have a greater influence on its performance than general inflation levels, and these rates do not necessarily move in tandem with the prices of goods and services - Financial statements are prepared in accordance with GAAP, using historical dollars, without considering the change in the relative purchasing power of money due to inflation[265](index=265&type=chunk) - Interest rates have a greater impact on the Company's performance than general levels of inflation, and interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services[265](index=265&type=chunk) [Liquidity](index=68&type=section&id=Liquidity) ConnectOne Bancorp actively manages its liquidity, which remained adequate as of June 30, 2025. Liquid assets totaled $1.0 billion, representing 7.5% of total assets and 8.7% of total deposits and borrowings. The Company had substantial available and unused credit of approximately $4.2 billion, including borrowing capacity from FHLB ($4.0 billion) and the Federal Reserve Bank of New York ($1.7 billion) - As of June 30, 2025, liquid assets (cash and due from banks, interest-bearing deposits with banks, and unencumbered investment securities) totaled **$1.0 billion**, representing **7.5% of total assets** and **8.7% of total deposits and borrowings**[268](index=268&type=chunk) - The Company had aggregate available and unused credit of approximately **$4.2 billion** as of June 30, 2025, including **$4.0 billion** from FHLB and **$1.7 billion** from the Federal Reserve Bank of New York[269](index=269&type=chunk) - Cash and cash equivalents increased by **$240.0 million** to **$596.5 million** as of June 30, 2025, with financing activities providing **$119.6 million** in net cash, primarily from increased deposits and subordinated debt issuance[270](index=270&type=chunk) [Deposits](index=69&type=section&id=Deposits) Deposits are ConnectOne Bancorp's primary funding source, with total average deposits increasing by $1.3 billion (16.4%) for the three months and $702 million (9.3%) for the six months ended June 30, 2025, primarily due to the FLIC merger. Total actual deposits increased by $3.5 billion (44.2%) to $11.3 billion as of June 30, 2025. Uninsured deposits were estimated at $4.8 billion, and nonreciprocal brokered deposits increased to $1.0 billion - Average total deposits increased by **$1.3 billion (16.4%)** for the three months ended June 30, 2025, and by **$702 million (9.3%)** for the six months ended June 30, 2025, primarily due to the FLIC merger[274](index=274&type=chunk)[279](index=279&type=chunk) Total Deposits by Type (in thousands) | (dollars in thousands) | June 30, 2025 Amount | June 30, 2025 Percent of total | December 31, 2024 Amount | December 31, 2024 Percent of total | |---|---|---|---|---| | Demand, noninterest-bearing | $2,424,529 | 21.5% | $1,422,044 | 18.2% | | Demand, interest-bearing & NOW | $4,888,144 | 43.3% | $3,248,731 | 41.5% | | Savings | $900,799 | 8.0% | $592,139 | 7.6% | | Time | $3,065,015 | 27.2% | $2,557,200 | 32.7% | | Total deposits | $11,278,487 | 100.0% | $7,820,114 | 100.0% | - Estimated uninsured deposits (excluding affiliate and subsidiary accounts) were **$4.8 billion** as of June 30, 2025, compared to **$2.7 billion** at December 31, 2024[285](index=285&type=chunk) - Nonreciprocal brokered deposits increased to **$1.0 billion** as of June 30, 2025, from **$907 million** at December 31, 2024[287](index=287&type=chunk) [Subordinated Debentures](index=72&type=section&id=Subordinated%20Debentures) ConnectOne Bancorp's subordinated debentures increased significantly due to the issuance of $200 million in fixed-to-floating rate subordinated notes (2025 Notes) in May 2025, bearing an initial annual interest rate of 8.125% until June 2030. Additionally, $75 million in 2020 Notes bear a variable rate (9.92% as of June 30, 2025), and $5.0 million in MMCapS capital securities (due 2034) converted to a SOFR-based floating rate (7.39% as of June 30, 2025) - The Parent Corporation issued **$200 million** in fixed-to-floating rate subordinated notes (2025 Notes) on May 15, 2025, with an initial annual interest rate of **8.125%** until June 1, 2030[291](index=291&type=chunk) - The **$75 million** 2020 Notes have a stated maturity of July 1, 2030, and bear a variable interest rate (Three-Month Term SOFR + 560.5 basis points), which was **9.92%** as of June 30, 2025[290](index=290&type=chunk) - The **$5.0 million** MMCapS capital securities (due January 23, 2034) converted to a floating rate based on CME Term SOFR plus 2.85% plus a tenor spread adjustment, resulting in a rate of **7.39%** as of June 30, 2025[289](index=289&type=chunk) [Stockholders' Equity](index=73&type=section&id=Stockholders%27%20Equity) ConnectOne Bancorp's stockholders' equity increased by $254.7 million to $1,496.4 million as of June 30, 2025, compared to December 31, 2024, primarily due to the FLIC merger. However, the tangible common equity ratio decreased to 8.09% from 9.49%, and tangible book value per common share decreased to $21.95 from $23.92, largely due to the increase in intangible assets from the merger - Stockholders' equity increased by **$254.7 million** to **$1.496 billion** as of June 30, 2025, primarily due to the FLIC merger[293](index=293&type=chunk) Tangible Common Equity Reconciliation (in thousands, except per share data) | (dollars in thousands, except for per share data) | June 30, 2025 | December 31, 2024 | |---|---|---| | Stockholders equity | $1,496,431 | $1,241,704 | | Less: preferred stock | $(110,927) | $(110,927) | | Common equity | $1,385,504 | $1,130,777 | | Less: intangible assets | $(281,926) | $(213,011) | | Tangible common stockholders' equity | $1,103,578 | $917,766 | | Total assets | $13,915,738 | $9,879,600 | | Less: intangible assets | $(281,926) | $(213,011) | | Tangible assets | $13,633,812 | $9,666,589 | | Common stock outstanding at period end | 50,270,162 | 38,370,317 | | Tangible common equity ratio (1) | 8.09% | 9.49% | | Book value per common share | $27.56 | $29.47 | | Less: intangible assets | $5.61 | $5.55 | | Tangible book value per common share | $21.95 | $23.92 | - Total goodwill and other intangible assets increased to **$281.9 million** as of June 30, 2025, from **$213.0 million** at December 31, 2024, impacting tangible equity ratios[293](index=293&type=chunk) [Regulatory Capital and Capital Adequacy](index=74&type=section&id=Regulatory%20Capital%20and%20Capital%20Adequacy) As of June 30, 2025, both ConnectOne Bancorp (the Company) and ConnectOne Bank (the Bank) satisfied all regulatory minimum capital standards and capital conservation buffer requirements. The Company's Tier 1 leverage capital ratio was 9.25%, and the Bank's was 10.22%, both well above the 4.00% minimum. The lowest ratio for the Company was the Tier 1 Risk Based Capital Ratio at 11.06%, and for the Bank, the Total Risk Based Capital Ratio at 13.24%, both exceeding minimums and buffers - Both the Company and the Bank satisfy the capital conservation buffer requirements as of June 30, 2025[302](index=302&type=chunk) Regulatory Capital Ratios as of June 30, 2025 | Capital Ratio | The Company | Minimum for Capital Adequacy | The Bank | Minimum for Capital Adequacy | Well-Capitalized | |---|---|---|---|---|---| | Tier 1 leverage capital | 9.25% | 4.00% | 10.22% | 4.00% | 5.00% | | CET I risk-based ratio | 10.04% | 4.50% | 12.22% | 4.50% | 6.50% | | Tier 1 risk-based capital | 11.06% | 6.00% | 12.22% | 6.00% | 8.00% | | Total risk-based capital | 14.35% | 8.00% | 13.24% | 8.00% | 10.00% | - The lowest ratio at the Company was the Tier 1 Risk Based Capital Ratio (**11.06%**), which was **2.56%** above the minimum buffer ratio. For the Bank, the lowest was the Total Risk Based Capital Ratio (**13.24%**), **2.74%** above the minimum buffer ratio[302](index=302&type=chunk) [Item 3. Qualitative and Quantitative Disclosures about Market Risks](index=75&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20about%20Market%20Risks) ConnectOne Bancorp's primary market risk is interest rate risk, which is actively managed through its asset and liability management function. Further details on the management of this risk are provided in the 'Interest Rate Sensitivity Analysis' section of Management's Discussion and Analysis - Interest rate risk management is ConnectOne Bancorp's primary market risk[303](index=303&type=chunk) - The Company's management of interest rate risk is discussed in detail under 'Item 2- Management's Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Sensitivity Analysis'[303](index=303&type=chunk) [Item 4. Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2025, ConnectOne Bancorp's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective. There have been no material changes in the Company's internal controls over financial reporting during the most recently completed fiscal quarter - The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[304](index=304&type=chunk) - There have been no material changes in the Company's internal controls over financial reporting during the most recently completed 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 provides disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information for ConnectOne Bancorp [Item 1. Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) ConnectOne Bancorp, as successor to FLIC, is facing a lawsuit filed on January 22, 2025, by a customer claiming approximately $11.1 million in damages due to suspicious wire transfer activity in July 2024. The Company vehemently disagrees with the allegations and intends to vigorously defend these claims - A customer filed a lawsuit on January 22, 2025, against FLIC and The First National Bank of Long Island (now ConnectOne Bancorp and ConnectOne Bank), claiming approximately **$11.1 million in damages**[308](index=308&type=chunk) - The lawsuit stems from suspicious wire transfer activity in July 2024, involving unauthorized access to banking information within the customer's control[307](index=307&type=chunk) - The Company vehemently disagrees with the allegations and intends to vigorously defend these claims[308](index=308&type=chunk) [Item 1a. Risk Factors](index=76&type=section&id=Item%201a.%20Risk%20Factors) There have been no material changes to the risk factors inherent in ConnectOne Bancorp's business from those described in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[309](index=309&type=chunk) [Item 2. 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) ConnectOne Bancorp did not repurchase any shares during the quarter ended June 30, 2025. As of that date, 641,118 shares remained available for repurchase under the existing program - The Company did not repurchase any shares during the quarter ended June 30, 2025[310](index=310&type=chunk) - As of June 30, 2025, **641,118 shares** remained available for repurchase under the share repurchase program[310](index=310&type=chunk) [Item 3. Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to ConnectOne Bancorp for the reporting period - Not applicable[311](index=311&type=chunk) [Item 4. Mine Safety Disclosures](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to ConnectOne Bancorp for the reporting period - Not applicable[311](index=311&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) This item is not applicable to ConnectOne Bancorp for the reporting period - Not applicable[311](index=311&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including supplemental indentures, certifications from the CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906), and Inline XBRL documents for taxonomy extension and interactive data files - Exhibits include the Third Supplemental Indenture, certifications from the CEO and CFO (Sarbanes-Oxley Act Sections 302 and 906), and various Inline XBRL documents[312](index=312&type=chunk) [SIGNATURES](index=78&type=section&id=SIGNATURES) This section formally attests to the accuracy and completeness of the quarterly report by the Company's principal executive and financial officers - The report was signed by Frank Sorrentino III, Chairman and Chief Executive Officer, and William S. Burns, Senior Executive Vice President and Chief Financial Officer, on August 11, 2025[316](index=316&type=chunk)

Exhibit 99.1 CONNECTONE BANCORP, INC. REPORTS SECOND QUARTER 2025 RESULTS; DECLARES COMMON AND PREFERRED DIVIDENDS Englewood Cliffs, N.J., July 29, 2025 (GLOBE NEWSWIRE) – ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the "Company" or "ConnectOne"), parent company of ConnectOne Bank (the "Bank"), today reported a net loss available to common stockholders of $(21.8) million for the second quarter of 2025 compared with net income available to common stockholders of $18.7 million for the first quarter of 2025 and $ ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Presents ConnectOne Bancorp's unaudited consolidated financial statements for Q1 2025, detailing condition, income, and cash flows Consolidated Statements of Condition Highlights (unaudited) | (in thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$9,759,255** | **$9,879,600** | | Net Loans Receivable | $8,118,731 | $8,192,125 | | Total Deposits | $7,767,230 | $7,820,114 | | **Total Liabilities** | **$8,506,316** | **$8,637,896** | | **Total Stockholders' Equity** | **$1,252,939** | **$1,241,704** | Consolidated Statements of Income Highlights (unaudited) | (in thousands, except per share data) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $65,756 | $60,300 | | Provision for Credit Losses | $3,500 | $4,000 | | **Net Income** | **$20,242** | **$17,205** | | Net Income Available to Common Stockholders | $18,733 | $15,696 | | **Diluted Earnings Per Share** | **$0.49** | **$0.41** | - The company entered into a definitive merger agreement with The First of Long Island Corporation, valued at approximately **$288 million** as of March 31, 2025, with shareholder approval obtained on February 14, 2025[39](index=39&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk) - As of March 31, 2025, the available-for-sale investment securities portfolio had a fair value of **$636.8 million**, with gross unrealized losses of **$89.1 million** primarily due to interest rate changes, and no allowance for credit losses was recorded[47](index=47&type=chunk)[49](index=49&type=chunk)[60](index=60&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes Q1 2025 financial performance, highlighting increased net income from expanded net interest margin and key operational areas [Operating Results Overview](index=50&type=section&id=Operating%20Results%20Overview) Net income to common stockholders increased in Q1 2025, driven by higher net interest income and lower credit loss provision Q1 2025 vs. Q1 2024 Performance | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income to Common Stockholders | $18.7 million | $15.7 million | | Diluted EPS | $0.49 | $0.41 | - The increase in net income was primarily due to **higher net interest income** and **lower provision for credit losses**, partially offset by **increased noninterest expenses**, which included **$1.3 million** in merger-related costs[174](index=174&type=chunk) [Net Interest Income and Margin](index=50&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased to $66.6 million in Q1 2025, with net interest margin expanding to 2.93% due to lower funding costs Net Interest Income and Margin (Tax-Equivalent) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $66.6 million | $61.1 million | | Net Interest Margin | 2.93% | 2.64% | | Avg. Yield on Earning Assets | 5.52% | 5.63% | | Avg. Cost of Interest-Bearing Liabilities | 3.35% | 3.82% | [Financial Condition](index=53&type=section&id=Financial%20Condition) Total assets were $9.8 billion as of March 31, 2025, with strong liquidity and exceeding regulatory capital requirements Loan Portfolio Composition | Loan Category | Balance at Mar 31, 2025 (in thousands) | % of Total | Change from Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | :--- | | Commercial | $1,492,920 | 18.2% | $(39,810) | | Commercial Real Estate | $5,837,671 | 71.1% | $(43,008) | | Commercial Construction | $617,593 | 7.5% | $1,347 | | **Total Gross Loans** | **$8,206,343** | **100.0%** | **$(74,139)** | Asset Quality Indicators | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonperforming Assets | $49,860 thousand | $57,310 thousand | | Nonperforming Assets to Total Assets | 0.51% | 0.58% | | ACL as a % of Loans Receivable | 1.00% | 1.00% | Capital Adequacy Ratios (Company) | Ratio | March 31, 2025 | Minimum Requirement | | :--- | :--- | :--- | | CET I Risk-Based Ratio | 11.14% | 4.50% | | Tier 1 Risk-Based Capital | 12.46% | 6.00% | | Total Risk-Based Capital | 14.29% | 8.00% | Tangible Book Value Per Share | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Tangible Book Value Per Common Share | $24.16 | $23.92 | | Tangible Common Equity Ratio | 9.73% | 9.49% | [Interest Rate Sensitivity Analysis](index=59&type=section&id=Interest%20Rate%20Sensitivity%20Analysis) The company manages interest rate risk using NII and EVE models, with rate changes impacting NII and EVE as of March 31, 2025 Interest Rate Sensitivity as of March 31, 2025 | Rate Shock (basis points) | Estimated Change in 1-Year NII | Estimated Change in EVE | | :--- | :--- | :--- | | +200 | -5.30% | -5.11% | | +100 | -2.16% | -1.64% | | -100 | +2.27% | +0.40% | [Qualitative and Quantitative Disclosures about Market Risks](index=68&type=section&id=Item%203.%20Qualitative%20and%20Quantitative%20Disclosures%20about%20Market%20Risks) The company identifies interest rate risk as its primary market risk, with detailed analysis in the MD&A section - The company's primary market risk is **interest rate risk management**, with further details provided in the MD&A section on Interest Rate Sensitivity Analysis[254](index=254&type=chunk) [Controls and Procedures](index=68&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls and procedures were effective as of Q1 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures are **effective**[255](index=255&type=chunk) - **No material changes** were made to the company's internal controls over financial reporting during the last fiscal quarter[256](index=256&type=chunk) [PART II – OTHER INFORMATION](index=69&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=69&type=section&id=Item%201.%20Legal%20Proceedings) The company is not subject to any legal proceedings expected to materially impact its financial condition or operations - The Company is **not subject to any legal proceedings** which could have a **materially adverse impact** on its results of operations and financial condition[258](index=258&type=chunk) [Risk Factors](index=69&type=section&id=Item%201a.%20Risk%20Factors) No material changes to the company's inherent business risk factors have occurred since the FY2024 Annual Report on Form 10-K - There have been **no material changes** to the risks inherent in the business from those described in the Annual Report on Form 10-K for the year ended December 31, 2024[259](index=259&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=69&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q1 2025, with 641,118 shares remaining authorized under the existing repurchase program - The Company **did not repurchase any shares** during the quarter ended March 31, 2025, with **641,118 shares remaining** for repurchase under the program[260](index=260&type=chunk) [Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The report includes **CEO and CFO certifications** pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, along with **Inline XBRL** instance and taxonomy documents[262](index=262&type=chunk)

Financial Performance - Net income available to common stockholders for Q1 2025 was $18.7 million, compared to $18.9 million in Q4 2024 and $15.7 million in Q1 2024, reflecting a year-over-year increase of 18.9%[2] - Diluted earnings per share for Q1 2025 were $0.49, unchanged from Q4 2024 and up from $0.41 in Q1 2024[2] - Operating net income for Q1 2025 was $19.7 million, down from $20.2 million in Q4 2024 but up from $15.9 million in Q1 2024[3] - Net income for Q1 2025 was $20,242, representing a 17.7% increase from $17,205 in Q1 2024[24] - Net income for Q1 2025 was $20,242,000, slightly down from $20,371,000 in Q4 2024, a decrease of 0.6%[28] - Operating net income available to common stockholders was $19,710,000 in Q1 2025, compared to $20,220,000 in Q4 2024, a decline of 2.5%[30] Interest Income and Margin - Fully taxable equivalent net interest income for Q1 2025 was $65.8 million, an increase of $1.0 million or 1.6% from Q4 2024, and up $5.5 million or 9.0% from Q1 2024[7][9] - Net interest income for Q1 2025 was $65,756, an increase of 8.1% compared to $60,300 in Q1 2024[24] - Net interest income for Q1 2025 was $65,756,000, an increase of 1.6% from $64,711,000 in Q4 2024[28] - The net interest margin widened by 7 basis points to 2.93% in Q1 2025, driven by a decrease in average costs of deposits[7] - Net interest margin (GAAP) increased to 2.93% in Q1 2025, up from 2.86% in Q4 2024[30] - The net interest spread improved to 2.17%, up from 2.05% in the prior period[35] Noninterest Income and Expenses - Noninterest income increased to $4.5 million in Q1 2025, compared to $3.7 million in Q4 2024 and $3.8 million in Q1 2024[10] - Noninterest income increased to $4,451 in Q1 2025, up from $3,848 in Q1 2024, a growth of 15.7%[24] - Total noninterest expenses for Q1 2025 were $39,305, an increase of 6.0% from $37,065 in Q1 2024[24] - Noninterest expenses were $39.3 million in Q1 2025, up from $38.5 million in Q4 2024 and $37.1 million in Q1 2024, primarily due to increased merger expenses[11] - Total noninterest income increased to $4,451,000 in Q1 2025, up from $3,744,000 in Q4 2024, representing a growth of 18.9%[28] - Noninterest expenses rose to $39,305,000 in Q1 2025, compared to $38,498,000 in Q4 2024, reflecting an increase of 2.1%[28] Assets and Liabilities - Total assets decreased to $9.759 billion as of March 31, 2025, from $9.880 billion as of December 31, 2024[15] - Total assets as of March 31, 2025, were $9,759,255, a decrease of 1.2% from $9,879,600 on December 31, 2024[23] - Total deposits decreased to $7,767,230 as of March 31, 2025, down from $7,820,114 at the end of 2024, a decline of 0.7%[23] - Total deposits were $7,767,230 as of March 31, 2025, a slight decrease from $7,820,114 on December 31, 2024, reflecting a 0.7% decline[26] - Gross loans decreased to $8,206,343 as of March 31, 2025, down from $8,280,482 on December 31, 2024, representing a decline of 0.9%[26] - Borrowings decreased to $613,053 as of March 31, 2025, down from $688,064 on December 31, 2024, a decline of 10.9%[26] Credit Losses and Risk Ratios - The provision for credit losses was stable at $3.5 million for Q1 2025, consistent with Q4 2024 and down from $4.0 million in Q1 2024[13] - Provision for credit losses remained stable at $3,500 for both Q1 2025 and Q4 2024[24] - Net loan charge-offs for the quarter were $3,400 thousand, slightly up from $3,334 thousand in the previous quarter, indicating a 2% increase[32] - Nonaccrual loans decreased to $49,860 thousand from $57,310 thousand, a reduction of 13%[32] - The common equity Tier 1 risk-based ratio improved to 11.14% from 10.97% in the previous quarter, showing a positive trend in capital adequacy[32] Capital Position - The company maintains a strong capital position with total stockholders' equity of $1,252,939 as of March 31, 2025[23] - Total stockholders' equity increased to $1,252,939 as of March 31, 2025, compared to $1,241,704 on December 31, 2024, marking a growth of 0.9%[27] - Tangible common equity rose to $929,280 thousand, compared to $917,766 thousand in the previous quarter, reflecting a 0.6% increase[32] - Book value per share (GAAP) increased to $29.69 from $29.47, marking a rise of 0.7%[32] Future Plans - The Company plans to finalize its merger with The First of Long Island Corporation in Q2 2025, aiming to create a premier community bank in the New York Metro area[5]

Assets and Mergers - ConnectOne Bancorp, Inc. has total assets of $9.880 billion[25] - The company completed the merger with Greater Hudson Bank, acquiring approximately $0.4 billion in loans and deposits[16] - The merger with Bancorp of New Jersey resulted in the acquisition of approximately $0.8 billion in loans and deposits[18] - The upcoming merger with The First of Long Island Corporation is expected to close in the first or second quarter of 2025, with FLIC having total assets of $4.1 billion and total deposits of $3.3 billion[20] - The company has acquired GHB, BoeFly, and BNJ since January 1, 2019, and is pending regulatory approval for the acquisition of FLIC[133] - The company is expected to exceed $10 billion in assets upon consummation of its merger with The First National Bank of Long Island, subjecting it to examination by the Consumer Financial Protection Bureau[58] Business Model and Operations - ConnectOne Bank operates a "branch-lite" model, focusing on efficiency and technology investments to serve clients in the New York Metropolitan area and South Florida[26] - The company offers a broad range of deposit and loan products, deriving a majority of revenue from net interest income[31] - ConnectOne Bank's market area includes robust markets in New Jersey, New York City, Long Island, and the Hudson Valley, with plans for continued expansion[29] - BoeFly, a subsidiary, connects small to medium-sized businesses with funding solutions through a digital marketplace[27] - The company emphasizes attracting quality business relationship officers to enhance client acquisition and retention[29] - The Company’s strategy emphasizes personalized banking services and cross-selling products to enhance client relationships and maintain funding costs[207] Employee and Training Initiatives - The Company had 489 full-time employees and 4 part-time and temporary employees as of December 31, 2024[43] - In 2024, 71 employees were promoted into new roles, reflecting the Company's focus on internal promotions[49] - ConnectOne University provided comprehensive job skills and cybersecurity training, advancing leadership skills for 125 managers in 2024[44] Regulatory Environment and Capital Requirements - The Dodd-Frank Act requires banking regulators to seek to make capital standards countercyclical, impacting capital requirements for the Company[58] - The Economic Growth, Regulatory Relief and Consumer Protection Act raised the asset threshold for stress tests from $10 billion to $250 billion, providing regulatory relief for midsized banks[60] - The Company and the Bank are required to maintain a Common Equity Tier 1 Capital Ratio of 4.5%, a Tier 1 Capital Ratio of 6.0%, and a Total Capital Ratio of 8.0%[73] - The New Rules require a capital conservation buffer of 2.5% composed entirely of CET1, on top of the minimum risk-weighted asset ratios[69] - An institution will be classified as "well capitalized" if it has a total risk-based capital ratio of at least 10.0%[64] - The Company has elected not to opt into the Community Bank Leverage Ratio framework[79] - The Company is studying the revisions to the Community Reinvestment Act regulations to determine the impact on its operations, which is currently uncertain[88] Loan Portfolio and Credit Losses - As of December 31, 2024, the company had $6.3 billion in commercial real estate loans, representing 76.2% of total loans receivable[104] - Commercial real estate loans accounted for 435% of the Bank's Tier 1 capital plus the allowance for credit losses on loans[104] - A significant portion of the loan portfolio will reset interest rates in 2025 and 2026, potentially increasing borrowers' repayment costs[111] - The company targets small-to medium-sized businesses, which may be more vulnerable to economic downturns, impacting their ability to repay loans[113] - The company is subject to regulatory scrutiny regarding its high concentration of commercial real estate loans, which may require heightened risk management practices[108] - The Company's allowance for credit losses for loans totaled $82.7 million as of December 31, 2024, an increase from $82.0 million in 2023, primarily due to increases in individually evaluated allowance[201] - The quantitative component of the allowance for credit losses for collectively evaluated loans decreased by $7.4 million to $81.2 million as of December 31, 2024, attributed to a decrease in collectively evaluated loans of $54.4 million[202] - The qualitative component of the allowance for credit losses increased by $8.0 million, reflecting trends in qualitative loss factors over 2024[202] Financial Performance - Net income available to common stockholders for the year ended December 31, 2024 was $67.8 million, a decrease of $13.2 million, or 16.3%, compared to $81.0 million for 2023[211] - Diluted earnings per share for 2024 were $1.76, reflecting a 15.0% decrease from $2.07 for 2023[211] - Net income available to common stockholders for 2023 was $81.0 million, a decrease of $38.2 million, or 32.1%, compared to $119.2 million for 2022[212] - Diluted earnings per share for 2023 were $2.07, a 31.2% decrease from $3.01 for 2022[212] - The company's net interest income is primarily influenced by the difference between interest earned on interest-earning assets and interest paid on borrowed funds[208] - Net interest margin is affected by the weighted average rates on interest-earning assets and interest-bearing liabilities[208] Risks and Challenges - The company may face challenges in raising additional capital to support its growth-oriented business strategy[102] - The impact of remote work on the commercial real estate market remains uncertain, potentially affecting borrowers' repayment capabilities[106] - Increased competition for deposits may require the company to raise interest rates to retain existing deposits or attract new ones[119] - The company faces substantial competition from fintech companies, which may offer more favorable terms and reduce margins on banking services[122] - The company may incur impairment to goodwill if significant negative industry trends or reduced cash flow estimates occur[132] - The inability to receive dividends from the bank could adversely affect the company's financial condition and results of operations[129] - The company is subject to heightened regulatory requirements due to its approaching $10 billion in total assets, which may increase operating costs[141] - Unanticipated costs related to the merger could have a dilutive effect on ConnectOne's earnings per share, potentially resulting in lower earnings than anticipated[154] - ConnectOne may face challenges in attracting and retaining customers during the merger process due to uncertainties affecting employees and business relationships[149] Cybersecurity and Compliance - Cybersecurity is a material part of ConnectOne's business, and incidents could have a material effect on its operations and reputation, although no significant incidents have occurred to date[174] - The Company maintains a cybersecurity risk mitigation program that includes monthly vulnerability scanning and annual risk assessments[178] Shareholder and Stock Information - The Company has a share repurchase program authorized for up to 2,000,000 shares, with 282,370 shares repurchased during the year ended December 31, 2024[190] - As of December 31, 2024, there were 641,118 shares remaining for repurchase under the share repurchase program[191] - The Company’s stock is traded on the NASDAQ Global Select Market under the symbol "CNOB," with 678 stockholders of record as of December 31, 2024[188]

Financial Performance - Net income available to common stockholders for Q4 2024 was $18.9 million, a 20.5% increase from Q3 2024 and a 6.2% increase from Q4 2023[1] - Diluted earnings per share for Q4 2024 were $0.49, compared to $0.41 in Q3 2024 and $0.46 in Q4 2023[1] - Full-year 2024 net income available to common stockholders was $67.8 million, down from $81.0 million in 2023[1] - Operating net income for Q4 2024 was $20.2 million, up from $16.1 million in Q3 2024 and $19.1 million in Q4 2023[2] - Net income for the year ended December 31, 2024, was $73,793 thousand, a decrease of 15.1% from $87,003 thousand in 2023[24] - Earnings per common share for the year ended December 31, 2024, were $1.77, down from $2.08 in 2023, reflecting a decrease of 14.9%[24] Interest Income and Margin - Fully taxable equivalent net interest income for Q4 2024 was $64.7 million, a 6.3% increase from Q3 2024[6] - The bank's net interest margin improved to 2.86% in Q4 2024, up from 2.67% in Q3 2024[6] - Net interest income after provision for credit losses was $233,537 thousand for the year ended December 31, 2024, down from $246,906 thousand in 2023, representing a decline of 5.4%[24] - The company reported a net interest income of $517,889 thousand for the year ended December 31, 2024, compared to $490,065 thousand in 2023, showing an increase of 5.7%[24] - Net interest income for Q4 2024 was $64,711 thousand, an increase of 3.0% compared to $60,887 thousand in Q3 2024[28] - Net interest income (tax equivalent basis) increased to $65,593 thousand from $62,627 thousand, showing a growth of 4.73%[31] Assets and Liabilities - Total assets as of December 31, 2024, were $9.880 billion, an increase from $9.856 billion a year earlier[14] - Total assets increased to $9,879,600 thousand as of December 31, 2024, compared to $9,855,603 thousand as of December 31, 2023, reflecting a growth of approximately 0.24%[23] - The company’s total liabilities were $8,637,896 thousand as of December 31, 2024, slightly down from $8,638,983 thousand in 2023, indicating a marginal decrease of 0.01%[23] - Total assets decreased slightly to $9,653,446 thousand from $9,742,853 thousand[36] Deposits and Loans - Total deposits rose to $7,820,114 thousand as of December 31, 2024, up from $7,536,202 thousand a year earlier, indicating an increase of 3.77%[23] - Total loans reached $8,275,553 thousand, reflecting an increase of 2.0% from $8,111,976 thousand in the previous quarter[26] - Loans receivable increased to $8,345,145 thousand from $8,297,957 thousand, reflecting a growth of 0.6% quarter-over-quarter[34] Credit Quality - Nonperforming assets were $57.3 million as of December 31, 2024, representing 0.58% of total assets[13] - The allowance for credit losses was 1.00% of loans receivable as of December 31, 2024, compared to 0.98% a year earlier[13] - The provision for credit losses increased to $13,800 thousand for the year ended December 31, 2024, compared to $8,200 thousand in 2023, marking a rise of 68.3%[24] - Nonperforming assets increased to $57,310 thousand from $52,524 thousand, indicating a rise in asset quality concerns[33] - Nonaccrual loans as a percentage of loans receivable rose to 0.63% from 0.57% in the previous quarter[34] Operational Efficiency - Noninterest expenses totaled $151,798 thousand for the year ended December 31, 2024, an increase of 5.4% from $143,949 thousand in 2023[24] - Noninterest expenses totaled $38,498 thousand in Q4 2024, a decrease from $38,641 thousand in Q3 2024[28] - The operating efficiency ratio (non-GAAP) improved to 52.9%, down from 53.4%, indicating enhanced operational efficiency[31] Equity and Shareholder Value - The company reported a total stockholders' equity of $1,241,704 thousand as of December 31, 2024, up from $1,239,496 thousand in the previous quarter[26] - Book value per share (GAAP) increased to $29.47 from $28.70, reflecting a positive trend in shareholder equity[33] - Common equity ratio (GAAP) decreased slightly to 11.45% from 11.71%, reflecting a minor decline in capital adequacy[33] Future Outlook - The proposed merger with The First of Long Island Corporation is expected to close in Q2 2025, enhancing ConnectOne's presence on Long Island[3]

Financial Performance - Net income available to common stockholders for Q3 2024 was $15.7 million, down from $19.9 million in Q3 2023, representing a decrease of 21.1%[162] - Diluted earnings per share for Q3 2024 were $0.41, compared to $0.51 for Q3 2023, a decrease of 19.6%[162] - For the nine months ended September 30, 2024, net income available to common stockholders was $48.9 million, down from $63.2 million in the same period of 2023, a decrease of 22.7%[163] - Diluted earnings per share for the nine months ended September 30, 2024 were $1.27, compared to $1.61 for the same period in 2023, a decrease of 21.1%[163] Interest Income and Margin - Fully taxable equivalent net interest income for Q3 2024 decreased by $1.5 million, or 2.4%, from Q3 2023[165] - The net interest margin for Q3 2024 was 2.67%, down from 2.76% in Q3 2023, a decrease of 9 basis points[165] - Net interest income for the nine months ended September 30, 2024, was $182.6 million, down from $193.3 million in 2023, representing a decrease of 5.5%[176] - The company reported a net interest margin of 2.67% for the nine months ended September 30, 2024, down from 2.85% in 2023[172] - The average yield on interest-earning assets increased to 5.67% for the nine months ended September 30, 2024, compared to 5.30% in 2023[172] Loan and Credit Quality - The loan portfolio decreased by $235.5 million or 2.8% to $8.1 billion as of September 30, 2024, compared to December 31, 2023[183] - The provision for credit losses increased by $2.3 million in Q3 2024 compared to Q3 2023[162] - Net charge-offs for the nine months ended September 30, 2024 were $9.9 million, compared to $8.0 million for the same period in 2023, with significant charge-offs related to multifamily and commercial loans[191] - Nonaccrual loans as of September 30, 2024 amounted to $51.3 million, representing 0.63% of total loans receivable, unchanged from December 31, 2023[199] - The provision for credit losses for the three months ended September 30, 2024 was $3.8 million, compared to $1.5 million for the same period in 2023, reflecting an increase in specific reserves[190] Noninterest Income and Expenses - Noninterest income rose to $13.0 million for the nine months ended September 30, 2024, compared to $9.8 million in 2023, marking an increase of 32.7%[177] - Noninterest expenses totaled $113.3 million for the nine months ended September 30, 2024, up from $106.1 million in 2023, indicating a rise of 6.8%[179] - Noninterest expenses for Q3 2024 included $0.7 million in merger expenses related to the merger with The First of Long Island Corporation[162] Deposits and Liquidity - Average total deposits increased by $27.7 million, or 0.4%, during Q3 2024 compared to Q3 2023, driven by a $143.5 million increase in savings deposits[223] - Total deposits decreased by $12.1 million, or 0.2%, to $7.52 billion as of September 30, 2024, compared to $7.54 billion as of December 31, 2023[235] - Estimated uninsured deposits rose to $6.50 billion as of September 30, 2024, from $6.15 billion as of December 31, 2023[234] - The bank had aggregate available and unused credit of approximately $2.9 billion as of September 30, 2024, after accounting for $1.4 billion in outstanding borrowings[218] - Cash and cash equivalents totaled $247.2 million as of September 30, 2024, reflecting a decrease of $4.5 million from December 31, 2023[219] Capital and Equity - The Company’s tangible common equity ratio improved to 9.71% as of September 30, 2024, compared to 9.25% as of December 31, 2023[240] - Total risk-based capital for the Company was $1.23 billion, with a ratio of 14.29% as of September 30, 2024, exceeding the minimum requirement[247] - The Company’s stockholders' equity remained flat at approximately $1.2 billion as of September 30, 2024, compared to December 31, 2023[240] - Retained earnings increased by $29 million, offset by $6 million in treasury stock and $2 million in accumulated other comprehensive losses[240] Interest Rate Sensitivity - A 200 basis-point increase in interest rates is estimated to decrease net interest income by 3.95% over the next year, compared to a decrease of 9.25% estimated as of December 31, 2023[206] - As of September 30, 2024, a 200 basis-point increase in interest rates would decrease net interest income by 1.23% over the next three years[207] - The estimated economic value of equity (EVE) would decrease by 9.81% with a 200 basis-point increase in interest rates as of September 30, 2024[208] Asset Management - Total interest-earning assets increased to $9.25 billion for the nine months ended September 30, 2024, compared to $9.16 billion for the same period in 2023, reflecting a growth of 0.9%[172] - The average securities portfolio increased by $13.5 million to approximately $736.9 million for the three months ended September 30, 2024, representing 8.0% of average total interest-earning assets[200] - Net unrealized losses on securities available-for-sale decreased to $51.1 million as of September 30, 2024, from $57.8 million as of December 31, 2023, due to changes in market conditions[201]

CONNECTONE BANCORP, INC. REPORTS THIRD QUARTER 2024 RESULTS; DECLARES COMMON AND PREFERRED DIVIDENDS Exhibit 99.1 Englewood Cliffs, N.J., October 24, 2024, (GLOBE NEWSWIRE) – ConnectOne Bancorp, Inc. (Nasdaq: CNOB) (the "Company" or "ConnectOne"), parent company of ConnectOne Bank (the "Bank"), today reported net income available to common stockholders of $15.7 million for the third quarter of 2024 compared with $17.5 million for the second quarter of 2024 and $19.9 million for the third quarter of 2023. In ...